Title 14 Ill. Adm. Code — Commerce

Chapter I Secretary of State

Part 100 Electronic Commerce Security Act

14 Ill. Adm. Code 100.10 Scope and Definitions

a) The purpose of this Part is to provide maximum flexibility to the implementation of digital signature technology for the private sector under the Illinois Electronic Commerce Security Act [5 ILCS 175]. The Act sets forth procedures by which the Secretary of State may certify security procedures for digital signature technology. However, the Act does not require any person to create, store, transmit, accept, or otherwise use or communicate information, records, or signatures by electronic means or in electronic form; or prohibit any person engaging in an electronic transaction from establishing reasonable requirements regarding the medium on which it will accept records or the method and type of symbol or security procedure it will accept as a signature.

b) For the purposes of this Part, and unless the context expressly indicates otherwise, definitions are as follows:

"Act" means the Illinois Electronic Commerce Security Act [5 ILCS 175].

"Applicant" means a person or entity other than a State agency seeking certification by the Secretary as a certification authority in the State of Illinois.

"Asymmetric cryptosystem" means a computer-based system capable of generating and using a key pair consisting of a private key for creating a digital signature and a public key to verify the digital signature.

"Certificate" means a record that at a minimum:

identifies the certification authority issuing it;

names or otherwise identifies its subscriber or a device or electronic agent under the control of the subscriber;

contains a public key that corresponds to a private key under the control of the subscriber;

specifies its operational period; and

is digitally signed by the certification authority issuing it.

"Certification authority" or "CA" means a person or entity who authorizes and causes the issuance of a certificate.

"Certification practice statement" or "CPS" is a statement published by a certification authority that specifies the policies or practices that the certification authority employs in issuing, managing, suspending, and revoking certificates and providing access to them.

"Certificate policy" or "CP" is a statement published by a certification authority that specifies the policies of the certification authority.

"Digital signature" means a type of electronic signature created by transforming an electronic record using a message digest function and encrypting the resulting transformation with an asymmetric cryptosystem using the signer's private key such that any person having the initial untransformed electronic record, the encrypted transformation, and the signer's corresponding public key can accurately determine whether the transformation was created using the private key that corresponds to the signer's public key and whether the initial electronic record has been altered since the transformation was made. A digital signature is a security procedure.

"Electronic" includes electrical, digital, magnetic, optical, electromagnetic, or any other form of technology that entails capabilities similar to these technologies.

"Electronic record" means a record generated, communicated, received, or stored by electronic means for use in an information system or for transmission from one information system to another.

"Electronic signature" means a signature in electronic form attached to or logically associated with an electronic record.

"Key pair" means, in an asymmetric cryptosystem, 2 mathematically related keys, referred to as a private key and a public key, having the properties that:

one key (the private key) can encrypt a message that only the other key (the public key) can decrypt; and

even knowing one key (the public key), it is computationally unfeasible to discover the other key (the private key).

"Message digest function" means an algorithm that maps or translates the sequence of bits comprising an electronic record into another, generally smaller, set of bits (the message digest) without requiring the use of any secret information, such as a key, so that an electronic record yields the same message digest every time the algorithm is executed using such record as input and it is computationally unfeasible that any 2 electronic records can be found or deliberately generated that would produce the same message digest using the algorithm unless the 2 records are precisely identical.

"Operational period of a certificate" begins on the date and time the certificate is issued by a certification authority (or on a later date and time certain if stated in the certificate) and ends on the date and time it expires as noted in the certificate or is earlier revoked, but does not include any period during which a certificate is suspended.

"Person" means an individual, corporation, business trust, estate, trust, partnership, limited partnership, limited liability partnership, limited liability company, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.

"Private key" means the key of a key pair used to create a digital signature.

"Public key" means the key of a key pair used to verify a digital signature.

"Record" means information that is inscribed, stored, or otherwise fixed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

"Repository" means a system for storing and retrieving certificates or other information relevant to certificates, including information relating to the status of a certificate.

"Revoke a certificate" means to permanently end the operational period of a certificate from a specified time forward.

"Secretary" means the Secretary of State of Illinois.

"Security procedure" means a methodology or procedure used for the purpose of:

verifying that an electronic record is that of a specific person; or

detecting error or alteration in the communication, content, or storage of an electronic record since a specific point in time.

A security procedure may require the use of algorithms or codes, identifying words or numbers, encryption, answer back or acknowledgment procedures, or similar security devices.

"Signature device" means unique information, such as codes, algorithms, letters, numbers, private keys, or personal identification numbers (PINs), or a uniquely configured physical device that is required, alone or in conjunction with other information or devices, in order to create an electronic signature attributable to a specific person.

"Signed" or "signature" includes any symbol executed or adopted, or any security procedure employed or adopted, using electronic means or otherwise, by or on behalf of a person with intent to authenticate a record.

"State agency" means and includes all officers, boards, commissions, courts, and agencies created by the Illinois Constitution, whether in the executive, legislative or judicial branch; all officers, departments, boards, commissions, agencies, institutions, authorities, universities, bodies politic and corporate of the State; and administrative units or corporate outgrowths of the State government that are created by or pursuant to statute, other than units of local government and their officers, school districts and boards of election commissioners; all administrative units and corporate outgrowths of the above and as may be created by executive order of the Governor.

"Subscriber" means a person who is the subject named or otherwise identified in a certificate, who controls a private key that corresponds to the public key listed in that certificate, and who is the person to whom digitally signed messages verified by reference to such certificate are to be attributed.

"Suspend a certificate" means to temporarily suspend the operational period of a certificate for a specified time period or from a specified time forward.

"Trustworthy manner" means through the use of computer hardware, software, and procedures that, in the context in which they are used:

can be shown to be reasonably resistant to penetration, compromise, and misuse;

provide a reasonable level of reliability and correct operation;

are reasonably suited to performing their intended functions or serving their intended purposes;

comply with applicable agreements between the parties, if any; and

adhere to generally accepted security procedures.

"Valid certificate" means a certificate that a certification authority has issued and that the subscriber listed in the certificate has accepted.

"Verify a digital signature" means to use the public key listed in a valid certificate, along with the appropriate message digest function and asymmetric cryptosystem, to evaluate a digitally signed electronic record, such that the result of the process concludes that the digital signature was created using the private key corresponding to the public key listed in the certificate and the electronic record has not been altered since its digital signature was created.

History

• Source: Amended at 31 Ill. Reg. 7284, effective May 7, 2007

14 Ill. Adm. Code 100.20 Certification of a Qualified Security Procedure for Electronic Records and Signature

a) In order to obtain the Secretary's certification of a qualified security procedure, an applicant must file an application form, designated by the Secretary, at the following location:

Certification Authority Application Section

Room 461

Howlett Building

Springfield, Illinois 62756

b) The applicant must document security procedures, policies and practices that delineate full and complete identification of security procedures. The documentation shall be submitted for review, in the form of a Certification Practice Statement (CPS) and Certificate Policy (CP), to the Secretary's Electronic Signature Steering Committee.

c) Applicants certified by the Secretary shall:

1. have adopted secure policies and procedures as designated by a recognized industry organization;

2. meet the criteria for acceptance of electronic signatures and records and the criteria for recognition of qualified security procedures as delineated in Sections 100.30 and 100.40 of this Part;

3. maintain an office in this State or maintain a registered agent for service of process in this State;

4. submit a suitable guaranty described in Section 100.50 of this Part;

5. submit an annual audit that complies with Section 100.60 of this Part;

6. pay an annual application fee of $2,000. The fee shall be paid by certified check upon the annual submittal of the application and be made payable to the Illinois Secretary of State. Such fee shall not be applicable to agencies of State government applying for the Secretary's certification pursuant to this Part; and

7. maintain records in accordance with Section 100.100 of this Part.

14 Ill. Adm. Code 100.30 Criteria for Acceptance of Electronic Signatures

A qualified security procedure is a security procedure for identifying a person that is capable of creating, in a trustworthy manner, an electronic signature that:

a) is unique to the signer within the context in which it is used;

b) can be used to objectively identify the person signing the electronic record;

c) was reliably created by such identified person and that cannot be readily duplicated or compromised;

d) is created and is linked to the electronic record to which it relates in a manner that, if the record or the signature is intentionally or unintentionally changed after signing, the electronic signature is invalidated; and

e) complies with this Part.

14 Ill. Adm. Code 100.40 Recognition of Qualified Security Procedures

a) The security structure of technology known as public key cryptographyis certified by a CA as a qualified security procedure for use by private entities in Illinois, provided that the digital signature is created consistent with this Section. Cryptography is a commercially reasonable standard and procedure for use by private industries in Illinois, provided that the digital signature is created consistent with this Section.

b) The Electronic Commerce Security Act requires that a digital signature be unique to the signer within the context in which it is used. A public key-based digital signature may be considered unique to the signer using it if:

1. the digital signature is created using an asymmetric algorithm;

2. the private key used to create the signature on the document is known only to the signer;

3. the digital signature can be verified by reference to the public key listed in a CA certificate;

4. the digital signature is created during the operational period of a valid CA certificate;

5. it is computationally infeasible to derive the private key from knowledge of the public key; and

6. the digital signature is created within the scope of any other restrictions specified or incorporated by reference in the CA certificate.

c) The Act requires that a digital signature can be used to objectively identify the person signing the electronic record. A public-key based digital signature is capable of objectively identifying the person signing the electronic record if:

1. the acceptor of the digitally signed document can verify the document was digitally signed by using the signer's public key and message digest function to decrypt the message; and

2. the issuing certification authority, through a process defined in the CP or CPS, authenticates the subscriber and the subscriber's public key and identifies the forms of identification required of the signer prior to issuing the CA certificate.

d) The Act requires that the digital signature be reliably created by an identified person and cannot be readily duplicated or compromised. The signer and all other persons that rightfully have access to signature devices assume a duty to exercise reasonable care to retain control and maintain secrecy of the signature device and to protect it from any unauthorized access, disclosure, or use during the period when reliance on a signature created by such device is reasonable.

e) The Act requires that the digital signature be created, and be linked to the electronic record to which it relates, in a manner that, if the record or the signature is intentionally or unintentionally changed after signing, the electronic signature is invalidated.

History

• Source: Amended at 31 Ill. Reg. 7284, effective May 7, 2007

14 Ill. Adm. Code 100.50 Suitable Guaranty

In order to receive the Secretary's certification of a qualified security procedure, an applicant is required to:

a) Provide suitable guaranty in the form of a surety bond executed by an insurer lawfully operating in this State or an irrevocable letter of credit issued by a financial institution lawfully operating in this State in the amount of $100,000.

b) The form of the suitable guaranty or letter of credit must:

1. identify the insurer;

2. identify the applicant;

3. be made payable to the Secretary for the purpose of persons holding qualified rights of payment against the applicant named as principal of the bond or customer of the letter of credit;

4. state that the bond or letter of credit is issued under the Act; and

5. specify a term of effectiveness of at least five years.

14 Ill. Adm. Code 100.60 Audit Requirements

a) Upon application for the Secretary's certification of a qualified security procedure, the applicant shall submit annually to the Secretary an independent third party audit with an unqualified opinion. If the applying certification authority has been in operation for one year or less, the applicant shall submit an American Institute of Certified Public Accountants Statement of Standards (S.A.S. 70) Type One Audit. If the applying certification authority has been in operation for longer than one year, the applicant shall submit a Type Two Audit. (The American Institute of Certified Public Accountants Statement of Standards (S.A.S. 70) (December 15, 1999; no subsequent dates or editions) is hereby incorporated and is available from the Institute at 1211 Avenue of the Americans, New York NY 10036.)

b) The auditor shall be a certified public accountant licensed in the State of Illinois, and shall have a current and valid certificate as either a certified information systems auditor by the Information Systems Audit and Control Foundation or as a certified information systems security professional by the International Information Systems Security Certification Consortium.

c) The auditors shall attest that they have demonstrated significant experience in the application of public key cryptographic technologies and computer security.

d) The audit shall include the auditor's opinion or attestation that the applicant has implemented and designed CA certification practices and policies to achieve the requirements of the applicant authority's policy and stated control objectives. The audit shall also establish that the applicant authority has the use of a trustworthy system.

14 Ill. Adm. Code 100.70 Certification Authorities

Certification authorities certified by the Secretary shall:

a) inform each subscriber of its agreement to be bound by the CPS and CP before obtaining a CA certificate;

b) provide each subscriber with a copy of the CPS and CP, or the Universal Resource Locator where the CPS and CP can be obtained;

c) include warranty disclaimers, liability limitations and indemnification provisions in their CPS or CP;

d) inform each subscriber as to changes made to the CPS or CP on a timely basis;

e) inform each subscriber as to its responsibility to maintain the confidentiality of its private key; and

f) inform each subscriber as to the applicant's responsibility to maintain a private key and utilize a trustworthy system.

History

• Source: Amended at 31 Ill. Reg. 7284, effective May 7, 2007

14 Ill. Adm. Code 100.80 Decertification of Certification Authorities

a) The Secretary may decertify a security procedure employed by a certification authority that was certified by the Secretary, in accordance with 5 ILCS 175/10-135d, for failure to comply with any requirement of this Part, for failure to remain qualified for the Secretary's certification, for failure to revoke a CA certificate pursuant to 5 ILCS 175/15-320, or for failure to comply with a lawful order of the Secretary.

b) Certification authorities in the State of Illinois that have been certified by the Secretary shall notify the Secretary in writing, within 10 days, if the certification authority has had its accreditation, licensing, Secretary's certification or approval revoked, lapsed or terminated by any other means by another state or authority.

c) The Secretary may order the summary suspension of the Secretary's certification of a certification authority following an appropriate investigation or review.

d) Any applicant or certification authority adversely affected by a decision of the Secretary of State pursuant to this Part may seek administrative review of that decision pursuant to the administrative hearings procedure set forth at 92 Ill. Adm. Code 1001.10-1001.130.

History

• Source: Amended at 31 Ill. Reg. 7284, effective May 7, 2007

14 Ill. Adm. Code 100.90 Performance of Services

The certification authority is solely responsible for all duties and responsibilities of contracted services and functions.

14 Ill. Adm. Code 100.100 Records Retention

State records shall be retained in accordance with Section 5-13 of the Act and the State Records Act [5 ILCS 160], when applicable.

14 Ill. Adm. Code 100.110 Provisions for Promoting Uniformity

a) The Secretary or the Department of Central Management Services may act as a certification authority under the Act.

b) The Secretary or the Department of Central Management Services may contract with an outside vendor to acquire the certification authority services required by this Part.

c) The Secretary's Electronic Signature Steering Committee, after review, may recognize proposed technologies as a qualified security procedure for the purpose of the Secretary's certification.

History

• Source: Amended at 31 Ill. Reg. 7284, effective May 7, 2007

14 Ill. Adm. Code 100.120 Foreign and Other Jurisdictional Certificates

a) The Secretary of State may recognize foreign private sector certification authorities, provided that the foreign private sector certification authority:

1. is certified:

A) as a certification authority by the Secretary; or

B) licensed by another state of the United States; or

C) licensed by the federal government or a federal government agency; and

2. the foreign private sector certification authority agrees to be bound to the terms of the Secretary's CP and CPS.

b) A foreign private sector certification authority shall provide to the Secretary a certified copy of a license or certification issued by a government entity. A license or certification recognized under this subsection (b) shall be valid in Illinois only during the time it is valid in the issuing jurisdiction.

c) A foreign private sector certification authority recognized in the State of Illinois shall provide notification, within 10 days, to the Secretary in writing if the certification authority has had its accreditation, licensing, certification or approval revoked, lapsed or terminated by any other means by another state or authority.

d) Certification authorities certified by the Secretary shall not be required to accept certificates issued by international entities.

e) A foreign private sector certification authority doing business in the State of Illinois shall be subject to the laws of Illinois.

f) The CPS of a certification authority certified by the Secretary shall indicate whether the CA accepts foreign certificates.

History

• Source: Amended at 31 Ill. Reg. 7284, effective May 7, 2007

Chapter I Department of Central Management Services

Part 105 Electronic Commerce Security Act

14 Ill. Adm. Code 105.10 Scope and Definitions

a) The purpose of this Part is to provide maximum flexibility to the implementation of digital signature technology, under the Electronic Commerce Security Act [5 ILCS 175], for State agencies and entities that do business with the State. The Department of Central Management Services serves as the single certification authority that may issue certificates to State agencies and as the primary certification authority that may issue certificates to persons, including non-State agencies, conducting business or other transactions with State agencies.

b) For the purposes of this Part, and unless the context expressly indicates otherwise, definitions are as follows:

"Act" means the Electronic Commerce Security Act [5 ILCS 175].

"Applicant" means a person conducting business or other transactions with a State agency that seeks certification of a security procedure by CMS, the State Certification Authority.

"Asymmetric Cryptosystem" means a computer-based system capable of generating and using a key pair consisting of a private key for creating a digital signature and a public key to verify the digital signature.

"Certificate" means a record that, at a minimum:

identifies the certification authority issuing it;

names or otherwise identifies its subscriber or a signature device or electronic agent under the control of the subscriber;

contains a public key that corresponds to a private key under the control of the subscriber;

specifies its operational period; and

is digitally signed by the certification authority issuing it.

"Certification" or "Certify" means validation of compliance with the requirements of Section 105.200 of this Part.

"Certification Authority" or "CA" means the person or entity that authorizes and causes the issuance of a certificate. For purposes of this Part, the Department of Central Management Services is the CA.

"Certification Practice Statement" or "CPS" is a statement created by CMS, with the advice of the Policy Authority, that specifies the policies or practices that CMS employs in issuing, managing, suspending, and revoking certificates and providing access to them.

"Certificate Policy" or "CP" is a statement published by CMS, with the advice of the Policy Authority, that specifies the policies utilized in operation of the Public Key Infrastructure.

"Department" or "CMS" means the Department of Central Management Services.

"Digital Signature" means a type of electronic signature created by transforming an electronic record using a message digest function and encrypting the resulting transformation with an asymmetric cryptosystem using the signer's private key such that any person having the initial untransformed electronic record, the encrypted transformation, and the signer's corresponding public key can accurately determine whether the transformation was created using the private key that corresponds to the signer's public key and whether the initial electronic record has been altered since the transformation was made. A digital signature is a security procedure.

"Director" means the Director of the Department of Central Management Services.

"Electronic" includes electrical, digital, magnetic, optical, electromagnetic, or any other form of technology that entails capabilities similar to these technologies.

"Electronic Record" means a record generated, communicated, received, or stored by electronic means for use in an information system or for transmission from one information system to another.

"Electronic Signature" means a signature in electronic form attached to or logically associated with an electronic record.

"Foreign Public Sector CA" means a certification authority that is a public sector entity of any government other than the government of the United States, any of the several states of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the territories and possessions of the United States, or any political subdivision thereof.

"Key Pair" means, in an asymmetric cryptosystem, 2 mathematically related keys, referred to as a private key and a public key, having the properties that:

one key (the private key) can encrypt a message that only the other key (the public key) can decrypt; and

even knowing one key (the public key), it is computationally unfeasible to discover the other key (the private key).

"Local Registration Authority" or "LRA" is the entity appointed by CMS to authenticate for a CA the identification of applicants desiring to become subscribers under this Part.

"Message Digest Function" means an algorithm that maps or translates the sequence of bits comprising an electronic record into another, generally smaller, set of bits (the message digest) without requiring the use of any secret information, such as a key, so that an electronic record yields the same message digest every time the algorithm is executed using the electronic record as input, and it is computationally unfeasible that any 2 electronic records can be found or deliberately generated that would produce the same message digest using the algorithm unless the 2 electronic records are precisely identical.

"Non-State Agency" means a person other than a State agency that is a public sector entity of any government, including, without limitation, a unit of local government, school district or board of elections created by or pursuant to the statutes of the State of Illinois, or any officer, commissioner, administrative unit or corporate outgrowth of the public sector entity. A non-State agency shall be deemed to be a person conducting business or other transactions with a State agency for purposes of the Act and this Part if it seeks certification of a security procedure by CMS or is a foreign public sector CA that seeks recognition under Section 105.240 of this Part.

"Operational Authority" (see State Operational Authority).

"Operational Period" means the period that begins on the date and time a certificate is issued by a certification authority (or on a later date and time certain if stated in the certificate) and ends on the date and time it expires as noted in the certificate or is earlier revoked, but does not include any period during which the certificate is suspended.

"Person" means an individual, corporation, business trust, estate, trust, partnership, limited partnership, limited liability partnership, limited liability company, association, joint venture, government, governmental subdivision, governmental instrumentality, State agency, non-State agency, or any other legal or commercial entity.

"Policy Authority" (see State Policy Authority).

"Private Key" means the key of a key pair used to create a digital signature.

"Public Key" means the key of a key pair used to verify a digital signature.

"Public Key Infrastructure" or "PKI" means a structure of hardware, software, people, processes and policies for creating a secure method for exchanging information based on public key cryptography.

"Qualified Security Procedure" means a security procedure that meets the criteria established under Section 105.210.

"Record" means information that is inscribed, stored, or otherwise fixed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

"Registration Authority" or "RA" means CMS in its role of authenticating the identity of subscribers prior to the issuance of certificates, but does not issue or sign the certificates.

"Rekey" means the process of securely regenerating signing/verification and/or encryption/decryption keys.

"Revocation" or "Revoke" means a temporary, conditional, or permanent termination of a certification as provided under Section 105.230 of this Part.

"Security Procedure" means a methodology or procedure used for the purpose of verifying that an electronic record is that of a specific person or detecting error or alteration in the communication, content, or storage of an electronic record since a specific point in time. A security procedure may require the use of algorithms or codes, identifying words or numbers, encryption, answer back or acknowledgment procedures, or similar security devices.

"Signature Device" means unique information, such as codes, algorithms, letters, numbers, private keys, or personal identification numbers (PINs), or a uniquely configured physical device that is required, alone or in conjunction with other information or devices, in order to create an electronic signature attributable to a specific person.

"Signed" or "Signature" includes any symbol executed or adopted, or any security procedure employed or adopted, using electronic means or otherwise, by or on behalf of a person with intent to authenticate a record.

"State Agency" means and includes all officers, boards, commissions, courts, and agencies created by the Illinois Constitution, whether in the executive, legislative or judicial branch; all officers, departments, boards, commissions, agencies, institutions, authorities, universities, bodies politic and corporate of the State; and administrative units or corporate outgrowths of the State government that are created by or pursuant to statute, other than units of local government and their officers, school districts and boards of elections commissioners; all administrative units and corporate outgrowths of the above and as may be created by executive order of the Governor.

"State Certification Authority" or "State CA" means the Department of Central Management Services in its role as the single certification authority that may issue certificates to State agencies and as a certification authority that may issue certificates to persons, including non-State agencies, conducting business or other transactions with State agencies.

"State Operational Authority" or "State OA" means the Department of Central Management Services in its role of interpreting certificate policies, with the advice of the Policy Authority, developing and managing the Certification Practice Statement, maintaining the PKI and providing for the issuance of digital certificates.

"State Policy Authority" or "Policy Authority" or "PA" is an internal intergovernmental committee of State employees representing various State agencies who are appointed by the Director. The PA is responsible for recommending policies relating to the operation of the PKI operated by CMS and for advising CMS about the maintenance and enforcement of those policies.

"Subscriber" means a person who is the subject named or otherwise identified in a certificate, who controls a private key that corresponds to the public key listed in that certificate, and who is the person to whom digitally signed messages verified by reference to the certificate are to be attributed.

"Suspension" or "Suspend" means to temporarily suspend the operational period of a certificate for a specified time period or from a specified time forward.

"Trustworthy Manner" means through the use of computer hardware, software, and procedures that, in the context in which they are used:

can be shown to be reasonably resistant to penetration, compromise, and misuse;

provide a reasonable level of reliability and correct operation;

are reasonably suited to performing their intended functions or serving their intended purposes;

comply with applicable agreements between the parties, if any; and

adhere to generally accepted security procedures.

"Valid Certificate" means a certificate that a certification authority has issued and that the subscriber listed in the certificate has accepted.

"Verify a Digital Signature" means to use the public key listed in a valid certificate, along with the appropriate message digest function and asymmetric cryptosystem, to evaluate a digitally signed electronic record, so that the result of the process concludes that the digital signature was created using the private key corresponding to the public key listed in the certificate and the electronic record has not been altered since its digital signature was created.

14 Ill. Adm. Code 105.20 Roles of the Department, the State Policy Authority, the Local Registration Authority and Other State Agencies

a) Department of Central Management Services

1. State Certification Authority/Certification Authority

A) Under Section 25-105 of the Act, the Department has the exclusive authority to specify the policies and procedures for certifying the security of digital records and signatures used by State agencies and persons conducting business with State agencies. CMS performs two essential functions:

i) authenticating the identity of the person who will be named on a certificate (i.e., the subscriber) and verifying that the subscriber possesses the private key that corresponds to the public key to be listed on the certificate; and

ii) issuing and digitally signing the subscriber's certificate.

B) The Department issues a Certificate Policy (CP) and a Certification Practices Statement (CPS) that describe various policies and procedures relating to the issuance of certificates and the use of digital signatures.

2. State Operational Authority

The Director of CMS, as chief administrative officer of the State OA, has delegated the responsibility of overseeing day-to-day operations to the State Operational Authority.

3. Standards

In determining the security of electronic record and signature procedures, the Department relies on the Federal Information Processing Standards (FIPS) established by the Information Technology Laboratory of the National Institute of Standards and Technology (NIST), U.S. Department of Commerce, 100 Bureau Drive, Stop 1070, Gaithersburg MD 20899-1070, http://www.itl.nist.gov/fipspubs/ (2007, no later amendments or editions included).

b) State Policy Authority

1. The PA will advise the Department on developing and maintaining the CP and CPS. The PA will include representatives of such State entities as the Comptroller's Office, State universities and agencies under the Governor and representatives of local government.

2. The PA may review technologies and submit them for CMS consideration as a qualified security procedure to be certified by CMS.

c) Local Registration Authority

1. CMS, as RA, is responsible for authenticating the identity of a subscriber before a certificate is issued. Under the CP and CPS, CMS may delegate RA functions and some CA functions to a Local Registration Authority (LRA). For purposes of the CP and CPS, an LRA is responsible for authenticating the identification of subscribers for a CA. For example, a State university may authenticate the identity of faculty, staff and students who have applied for a certificate.

2. Qualification of LRAs

A) Initial Qualification. Each participating State agency, and other entities as determined by CMS, with the advice of the PA, may nominate one or more individuals to serve as LRAs for that entity. Prospective LRAs must return a completed LRA application form and a signed LRA agreement (wet signature or digitally signed) to CMS. Applicant individuals must submit to a Department of State Police criminal history background check. If the background check reveals that the applicant has been convicted of a criminal offense, the applicant is subject to disqualification at the discretion of CMS, with the advice of the PA.

B) Ongoing Qualification. If a qualified LRA is formally accused of a criminal offense, the applicant must, within 3 days after being charged, notify CMS, which will notify the PA. CMS will periodically conduct random criminal history background checks of LRAs to assure compliance with the ongoing reporting requirements of this subsection (c)(2)(B).

C) Disqualification. LRA privileges may be denied, suspended or revoked at the discretion of CMS, with the advice of the PA. Reasonable notice and opportunity for hearing under Section 105.60 shall be provided. Grounds for denial, suspension or revocation of LRA privileges include, but are not limited to:

i) Conviction of a criminal offense.

ii) Failure to cooperate fully in any investigation by CMS.

iii) Failure to comply with the Act, this Part, the CP and the CPS.

iv) Separation from, or reassignment within, the sponsoring entity.

v) Refusal or inability to diligently complete the obligations of an LRA.

d) Other State Agencies

Under the Act, other State agencies may act as a CA provided that their certification program is conducted in accordance with all the rules, procedures and policies specified by CMS. A State agency that assumes the role of CA can do so only with respect to its own employees and persons conducting business with that agency.

14 Ill. Adm. Code 105.30 Maintenance of the State Certificate Policy and Certification Practice Statement

a) Creation and Maintenance

CMS, with the advice of the PA, develops and maintains a Certificate Policy and a Certification Practice Statement indicating how that policy is going to be implemented. The purpose of these documents is to outline, within the broad parameters established by this Part, the specific details of the PKI. How changes are made in either document depends on whether CMS, with advice of the PA, determines the proposed changes are minor or major. This Part will be amended as prescribed by the Illinois Administrative Procedure Act [5 ILCS 100] to reflect any changes in the CP or CPS that also require changes in this underlying rule.

b) Minor Changes

Minor changes are those proposed changes to CP/CPS that, in the judgment of CMS, with the advice of the PA, will have no or minimal impact on subscribers or persons using certificates or lists of revoked certificates. Minor changes may be made without notice and with no change to CP or CPS version numbers.

c) Major Changes

Major changes are those proposed changes to CP/CPS that, in the judgment of CMS, with the advice of the PA, may have significant impact on subscribers or persons using certificates or lists of revoked certificates. Major changes shall be subject to a review and comment period of 60 days.

1. CMS and the PA shall review all comments and shall respond individually to the persons providing the comments.

2. After the 60-day review period is completed, CMS and the PA shall consider all comments received. CMS, with the advice of the PA, shall determine the new policies to be adopted, if any. New policies shall be incorporated in the CP or the CPS as appropriate, which shall be given new version numbers as appropriate. The new versions of the CP or the CPS shall be published on the CMS website, http://www.illinois.gov/pki/, and shall be made available in hard copy upon request.

3. In order to allow persons to modify their procedures as needed, all changes made under this subsection (c) shall become effective 30 days after the corresponding new versions of the CP and/or CPS are published on the CMS website. It shall be the responsibility of subscribers and other persons to periodically check the CMS website to determine if new versions of the CP and/or CPS have been published.

4. Use of or reliance upon a certificate more than 30 days after a new version of the CP and/or CPS has been published, regardless of when the certificate was issued, shall be deemed acceptance of the new policies reflected in the new versions of the CP and/or CPS.

14 Ill. Adm. Code 105.40 Records Retention

State records as defined under the State Records Act [5 ILCS 160] shall be retained in accordance with Section 5-13 of the Act and the State Records Act, as applicable.

14 Ill. Adm. Code 105.50 Audit Requirements

a) CMS shall submit to an annual PKI compliance audit to be performed by the Auditor General of Illinois or an independent auditor selected by the Department contracted specifically for the purpose of auditing the State's PKI operations.

b) An independent auditor must demonstrate competence in the field of compliance audits and must regularly perform compliance audits as a primary responsibility, and shall attest that it has significant experience in the application of public key cryptographic technologies and computer security.

c) The annual audit investigates the operations of CMS and RAs with respect to the State PKI to ensure their compliance with the CP and the CPS. Areas of focus for these audits include, but are not limited to:

1. Identification & Authentication

A) Initial Registration

B) Routine Rekey

C) Rekey After Revocation

D) Revocation Request

2. Operational Requirements

A) Certificate Application

B) Certificate Issuance

C) Certificate Acceptance

D) Key Recovery

E) Certificate Suspension/Revocation

F) Computer Security Audit Procedures

G Records Archival

H) CA Key Changeover

I) Compromise and Disaster Recovery

J) CA Termination

3. Physical, Procedural & Personnel Security

A) Physical Security Controls

B) Procedural Controls

C) Personnel Security Controls

4. Technical Security Controls

A) Key Pair Generation & Installation

B) Private Key Protection

C) Other Aspects of Key Pair Management

D) Activation Data

E) Computer Security Controls

F) Lifecycle Security Controls

G) Network Security Controls

H) Cryptographic Module Engineering Controls

5. Certificate & CRL Profiles

A) Certificate Profile

B) CRL Profile

6. Specification Administration

A) Contact Information

B) Specification Change Procedures

C) Publication and Notification Procedures

D) Approval Procedures

14 Ill. Adm. Code 105.60 Appeals

Any person who is adversely affected by a decision of the Department in resolving a request for reconsideration under Section 105.20(c) or Section 105.200(d) may appeal that decision to the Director as provided under this Section.

a) Director's Designee

The Director may designate any person qualified to be an administrative law judge for the Department to act in the Director's stead under this Section. Any person designated shall have all powers and duties of the Director under this Section, except for the power to designate a representative of the Department under subsection (c). Any person designated may be disqualified for bias or conflict of interest upon the motion of a party.

b) Filing an Appeal

An appeal must be filed with the Director within 30 days from the date the CMS decision is received. A decision shall be deemed to be received on the date of actual receipt by the appellant or 2 days after the date of mailing, whichever is earlier.

1. An appeal does not need to be in any particular form, but:

A) must be in writing, dated and signed by the appellant or the authorized officer or agent of the appellant;

B) must set forth specific facts showing why the decision of the Department appealed from is erroneous; and

C) may include any documentation that is material and relevant to the appeal.

2. An appeal may be filed by mail, in which case it shall be deemed to be filed on the date of the postmark stamped by the United States Postal Service on the envelope in which it was mailed.

3. The appellant shall serve a copy of the appeal on all parties named in the appeal no later than the last date for filing the appeal.

4. Upon motion of the appellant showing good cause, the Director may extend the time within which to file an appeal.

c) Department Representative

CMS shall be the appellee to appeals under this Section, and shall be represented by the chief administrator of the State OA or a designee of that person or of the Director. The CMS representative for an appeal shall not be a person designated by the Director under subsection (a) with regard to the appeal.

d) Preliminary Review

The Director shall review an appeal for timeliness and completeness as provided under subsection (b).

1. The Director shall dismiss the appeal if it is untimely and/or incomplete.

2. The Director may allow the appellant to cure any defects and re-file the appeal within the time period established by the Director. A re-filed appeal shall be subject to preliminary review as provided under this subsection (d).

e) Review of Merits

If an appeal is timely and complete, the Director may review the merits of the appeal on its face.

1. The Director shall review any documentation included with the appeal, and may conduct an investigation if warranted under the circumstances.

A) An investigation may include, without limitation, requests for information from the parties and an informal conference with the parties. An informal conference shall be conducted and controlled by the Director. The parties shall not have the right at an informal conference to present evidence or argument or to ask questions of the Director or any other person in attendance, but shall have the right to be represented by counsel.

B) Any information obtained by the Director from an investigation shall not be evidence at a hearing under this Section, and shall not be considered by the Director when reaching a decision under subsection (n), unless the information is entered into evidence in the record at the hearing.

2. The Director may order any appropriate disposition provided under subsection (n) if the Director concludes after review under this subsection (e) that substantial justice was not done by the decision of CMS.

f) Notice of Hearing

Unless the Director has ordered a disposition under subsection (e), the Director shall issue a notice of hearing to all parties no later than 30 days after the date the appeal was filed. The Director may extend the time for issuing the notice of hearing if warranted under the circumstances. The Director shall provide notice to all parties of any extension.

1. A notice of hearing shall be mailed to all parties no less than 10 days before the date of the hearing, but may be mailed less than 10 days before the date of the hearing if all parties agree on the record.

2. The notice of hearing shall include the time and date of the hearing and shall identify the parties, the issues on appeal and the CMS decision appealed from.

3. If the notice of hearing requires any parties to appear at the hearing in person, the notice of hearing shall include the place where the hearing shall be held.

4. If the notice of hearing requires any parties to appear at the hearing by telephone, the notice of hearing shall include instructions about how the parties should:

A) advise the Director of the telephone number where they may be called at the time of the hearing;

B) submit documents to the Director for consideration at the hearing; and

C) arrange the appearance of witnesses by telephone at the hearing.

g) Continuances

A request for a continuance must be in writing and must set forth facts showing why the continuance would be granted. A continuance requested by fewer than all the parties shall be granted only for good cause shown. A continuance requested by all the parties shall be considered and granted or denied by the Director. The Director may enter a continuance on his or her own motion.

h) Burden of Proof

The burden is on the appellant to prove by a preponderance of the evidence that the CMS decision appealed from is erroneous.

i) Withdrawal of Appeal

An appellant may voluntarily withdraw an appeal at any time without penalty by filing a signed written notice with the Director. The appellant shall serve a copy of the notice of voluntary withdrawal on all other parties.

j) Manner of Hearing

Hearings shall be conducted by telephone unless the Director requires the parties to appear in person.

1. Parties scheduled to appear at a hearing by telephone must designate a telephone number for the Director to call at the time of the hearing, and must answer the Director's call to that telephone number at the time of the hearing. A party who does not comply with either of these requirements shall be deemed to have not appeared at the hearing.

2. Parties scheduled to appear at a hearing in person must appear at the place of the hearing on the date and time of the hearing as designated in the notice of hearing. A party who does not comply with this requirement shall be deemed to have not appeared at the hearing.

3. Parties scheduled to appear at a hearing by telephone must provide the Director with all documents they want considered at the hearing at least 5 days before the hearing, and must provide copies of those documents to the other parties at least one day before the hearing.

4. The Director may require some, but not all, parties to appear at a hearing in person. If the Director so requires, the other parties may, but are not required to, appear at the hearing in person.

5. A party may request to appear in person at a hearing. If the Director grants the request, the other parties may appear at the hearing in person or by telephone as they choose, unless the Director requires them to appear in a particular manner.

6. The Director may allow any witness to appear at any hearing in person or by telephone. The Director may require any witness to appear at any hearing in person, but in doing so the Director shall weigh the expense and inconvenience to the witness caused by testifying in person with the benefit to the Director of receiving the testimony in person.

7. Hearings involving the in-person appearance of a person shall be conducted at the Department's offices in Springfield, Illinois, or at another location designated by the Director.

k) Failure to Appear

Failure of the appellant to appear at a hearing as provided under subsection (j) shall result in dismissal of the appeal. Failure of any other party to appear at a hearing as provided under subsection (j) shall result in an appropriate sanction, including without limitation, imposition of a disposition under subsection (n) favorable to the appellant.

l) Conduct of Hearing

All hearings are subject to the requirements of this Section and the Illinois Administrative Procedure Act [5 ILCS 100]. The Director shall conduct and control the hearing, which shall be limited to the factual and legal issues presented on the appeal.

1. A record shall be kept of all proceedings before the Director.

2. The Director shall have all powers and duties of an administrative law judge under Illinois law not inconsistent with this Section.

3. All parties have the right to be represented by counsel, to present testimony and other evidence material relevant to the issues on appeal, and to ask questions of any person who testifies at the hearing.

4. The Director may allow the parties to make opening and/or closing statements.

5. The Director may ask questions of any person appearing at the hearing, may enter any material and/or relevant evidence into the record on his or her motion or the motion of a party, and shall ensure that all parties have a full and fair opportunity to be heard.

6. The technical rules of evidence do not apply to hearings under this Section. The Director may accept any material evidence that is relevant to the issues on appeal. The Director shall determine the credibility of the witnesses and the evidence. The Director may accept hearsay as evidence, but, if hearsay is accepted, the hearsay nature of the evidence shall be considered when the Director weighs the evidence. The Director is not required to rule on any objection to the introduction of evidence, but any objection shall be noted and made part of the record.

7. The Director may exclude any person from the hearing who becomes abusive or disruptive. The hearing shall continue without the participation of the excluded person, and the Director shall render a decision based on the evidence in the record.

m) Post-Hearing Memoranda

The Director may allow or require the parties to submit post-hearing memoranda addressing any hearing issues identified by the Director.

n) Decision of the Director

The Director shall issue a decision based on the preponderance of the credible evidence in the record, and may take the arguments of the parties into consideration.

1. The Director's decision shall include a statement of the issues presented, findings of fact and conclusions of law, and the Director's conclusions.

2. The Director shall enter a disposition of the appeal by remanding with instructions, revising, reversing or sustaining the CMS decision appealed from.

3. The Director's decision shall be the final administrative decision of the Department on the matter of the appeal.

14 Ill. Adm. Code 105.200 Certification of a Qualified Security Procedure for Electronic Records and Signature

a) In order to obtain certification of a qualified security procedure in conformance with the CPS and CP, an applicant must make a request in writing to the Department of Central Management Services, Illinois Digital Certificate Authority, 201 W. Adams St., Springfield IL 62704-1874.

b) The applicant must document procedures, policies and practices that delineate full and complete identification of security procedures. The documentation shall be submitted for review to CMS.

c) An applicant's security procedure certified by CMS shall:

1. adopt secure policies and procedures as designated by FIPS (see Section 105.20(a)(3)); and

2. meet the criteria for acceptance of electronic signatures and records and the criteria for recognition of qualified security procedures as delineated in Section 105.210.

d) An applicant may request reconsideration of a decision to deny certification of a security procedure, but the request must be submitted no later than 30 days after the decision was issued. All requests for reconsideration must be submitted to CMS in writing. A person who is adversely affected by a CMS decision resolving a request for reconsideration may appeal that decision as provided under Section 105.60.

14 Ill. Adm. Code 105.210 Qualified Security Procedures

a) A qualified security procedure is a security procedure for identifying a person that is capable of creating, in a trustworthy manner, an electronic signature that:

1. is unique to the signer within the context in which it is used;

2. can be used to objectively identify the person signing the electronic record;

3. was reliably created by the identified person and that cannot be readily duplicated or compromised;

4. is created and is linked to the electronic record to which it relates in a manner that, if the record or the signature is intentionally or unintentionally changed after being signed, the electronic signature is invalidated; and

5. complies with this Part.

b) The Department will accept as adequate a security procedure that meets the requirements of the Federal Information Processing Standards promulgated by NIST's Information Technology Laboratory, as incorporated by Section 105.20(a)(3).

c) Public Key Cryptography

1. The security structure known as public key cryptography is a qualified security procedure for purposes of this Section, provided that the digital signature is created consistently with this Part. Public key cryptography with a digital signature created consistent with this Part is a commercially reasonable standard and procedure that has been generally accepted in the security and scientific communities.

2. The Act requires that a digital signature be unique to the signer within the context in which it is used. A public key-based digital signature may be considered unique to the signer using it if:

A) the digital signature is created using an asymmetric algorithm;

B) the private key used to create the signature on the document is known only to the signer;

C) the digital signature can be verified by reference to the public key listed in the certificate;

D) the digital signature is created during the operational period of a valid certificate;

E) it is computationally infeasible to derive the private key from knowledge of the public key; and

F) the digital signature is created within the scope of any other restrictions specified or incorporated by reference in the certificate.

3. The Act requires that a digital signature can be used to objectively identify the person signing the electronic record. A public-key based digital signature is capable of objectively identifying the person signing the electronic record if:

A) the acceptor of the digitally signed document can verify the document was digitally signed by using the signer's public key and message digest function to decrypt the message; and

B) CMS, or a designated RA, through a process defined in the CP or CPS, authenticates the subscriber and the subscriber's public key and identifies the forms of identification required of the signer prior to issuing the certificate.

4. The Act requires that the digital signature be reliably created by an identified person and cannot be readily duplicated or compromised. The signer and all other persons that rightfully have access to signature devices assume a duty to exercise reasonable care to retain control and maintain secrecy of the signature device and to protect it from any unauthorized access, disclosure, or use during the period when reliance on a signature created by the signature device is reasonable.

5. The Act requires that the digital signature be created, and be linked to the electronic record to which it relates, in a manner that, if the record or the signature is intentionally or unintentionally changed after being signed, the electronic signature is invalidated.

14 Ill. Adm. Code 105.220 State Pki Procedures

CMS shall:

a) inform each applicant or subscriber that the subscriber it is bound by the CPS and CP;

b) require each subscriber to enter into a subscriber agreement that governs each subscriber's performance with respect to use of and reliance on certificates issued by CMS. The subscriber agreement may be viewed at http://www.illinois.gov/pki/pki_subscriber.cfm;

c) provide each applicant or subscriber with a copy of the CPS and CP, or the website (http://www.illinois.gov/pki/) where the CPS and CP can be obtained;

d) include warranty disclaimers, liability limitations and indemnification provisions in the CPS or CP;

e) inform each applicant or subscriber as to changes made to the CPS or CP on a timely basis;

f) inform each subscriber as to his or her responsibility to maintain the confidentiality of his or her private key; and

g) inform each applicant or subscriber as to his or her responsibility to maintain a private key in a trustworthy manner.

14 Ill. Adm. Code 105.230 Revocation or Suspension of Certification of a Security Procedure

a) CMS may revoke or suspend the certification of a security procedure for failure to comply with any requirement of this Part or the CPS or CP, for failure to remain qualified for certification, or for failure to comply with a lawful order of CMS.

b) A person may request reconsideration of a decision to revoke or suspend the certification of a security procedure, but the request must be submitted no later than 30 days after the decision was issued. All requests for reconsideration must be submitted to CMS in writing. Reconsideration of a decision to revoke or suspend the certification of a security procedure is made by CMS. A person who is adversely affected by a CMS decision resolving a request for reconsideration under this Section may appeal that decision as provided under Section 105.60.

14 Ill. Adm. Code 105.240 Foreign Public Sector Certificate Authorities

a) CMS may recognize a foreign public sector CA, provided that the foreign public sector CA is certified and/or licensed by the United States government and agrees to be bound by the Illinois CP and CPS and Illinois law.

b) A foreign public sector CA shall provide to CMS a certified copy of its United States certificate and/or license. A certificate or license shall be valid in Illinois only during the time it is valid in the issuing jurisdiction.

c) A foreign public sector CA shall provide written notification to CMS if its United States certification and/or license is revoked, lapsed or otherwise terminated. CMS shall be notified within 10 days after the revocation, lapse or termination occurs.

14 Ill. Adm. Code 105.300 Identified and Approved Electronic Signature Activity

The Department has identified and recognizes the following agency electronic signature utilization:

Agency Name

Application Type − Project Description − Objective

Agriculture

Desktop application

Aging

TruePass web application

Aging

TruePass internal application

Auditor General

Desktop software for encryption

CMS

Using TruePass to control access to Mobius report viewing server for tracking time usage of employees

CMS

TruePass system to authenticate into Enterprise Web Operations site

CMS

Encrypted Disaster Recovery information contained on flash drives. Uses desktop Entelligence suite

DHS

Secure email

DCEO

TruePass/Access Manager − Access mainframe applications through the internet

HFS

TruePass authentication to Health and Family Services MEDI portal

EPA

TruePass/GetAccess internet application for online eforms

Fire Marshal

Entrust Security Provider for desktop encryption and secure email

IGAC

Desktop encryption and signing

ISAC

Teacher Education Scholarship Program (CollegeZone)

IDOT

Digital signatures with electronic forms (leave slips and time cards)

IDOT

Entrust Desktop Solutions with Word and Excel

IEMA

Desktop encryption via Entelligence

Illinois State Police

State Police application to automatically encrypt attachments for background checks

Illinois State Police

STICS (State Terrorism Information Center System) access

Illinois State Police

TruePass system developed for photo enforcement of traffic

Law Enforcement Training and Standards Board

Provide end users with access to training database

Office of Executive Inspector General for the Agencies of the Governor

Electronic timekeeping using digital signatures

Office of Executive Inspector General for the Agencies of the Governor

Desktop software

Pollution Control Board

Use of Entrust TruePass to provide authentication

Property Tax Appeal Board

Entrust Security Provider and Adobe forms

Revenue

Desktop software

State Employee Retirement System

TruePass/Access Manager − online State employee benefits

Veterans' Affairs

Encryption of documents using desktop suite

History

• Source: Added at 33 Ill. Reg. 5745, effective April 6, 2009

Chapter I Department of Commerce and Economic Opportunity

Part 110 High Technology School-to-Work Program

14 Ill. Adm. Code 110.10 General Purpose

There is a need to increase the number of secondary and post secondary students that prepare for and enter high technology occupations in Illinois. The purpose of the High Technology School-to-Work Program is to increase the number of students exiting secondary and postsecondary schools that enter occupations and advanced educational programs that require advanced skills in the areas of science, mathematics, and advanced technology. (Sections 5(5) and 15 of the Act)

14 Ill. Adm. Code 110.20 Definitions

"Act" means the High Technology School-to-Work Act [20 ILCS 701].

"Department" means the Department of Commerce and Economic Opportunity.

"Director" means the Director of the Department of Commerce and Economic Opportunity

"High technology occupations" means scientific, technical, and engineering occupations including, but not limited to, the following occupational groups and detailed occupations: engineers; life and physical scientists; mathematical specialists; engineering and science technicians; computer specialists; and engineering, scientific, and computer managers. (Section 10 of the Act)

"Local partnership" means a cooperative agreement between one or more employers, including employer associations, and one or more secondary or postsecondary schools established to operate a High Technology School-to-Work project. The partnerships must be employer-led and designed to respond to the high technology skill requirements of participating employers. (Section 10 of the Act)

"Student Participants" means secondary and post secondary students in 9th grade or higher.

14 Ill. Adm. Code 110.30 Legal Requirements

a) Any entity awarded a High Technology School-to-Work Grant shall be required to execute a grant agreement that sets forth the rights and responsibilities of the grantee and the Department. The Grant Agreement shall reflect all applicable State and federal statutory and administrative requirements, including but not limited to provisions covering the expenditure of grant funds and utilization of property purchased with grant funds.

b) When a grant has been awarded, the grantee and the Department shall execute an Agreement. The Agreement shall be executed by the grantee and the Director of the Department or the Director's designee on behalf of the Department. The Agreement shall contain substantive provisions including, but not limited to, the following:

1. A recitation of legal authority under which the Agreement is made;

2. An identification of the project scope and schedule and the work or services to be performed or conducted by the grantee;

3. An identification of the grant amount;

4. The conditions by, and manner in which, the Department shall pay the grant amount, subject at all times to annual appropriation by the General Assembly;

5. A promise by the grantee not to assign or transfer any of the rights, duties or obligations of the grantee without the written consent of the Department;

6. A promise by the grantee not to amend the Agreement without the written consent of the Department. Failure to do so will result in a cost disallowance. The project must be completed by the completion date on the notice of grant award unless a written request for an extension is submitted no later than 30 days prior to the award completion date;

7. A covenant that the grantee shall expend the grant amount and any accrued interest only for the purposes of the project as stated in the Grant Agreement and approved by the Department; and

8. A covenant that the grantee shall refrain from entering into any written or oral agreement or understanding with any party that might be construed as an obligation of the State of Illinois or the Department for the payment of any funds under the program.

Chapter I Department of Commerce and Economic Opportunity

Part 110 High Technology School-to-Work Program

14 Ill. Adm. Code 110.110 Purpose

Subject to appropriation, the Department shall make grants to local partnerships that provide students with work experience in high technology occupations combined with related classroom instruction. Employers and educators must cooperatively adopt or develop, or both, skills standards, curricula, and assessment tools. Skills standards must be current with high performance workplaces and technology requirements. (Section 25 of the Act)

14 Ill. Adm. Code 110.120 Coordination with Economic Development Activities

The Department must coordinate the administration of the High Technology School-to-Work Program, including the targeting of projects, with the Department's technology related planning and economic development initiatives administered by the Department's Bureau of Technology and Industrial Competitiveness. (Section 20 of the Act)

14 Ill. Adm. Code 110.130 Eligible Applicants

Local partnerships are eligible applicants for grants under the High Technology School-to-Work Grant Program. The program must include a partnership between employers or employer-based intermediary organizations and one or more schools. Business involvement in the High Technology School-to-Work Program ensures that the training activities are responsive to industry needs and that the skill standards are current with high-performance workplace and technology requirements.

14 Ill. Adm. Code 110.140 Authorized Activities

In general, authorized activities shall include, but not be limited to, establishing, coordinating and administering High Technology School-to-Work projects. Grant recipients typically engage in a variety of activities such as:

a) designing in-school and related work-based curricula;

b) training teachers;

c) training work site supervisors and mentors;

d) developing instructional materials;

e) coordinating activities among the partners;

f) outreach and recruitment of students;

g) developing assessment tools;

h) providing vocational counseling to student participants;

i) completing project related administrative activities; and

j) evaluating the project. (Section 25 of the Act)

14 Ill. Adm. Code 110.150 Allowable Costs

Subject to the limitations in Section 35 of the Act, grant funds shall be used for any reasonable and necessary expenses associated with the planning and operation of a high technology school-to-work project, as agreed to by the Department and as specified in the Grant Agreement. (Section 30 of the Act) To be an allowable grant cost, expenses must be for an extraordinary cost incurred due to the High Technology School-to-Work project. (Section 35 of the Act) Such costs may include reimbursement for expenses for:

a) personal services;

b) fringe benefits;

c) travel;

d) equipment;

e) supplies;

f) rent/facilities costs;

g) contractual services; and

h) other costs, as agreed upon by the Department and as specified in the Grant Agreement.

14 Ill. Adm. Code 110.160 Proposal Content

Subject to appropriations, the Department shall issue instructions and formats to eligible applicants for the submittal of grant proposals in advance of each funding cycle. The proposal shall contain sufficient information to clearly explain the nature and potential benefits of the proposed project. The proposal will generally include the following sections:

a) an executive summary;

b) a description of the targeted industries, occupations and skills that demonstrate that they are high technology in nature as required by Section 110.20 of this Part;

c) a description of the local partnership, including the roles of the employers or employer-associations and the schools in establishing, coordinating, and administering the High Technology School-to-Work project;

d) a detailed description of the secondary and postsecondary students who will be recruited to participate in the High Technology School-to-Work project, including:

1. a description of who will be responsible for recruiting students to participate in the High Technology School-to-Work project;

2. a description of how the students will be chosen to participate in the High Technology School-to-Work project;

3. a description of the applicant's plan to recruit women and minority students to participate in the High Technology School-to-Work project;

e) a description of the school-based and work-based activities proposed by the applicant to be undertaken during the period of performance of the grant;

f) a schedule for the implementation of proposed activities;

g) a description of the measurable outcomes and objectives to be achieved during the period of performance for the grant;

h) a budget requesting grant funds for allowable costs and a justification for all costs requested; and

i) a description of the qualifications and related experience of key project staff.

Chapter I Department of Commerce and Economic Opportunity

Part 110 High Technology School-to-Work Program

14 Ill. Adm. Code 110.170 Review Criteria and Negotiation Procedures

Grant proposals shall be reviewed using the criteria outlined in this Section. Based on the review, applicants shall be selected to enter into negotiations with the Department for a grant. The purpose of negotiations shall be to arrive at mutually acceptable grant provisions, which will be reflected in the Grant Agreement, including general, budgetary, and scope-of-work provisions. The final decision to make a grant award will be made by the Director of the Department. The Department shall use the following criteria when reviewing grant proposals and making awards:

a) the appropriateness of the targeted industries and occupations;

b) the appropriateness of the targeted student population;

c) the efforts to recruit female and minority students into the project;

d) the strength of the local partnership and private sector involvement;

e) the related experience and qualifications of the project staff;

f) the quality of the project work plan;

g) the proposed project costs in relationship to planned outcomes;

h) the relationship of the project to the Department's economic development plans and initiatives;

i) the geographic distribution of grant awards throughout the State; and

j) the quality of presentations made to the Department, if the Department requests information. (Section 45 of the Act)

History

• Source: Amended at 30 Ill. Reg. 7741, effective April 10, 2006

14 Ill. Adm. Code 110.180 Limitations

Grants are subject to the following limitations:

a) Grant funds may not be used for stipends or wages paid to students during the work-based project activities.

b) Grant funds may not be used to pay the wages of teachers working in short-term, part-time, internship, or similar work experience arrangements with private employers designed to provide teachers with experience in an industry. (Section 35 of the Act)

14 Ill. Adm. Code 110.190 Reporting

An entity receiving a grant shall report financial and programmatic data to the Department on a regular basis using the format provided by the Department. The Department shall require quarterly reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

a) Expenditures: Unless otherwise specified in the Grant Agreement, an entity receiving a grant shall report actual expenditures using the expenditure report format supplied by the Department. Expenditure summaries are to be submitted to the Department by the 15th day following the end of each fiscal quarter in which any expenditure of grant funds is made.

b) Program Report: Unless otherwise specified in the Grant Agreement, an entity receiving a grant shall submit a program report in a format provided by the Department. The program report shall include a narrative describing the entity's progress towards achieving objectives and activities as specified in the Grant Agreement. Program reports shall be submitted to the Department by the 15th day following the end of each fiscal quarter.

Part 120 Manufacturing Illinois Chips for Real Opportunity (micro) Act

14 Ill. Adm. Code 120.10 Purpose

It is the intent of the General Assembly that Illinois should lead the nation in production of semiconductors and microchips as they become even more prevalent in everyday life. The General Assembly finds that, through investments in semiconductors and microchips, Illinois will be on the forefront of reshoring semiconductor and microchip production that fuels modern technologies that are essential to the operation of computers, phones, vehicles and any electric product that have become essential to modern life. This Act will create good paying jobs, and generate long-term economic investment in the Illinois business economy, in addition to ensuring a vital product is made in the United States. Illinois must aggressively adopt new business development investment tools so that Illinois can compete with domestic and foreign competitors for semiconductor and chip manufacturing. [35 ILCS 45/110-5]

14 Ill. Adm. Code 120.20 Definitions

The following definitions are applicable to this Part.

"Act" means the Manufacturing Illinois Chips for Real Opportunity (MICRO) Act [35 ILCS 45/110].

"Agreement" means the agreement between a taxpayer and the Department under the provisions of the Act.

"Applicant" means a taxpayer that:

operates a business in Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts; or

is planning to locate a business within the State of Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts.

"Applicant" does not include a taxpayer who closes or substantially reduces by more than 50% operations at one location in the State and relocates substantially the same operation to another location in the State. This does not prohibit a Taxpayer from expanding its operations at another location in the State. This also does not prohibit a Taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation, provided that the Department determines that expansion cannot reasonably be accommodated within the municipality or county in which the business is located, or, in the case of a business located in an incorporated area of the county, within the county in which the business is located, after conferring with the chief elected official of the municipality or county and taking into consideration any evidence offered by the municipality or county regarding the ability to accommodate expansion within the municipality or county.

"Capital improvements" means the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment, and furnishings in an approved project sited in Illinois and expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. For land, buildings, structures, and equipment that are leased, the lease must equal or exceed the term of the agreement, and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments.

"Compensation" means compensation as defined in Section 1501(a)(3) of the Income Tax Act. [35 ILCS 5/1501(a)(3)]

"Credit" or "MICRO credit" means a credit agreed to between the Department and applicant under the Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Director" means the Director of Commerce and Economic Opportunity.

"Energy Transition Area" means a county with less than 100,000 people or a municipality that contains one or more of the following:

a fossil fuel plant that was retired from service or has significant reduced service within 6 years before the time of the application or will be retired or have service significantly reduced within 6 years following the time of the application; or

a coal mine that was closed or had operations significantly reduced within 6 years before the time of the application or is anticipated to be closed or have operations significantly reduced within 6 years following the time of the application.

"Full-time employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. Annually scheduled periods for inventory or repairs, vacations, holidays and paid time for sick leave, vacation or other leave shall be included in this computation of full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week.

"Incremental income tax" means the total amount withheld during the taxable year from the compensation of new employees and, if applicable, retained employees under Article 7 of the Illinois Income Tax Act [35 ILCS 5/70] arising from employment at a project that is the subject of an agreement.

"Institution of higher education" or "institution" means any accredited public or private university, college, community college, business, technical, or vocational school, or other accredited educational institution offering degrees and instruction beyond the secondary school level.

"Local workforce investment area" means a single county or multiple counties designated by the Governor, which allows for the receipt of an allotment of funds under Sections 127(b) or 132(b) of the Workforce Innovation and Opportunity Act, (P.L. 113 through 128 (2014)) (WIOA), with considerations consisting of the extent to which the areas:

are consistent with labor market areas in the State;

are consistent with regional economic development areas in the State; and

have available the federal and non-federal resources necessary to effectively administer activities under subtitle B and other applicable provisions of WIOA,

including whether the areas have the appropriate education and training providers, such as institutions of higher education and area career and technical education schools.

"MICRO construction jobs credit" means a credit agreed to between the Department and the applicant under the Act that is based on the incremental income tax attributable to construction wages paid in connection with construction of the project facilities.

"MICRO credit" means a credit agreed to between the Department and the applicant under the Act that is based on the incremental income tax attributable to new employees and, if applicable, retained employees, and on training costs for such employees at the applicant's project.

"Microchip" means a wafer of semiconducting material that is less than 15 millimeters long and less than 5 millimeters wide and is used to make an integrated circuit.

"Microchip manufacturer" means a new or existing manufacturer that is focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces microchips or key components that directly support the functions of microchips.

"Minority person" means a minority person as defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act [30 ILCS 575/0.01].

"New employee" means a newly-hired full-time employee employed to work at the project site and whose work is directly related to the project.

The term "New Employee" does not include:

an employee of the taxpayer who performs a job that was previously performed by another employee, if that job existed for at least 6 months before hiring the employee;

an employee of the taxpayer who was previously employed in Illinois by a related member of the taxpayer and whose employment was shifted to the taxpayer after the taxpayer entered into the tax credit agreement or;

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer.

"Noncompliance date" means, in the case of a taxpayer that is not complying with the requirements of the agreement or the provisions of the Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the agreement and the provisions of the Act, as determined by the Director.

"Pass-through entity" means an entity that is exempt from the tax under subsection (b) or (c) of Section 205 of the Illinois Income Tax Act [35 ILCS 5/205].

"Placed in service" means the state or condition of readiness, availability for a specifically assigned function, and the facility is constructed and ready to conduct its facility operations to manufacture goods.

"Professional employer organization" or "PEO" means an employee leasing company that is an individual or entity contracting with a client to supply or assume responsibility for personnel management of one or more workers to perform services for the client on an on-going basis rather than under a temporary help arrangement, as defined in Section 206.1 of the Illinois Unemployment Insurance Act.

"Program" means the Manufacturing Illinois Chips for Real Opportunity (MICRO) program established in the Act.

"Project" means a for-profit economic development activity for the manufacture of semiconductors and microchips.

"Project costs" includes cost of the project incurred or to be incurred by the taxpayer including: capital investment, including, but not limited to, equipment, buildings, or land; infrastructure development; debt service, except refinancing of current debt; research and development; job training and education; lease costs or relocation costs, but excludes the value of State incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans.

"Related member" means a person that, with respect to the taxpayer during any portion of the taxable year, is any one of the following:

An individual stockholder, if the stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the taxpayer's outstanding stock.

Partnership, estate, trust and any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the taxpayer.

A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the Taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock.

A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, capital, stock, or value of the taxpayer.

A person to or from whom there is an attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a related member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code.

"Retained employee" means a full-time employee employed by the taxpayer prior to the term of the Agreement who continues to be employed during the term of the agreement whose job duties are directly and substantially related to the project. For purposes of this definition, "directly and substantially related to the project" means at least two-thirds of the employee's job duties must be directly related to the project and the employee must devote at least two-thirds of his or her time to the project. The term "retained employee" does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership of at least 5% in the profits, equity, capital, or value of the taxpayer.

"Semiconductor" means any class of crystalline solids intermediate in electrical conductivity between a conductor and an insulator.

"Semiconductor manufacturer" means a new or existing manufacturer that is focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces semiconductors or key components that directly support the functions of semiconductors.

"Statewide baseline" means the total number of full-time employees of the applicant and any related member employed by such entities at the time of application for incentives under the Act.

"Taxpayer" means an individual, corporation, partnership, or other entity that has a legal obligation to pay Illinois income taxes and file an Illinois income tax return.

"Training costs" means costs incurred to upgrade the technological skills of full-time employees in Illinois and includes: curriculum development; training materials (including scrap product costs); trainee domestic travel expenses; instructor costs (including wages, fringe benefits, tuition and domestic travel expenses); rent, purchase or lease of training equipment; and other usual and customary training costs. "Training costs" do not include costs associated with travel outside the United States (unless the taxpayer receives prior written approval for the travel by the Director based on a showing of substantial need or other proof the training is not reasonably available within the United States), wages and fringe benefits of employees during periods of training, or administrative cost related to full-time employees of the taxpayer.

"Underserved area" means any geographic areas as defined in Section 5-5 of the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10/5-5].

14 Ill. Adm. Code 120.30 Eligibility Determination

a) Any taxpayer that:

1. operates a business in Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts; or

2. is planning to locate a business within the State of Illinois as a semiconductor manufacturer, a microchip manufacturer, or a manufacturer of semiconductor or microchip component parts. [35 ILCS 45/110-10]

b) In order to qualify for credits under the MICRO Program, an applicant must:

1. for a semiconductor manufacturer or microchip manufacturer:

A) make an investment of at least $1,500,000,000 in capital improvements at the project site;

B) to be placed in service within the State within a 60-month period after approval of the application; and

C) create at least 500 new full-time employee jobs; or

2. for a semiconductor or microchip component parts manufacturer:

A) make an investment of at least $300,000,000 in capital improvements at the project site;

B) manufacture one or more parts that are primarily used for the manufacture of semiconductors or microchips;

C) to be placed in service within the State within a 60-month period after approval of the application; and

D) create at least 150 new full-time employee jobs; or

3. for a semiconductor manufacturer or microchip manufacturer or a semiconductor or microchip component parts manufacturer that does not qualify under subsection (b)(2):

A) make an investment of at least $20,000,000 in capital improvements at the project site;

B) to be placed in service within the State within a 48-month period after approval of the application; and

C) create at least 50 new full-time employee jobs; or

4. for a semiconductor manufacturer or microchip manufacturer or a semiconductor or microchip component parts manufacturer with existing operations within Illinois that intends to convert or expand, in whole or in part, the existing facility from traditional manufacturing to a semiconductor manufacturing or microchip manufacturing or semiconductor or microchip component parts manufacturing:

A) make an investment of at least $100,000,000 in capital improvements at the project site;

B) to be placed in service within the State within a 60-month period after approval of the application; and

C) create the lesser of 75 new full-time employee jobs or new full-time employee jobs equivalent to 10% of the statewide baseline applicable to the taxpayer and any related member at the time of application. [35 ILCS 45/110-20(c)]

c) For any applicant creating the full-time employee jobs noted in subsection (b), applicants shall receive credit for those jobs with compensation equal to or greater than 120% of the average wage paid to full-time employees in a similar position within an occupational group in the county where the project is located, and the Department shall utilize the occupational group data provided by the U.S. Bureau of Labor Statistics, the Illinois Department of Employment Security, or other reliable date source. [35 ILCS 45/110-20(d)]

d) Not have entered into another agreement under the Act with respect to a single address or location for the same period of time. Also, a taxpayer may not enter into an agreement under the Act with respect to a single address or location for the same period of time for which the taxpayer currently holds an active agreement under the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10/5-1] unless:

1. The previous agreement under this Act or EDGE expired or was voluntarily terminated to the extent that the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department.

2. The provision in subsection (d) does not preclude the applicant from entering into an additional agreement after the expiration or voluntary termination of an earlier agreement under the Act or under the Economic Development for a Growing Economy Tax Credit Act to the extent that the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department. An applicant with an existing agreement under the Economic Development for a Growing Economy Tax Credit Act may submit an application for an agreement under the Act after it terminates any existing agreement under the Economic Development for Growing Economy Tax Credit Act with respect to the same addresses or location. [35 ILCS 45/110-20(f)]

e) A taxpayer is not entitled to claim a credit provided by the Act with respect to any jobs that the taxpayer relocates from one site in Illinois to another site in Illinois. Any full-time employee relocated to Illinois in connection with a qualifying project is deemed to be a new employee for purposes of the Act. Determinations under Section 35 of the Act shall be made by the Department. [35 ILCS 45/110-35]

14 Ill. Adm. Code 120.40 Form of Application

a) Applications will be accepted at any time during the year. An application should be submitted on the standard application form provided by the Department and posted to the Department's website. (https://dceo.illinois.gov/content/dam/soi/en/web/dceo/businesshelp/micro/micro-application.pdf) Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

b) Any taxpayer planning a project to be located in Illinois may request consideration for designation of its project as a MICRO project, by application to the Department, in which the applicant states its intent to make at least a specified level of investment and intends to hire a specified number of full-time employees at a designated location in Illinois. [35 ILCS 45/110-20]

c) Written applications will be required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the designated Department email address specified on the Department website (CEO.MICRO@illinois.gov) and also identified on the application form. There is no application fee and the application shall include:

1. Application Cover Page – containing name, address, and telephone number of applicant; key contact and title; total number of new employees to be hired, and when applicable, the number of full-time employees to be retained; company Federal Employer Identification Number (F.E.I.N.); Standard Industrial Code (S.I.C.); if available, Illinois Unemployment Insurance Account Code; State Senate District number; State Representative District number; authorized signatures; and related information.

2. Project Summary – a detailed description of the project that is to be the subject of the agreement. [35 ILCS 45/110-45(a)(1)]

3. Site Map – an outline of the general location of the project on a site map, including the location of any flood plain areas and wetland areas.

4. Jobs Impact – a detailed description of the number of new employees to be hired, and the occupation and payroll of the full-time jobs to be created or retained as a result of the project, and a schedule of anticipated starting dates of the new hires. In addition, the applicant must provide the total number of full-time employees employed by the applicant and any related member, subsidiary, parent, or sister company in the State of Illinois at the time of the application. If the applicant seeks a credit with respect to retained employees, the application shall include the occupation and payroll of the full-time employees to be retained because of the project. [35 ILCS 45/110-45(a)(9)]

5. Capital Improvements Planned – a detailed description of the minimum investment the taxpayer will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment. This shall include but not be limited to a description (or specifications or lists) of the planned capital improvements demonstrating the investment is qualified; documentation to substantiate the value of the investment (value of capital improvements as provided by appraisers, vendors, contractors and/or architects and engineers); and a schedule regarding when the eligible investment will be placed in service. [35 ILCS 45/110-(a)(10)]

6. Total Project Costs – a detailed description of the total project cost.

7. Statewide Baseline – a detailed description of full-time employees of the applicant and any related members employed by such entities at the time of the application. The information provided for the current full-time employees shall include the following: name, position title, occupation code, date of hire, and facility address.

8. Hiring plan – a detailed description of applicant's hiring plan and commitment to recruit and hire full-time employee positions at the project site. The hiring plan may include a partnership with an institution of higher education to provide internships, including, but not limited to, internships supported by the Clean Jobs Workforce Network Program, or full-time permanent employment for students at the project site. Additionally, the applicant may create or utilize participants from apprenticeship programs that are approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training. The Applicant may apply for apprenticeship education expense credits in accordance with the provisions set forth in 14 Ill. Admin. Code 522. Each applicant is required to report annually, on or before April 15, on the diversity of its workforce in accordance with Section 110-50 of the Act [35 ILCS 45/110-50]. For existing facilities of applicants under Section 120.30(b)(3), if the taxpayer expects a reduction in force due to its transition to manufacturing semiconductors, microchips, or semiconductor or microchip component parts, the plan submitted under this Section must outline the taxpayer's plan to assist with retraining its workforce aligned with the taxpayer's adoption of new technologies and anticipated efforts to retrain employees through employment opportunities within the taxpayer's workforce. [35 ILCS 45/110-20(e)]

9. Financial Statement – a balance sheet and a profit and loss statement of the taxpayer for the last two years.

10. Other Provisions – any other provisions or information the Department determines is necessary to evaluate the applicant's eligibility under the Act and if the criteria established in Section 120.30 are met.

d) The applicant is responsible for the accuracy of all data, information and documentation included in its application. Once submitted, applications shall become the property of the Department and subject to the provisions and exemptions of the Freedom of Information Act [5 ILCS 140].

Chapter I Department of Commerce and Economic Opportunity

Part 120 Manufacturing Illinois Chips for Real Opportunity (micro) Act

14 Ill. Adm. Code 120.50 Application Review

a) Prior to substantive evaluation of an application, the Department shall screen all applications to determine that all requirements of the application package, as described in Section 120.40, have been addressed. Applicants will be notified of deficiencies in applications and given an opportunity to correct those deficiencies through submission of additional documentation.

b) In evaluating applications, the Department shall evaluate and confirm if all of the criteria in subsections (b)(1) through (4) of this Section are met. If the applicant demonstrates that all criteria are met, the Department will notify the applicant by electronic mail that the application was accepted. If the applicant cannot demonstrate that all four conditions exist, the application will be denied and notification to the applicant provided in accordance with Section 120.60.

1. the applicant intends to make the required investment in the State and intends to hire the required number of full-time employees;

2. the applicant's project is economically sound and will benefit the people of the State by increasing opportunities for employment and strengthen the economy of the State;

3. awarding the credit will result in an overall positive fiscal impact to the State, as certified by the Department using the best available data; and

4. the credit is not prohibited under the Act. [35 ILCS 45/110-25]

14 Ill. Adm. Code 120.60 Application Denial/Approval

a) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application for the credit, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation. If the applicant disagrees with the Department's decision it may seek relief through the process afforded in the Department's Administrative Hearing Rules set forth at 56 Ill. Adm. Code 2605.

b) For applications accepted by the Department, the Department will send a notification by e-mail to the applicant. The Department will proceed to negotiate a formal agreement with the applicants determined to be eligible for award of a credit.

14 Ill. Adm. Code 120.70 Tax Credit Award

Subject to the conditions set forth in the Act, a taxpayer is entitled to a credit against the tax imposed pursuant to subsections (a) and (b) of Section 201 of the Illinois Income Tax Act [35 ILCS 5/201] for a taxable year beginning on or after January 1, 2025 if the taxpayer is awarded a credit by the Department in accordance with an agreement under the Act. The Department has authority to award credits under the Act on and after January 1, 2023. [35 ILCS 45/110-30]

a) MICRO Illinois Credit

1. A taxpayer may receive a tax credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act, not to exceed the sum of:

A) 75% of the incremental income tax attributable to new employees at the applicant's project; and

B) 10% of training costs of the new employees.

2. If the project is in an underserved area or an energy transition area, then the amount of the credit may not exceed the sum of:

A) 100% of the incremental income tax attributable to new employees at the applicant's project; and

B) 10% of the training costs of the new employees.

3. The percentage of training costs includable in the calculation may be increased by an additional 15% for training costs associated with new employees that are recent (2 years or less) graduates, certificate holders, or credential recipients from any of the following:

A) an institution of higher education in Illinois;

B) Clean Jobs Workforce Network Program; or

C) apprenticeship and training program located in Illinois and approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training.

4. An applicant is also eligible for a training credit that shall not exceed 10% of the training costs of retained employees for the purpose of upskilling to meet the operational needs of the applicant or the project.

5. The percentage of training costs includable in the calculation shall not exceed a total of 25%.

6. If an applicant agrees to hire the required number of new employees, then the maximum amount of the credit for that applicant may be increased by an amount not to exceed 75% of the incremental income tax attributable to retained employees at the applicant's project; provided that, in order to receive the increase for retained employees, the applicant must, if applicable, meet or exceed the statewide baseline that is specified in the agreement. If the project is an underserved area or an energy transition area, the maximum amount of the credit attributable to retained employees for the applicant may be increased to an amount not to exceed 100% of the incremental income tax attributable to retained employees at the applicant's project; provided that, in order to receive the increase for retained employees, the applicant must meet or exceed the statewide baseline that is specified in the agreement.

7. Credits awarded may include credit earned for incremental income tax withheld and training costs incurred by the taxpayer beginning on or after January 1, 2023. Credits so earned and certified by the Department may be applied against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act for taxable years beginning on or after January 1, 2025. [35 ILCS 45/110-30(b)]

b) MICRO Construction Jobs Credit:

1. For construction wages associated with a project that qualified for a credit under subsection (b) of Section 110-30 of the Act, the taxpayer may receive a tax credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act in an amount equal to 50% of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities, as a jobs credit for workers hired to construct the project.

2. The MICRO Construction Jobs Credit may not exceed 75% of the amount of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities if the project is in an underserved area or an energy transition area. [35 ILCS 45/110-30(c)]

3. The applicant seeking certification for a MICRO construction jobs credit shall require the contractor to enter into a project labor agreement that conforms with the Project Labor Agreements Act. [35 ILCS 45/110-30(e)]

c) Tax Credit Certification to the Department of Revenue. The Department shall certify to the Department of Revenue the following information regarding the tax credit award for each taxpayer outlined in subsections (a) and (b) of Section 120.70:

1. The identity of taxpayers that are eligible for the MICRO Illinois credit and MICRO construction jobs credit;

2. The amount of the MICRO Illinois credit and MICRO construction jobs credit awarded in each calendar year; and

3. The amount of the MICRO Illinois credit and MICRO construction jobs credit claimed in each calendar year as detailed in Section 30(d) of the Act). [35 ILCS 45/110-30(d)]

Chapter I Department of Commerce and Economic Opportunity

Part 120 Manufacturing Illinois Chips for Real Opportunity (micro) Act

14 Ill. Adm. Code 120.80 Determination of Amount and Term of the Credit

a) The Department shall determine the amount and duration of the MICRO Illinois credit awarded under the Act.

b) The credit may be stated as a percentage of the incremental income tax and training costs attributable to the applicant's project and may include a fixed dollar limitation.

c) For the credit term, a project that qualified under paragraph (1), (2), or (4) of subsection (c) of Section 110-20 of the Act, the duration of the credit may not exceed 15 taxable years, unless the agreement is renewed.

d) For project that qualified under paragraph (3) of subsection (c) of Section 110-20 of the Act, the duration of the credit may not exceed 10 taxable years, unless the agreement is renewed. [35 ILCS 45/110-40]

14 Ill. Adm. Code 120.90 Tax Credit Agreement

The Department and each taxpayer whom the Department determines qualifies for a credit under the Act shall enter into an agreement that specifies terms and conditions regarding the provision of the credit and defines the rights and responsibilities of the taxpayer and the Department. Provisions that the taxpayer will be contractually bound to comply with include, but are not limited to, the following:

a) A detailed description of the project that is the subject of the agreement, including the location and amount of the investment and jobs created or retained.

b) The duration of the credit, the first taxable year for which the credit may be awarded, and the first taxable year in which the credit may be used by the taxpayer.

c) The credit amount that will be allowed for each taxable year.

d) For a project qualified under paragraphs (1), (2), or (4) of subsection (c) of Section 110-20 of the Act, a requirement that the taxpayer shall maintain operations at the project location a minimum number of years not to exceed 15. For project qualified under paragraph (3) of subsection (c) of Section 110-20 of the Act, a requirement that the taxpayer shall maintain operations at the project location a minimum number of years not to exceed 10.

e) A specific method for determining the number of new employees and if applicable, retained employees, employed during a taxable year. The agreement will specify that an employee of the taxpayer who was previously employed in Illinois by the taxpayer and whose employment was shifted to the project after the taxpayer entered into the tax credit agreement are not considered new employees.

1. An employee may be considered a new employee under the agreement if the employee performs a job that was previously performed by an employee who was:

A) treated under the agreement as a new employee; and

B) promoted by the taxpayer to another job.

2. The agreement will specify that the Department may award a credit to the taxpayer with respect to an employee hired prior to the date of the agreement if:

A) the applicant is in receipt of a letter from the Department stating an intent to enter into a credit agreement;

B) the letter described in subsection (e)(2)(1) under the employees that are not included in the term "new employees" is issued by the Department not later than 15 days after the effective date of the Act; and

C) the employee was hired after the date the letter described in subsection (e)(2)(1) under the employees that are not included in the term "new employees" was issued.

3. The agreement will address that an employee shall be considered a new employee under the agreement if the employee fills a job vacancy that had been continuously vacant for the 184 day period immediately preceding the date of the agreement. A job vacancy whose incumbent is on approved leave, is locked out or is on strike is not a vacancy.

f) A requirement that the taxpayer shall annually report to the Department the number of new employees, the incremental income tax withheld in connection with the new employees, and any other information the Department deems necessary and appropriate to perform its duties under the Act.

g) A requirement that the Director is authorized to verify with the appropriate State agencies the amounts reported under subsection (f), and after doing so shall issue a certificate to the taxpayer stating that the amounts have been verified.

h) A requirement that the taxpayer shall provide written notification to the Director not more than 30 days after the taxpayer makes or receives a proposal that would transfer the taxpayer's State tax liability obligations to a successor taxpayer.

i) A detailed description of the number of new employees to be hired, and the occupation and payroll of full-time jobs to be created or retained because of the project.

j) The minimum investment the taxpayer will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment.

k) A requirement that the taxpayer shall provide written notification to the Director and the Director's designee not more than 30 days after the taxpayer determines that the minimum job creation or retention, employment payroll, or investment no longer is or will be achieved or maintained as set forth in the terms and conditions of the agreement. Additionally, the notification should outline to the Department the number of layoffs, date of the layoffs, and detail taxpayer's efforts to provide career and training counseling for the impacted workers with industry-related certifications and trainings.

l) A provision that, if the total number of new employees falls below a specified level, the allowance of credit shall be suspended until the number of new employees equals or exceeds the agreement amount.

m) If applicable, a provision that specifies the statewide baseline at the time of application for retained employees. Additionally, the agreement must have a provision addressing if the total number retained employees falls below the statewide baseline, the allowance of the credit shall be suspended until the number of retained employees equals or exceeds the agreement amount.

n) A detailed description of the items for which the costs incurred by the taxpayer will be included in the limitation on the Credit provided in Section 40 of the Act.

o) A provision stating that if the taxpayer fails to meet either the investment or job creation and retention requirements specified in the agreement during the entire 5-year period beginning on the first day of the first taxable year in which the agreement is executed and ending on the last day of the fifth taxable year after the agreement is executed, then the agreement is automatically terminated on the last day of the fifth taxable year after the agreement is executed, and the taxpayer is not entitled to the award of any credits for any of that 5-year period. [35 ILCS 45/110-45(a)(15)]

p) A requirement that the taxpayer shall annually report to the Department the number of new employees, if applicable, the number of retained employees, and the incremental income tax withheld in connection with the new employees.

q) A provision stating that the taxpayer must provide the reports outlined in Sections 110-50(a) and (b) and 110-55 of the Act on or before April 15 each year. The agreement shall state that any taxpayer seeking to claim a credit under the Act that fails to timely submit the report required under Section 110-50(a) of the Act shall not receive a credit for that taxable year unless and until such report is finalized and submitted to the Department.

r) A provision requiring the taxpayer to report annually its contractual obligations or otherwise with a recycling facility for its operations.

s) Any other performance conditions or contract provisions the Department determines are necessary or appropriate.

t) Each taxpayer under Section 120.30(b)(1) shall maintain labor neutrality toward any union organizing campaign for any employees of the taxpayer assigned to work on the premises of the project. This paragraph shall not apply to a manufacturer who is subject to collective bargaining agreement entered into prior to the taxpayer filing an application pursuant to the Act. [35 ILCS 45/110-45(a)]

u) A provision that the taxpayer must annually report to the Department the total project tax benefits received to date. The report is due no later than May 31 of each year and shall cover the previous calendar year. For applicants issued a certificate of exemption under Section 110-105 of the Act, the report shall be the same as required for a High Impact Business under subsection (a-5) of Section 8.1 of the Illinois Enterprise Zone Act. Each person required to file a return under the Gas Revenue Tax Act, the Electricity Excise Tax Act, or the Telecommunications Excise Tax Act shall file a report on customers issued an exemption certificate under Section 110-95 of the Act in the same manner and form as they are required to report under subsection (b) of Section 8.1 of the Illinois Enterprise Zone Act. [35 ILCS 45/110-30(f)]

v) A provision that the taxpayer shall at all times keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the agreement in the custody or control of the taxpayer open for reasonable Department inspection and audits, and including without limitation, the making of copies of the books, records, or papers, and inspection or appraisal of any the taxpayer or project assets. [35 ILCS 45/110-15]

w) A provision that the taxpayer claiming a credit under the Act shall, prior to April 15 of each taxable year for which the taxpayer claims a credit under the Act, submit to the Department a report detailing that taxpayer's sexual harassment policy, which contains, at a minimum, the following information:

1. the illegality of sexual harassment;

2. the definition of sexual harassment under State law;

3. a description of sexual harassment, utilizing examples;

4. the vendor's internal complaint process, including penalties;

5. the legal recourse and investigative and complaint processes available through the Department;

6. directions on how to contact the Department; and

7. protection against retaliation as provided by Section 6-101 of the Illinois Human Rights Act [775 ILCS 5/6-101]. A copy of the policy shall be provided to the Department upon request. The reports required under this Section shall be submitted in a form and manner determined by the Department. [35 ILCS 45/110-55]

14 Ill. Adm. Code 120.100 Certification of Verification

a) The taxpayer shall notify the Department on forms provided by the Department when the minimum eligible capital improvement investments have been placed in service and the minimum new full-time employee jobs have been created and that retained employees remain employed by the taxpayer.

b) The taxpayer shall provide, for land and/or building acquisition, a copy of the purchase agreement; for building construction or renovation, a contractor's or architect's cost certification; for space rental, a rental/lease agreement.

c) For a taxpayer to be eligible for a certificate of verification, the taxpayer shall provide proof as required by the Department prior to the end of each calendar year, including, but not limited to, attestation by that project:

1. has achieved the level of new employee jobs specified in the agreement;

2. has achieved the level of annual payroll in Illinois specified in the agreement;

3. has achieved the level of capital investment in Illinois specified in the agreement;

4. has maintained the statewide baseline employment specified in the agreement; and

5. the taxpayer has materially complied with the terms of the agreement and is not otherwise in violation of any provision of the Act.

d) Upon receipt of valid proof from the taxpayer, the Department shall provide the taxpayer with a certificate of verification.

e) A taxpayer claiming a credit under the Act shall submit to the Department of Revenue a copy of the Director's certificate of verification under the Act for the taxable year. However, failure to submit a copy of the certificate with the taxpayer's tax return shall not invalidate a claim for a credit. [35 ILCS 45/110-60]

14 Ill. Adm. Code 120.110 Noncompliance with the Agreement

a) If the Director determines that a taxpayer who has received a credit under the Act is not complying with the requirements of the agreement or all of the provisions of the Act, the Director shall provide notice to the taxpayer of the alleged noncompliance and allow the taxpayer a hearing under the provisions of the Illinois Administrative Procedure Act. If, after notice and any hearing, the Director determines that a noncompliance exists, the Director shall issue to the Department of Revenue notice to that effect, stating the noncompliance date. [35 ILCS 45/110-70] Alleged noncompliance shall include, but not be limited to:

1. a demonstration that the taxpayer failed materially to comply with the terms and conditions of the agreement;

2. a determination upon investigation that the taxpayer or any of its agents or representative provided false or misleading information to the Department; or

3. a failure to submit the annual report required by Section 30(f) of the Act.

b) The Department shall notify a taxpayer in writing that its certification of verification subject to revocation. Such notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605.

c) Following revocation of the certification of verification the Department will contact the Director of the Illinois Department of Revenue who may begin proceedings to recover wrongfully exempted State taxes.

14 Ill. Adm. Code 120.120 Recapture and Reallocation of Recaptured Amounts

a) If, during the term of an agreement, the taxpayer ceases principal operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Department and the Department of Revenue shall recapture from the taxpayer the entire credit amount awarded under the agreement prior to the date the taxpayer ceases operations. [35 ILCS 45/110-70]

1. If the Department determines that a taxpayer ceases principal operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Director shall provide notice to the taxpayer of that determination and allow the taxpayer a hearing under the Illinois Administrative Procedure Act [5 ILCS 100]. Example of activities that evidence a cessation of operation at a project location with an intent to terminate operations in the State include, but are not limited to, WARN (Worker Adjustment and Retraining Notification) notices reflecting layoffs in excess of 65% of the full-time employees located at the project site, and public announcements or other media reflecting an intent to relocate operations outside the State.

2. The Department shall notify a taxpayer in writing that the MICRO construction jobs credit and/or the MICRO credit is subject to recapture. The notice shall include the reason for revocation of the certification of verification and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

3. Following a determination that credits received pursuant to an agreement are subject to recapture, the Department will contact the Director of the Illinois Department of Revenue requesting proceedings begin to determine the amounts to be reallocated by the Department pursuant to Section 110-70 of the Act.

b) The Department shall, subject to appropriation, reallocate the recaptured amount within 6 months to the local workforce investment area, through competitive grants opportunities in accordance with the Grant Accountability and Transparency Act, in which the project was located for the purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce. Grant funds shall be distributed in accordance with GATA. [35 ILCS 45/110-70]

14 Ill. Adm. Code 120.130 Eligibility

a) A taxpayer with a credit for a project that meets the qualifications under paragraphs (1), (2), and (4) of subsection (c) of Section 110-20 [35 ILCS 45/110-95], subject to an agreement under the Act, may be certified by the Department to receive an exemption from:

1. the tax imposed at the project site by Section 2-4 of the Electricity Excise Tax Law, and/or

2. any additional charges added to the taxpayer's utility bills at the project site as a pass-on of State utility taxes under Section 9-222 of the Public Utilities Act. [35 ILCS 45/110-95]

b) To receive a certification for the utility tax exemption, the taxpayer must be registered to self-assess that tax.

14 Ill. Adm. Code 120.140 Form of Application

An application for the Utilities Tax Exemption shall be submitted on the standard application form provided by the Department. An application shall include:

a) Taxpayer's fully executed MICRO Illinois credit agreement with the Department;

b) Name, address, and Federal Employer Identification Number of the taxpayer; and

c) The applicant will attest that it is registered to self-assess the utility tax. [35 ILCS 45/110-95]

14 Ill. Adm. Code 120.150 Application Approval Process

a) Application Approval Requirements. Applications shall be submitted to the Department and approved or denied in writing within 90 days after receipt. The Department will issue a certification of exemption to the Illinois Department of Revenue for approved applicants, with a copy to the approved applicant. The application shall be approved if it meets the following requirements:

1. The applicant has an executed MICRO Illinois agreement; and

2. The applicant eligibility criteria outlined in Section 120.130 are met.

b) 10-Year Exemption Period. All certified businesses shall receive a ten-year exemption from Section 2-4 of the Electricity Excise Tax Law, and Section 9-222 of the Public Utilities Act.

c) Use of Exemption and Failure to Comply. Applicant may utilize the exemption prior to achieving the capital investment and job creation requirements set forth in the MICRO Illinois agreement. However, the Applicant shall repay the exempted amount if the applicant fails to comply with the terms and conditions of the executed MICRO Illinois agreement. [35 ILCS 45/110-95]

Part 125 Invest in Illinois Incentive Program

14 Ill. Adm. Code 125.10 Purpose

The General Assembly finds that the State must encourage and promote the retention and expansion of existing businesses and industry within the State and recruit and attract new businesses and industry to the State by providing businesses with ready access to the capital and incentives needed to stimulate economic activity and create new jobs. [30 ILCS 751/5]

14 Ill. Adm. Code 125.20 Definitions

The following definitions are applicable to this Part.

"Act" means the Invest in Illinois Act [30 ILCS 751].

"Agreement" means an agreement between an applicant and the Department pursuant to this Part and Section 30 of the Act.

"Applicant" means a taxpayer that operates or plans to operate an eligible business in the State.

"Business" means a sole proprietorship, partnership, corporation, or limited liability company.

"Capital improvement" means:

i) the purchase, renovation, rehabilitation, or construction, at an approved project site in the State, of land, buildings, structures, equipment, or furnishings; and

ii) goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. "Capital improvement" does not include land, buildings, structures, and equipment that are leased, unless the term of the lease equals or exceeds the term of the agreement. For land, buildings, structures, and equipment that are leased and are considered capital improvements, the cost of the property shall be determined from the present value of the lease payments, using the corporate interest rate prevailing at the time of the application.

"Capital investment" means the expenditure of money for capital improvements.

"Department" means the Department of Commerce and Economic Opportunity. [30 ILCS 751]

"Domestic bank" shall mean any branch or office within the United States of any of the following which is not a national of a designated foreign country; any bank or trust company incorporated under the banking laws of the United States or any State, territory, or district of the United States, or any private bank or banker subject to supervision and examination under the banking laws of the United States or of any State, territory or district of the United States.

"Director" means the Director of the Department of Commerce and Economic Opportunity.

"Full-time employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. Annually scheduled periods for inventory or repairs, vacations, holidays, and paid time for sick leave, vacation, or other leave shall be included in this computation of full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week. [30 ILCS 751]

"Performance Condition" means any term, provision, or clause of the agreement that the awardee must comply with before receiving an award.

"Project" means for-profit economic development activity or activities at a single site. For-profit economic development activity or activities of one or more taxpayers at multiple sites may be considered a project if the economic activities are vertically integrated and designated by the Department as a project and as the subject of an agreement that includes capital improvement requirements and job creation requirements and, if applicable, job retention requirements for the project location or locations. The employees subject to the agreement must be assigned to a specific project location and work there as their primary location.

"Taxpayer" means a business that is subject to any tax or fee collected by the Department of Revenue or that will be subject to any tax or fee collected by the Department of Revenue upon the location of the business in the State. [30 ILCS 751]

14 Ill. Adm. Code 125.30 Eligibility

a) The Department may make non-competitive economic incentive awards, including, but not limited to, grants and loans, to assist applicants that pledge to make capital investments and create new jobs in this State or retain jobs in this State. "Non-competitive" means the Department determines the recipient of the award and is not required to follow a competitive application process. [30 ILCS 751/15(a)]

b) To qualify for an incentive award, the applicant must:

1. be in good standing under the laws of this State and the laws of all other states where the applicant was formed or is organized; and

2. owe no delinquent taxes to the State of Illinois.

c) The Department may not award an incentive award to an applicant that:

1. closes operations at one location in the State or reduces those operations by more than 50% within the last 12 months; and

2. relocates substantially the same operations to another location in the State.

This prohibition does not apply if the applicant moves its operations from one location in the State to another location in the State for the purpose of expanding its operations in the State and the Department determines that expansion could not reasonably be accommodated within the municipality or county where the business was located prior to the relocation. In making its determination, the Department shall confer with the chief executive officer of the municipality or county where the business was located prior to the relocation and take into consideration any evidence offered by the municipality or county regarding its ability to accommodate expansion within the municipality or county. [30 ILCS 751/15(c)]

d) The Department shall only disburse the award to the applicant's domestic bank.

14 Ill. Adm. Code 125.40 Form of Application

An applicant seeking an economic incentive under this Act shall submit a detailed application to the Department. [30 ILCS 751/20] The application will be provided by the Department. The application shall contain:

a) the location of the project;

b) the amount of the capital investment the applicant will make in the project;

c) the number of new jobs that will be created as a result of the project;

d) the number of jobs retained by an existing applicant; and

e) the average salary of the jobs to be created or retained. [30 ILCS 751/20]

14 Ill. Adm. Code 125.50 Application Review

The Department shall determine which projects will benefit the State and are eligible to receive an award. In making this determination, the Department will consider:

a) the number of jobs to be created by the project;

b) the number of jobs to be retained by the project;

c) the average salary of jobs created by the project;

d) the average salary of jobs retained by the project;

e) the total capital investment to be made by the applicant;

f) the likelihood of other businesses locating within the same vicinity or within the State as a result of the business activity to be conducted by the applicant receiving the economic incentive;

g) the impact on the economy of the area or community where the project is located; and

h) any other factors the Department determines to be relevant to the goals established in the purpose statement of the Act. [30 ILCS 751/25]

14 Ill. Adm. Code 125.60 Incentive Agreement

The Department and each taxpayer whom the Department determines qualifies for an incentive under the Act shall enter into an agreement that specifies terms and conditions regarding the provision of the incentive and defines the rights and responsibilities of the taxpayer and the Department. Provisions that the taxpayer will be contractually bound to comply with include, but are not limited to, the following:

a) a detailed description of the project that is the subject of the agreement;

b) the performance conditions that must be met to obtain the award, including, but not limited to, the number of new jobs created or retained, the average salary of the new jobs created, and the total capital investment;

c) the schedule of payments;

d) a requirement that the awardee maintain operations at the project location for a minimum number of years;

e) a specific method for determining the number of new employees and, if applicable, the number of retained employees, to be employed during each taxable year covered by the agreement;

f) a requirement that the awardee annually report to the Department the number of new employees and any other information the Department deems necessary and appropriate to perform its duties under this Act;

g) a detailed description of the number of new employees to be hired and the occupation and payroll of full-time jobs to be created or retained because of the project;

h) the minimum capital investment the awardee will make, the time period for placing the property in service, and the designated location in Illinois for the capital investment;

i) a requirement that the awardee provide written notice to the Director and the Director's designee not more than 30 days after the awardee determines that the minimum job creation, job retention, employment payroll, or capital investment is no longer or will no longer be achieved or maintained as required in the agreement and include in that notice the number of layoffs, the date of the layoffs, and the awardee's efforts to provide career and training counseling to the impacted workers with industry-related certifications and trainings;

j) a claw-back provision, pursuant to Section 125.180, to recapture the award, in whole or in part, for failure to comply with the agreement; and

k) a provision that the agreement shall not take effect, nor may any funds be expended or transferred under the agreement, if the Department fails to comply with the notification requirements under Section 32 of the Act and under Subpart E of these rules, or if the Speaker of the House of Representatives or the Senate President (or their designees, if applicable) submit a letter of rejection. [30 ILCS 751/30]

14 Ill. Adm. Code 125.70 Noncompliance with the Agreement

a) If the Department determines that a taxpayer is not complying with the terms of the agreement, then the applicant may be required to repay some or all of the award along with any applicable interest to the State at the agreed upon rate and on the agreed terms set forth in the agreement. The amount of the incentive that the applicant will be required to repay shall be set forth in the agreement.

b) In addition to the rights of the Department set forth in subsection (a), if the taxpayer fails to comply with any of the other terms of the agreement, the Department may:

1. obtain a lien or other interest in the capital improvements in proportion to the percentage of the incentive amount used to pay for those capital improvements; and

2. If the taxpayer sells the capital improvements, require the taxpayer to:

A) repay to the State the funds used to pay for the capital improvement, with interest at the rate and according to the other terms provided by the agreement; and

B) share with the State a proportionate amount of any profit realized from the sale

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.100 Business Hours of the Securities Department

a) An office of the Securities Department at 421 East Capitol Street, Springfield IL 62701 is open each day, except Saturdays, Sundays and holidays, from 8:00 a.m. to 4:30 p.m.

b) An office of the Securities Department at 69 West Washington Street, Suite 1220, Chicago, Illinois 60602 is open each day, except Saturdays, Sundays and holidays, from 8:30 a.m. to 5:00 p.m.

History

• Source: Amended at 40 Ill. Reg. 391, effective December 22, 2015

14 Ill. Adm. Code 130.101 Computation of Time

The time within which an act under the Illinois Securities Law of 1953, (Ill. Rev. Stat. 1985, ch. 121½, par. 137.1 et seq.) (the "Act") shall be done shall be computed by excluding the first day and including the last, unless the last day is a Saturday, Sunday or holiday as defined or fixed in any statute now or hereafter in force in this state, and then it shall also be excluded. If the day succeeding such Saturday, Sunday or holiday is also a Saturday, Sunday or holiday, then such succeeding day shall also be excluded.

14 Ill. Adm. Code 130.110 Payment of Fees

a) Fees under the Act are as follows:

Section 2a (Federal covered transactions or securities)

Issuers of securities pursuant to Regulation D, Rule 506 of the Federal Act

$100

Issuers of shelf offerings

$500-$6,000**

Series issuers

$500-$3,000**

Issuers of face amount certificate contracts

$1,000

Issuers of open-end investment fund shares

$1,000 plus $100 for each series, class or portfolio

General filing fee for securities not covered above

$500-$2,500**

Section 4.D

Filing Fee

$100

Section 4.F.2

Application Filing Fee

$1,000

Section 4.G

Report of Sale Filing Fee

$100

Late filing fee

$200 ($100 filing fee plus $100 late fee)

Section 4.P

Offering Sheet Examination Fee

$300

Report of Sale Filing Fee

$10-$100*

Section 5.A

General Filing or Renewal Fee

$500-$2,500**

Filing or Renewal Fee for Shelf Offerings

$500-$6,000**

Filing or Renewal Fee for Series Issuers

$500-$3,000**

Section 5.B

If registered pursuant to the Federal 1933 Act:

General Examination Fee

$300

General Filing Fee

$500-$2,500**

Filing or Renewal Fee for Shelf Offerings

$500-$6,000**

Filing or Renewal Fee for Series Issuers

$500-$3,000**

If not registered pursuant to the Federal 1933 Act:

Examination Fee

$150

Filing Fee

$250

Amendment Examination Fee

$25

Section 5.C

Additional Fee

$500

Section 5.E

Additional fee for renewal of securities 9 business days or less but prior to expiration of registration or renewal

$200

Additional fee after expiration of registration or renewal (not to exceed one year after the date of expiration of the most recent registration or renewal)

1st-30th day

$500

31st-60th day

$1,000

61st-90th day

$1,500

91st-120th day

$2,000

121st-150th day

$2,500

151st-180th day

$3,000

On or after 181st day

$5,000

Section 5.H

Additional fee for the failure to file or file timely any required post-registration document

$50

Additional fee for the failure to file or file timely notice of SEC effectiveness for filings made on the third through tenth business day after SEC effectiveness

$100

Additional fee for the failure to file or file timely notice of SEC effectiveness for filings made after the tenth day after SEC effectiveness

11th-30th day

$200

31st-60th day

$400

61st-90th day

$600

91st-120th day

$800

121st-150th day

$1,000

151st-180th day

$1,200

On or after the

181st day

$2,500

Section 6.A

Filing or Renewal Fee

$1,000

Amendment Filing Fee for Additional Series, Types or Classes

$100

Section 6.B

Examination Fee

$300

Filing or Renewal Fee

$1,000

Amendment Examination Fee

$50

Amendment Filing Fee for Additional Series, Types or Classes

$100

Transaction Charge

$10

Annual Fee

1/30th of 1% of average of Quarterly computation of aggregate principal amount of securities on deposit

Section 6.F

Additional fee for renewal of securities 9 business days or less but prior to expiration of registration or renewal

$200

Additional fee after expiration of registration or renewal (not to exceed one year after the date of expiration of the most recent registration or renewal)

1st-30th days

$500

31st-60th day

$1,000

61st-90th day

$1,500

91st-120th day

$2,000

121st-150th day

$2,500

151st-180th day

$3,000

On or after the

181st day

$5,000

Section 6.L

Additional fee for the failure to file or file timely any required post-registration document

$50

Additional fee for the failure to file or file timely notice of SEC effectiveness for filings made on the third through tenth business day after SEC effectiveness

$100

Additional fee for the failure to file or file timely notice of SEC effectiveness for filings made after the tenth day after SEC effectiveness

11th-30th day

$200

31st-60th day

$400

61st-90th day

$600

91st-120th day

$800

121st-150th day

$1,000

151st-180th day

$1,200

On or after the

181st day

$2,500

Section 7.A

Filing or Renewal Fee

$1,000 plus $100 for each series, class or portfolio

Section 7.B

Examination Fee

$300

Filing or Renewal Fee

$1,000 plus $100 for each series, class or portfolio

Amendment Examination Fee

$50

Section 7.D

Amendatory statement

$100

Section 7.G

Additional fee for renewal of securities 9 business days or less but prior to expiration of registration or renewal

$200

Additional fee after expiration of registration or renewal (not to exceed one year after the date of expiration of the most recent registration or renewal)

1st-30th day

$500

31st-60th day

$1,000

61st-90th day

$1,500

91st-120th day

$2,000

121st-150th day

$2,500

151st-180th day

$3,000

On or after the

181st day

$5,000

Section 7.J

Additional fee for the failure to file or file timely any required post-registration document

$50

Additional fee for the failure to file or file timely notice of SEC effectiveness for filings made on the third through tenth business day after SEC effectiveness

$100

Additional fee for the failure to file or file timely notice of SEC effectiveness for filings made after the tenth day after SEC effectiveness

11th-30th day

$200

31st-60th day

$400

61st-90th day

$600

91st-120th day

$800

121st-150th day

$1,000

151st-180th day

$1,200

On or after the 181st day

$2,500

Section 8

Dealer Filing or Renewal Fee

$300 plus $20 for each branch office in this State

Dealer fee to report a change in its form of organization

$300

Investment Adviser Filing or Renewal Fee and Federal Covered Investment Adviser notification filing fee or renewal fee

$200 plus $20 for each branch office in this State

Federal Covered Investment Adviser fee and Investment Adviser fee to report a change in its form of organization

$200

Salesperson Filing or Renewal Fee

$75 ($40 filing or renewal fee and $35 Securities Audit and Enforcement Fund fee; all fees may be paid by a single check)

Salesperson Transfer Fee

$75 ($40 transfer fee and $35 Securities Audit and Enforcement Fund fee; all fees may be paid by a single check)

Federal Covered Investment Adviser Representative and Investment Adviser Representative

$75

Federal Covered Investment Adviser Representative and Investment Adviser Representative transfer fee

$75

Section 8.J

Additional fee for the failure to file or file timely any required statement of financial condition or financial statement

$250

Additional fee for the second and subsequent failure to file or file timely any required statement of financial condition or financial statement

$500

Additional fee for the failure to file or file timely any required post-registration or post-notification document (other than statement of financial condition or financial statement)

$50

Additional fee for the second and subsequent failure to file or file timely any required post-registration or post-notification document other than statement of financial condition or financial statement)

$250

Section 10

Service of Process (when served upon the Secretary)

$10

Sections 15.B and 15.C

Certificate

$10

Certified Copy of Document

$10 plus

Each Page Certified

$.50

Section 15a

Non-binding statement

$75

Duplication of documents each page duplicated

$.50

Additional fee for payment of fee returned to the Securities Department due to insufficient funds or for a similar reason

$50

• 1/10th of 1% of the aggregate dollar amount reported therein, but not less than the specified minimum nor more than the specified maximum.

** 1/20th of 1% of the maximum aggregate price, as defined in Section 130.251 of this Part, but not less than the specified minimum nor more than the specified maximum.

b) All payments of fees, except for payment of administrative fines under Section 11.E of the Act as set forth below, shall be made by check, money order, certified check, bank cashier's check, bank money order or indicia of forms of electronic transfer of funds payable to the "Secretary of State". No third party check or money order endorsed over to the Secretary of State ("Secretary") shall be accepted as payment of any fee. All payments for administrative fines under Section 11.E of the Act in excess of $500, except for a person registered under Section 5, 6, 7 or 8 of the Act, shall be made by money order, certified check or bank cashier's check.

c) Any person whose payment of fees is returned to the Securities Department due to insufficient funds or for a similar reason shall pay to the Secretary the amount of fee owed plus an additional fee a set forth in this Section for each payment returned. This fee shall include the fee required by 5 ILCS 290/10.

d) The Secretary shall require any person to make payment of fees in the form of a United States postal money order, certified check, bank cashier's check or bank money order if any previous payment of fees has been returned to the Securities Department due to insufficient funds or for a similar reason.

e) All payment of fees under the Act for which a calculation of the fee is required shall be deemed to be filed and the fees paid upon receipt by the Securities Department, provided that the fee paid is within $5 of the actual amount due.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.120 Place of Filing

All applications for registration or exemption from registration and other papers filed with the Securities Department or the Secretary pursuant to Section 4, 5, 6, 7, 8, 9, 13 or 15a of the Act shall be filed at Springfield or Chicago, Illinois. Such material may be filed by delivery to the Securities Department, through the mails or otherwise. In addition, such material may be filed electronically or by facsimile with the Securities Department. All other papers filed with the Securities Department or the Secretary pursuant to the Act may be filed at the office of the Securities Department in Springfield or Chicago, Illinois.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.130 Date of Filing

a) Except as otherwise specified in Section 4, 5, 6, 7 or 8 of the Act, the date of filing of any document required to be filed with the Securities Department shall be the date of delivery of the document and any required fee to the Securities Department in Springfield or Chicago, Illinois, as specified in Section 130.120 of this Part, or:

1. if transmitted through the United States mail, shall be deemed filed with the Secretary on the date shown by the post office cancellation mark stamped upon the envelope or other wrapper containing the document or fee;

2. if mailed but not received by the Secretary, or if received but without a cancellation mark or with the cancellation mark illegible or erroneous, shall be deemed filed with the Secretary on the date it was mailed, but only if the sender establishes by competent evidence that the document or fee was deposited, properly addressed, in the United States mail on or before the date on which it was required or was due. In cases in which the document or fee was mailed but not received, the sender must also submit, or pay to, the Secretary a duplicate document or fee, or both, as the case may be, within 30 days after written notification of nonreceipt of the document or fee is given by the Secretary to the person claiming to have sent the document or fee;

3. if a document or fee is sent by United States registered mail, certified mail or certificate of mailing, a record authenticated by the United States Postal Service of such registration, certification or certificate shall be considered competent evidence that the document or fee was mailed on the date shown on the record;

4. if transmitted electronically, it shall be deemed filed with the Secretary on the date the information that is inscribed or stored electronically becomes retrievable in perceivable form to the Securities Department.

b) A document may not be deemed to be filed with the Secretary unless all requirements of the Act with respect to such filing have been complied with and the required fee has been paid.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.135 Registration of Securities Under Section 5 or 7 of the Act Utilizing the Srd

For the purpose of this Section and to implement a supplemental registration procedure known as the SRD, a computer based registration system for the registration and renewal of registration of securities, investment fund shares and unit investment trusts registered under the Federal 1933 Act and the Federal 1940 Investment Company Act, the term "with the Secretary of State" as used in Sections 5(A), 5(B), 5(E), 7(A), 7(B) and 7(G) of the Act or this Part shall include a filing made with the SRD.

History

• Source: Added at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.140 Requirements as to Proper Form

Any document filed with the Secretary pursuant to the Act shall be prepared in accordance with the form, if any, prescribed therefor by the Secretary as in effect on the date of filing. Any such document shall be deemed to be filed on the proper form unless objection to the form is made by the Securities Department.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.141 Additional Information

In addition to the information expressly required to be included in a document filed under Section 4, 5, 6, 7 or 8 of the Act, there shall be added such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.142 Additional Exhibits (Repealed)

History

• Source: Repealed at 21 Ill. Reg. 15892, effective December 1, 1997

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.143 Information Unknown or Not Reasonably Available

Information required need be given only insofar as it is known or reasonably available to the registrant. If any required information is unknown and not reasonably available to the registrant, either because the obtaining thereof would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the registrant, the information may be omitted, subject to the following conditions:

a) The registrant shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof.

b) The registrant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

14 Ill. Adm. Code 130.144 Requirements as to Paper, Printing, and Language

a) Application for registration shall be filed on good quality, unglazed, white paper 8½ by 11, inches in size, insofar as practicable. However, tables, charts, maps, and financial statements may be on larger paper, if folded to that size, and the prospectus may be on smaller paper, if the registrant so desires, but not less than 7½ by 9 inches in size.

b) The application for registration and, insofar as practicable, all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed, or typewritten. However, the application or any portion thereof may be prepared by any similar process which in the opinion of the Secretary of State produces copies suitable for permanent record. Irrespective of the process used, all copies of the material shall be clear, easily readable and suitable for repeated photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies.

c) The application for registration shall be in the English language. If any exhibit or other paper or document filed with the application for registration is in a foreign language, it shall be accompanied by a translation into the English language.

14 Ill. Adm. Code 130.145 Number of Copies – Signatures

a) One copy of the completed application for registration, manually signed by the applicant, including exhibits and all other papers and documents filed as a part of the application, shall be filed with the Secretary of State.

b) If any name is signed to the application for registration pursuant to a power of attorney, copies of the power of attorney shall be filed with the application for registration. In addition, if the name of any officer signing on behalf of the applicant, or attesting the applicant's seal, is signed pursuant to a power of attorney, certified copies of a resolution of the applicant's board of directors authorizing the signature shall also be filed with the application for registration.

c) Signatures to or within any electronic submission shall be in printed or typed form rather than manual format. A manually signed signature page or other document authenticating, acknowledging or otherwise adopting the signatures that appear in printed or typed form within an electronic filing shall be executed before or at the time the electronic filing is made and shall be retained by the filer for a period of six years from the date of expiration or termination of the registration of the security, salesperson, dealer, investment adviser or investment adviser representative. A signature on a document filed by facsimile is prima facie evidence for all purposes that the document actually was signed by the person whose signature appears on the facsimile.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.190 Provisions for Granting of Variance from Rules

The Secretary of State or his or her designee may grant variances from this Part in individual cases where he or she determines that:

a) the provision from which the variance is granted is not statutorily mandated;

b) no party will be injured by granting the variance; and

c) the Rule from which the variance is granted would, in the particular case, be unnecessarily burdensome.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.200 Definitions of Terms Used in the Act and the Rules

a) As used in the Act and this Part, unless the context otherwise requires, the term:

"Act" means the Illinois Securities Law of 1953 [815 ILCS 5].

"Affiliate" of, or a person "affiliated" with, a specified person means a person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

"Amount", when used in regard to securities, means the principal amount if relating to evidences of indebtedness, the number of shares if relating to shares, and the number of units if relating to any other kind of security.

"Applicant" means the person making application for registration or exemption.

"Approved IAR Continuing Education Content" means the materials, written, oral, or otherwise, that have been approved by order of the Securities Department, and which make up the educational program provided to an IAR under this Part. To encourage the uniform application of securities laws, the Department will give weight to IAR continuing education content approved by NASAA.

"Authorized Provider" means a person that the Securities Department has authorized to provide continuing education content required by this Part.

"CFTC" means the federal Commodity Futures Trading Commission.

"Charter" includes articles of incorporation, a declaration of trust, articles of association or partnership, or any similar instrument, as amended, affecting (either with or without filing with any governmental agency) the organization or creation of an incorporated or unincorporated person.

"Controlling Person" as used in Section 4.F of the Act shall not include any sponsor of a unit investment trust after the completion of the initial distribution.

"CRD" means the computer registration system for the registration of dealers and salespersons known as the "Central Registration Depository" operated by FINRA.

"Credit" means a unit that has been designated by the Securities Director as at least 50 minutes of educational instruction.

"Customer", as used in Section 130.270, means any person for whom the futures commission merchant effects or intends to effect transactions in futures, options on futures, or any other instruments subject to CFTC jurisdiction.

"Director" means any director of a corporation or any person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Employee" does not include a director, trustee, or officer.

"Federal 1933 Act" means the Act of the Congress of the United States known as the Securities Act of 1933 (15 U.S.C. 77a-77aa).

"Federal 1934 Act" means the Act of Congress of the United States known as the "Securities Exchange Act of 1934" (15 U.S.C. 78a-78aa).

"Federal 1936 Act" means the Act of Congress of the United States known as the Commodity Exchange Act of 1936 (7 U.S.C. 1 et seq.).

"Federal 1940 Investment Company Act" means the Act of Congress of the United States known as the Investment Company Act of 1940 (15 U.S.C. 80a-1 through 80a-52).

"Federal Banking Act of 1933" means 12 U.S.C. 227.

"Federal Covered Investment Adviser Representative" means any person with a place of business in this State who is an investment adviser representative of a federal covered investment adviser.

"FINRA" means the self-regulatory organization registered under the Federal 1934 Act, as defined in this Section, known as the Financial Industry Regulatory Authority.

"Fiscal Year" means the annual accounting period or, if no accounting period has been adopted, the calendar year ending on December 31.

"Futures" and "Futures Contracts", as used in Section 130.270, mean contracts of sale of a commodity for future delivery traded on or subject to the rules of a contract market designated by the CFTC or traded on or subject to the rules of any board of trade located outside the United States, its territories or possessions.

"Futures Commission Merchants", as used in Section 130.270, means individuals, associations, partnerships, corporations and trusts engaged in soliciting or in accepting orders for the purchase or sale of any commodity for future delivery on or subject to the rules of any contract market and that, in or in connection with such solicitation or acceptance of orders, accepts any money, securities, or property (or extends credit in lieu thereof) to margin, guarantee or secure any trades or contracts that result or may result therefrom.

"Hearing" means a proceeding conducted by the Securities Department in which the rights, privileges, immunities, duties or obligations of any person or party are required by law to be determined by the Secretary only after opportunity for a hearing.

"Hearing Officer" means the designee of the Secretary or the Securities Director who, pursuant to Section 11 of the Act, is designated in the Notice of Hearing to preside at a hearing conducted pursuant to Section 11 of the Act or any person so designated as a substitute hearing officer.

"Home State" means the state in which the investment adviser representative either resides, has its principal office, or principal place of business.

"IAR" means an investment adviser representative, who is an individual meeting the definition of "investment adviser representative" under the Act and 17 CFR 275.203A-3.

"IAR Ethics and Professional Responsibility Content" means approved IAR continuing education content that addresses an IAR's ethical and regulatory obligations.

"IAR Products and Practice Content" means approved IAR continuing education content that addresses an IAR's continuing skills and knowledge regarding financial products, investment features, and practices in the investment advisory industry.

"IARD" means the computer web-based registration system for the registration of investment advisers and investment adviser representatives known as the Investment Adviser Registration Depository operated by FINRA.

"Identifying Statement" means a written or oral communication or advertisement meeting the requirements of Section 130.210(b)(1).

"Insolvency" or "Insolvent" means the inability to pay debts and obligations when due or when current liabilities exceed current assets. Any party regulated by this Part claiming insolvency shall file with the Securities Department a balance sheet prepared as of a current date and executed and verified by the chief financial officer of the party.

"Internal Revenue Code" means the Internal Revenue Code of 1986 (26 U.S.C. 1 through 9834).

"Majority-Owned Subsidiary" means a subsidiary more than 50% of whose outstanding securities, which represent the right, other than as affected by events of default, to vote for the election of directors, is owned by the subsidiary's parent and/or one or more of the parent's other majority-owned subsidiaries.

"Material", when used to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which there is a substantial likelihood that a reasonable investor would consider it important in deciding upon a course of action to be taken, including, but without limitation, purchasing, selling or holding the security or securities involved, or accepting or rejecting an offer or proposal made with regard to any security or securities.

"NASAA" means the North American Securities Administrators Association or a committee designated by its board of directors.

"Nonaccredited Investor", as used in Section 130.420, means a person who is not a person set forth in Section 4.C, 4.H, 4.R or 4.S of the Act.

"Office", unless otherwise clarified, refers to the Office of the Securities Department of the Secretary of State, and not to any particular address or location.

"Officer" means the president; any vice president in charge of a principal business unit, division or function; the secretary; the treasurer; any principal financial officer, comptroller or principal accounting officer; any other officer performing a principal policy-making function; and any other person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Options on Futures", as used in Section 130.270, means puts or calls on a futures contract traded on or subject to the rules of a contract market designated by the CFTC or traded or subject to the rules of any board of trade located outside the United States, its territories or possessions.

"Pacific Coast Stock Exchange, Inc." means the Pacific Stock Exchange, Inc.

"Parent" of a specified person means an affiliate controlling such person directly or indirectly through one or more intermediaries.

"Party" means any person named as a petitioner or a respondent in a hearing conducted by the Securities Department.

"Person" means a natural person, a corporation, a partnership, a limited partnership, a limited liability company, a limited liability limited partnership, an association, a joint stock company, a trust or any unincorporated organization, except that, as used in this Section, the word "trust" includes only a trust where the interest or the interests of the beneficiary or beneficiaries are a security.

"Place of Business" of a federal covered investment adviser representative means a location at which the federal covered investment adviser representative provides investment advisory services, solicits, meets with, or otherwise communicates with clients, and any other location that is held out to the general public as a location at which the investment adviser representative provides investment advisory services, solicits, meets with, or otherwise communicates with clients.

"Predecessor" means a person, the major portion of the business and assets of which another person acquired in a single succession or in a series of related successions in each of which the acquiring person acquired the major portion of the business and assets of the acquired person.

"Preliminary Prospectus" means a document meeting the requirements of Section 130.210(b)(2).

"Principal Underwriter" means an underwriter in privity of contract with the issuer of the securities as to which that person is an underwriter.

"Promoter" means any person who, acting alone or in conjunction with one or more other persons, directly or indirectly takes initiative in founding and organizing the business or enterprise of an issuer; or any person who, in connection with the founding and organizing of the business or enterprise of an issuer, directly or indirectly receives in consideration of services or property, or both, 10% or more of any class of securities of the issuer or 10% or more of the proceeds from the sale of any class of securities of the issuer. However, a person who receives the securities or proceeds either solely as underwriting commissions or solely in consideration of property shall not be deemed a promoter within the meaning of this definition if the person does not otherwise take part in founding and organizing the enterprise.

"Prospectus" means any prospectus, notice, circular, advertisement, letter or communication, written or by radio, television or other communications medium that offers any security for sale or confirms the sale of any security; except that a communication sent or given after the effective date of the registration of the security (other than a prospectus permitted under section 10(b) of the Federal 1933 Act) shall not be deemed a prospectus if it is proved that, prior to or at the same time as the communication, a written prospectus, meeting the requirements of section 10(a) of the Federal 1933 Act at the time of the communication, was sent or given to the person to whom the communication was made, and a notice, circular, advertisement, letter or communication in respect to a security shall not be deemed to be a prospectus if it states from whom a written prospectus meeting the requirements of Section 5 of the Act may be obtained and, in addition, does no more than identify the security, state the price thereof, state by whom orders will be executed, and contain such other information as the Secretary by this Part deems necessary or appropriate in the public interest and for the protection of investors and, subject to such terms and conditions as may be described therein, may permit.

"Regulated Account", as used in Section 130.270, means a customer segregation account subject to 17 CFR 1.20 (August 1, 1997); provided, however, that, where such regulations do not permit to be maintained in such an account or require to be maintained in a separate regulated account funds or securities in proprietary accounts or funds or securities used as margin for or excess funds related to futures contracts, options on futures or any other instruments subject to CFTC jurisdiction that trade outside the United States, its territories or possessions, the term "regulated account" means such separate regulated account or any other account subject to 17 CFR 1.31 et seq. (August 1, 1997).

"Registrant" means the issuer of the securities that are the subject of the application for registration.

"Reporting Period" means one 12-month period as determined by the Securities Director or the Director's designee. An IAR's initial Reporting Period with this state commences the first day of the first full Reporting Period after the individual is registered or required to be registered with this state.

"Rules" refers to all rules adopted by the Secretary pursuant to the Act.

"Share" means a share of stock in a corporation or unit of interest in an unincorporated person.

"SEC" means the United States Securities and Exchange Commission.

"Secretary of State" or "Secretary" means the Secretary of State of Illinois.

"Section" refers to a Section of this Part unless a reference to the Act is specifically made.

"Securities Department" means the Securities Department of the Office of the Secretary of State.

"Securities Director" means the Director of the Securities Department of the Office of the Secretary of State.

"Securities Protection Act of 1970" means the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.).

"Segregated Customer Funds", as used in Section 130.270, means funds subject to 17 CFR 1.20 (August 1, 1997).

"SRD" means the automated computer registration system for the registration and renewal of registration of securities, investment fund shares and unit investment trusts registered under the Federal 1933 Act and Federal 1940 Investment Company Act known as the Securities Registration Depository.

"Significant Subsidiary" means a subsidiary for which:

the assets of the subsidiary, or the investments in and advances to the subsidiary by its parent and the parent's other subsidiaries, if any, exceed 15% of the assets of the parent and its subsidiaries on a consolidated basis; or

the sales and operating revenues of the subsidiary exceed 15% of the sales and operating revenues of its parent and the parent's subsidiaries on a consolidated basis.

In determining whether a subsidiary is a significant subsidiary, such a subsidiary shall be considered in the aggregate with any subsidiaries of which it is the parent.

"State Bond and Mortgage Company" means the company currently known as SBM Certificate Company or any successor company.

"Subsidiary" of a specified person is an affiliate controlled by such person directly or indirectly through one or more intermediaries. (See also "Majority-Owned Subsidiary", "Significant Subsidiary" and "Totally-Held Subsidiary".)

"Succession" means the direct acquisition of the assets comprising a going business, whether by merger, consolidation, purchase, or other direct transfer. The term does not include the acquisition of control of a business unless followed by the direct acquisition of its assets. The terms "succeed" and "successor" have the same meaning as "succession".

"Totally-Held Subsidiary" means a subsidiary substantially all of whose outstanding securities are owned by its parent and/or the parent's other totally-held subsidiaries, and that is not indebted to any person other than its parent and/or the parent's other totally-held subsidiaries in an amount that is material in relation to the particular subsidiary, excepting indebtedness incurred in the ordinary course of business that is not overdue and that matures within one year from the date of its creation, whether evidenced by securities or not.

"Unit Investment Trust" means an investment company that:

is organized under a trust indenture, agency or custodianship contract or similar instrument, does not have a board of directors; and

issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities.

The term "unit investment trust" does not include a voting trust.

"Unsolicited Transaction", as used in Section 130.270, means a transaction that is not effected in a discretionary account or recommended to a customer by the futures commission merchant, an associated person of a futures commission merchant, a business affiliate that is controlled by, controlling, or under common control with, the futures commission merchant, or an introducing broker that is guaranteed by the futures commission merchant.

b) A Section in this Part that defines a term without express reference to the Act or to this Part defines that term for all purposes as used both in the Act and in this Part. Terms defined in the Act and not defined in this Part have the meanings given them in the Act.

History

• Source: Amended at 49 Ill. Reg. 4061, effective March 19, 2025

14 Ill. Adm. Code 130.201 Definition of the Term "investment Contract", as Used in Section 2.1 of the Act

The term "investment contract" shall include, but not be limited to:

a) any interest or participation in a contract, transaction, scheme, common enterprise, or profit-seeking venture whereby the investor transfers capital to the promoter or promoters thereof or invests therein and looks to the promoter or promoters for the success of the venture;

b) any interest as a limited partner in a limited partnership;

c) any investment with regard to completion costs of any oil, gas, or other mineral lease, right or royalty; and

d) any enterprise or venture whereby the investor is solicited to transfer initial capital to an enterprise on the promise or inducement that a value or benefit will accrue to the investor from the enterprise where the investor's capital is placed at risk by the enterprise and the investor asserts no managerial or operational control over the enterprise.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.202 Definition of the Term "fractional Undivided Interest", as Used in Section 2.1 of the Act with Reference to Oil and/or Gas Leases, Rights or Royalties

The term "fractional undivided interest" as used with reference to oil and/or gas leases, rights or royalties includes landowner's royalty interests, overriding interests, working interests, participating interests, and oil or gas payments, as the terms are hereinafter defined in this section:

a) The term "landowner's royalty interests" means fractional undivided interests in the royalty reserved by a landowner or fee owner upon the creation of an oil or gas lease.

b) The term "overriding royalty interests" means fractional, undivided interests or rights of participation in the oil or gas, or in the proceeds from the sale of the oil or gas, produced from a specified tract or tracts, which are limited in duration to the terms of an existing lease and which are not subject to any portion of the expense of development, operation or maintenance.

c) The term "working interests" means fractional, undivided interests in an oil or gas leasehold which are subject to any portion of the expense of development, operation or maintenance and the costs of which include leasehold acquisition and drilling costs and any promotional expenses.

d) The term "participating interests" means fractional, undivided interests or rights of participation in the oil or gas, or in the proceeds from the sale of oil or gas, produced from a specified tract(s) or well(s), which are limited in duration to the terms of an existing lease and which are subject to any portion of the expense of development, operation or maintenance.

e) The term "oil or gas payments" means fractional, undivided interests or rights of participation in the oil or gas, or in the proceeds from the sale of oil or gas, produced from a specified tract(s) or well(s) and which are limited to a maximum amount fixed in barrels of oil, cubic feet of gas, or dollars.

14 Ill. Adm. Code 130.205 Definition of the Term "issuer" as Used in Section 2.2 of the Act as Applied to Fractional Interests in Oil, Gas and Other Mineral Leases, Rights or Royalties

The term "issuer" when applied to fractional interests in oil, gas or other mineral leases, rights or royalties means the person who first divides the interest sold into the fractional interests and each fractional interest holder who subsequently divides and conveys the interest.

14 Ill. Adm. Code 130.210 Definition of Acts Not Constituting a "sale" or "offer" as Used in Section 2.5 or 2.5a of the Act

a) The transmitting, sending or giving to any person or publishing an identifying statement, circular or preliminary prospectus, notice, advertisement, letter or other communication shall not constitute an "offer" or "sale" as used in Section 2.5 or 2.5a of the Act, provided that the identifying statement, circular or preliminary prospectus, notice, advertisement, letter, or other communication is used in connection with a security which is the subject of a pending application for registration which is on file with the Securities Department of the Office of the Secretary of State under Section 5 of the Act and substantially complies with the provisions of subsection (b).

b) For the purpose of this Part, the terms:

1. "identifying statement" and "circular" mean a written communication or advertisement or radio or television advertisement meeting the requirements of 17 CFR 230.134 (Rule 134) (May 31, 2011) under the Federal 1933 Act; and

2. "preliminary prospectus" means a document which contains substantially the information required by the Act to be included in a prospectus meeting the requirements of Section 5 of the Act for the securities being registered, or contains substantially that information except for the omission of information with respect to the offering price, underwriting discounts or commissions, discounts or commissions to dealers, amounts of proceeds, conversion rates, call prices, or other matters dependent upon the offering price.

c) The outside front cover page of the preliminary prospectus shall bear, in red ink, the caption "Preliminary Prospectus", the date of its issuance, and:

1. the following statement printed in type as large as that generally in the body of the prospectus:

"An application for registration relating to these securities has been filed with the Secretary of State of Illinois, but has not yet become effective. Information contained herein is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the application for registration becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities prior to registration under the Illinois Securities Law of 1953."; or

2. When applicable, the statement required by Regulation S-K, Section 229.501 (Item 501) in effect on May 31, 2011 under the Federal 1933 Act (no subsequent amendments or editions).

d) This Section shall not apply when the application for registration is the subject of pending proceedings under Section 11 of the Act or of an order of suspension, denial or prohibition entered under such Section.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.211 Definition of Acts Not Constituting an "offer" of Securities Under Section 5, 6, 7 or 8 of the Act

a) Notwithstanding any other provision of the Act or this Part, the transmitting or sending of any announcement, offering circular, prospectus or other communication via the nonproprietary, public computer network (commonly known as the "Internet") shall not constitute an offer of securities under Section 5, 6 or 7 of the Act; provided that the communication indicates, directly or indirectly, that the securities are not being offered to the residents of this State, and an offer is not otherwise specifically directed to any person in this State by or on behalf of the issuer of the securities.

b) No sale of securities shall be made in this State until the securities have been registered under Section 5, 6 or 7 of the Act and a prospectus, offering circular or Form U-7 in its most current form has been delivered to each offeree prior to the sale, or the securities are exempt from registration under Section 3 of the Act or sold in transactional exemptions set forth under Section 4 of the Act (except subsection G, H or R of Section 4 of the Act, or subsection M of Section 4 of the Act if any commission or other remuneration is paid or given, directly or indirectly, on account of the sale or sales or issuance of the securities).

c) Nothwithstanding any other provision of the Act or this Part, salespersons or dealers who transmit or distribute information on available products and services via the Internet shall not constitute an offer of securities for purposes of Section 8 of the Act provided that:

1. The communication contains a legend clearly stating that the salesperson or dealer may only transact business in those states where he, she or it is registered or otherwise excluded or exempted from State registration;

2. The sender of the communication has taken reasonable measures to insure that any subsequent interaction between prospective customers or clients residing in states where the salesperson or dealer is not registered is limited so as to not otherwise require State salesperson, dealer or securities registration;

3. The communication does not involve the actual effecting of securities transactions or trades for compensation over the Internet but is limited to the dissemination of information on products or services; and

4. In the case of a salesperson, the affiliation with a dealer is prominently disclosed within the communication; the dealer retains the responsibility of reviewing and approving the content of the Internet communication; the dealer has authorized the distribution or dissemination of information on products and services via the Internet communication; and the salesperson is acting within the scope of his or her authority in distributing or disseminating the Internet communication.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.212 Definition of Acts Not Constituting an "offer" Under Section 2.5a of the Act (testing the Waters)

a) The solicitation of indications of interest to purchase a security made by or on behalf of an issuer for the sole purpose of soliciting an indication of interest in receiving a prospectus (or its equivalent) for such security does not constitute an offer under Section 5 of the Act provided that all of the following conditions are satisfied:

1. The issuer is, or will be, a business entity organized under the laws of one of the states or possessions of the United States or one of the provinces or territories of Canada, is engaged in or proposes to engage in a business other than petroleum exploration or production or mining or other extractive industries and is not a blind pool offering or other offering for which the specific business or properties cannot now be described. For purposes of this Section, the term "blind pool" means, without limitation, a development stage company that has generally disclosed its business plan or purpose, but such business plan or purpose has not identified specific properties or products to be purchased, constructed or developed;

2. The solicitor intends to register the security under Section 5 of the Act;

3. At least ten business days prior to the initial solicitation of interest under this Section, the solicitor files with the Securities Department a Solicitation of Interest Form together with any other materials or communications which are to be utilized in the solicitation of interest, including, without limitation, the script of any broadcast to be made, the text of any electronic dissemination through such media as the Internet or other data networks, and any similar documents together with a copy of any notice or materials to be published or circulated;

4. At least five business days prior to its usage, the solicitor files with the Securities Department any amendments or supplements to the foregoing materials or additional materials to be utilized in the solicitation of interest, except for materials provided to a particular solicitee pursuant to a request by that person;

5. No Solicitation of Interest Form, script, advertisement or other material which the solicitor has been notified by the Securities Department not to distribute is utilized to solicit indications of interest;

6. Except for scripted broadcasts and published notices, the solicitor does not communicate with any solicitee about the contemplated offering unless the solicitee is provided with the most current Solicitation of Interest Form at or before the time of the communication but no later than five days from the date of communication;

7. During the solicitation of interest period, the solicitor does not solicit or accept money or a commitment to purchase securities;

8. No sale is made until seven days after delivery to the purchaser of a final prospectus, offering circular or disclosure document as the case may be, or in those instances hereunder in which delivery of a preliminary prospectus is allowed, a preliminary prospectus; and

9. The solicitor does not know, and in the exercise of reasonable care, could not know that the issuer or any of the issuer's officers, directors, ten percent shareholders, partners, members or promoters (or any person performing a similar function):

A) Has filed a registration statement or an application for registration of securities which is the subject of a currently effective registration stop order entered pursuant to any federal or state securities law within five years prior to the filing of the Solicitation of Interest Form.

B) Has been convicted within five years prior to the filing of the Solicitation of Interest Form of any felony or misdemeanor in connection with the offer, purchase or sale of any security, or any felony involving fraud or deceit, including, without limitation, forgery, embezzlement, obtaining money under false pretenses, larceny, or conspiracy to defraud.

C) Is currently subject to any federal or state administrative enforcement order or judgment entered by any state securities administrator or the Securities and Exchange Commission within five years prior to the filing of the Solicitation of Interest Form or is subject to any federal or state administrative enforcement order or judgment entered within five years prior to the filing of the Solicitation of Interest Form in which fraud or deceit, including, without limitation, making untrue statements of material facts or omitting to state material facts, was found.

D) Is subject to any federal or state administrative enforcement order or judgment which prohibits, denies, or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities.

E) Is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining such party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the State entered within five years prior to the filing of the Solicitation of Interest Form.

The prohibitions listed above in subsections (a)(9)(A) through (E) of this Section shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against such person or if the dealer employing such party is registered in this State and the Form BD filed with this State discloses the order, conviction, judgment or decree relating to such person. No person disqualified under this Section may act in a capacity other than that for which the person is registered. Any disqualification caused by this Section is automatically waived if the agency which created the basis for the disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied.

b) A failure to comply with any condition of subsection (a) of this Section will not result in the offer of a security provided that the solicitor demonstrates that:

1. the failure to comply did not pertain to a condition directly intended to protect that particular individual or entity;

2. the failure to comply was insignificant with respect to the offering as a whole; and

3. a good faith and reasonable attempt was made to comply with all applicable conditions of subsection (a) of this Section.

Where a solicitation of interest is established only through reliance upon this subsection (b), the failure to comply shall nonetheless be actionable by the Securities Department as a violation of Section 12 of the Act.

c) The solicitor shall comply with the requirements set forth below:

1. Any published notice, script for broadcast or electronic dissemination through such media as the Internet or other data networks or similar means of communication shall contain at least the identity of the chief executive officer of the issuer, a brief and general description of its business and products, and the following legends:

A) THIS IS A SOLICITATION OF INTEREST ONLY. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED AND NONE WILL BE ACCEPTED;

B) NO SALES OF THE SECURITIES WILL BE MADE OR COMMITMENT TO PURCHASE ACCEPTED UNTIL THE DELIVERY OF A FINAL OFFERING STATEMENT THAT INCLUDES COMPLETE INFORMATION ABOUT THE ISSUER AND THE OFFERING;

C) AN INDICATION OF INTEREST MADE BY A PROSPECTIVE INVESTOR INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND;

D) THIS SOLICITATION OF INTEREST IS BEING MADE PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE FEDERAL AND STATE SECURITIES LAWS. NO SALE MAY BE MADE UNTIL THE OFFERING STATEMENT IS QUALIFIED BY THE SEC AND IS REGISTERED IN THIS STATE; AND

E) NEITHER THE FEDERAL NOR THE STATE AUTHORITIES HAVE CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT OR ANY OTHER DOCUMENT PRESENTED TO YOU IN CONNECTION WITH THIS SOLICITATION OF INTEREST.

2. All communications with prospective investors made in reliance on this Section must cease after an application for registration of securities is filed in this State, and no sale may be made until at least twenty days after the last communication made in reliance on this Section.

3. A preliminary prospectus (or its equivalent) may only be used in connection with an offering for which indications of interest have been solicited under this Section provided that the offering is conducted by a registered dealer in this State.

d) The Securities Director, or his or her designee, may waive in writing any provision of this Section, upon written application by the solicitor and due cause having been shown. Neither compliance nor attempted compliance with this Section, nor the absence of any objection or proceeding instituted or Order issued by the Secretary of State under Section 11 of the Act with respect to any solicitation of interest to purchase securities undertaken pursuant to this Section, shall be deemed to be a waiver of any provision of this Section or deemed to be a confirmation by the Securities Department of the availability of this Section.

e) Issuers on whose behalf indications of interest are solicited under this Section may not make offers or sales in reliance upon subsection D, G, H, R or S of Section 4 of the Act until twelve months after the last communication with a solicitee made pursuant to this Section.

History

• Source: Added at 21 Ill. Reg. 7523, effective May 23, 1997

14 Ill. Adm. Code 130.215 Definition of "commission from an Underwriter or Dealer Not in Excess of the Usual and Customary Distributors' or Sellers' Commissions", as Used in Section 2.6 of the Act for Certain Transactions

a) The term "commission" in Section 2.6 of the Act includes such remuneration, commonly known as a "spread", as may be received by a distributor or dealer as a consequence of reselling securities bought from an underwriter or dealer at a price below the offering price of such securities, where such resales afford the distributor or dealer a margin of profit not in excess of what is usual and customary in such transactions.

b) The term "commission from an underwriter or dealer" in Section 2.6 of the Act includes commissions paid by an underwriter or dealer directly or indirectly controlling or controlled by or under direct or indirect common control with the issuer.

c) The term "usual and customary distributors' or sellers' commission" in Section 2.6 of the Act means a commission or remuneration, commonly known as a "spread", paid to or received by any person selling securities, either for his own account or for the account of others, which is not in excess of the amount usual and customary in the distribution of the particular issue but such term does not include amounts paid to any person whose function is the management of the distribution of all or a substantial part of the particular issue or who performs the functions normally performed by an underwriter or underwriting syndicate.

14 Ill. Adm. Code 130.216 Definition of "participates" and "participation", as Used in Section 2.6 of the Act in Relation to Certain Transactions

a) The terms "participates" and "participation" in Section 2.6 of the Act shall not include the interest of a person

1. who is not in privity of contract with the issuer nor directly or indirectly controlling, controlled by or under common control with, the issuer, and

2. who has no association with any principal underwriter of the securities being distributed, and

3. whose function in the distribution is confined to an undertaking to purchase all or some specified portion of the securities remaining unsold after the lapse of some specified period of time, and

4. who purchases the securities for investment and not with a view to distribution.

b) As used in this Part the term "association" shall include a relationship between two persons under which one:

1. is an affiliate of the other, or

2. has, in common with the other, one or more partners, officers, directors, trustees, branch managers, or other persons occupying a similar status or performing similar functions, or

3. has a substantial participation, direct or indirect, in the profits of the other, or has a substantial financial interest, by debtor-creditor relationship, stock ownership, contract or otherwise, in the income or business of the other.

14 Ill. Adm. Code 130.220 Definition of "regularly Engaged in Securities Sales Activities", as Used in Section 2.9 of the Act

The term "regularly engaged in securities sales activities" in Section 2.9 of the Act means making more than 10 sales, as defined in Section 2.5 of the Act, within a consecutive 12 month period, or without numerical limitation if no commission, discount or remuneration is paid or given, directly or indirectly, on account of any sale of the securities. For purposes of computing the number of sales, transactions enumerated in Section 4, other than subsection F, of the Act shall be excluded.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.221 Exclusion of Certain Persons from the Definition of Investment Adviser in Section 2.11 of the Act

Any person whose investment advice is limited to providing such advice to his or her employer as part of the employee's regular assigned duties, who receives no special compensation on account of such advice (other than salary and other compensation alternatives generally available to persons at a similar level of responsibility within the employer) and who is not held out to the public as an investment adviser by the employer is hereby designated as a person not within the intent of Section 2.11 of the Act pursuant to Section 2.11(6) thereof.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.225 Definition of "investment Fund Shares", as Used in Section 2.15 of the Act in Relation to Certain Issuers

a) The term "investment fund shares" in Section 2.15 of the Act shall include securities issued by any issuer which:

1. is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, holding or trading in securities;

2. is or will be registered under the Federal Investment Company Act of 1940, except that such term shall not include securities issued by such an issuer which are designated in the Act as "Face Amount Certificate Contracts" or securities issued by such an issuer which is a unit investment trust;

3. is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer's total assets (exclusive of Government securities or cash items) on an unconsolidated basis. As used in this paragraph, "investment securities" includes all securities except Government securities, securities issued by employees' securities companies, and securities issued by majority-owned subsidiaries of the owner which are not investment companies.

b) Notwithstanding paragraph (a)(3) of this section, none of the following persons is an issuer of investment fund shares within the meaning of that term as used in Section 2.15 of the Act:

1. any issuer primarily engaged directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding or trading in securities;

2. any issuer, all the outstanding securities of which (other than short-term paper or directors' qualifying shares) are directly or indirectly owned by a company described in paragraph (b) (1) of this section;

3. any issuer whose outstanding securities (other than short-term paper) are beneficially owned by not more than 100 persons. For the purpose of this paragraph, beneficial ownership by a company shall be deemed to be beneficial ownership by one person; except that, if the company owns 10% or more of the outstanding voting securities of the issuer, the beneficial ownership shall be deemed to be that of the holders of the company's outstanding securities (other than short-term paper);

4. any person primarily engaged in the business of underwriting and distributing securities issued by other persons, selling securities to customers, and acting as a dealer, or any one or more of such activities whose gross income normally is derived principally from such business and related activities;

5. any bank or insurance company; any savings and loan association, building and loan association, cooperative bank, homestead association or similar institution; any receiver, conservator, liquidator, liquidating agent or similar official or person thereof or therefor; or any common trust fund or similar fund maintained by a bank under the Common Trust Fund Act (Ill. Rev. Stat. 1983, ch. 16½, pars. 57 et seq.) exclusively for the collective investment and reinvestment of moneys contributed thereto by the bank in its capacity as a trustee, executor, administrator, conservator or guardian;

6. any holding company affiliate, as defined in the Federal Banking Act of 1933, which is under the supervision of the Board of Governors of the Federal Reserve System by reason of the fact that the holding company affiliate holds a general voting permit issued to it by such Board prior to January 1, 1940; and any holding company affiliate which is under the supervision of such Board by reason of the fact that it holds a general voting permit thereafter issued to it by the Board of Governors and which is determined by the Board to be primarily engaged, directly or indirectly, in the business of holding the stock of, and managing or controlling, banks, banking associations, savings banks or trust companies;

7. any person, substantially all of whose business is confined to making small loans, industrial banking or similar businesses;

8. any person who is not engaged in the business of issuing face-amount certificate contracts, and who is primarily engaged in one or more of the following businesses:

A) purchasing or otherwise acquiring notes, drafts, acceptances, open accounts receivable or other obligations representing part or all of the sales prices of merchandise, insurance or services;

B) making loans to manufacturers, wholesalers or retailers of, or to prospective purchasers of, specified merchandise, insurance or services; or

C) purchasing or otherwise acquiring mortgages or other liens on or interests in real estate;

9. any company primarily engaged, directly or through majority-owned subsidiaries, in one or more of the businesses described in paragraphs (b)(5), (7) and (8) of this Section or in one or more of such businesses (from which not less than 25% of such company's gross income during its last fiscal year was derived) together with an additional business or businesses other than investing, reinvesting, owning, holding or trading in securities;

10. any company 90% or more of the value of whose investment securities are represented by securities of a single issuer included within a class of persons enumerated in paragraph (b) (7), (8) or (9) of this Section;

11. any company subject to regulation under the Illinois Commerce Commission or any company whose entire outstanding capital stock is owned or controlled by such a company; provided that the assets of the controlled company consist substantially of securities issued by companies which are subject to regulation by the Illinois Commerce Commission;

12. any company with a registration in effect as a holding company under the Federal Public Utility Holding Company Act of 1935;

13. any person, substantially all of whose business consists of owning or holding oil, gas or other mineral royalties or leases, or fractional interests therein, or certificates of interest or participation in or investment contracts relative to the royalties, leases or fractional interests;

14. any company organized and operated exclusively for religious, educational, benevolent, fraternal, charitable or reformatory purposes, no part of the net earnings of which inures to the benefit of any private shareholder or individual;

15. any employees' stock bonus, pension or profit-sharing trust which meets the conditions of Section 401 of the Internal Revenue Code;

16. any voting trust, the assets of which consist exclusively of securities of a single issuer which is not an investment company;

17. any security holders' protective committee or similar issuer having outstanding, and issuing no securities other than, certificates of deposit and short-term paper.

c) As used in this Section, the term "employees' securities company" means any investment company or similar issuer, all of the outstanding securities of which (other than short-term paper) are beneficially owned

1. by the employees or persons on retainer of a single employer or of two or more employers each of which is an affiliated company of the other,

2. by former employees of the employer or employers,

3. by members of the immediate family of the employees, persons on retainer or former employees,

4. by any two or more of the foregoing classes of persons, or

5. by the employer or employers together with any one or more of the foregoing classes of persons.

14 Ill. Adm. Code 130.233 Definition of the Phrase "promissory Note or Draft, Bill of Exchange or Bankers' Acceptance" as Used in Section 3(l) of the Act

The phrase "promissory note or draft, bill of exchange or bankers' acceptance" as used in Section 3(L) of the Act shall mean a negotiable security which is eligible for discounting, pursuant to 12 U.S.C., Sections 24(7) and 85, by banks which are members of the Federal Reserve System, pursuant to 12 U.S.C., Sections 222, 282, 321 and 333.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.234 Definition, For Certain Purposes, of the Terms "Employee Security-Purchase Plan", "Employee Profit-Sharing Trust or Plan", "Employee Pension Trust or Plan", as Used in Section 3.N and Section 3.O of the Act (Repealed)

History

• Source: Repealed at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.235 Definition, For Certain Purposes, of the Terms "Employee Profit-Sharing Trust or Plan", "Employee Pension Trust or Plan", as Used in Section 3.O of the Act (Repealed)

History

• Source: Repealed at 21 Ill. Reg. 15892, effective December 1, 1997

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.241 Definition of the Term "institutional Investor" Under Sections 4c and 4d of the Act

The term institutional investor shall include, but not be limited to:

a) investment companies, universities, and other organizations whose primary purpose is to invest its own assets or those held in trust by it for others;

b) trust accounts and individual or group retirement accounts in which a bank, trust company, insurance company or savings and loan institution acts in a fiduciary capacity; and

c) foundations and endowment funds exempt from taxation under the Internal Revenue Code, a principal business function of which is to invest funds to produce income in order to carry out the purpose of the foundation or fund.

14 Ill. Adm. Code 130.242 Definition of the Term "financial Institution" Under Section 4.c of the Act

The term "financial institution" shall include, but not be limited to, a manager of investment accounts on behalf of other than natural persons, who, with affiliates, exercises sole investment discretion with respect to such accounts, and provided such accounts exceed 10 in number and have a fair market value of not less than $10,000,000 at the end of the calendar month preceding the month during which the transaction occurred for which the exemption is utilized.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.244 Definition of "issuer Required to File Reports Pursuant to the Provisions of Section 13 or Section 15(d) of the Federal 1934 Act" with Respect to Certain Foreign Private Issuers and "reports Required to Be Filed at Regular Intervals Pursuant to the Provisions of Section 13 or Section 15(d)", as Used in Section 4(f)(1) of the Act

a) "Issuer required to file reports pursuant to the provisions of Section 13 or Section 15(d) of the Federal 1934 Act", as defined in Section 130.200 of this Part, as used in Section 4(F)(1) of the Act shall be deemed to include any foreign private issuer with respect to which there is furnished to the United States Securities and Exchange Commission the information specified in 17 CFR 12g 3-2(b) as in effect on July 1, 1989 (no subsequent dates or editions), and "reports required to be filed at regular intervals pursuant to the provisions of Section 13 or Section 15(d)" shall be deemed to include the information furnished to the United States Securities and Exchange Commission pursuant to 17 CFR 12g 3-2(b). For purposes of this Section, the term "foreign private issuer" shall have the meaning ascribed thereto in 17 CFR 240.3b-4(c), as in effect on July 1, 1989 (no subsequent dates or editions).

b) The term "reports required to be filed at regular intervals pursuant to the provisions of Section 13 or Section 15(d)" as used in Section 4(F)(1)(c) of the Act shall not include any current report on Form 8-K required to be filed with the SEC; provided, however, that such term as used in Section 4(F)(1)(d) of the Act shall include any current report on Form 8-K which, to the actual knowledge of the dealer, has been filed under the Federal 1934 Act, as defined in Section 130.200 of this Part.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.245 Definition of the Terms "balance Sheet" and "income Statement", as Used in Section 4.f of the Act

a) The term "balance sheet" as it appears in Section 4.F of the Act and as it relates to unit investment trusts shall include a "statement of condition" or a "statement of securities owned" or a "statement of net assets" or a "statement of a bond portfolio".

b) The term "income statement" as it appears in Section 4.F of the Act and as it relates to unit investment trusts shall include a "statement of interest account earnings" or "statement of income account earnings".

14 Ill. Adm. Code 130.246 Definition of the Terms "residents of This State", "aggregate Sales Price" and "sales Made in Reliance Upon the Exemption" Under Section 4.g of the Act and "general Advertising or General Solicitation" Under Sections 4.g, 4.h, 4.m and 4.r of the Act

a) The term "sales made in reliance upon the exemption" as used in Section 4.G.(4) of the Act with respect to the Report of Sale required to be filed under that Section shall include only those sales made to residents of this State in reliance on the exemption.

b) The term "residents of this State" shall mean persons having their principal place of residence or domicile in this State.

c) The term "aggregate sales price" shall mean the sum of all cash, services, property, notes, cancellation of debt, or other consideration received by an issuer for issuance of its securities. Where securities are being offered for both cash and non-cash consideration, the aggregate sales price shall be based on the price at which the securities are offered for cash. If securities are not offered for cash, the aggregate offering price shall be based on the value of the consideration as established by bona fide sales of that consideration made within a reasonable time, or in the absence of sales, on the fair value as determined by an accepted standard.

d) The terms "general advertising" or "general solicitation" shall include but not be limited to:

1. any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio or any seminar or meeting where attendees have been invited by any of the foregoing;

2. any indiscriminate contact by mail, telephone, or similar communicative process, unless otherwise shown by the particular facts.

e) For purposes of Section 4.H and 4.R of the Act, the terms "general advertising" or "general solicitation" shall not include the transmitting or sending of any announcement, offering circular, prospectus or other communication that is delivered through an electronic database that is restricted to persons to whom an offer, sale or issuance of a security would be exempt pursuant to Section 4.H or 4.R of the Act.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.247 Definition of the Term "public" as Used in Section 4(g)(4) of the Act

The term "public" as used in Section 4(G)(4) of the Act shall not include:

a) A purchaser of the securities named in the Report of Sale, so long as the information disclosed is limited to the information in such Report, if any, concerning the sale of securities to the person requesting the information;

b) The issuer, controlling person or dealer who filed the Report of Sale with respect to which information is disclosed, or on whose behalf such Report of Sale was filed with the Secretary;

c) The agent, representative or attorney of a person referred to in subsection (a) or (b) of this Section, provided that such agent, representative or attorney submits written authorization from such person authorizing the release of such information with respect to such person;

d) Any state, federal or other governmental agency, or any self-regulatory organization registered under the Federal 1934 Act or Federal 1936 Act, as defined in Section 130.200 of this Part, provided the following conditions are satisfied:

1. The party seeking the information submits a written request therefor to the Securities Department;

2. The written request contains a representation that the information has been requested for purposes of gathering information in connection with an investigation being conducted by the respective governmental or self-regulatory authority; and

3. The written request contains an undertaking on behalf of the respective governmental authority or self-regulatory organization which provides that any information or documents tendered in response to the request shall not be disclosed to any person employed outside of the government or self-regulating organization conducting the investigation without prior written approval of the Securities Director, or his or her designee unless so ordered by a court of competent jurisdiction.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.248 Definition of the Terms "Offers for Sale" and "Solicitations of Offers to Buy", as Used in Section 4.L of the Act

a) Sending or giving to any person, before an application for registration becomes effective, a copy of the preliminary prospectus filed as a part of the application for registration is construed an "offer for sale" or a "solicitation of an offer to buy" as used in Section 4.L of the Act provided:

1. the preliminary prospectus contains substantially the information required by the Federal 1933 Act and the Act to be included in a prospectus for registered securities, or contains substantially that information except for the omission of information with respect to the offering price, underwriting discounts or commissions, discounts or commissions to dealers, amount of proceeds, conversion rates, call prices, or other matters dependent upon the offering price, and

2. the outside front cover page of every copy of the preliminary prospectus bears the caption "Preliminary Prospectus", the date of its issuance and the statement required by paragraph (c)(8) of Item 501 of Regulations S-K, 17 C.F.R. Section 229.501, as in effect on July 1, 1984 under the Federal 1933 Act (no incorporation by reference in this Part subject to Section 5-75 of the Illinois Administrative Procedure Act, Ill. Rev. Stat. 1991, ch. 127, par. 1005-75 to include any later amendments or editions) printed in red ink in type as large as that used generally in the body thereof.

b) This Section shall not apply to the sending or giving of any preliminary prospectus if, at the time the preliminary prospectus is sent or given to any person, the application for registration is the subject of pending proceedings under Section 11.E of the Act or of an order of suspension, denial or prohibition entered under such Section.

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.250 Definition, for Certain Purposes, of the Terms "commissions, Remuneration or Discounts", as Used in Section 4 and Section 5 of the Act

a) The terms "commissions, remuneration or discounts" as used in Section 4 and Section 5 of the Act shall include:

1. all commissions or discounts paid or to be paid, directly or indirectly, by the issuer or an affiliate of the issuer to any person including but not limited to underwriters or dealers (acting either as agent or principal), in respect of the sale of the security to be offered, and

2. all cash, securities, contracts, or anything else of value paid, to be set aside, disposed of, or understandings with or for the benefit of any such underwriter or dealer, made in connection with the sale of such security.

b) Whenever the issuer, the parent of the issuer, or a controlling person in respect of the issuer has, at or about the date or proposed date of an offering or proposed offering of securities of such issuer, issued, sold, transferred, or assigned to an underwriter or underwriters of the securities, securities of the same class as those offered or proposed to be offered at a price which is less than the public offering price or proposed public offering price of the securities, the difference between the aggregate price at which the securities were acquired by the underwriters and the aggregate value of the securities at the public offering price or proposed public offering price shall be presumed to be commissions, remuneration or discounts paid in connection with the underwriting of the securities offered or proposed to be offered.

c) Whenever securities are sold to or acquired by an underwriter at a fixed or determinable price under an agreement whereby an offering of the securities is authorized to be made first through options, warrants or similar transferable rights to existing security holders of the issuer and whereby the underwriter agrees to distribute any portion of the offering not subscribed by said existing security holders, at a price or prices to be determined by the underwriter or in accordance with a formula, the difference between the aggregate proceeds of sale of the securities by the underwriter and the aggregate cost of the securities to the underwriter, constitutes commissions, remuneration or discounts paid in connection with the underwriting of the securities offered or proposed to be offered.

d) As used in this Section, the term "aggregate proceeds of sale of such securities" includes:

1. The gross proceeds of sale of securities remaining unsold at the end of a period during which the securities were initially offered to security holders, whether by warrants, options or similar transferable rights, acquired by the underwriter at the end of the period and sold by the underwriter during the term of existence of the underwriting and sales agreements pertaining to the securities;

2. The gross proceeds of sale of securities acquired by the underwriter by the purchase and exercise of any warrants or rights pertaining to the securities and sold by the underwriter either prior to or after the expiration date of the warrants or rights, or during the term of existence of the underwriting and sales agreements pertaining to the securities.

e) As used in this Section, the term "aggregate cost of the securities to the underwriter" includes any sums paid by the underwriter to the issuer as the purchase price or other cost of securities acquired pursuant to the exercise of any rights, but does not include transfer taxes, legal fees, registration fees, accountants' fees, printing expenses, overhead or any expenses incurred in connection with the acquisition and distribution of the securities offered or proposed to be offered.

14 Ill. Adm. Code 130.251 Definition of the Term "maximum Aggregate Price", as Used in Section 5 of the Act

Except as otherwise provided in Section 5.C.(2) of the Act, the term "maximum aggregate price" as used in Section 5 of the Act means the applicant's bona fide estimate thereof, which shall be calculated in the manner provided in Rule 457 under the Federal 1933 Act, 17 C.F.R. Section 230.457. Such calculation shall be made as of the time specified in Section 5.C.(1), 5.C.(2) or 5.E of the Act, as applicable.

14 Ill. Adm. Code 130.270 Definition of Certain Persons Not Considered to Be Dealers Under Section 2.7 of the Act

a) A futures commission merchant registered with the CFTC is not a dealer solely because the futures commission merchant effects transactions in government securities that are defined in subsection (b) as incidental to that person's futures-related business.

b) Transactions that Qualify as Incidental under Subsection (a)

1. The futures commission merchant:

A) maintains in a regulated account as set forth in 17 CFR 1.20 (May 31, 2011) all funds and securities associated with the government securities transactions (except funds and securities associated with transactions under subsection (b)(2)(A)(i)); and

B) does not advertise that it is in the business of effecting transactions in government securities otherwise than in connection with futures or options on futures trading or the investment of margin or excess funds related to trading or the trading of any other instrument subject to CFTC jurisdiction.

2. The following transactions in government securities are incidental to the futures-related business of a futures commission merchant:

A) Transactions as agent for a customer:

i) to effect delivery pursuant to a futures contract; or

ii) for risk reduction or arbitrage of existing or contemporaneously created positions in futures or options on futures;

B) Transactions as agent for a customer for investment of margin and excess funds related to futures or options on futures trading or the trading of other instruments subject to CFTC jurisdiction, provided further that:

i) the transactions involve Treasury securities with a maturity of less than 93 days at the time of the transaction;

ii) the transactions generate no monetary profit for the futures commission merchant in excess of the costs of executing the transactions; or

iii) the transactions are unsolicited, and commissions and other income generated on transactions pursuant to this subsection (b)(2)(B)(iii) (including transactional fees paid by the futures commission merchant and charged to its customer) do not exceed 2% of the futures commission merchant's total commission revenues;

C) Exchange of futures for physicals transactions as agent for or as principal with a customer; and

D) Any transaction or transactions that the SEC exempts, either unconditionally or on specified terms and conditions, as incidental to the futures-related business of a specified futures commission merchant, a specified category of futures commission merchants, or futures commission merchants generally.

c) A person registered with the CFTC, a contract market designated by the CFTC under section 5 of the Federal 1936 Act, as defined in Section 130.200, the a contract market's affiliated clearing organization, or any floor trader on the a contract market (hereinafter referred to collectively as a "CFTC-regulated person") is not a dealer solely because the person effects transactions for its own account in government securities that are defined in subsection (d) as incidental to that person's futures-related business.

d) Provided that a CFTC-regulated person does not advertise or otherwise hold itself out as a dealer except as permitted by 17 CFR 240.3a43-1 (May 31, 2011), the following transactions in government securities for its own account are incidental to the futures-related business of a CFTC-regulated person:

1. Transactions to effect delivery of a government security pursuant to a futures contract;

2. Exchange of futures for transactions with:

A) a dealer that has registered with the SEC or filed notice pursuant to section 15C(a) of the Federal 1934 Act, as defined in Section 130.200 of this Part; or

B) a CFTC-regulated person.

3. Transactions (including repurchase agreements and reverse repurchase agreements) involving segregated customer funds and securities or funds and securities held by a clearing organization with:

A) a dealer that has registered with the SEC or filed notice pursuant to section 15C(a) of the Federal 1934 Act, as defined in Section 130.200 of this Part; or

B) a bank.

4. Transactions for risk reduction or arbitrage of existing or contemporaneously created positions in futures or options on futures with:

A) a dealer that has registered with the SEC or filed notice pursuant to section 15C(a) of the Federal 1934 Act, as defined in Section 130.200 of this Part; or

B) a CFTC-regulated person.

5. Repurchase and reverse repurchase agreement transactions between a futures commission merchant acting in a proprietary capacity and another CFTC-regulated person action in a proprietary capacity and contemporaneous offsetting transactions between such a futures commission merchant with:

A) a dealer that has registered with the SEC or filed notice pursuant to section 15C(a) of the Federal 1934 Act, as defined in Section 130.200 of this Part;

B) a bank; or

C) a CFTC-regulated person.

6. Any transaction or transactions that the SEC exempts, either unconditionally or on specified terms and conditions, as incidental to the futures related business of a specified CFTC-regulated person, a specified category of CFTC-regulated persons, or CFTC-regulated persons generally.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.280 Definition of the Term "branch Office" of a Registered Dealer, as Used in Section 8 of the Act

a) A "branch office" is any location where one or more associated persons of a registered dealer regularly conduct the business of effecting any transactions in, or inducing or attempting to induce the purchase or sale of, any security, or is held out as such, excluding:

1. Any location that is established solely for customer service or back-office type functions where no sales activities are conducted and that is not held out to the public as a branch office;

2. Any location that is the associated person's primary residence; provided that:

A) Only one associated person or multiple associated persons who reside at that location and are members of the same immediate family, conduct business at the location;

B) The location is not held out to the public as an office and the associated person does not meet with customers at the location;

C) Neither customer funds nor securities are handled at that location;

D) The associated person is assigned to a designated branch office, and that designated branch office is reflected on all business cards, stationery, advertisements and other communications to the public by the associated person;

E) The associated person's correspondence and communications with the public are subject to the firm's supervision in accordance with FINRA Rule 3010;

F) Electronic communications are made through the registered dealer's electronic system;

G) All orders are entered through the designated branch office or an electronic system established by the registered dealer that is reviewable at the branch office;

H) Written supervisory procedures pertaining to supervision of sales activities conducted at the residence are maintained by the registered dealer; and

I) A list of the residence locations is maintained by the registered dealer;

3. Any location, other than a primary residence, that is used for securities business for less than 30 business days in any one calendar year, provided the registered dealer complies with the provisions of subsections (a)(2)(A) through (I);

4. Any office of convenience, where associated persons occasionally and exclusively by appointment meet with customers, that is not held out to the public as an office. If the office of convenience is located on bank premises, signage necessary to comply with applicable federal and State laws, rules and regulations and applicable rules and regulations of the New York Stock Exchange (NYSE), other self-regulatory organizations, and securities and banking regulations may be displayed and shall not be deemed "holding out" for purposes of this Section;

5. Any location that is used primarily to engage in non-securities activities and from which the associated persons effects no more than 25 securities transactions in any one calendar year; provided that any advertisement or sales literature identifying the location also sets forth the address and telephone number of the location from which the associated persons conducting business at the non-branch locations are directly supervised;

6. The floor of a registered national securities exchange where a registered dealer conducts a direct access business with public customers; or

7. A temporary location established in response to the implementation of a business continuity plan.

b) The term "business day", as used in this Section, shall not include any partial business day provided that the associated person spends at least four hours on the business day at that person's designated branch office during the hours that the office is normally open for business.

History

• Source: Amended at 49 Ill. Reg. 4061, effective March 19, 2025

14 Ill. Adm. Code 130.281 Definition of the Term "branch Office" of a Registered Investment Adviser, as Used in Section 8 of the Act

a) "Branch office", as used in Section 8 of the Act, shall mean any office, residence or other place or location in this State where the registered investment adviser or its investment adviser representatives provide investment advisory services, solicit, meet with, or otherwise communicate with clients, or any other location that is held out to the general public as a location at which the registered investment adviser or its investment adviser representatives provide investment advisory services, solicit, meet with, or otherwise communicate with clients.

b) The principal office located in this State of the registered investment adviser, if any, shall not be considered a branch office.

History

• Source: Amended at 25 Ill. Reg. 8817, effective July 6, 2001

14 Ill. Adm. Code 130.282 Definition, for Certain Purposes, of the Term "officers", as Used in Section 2.9 and Section 8.b.(6) of the Act

The term "officers" as used in Section 2.9 of the Act means the president, any vice president in charge of a principal business unit, division or function, the secretary, and the treasurer or principal financial officer, comptroller or principal accounting officer. The term "officers" as used in Section 8.B.(6) of the Act means the president, any vice president in charge of a principal business unit, division or function, the secretary, the treasurer, any principal financial officer, comptroller or principal accounting officer, and any other officer who performs a principal policy making function.

14 Ill. Adm. Code 130.285 Definition, for Certain Purposes, of the Terms "inequitable", "tend to Work a Fraud or Deceit", "inequitable Practice in the Sale of Securities", and "fraudulent Business Practices", as Used in Section 8 and Section 11 of the Act

a) The failure of any dealer or salesperson to comply with Sections 130.810 130.821, 130.824, 130.825, 130.827, 130.850, 130.851 and 130.855 of this Part shall constitute an inequitable practice in the sale of securities and a fraudulent business practice.

b) The failure of any investment adviser or investment adviser representative to comply with Sections 130.840, 130.841, 130.844, 130.845, 130.852, 130.853, 130.854 and 130.855 of this Part shall constitute an inequitable practice in the sale of securities and a fraudulent business practice.

History

• Source: Amended at 33 Ill. Reg. 12817, effective September 8, 2009

14 Ill. Adm. Code 130.291 Definition of the Terms "fraudulent" and "work or Tend to Work a Fraud or Deceit" as Used in Sections 11.e and 12.f of the Act for Purposes of the Payment of Completion Costs in Connection with the Offer or Sale of Securities Involving an Oil, Gas or Other Mineral Lease, Right or Royalty

a) In connection with an offer or sale of a security involving an oil, gas or other mineral lease, right or royalty, the terms "fraudulent" and "work or tend to work a fraud or deceit" shall include activities such as the failure to disclose to the offeree, prior to payment of any completion costs, all material geological and other material information regarding the oil, gas or other mineral lease, right or royalty, including, without limitation, any of the following:

1. whether an issuer (or any controlling person of or dealer for an issuer, if such person or dealer has any share in such lease, right or royalty) has paid, and if not, whether such issuer (or such controlling person or dealer) is under an obligation to pay, a proportionate share of the completion costs, when completion costs have been or are to be included in the cost to the purchaser;

2. whether any parts or equipment to be used for completion are being sold or otherwise furnished by or for the benefit of an issuer (or any affiliate or controlling person of or dealer for an issuer) and, if so, whether and the extent to which the sales price or other charge to the purchaser for those parts or equipment exceeds actual costs and the amount which would have been charged by unaffiliated parties selling or furnishing parts or equipment in arms-length transactions under comparable circumstances;

3. whether upon resale of parts and equipment, the purchaser will receive his or her proportionate share of the proceeds of resale; and

4. whether the purchaser will be charged an amount for completion costs that exceeds his or her proportionate share of the actual costs of completion incurred by the issuer.

b) For purposes of this Section, completion costs shall include, but not be limited to, the cost of all parts, equipment, labor and service to place an oil, gas or other mineral lease, right or royalty into production after drilling or other operation to reach the mineral deposit has been terminated.

c) Disclosure of the information required by paragraph (a) above shall not affect the applicability of any limitation contained in the Act or this Part, including but not limited to Section 4.G.(1)(c) of the Act, upon the amount of commission, discount or other remuneration which may be paid or given, directly or indirectly, for or on account of the sale of securities.

14 Ill. Adm. Code 130.293 Issuers of Covered Securities Required to File Notifications and Pay Fees and the Refusal to File Notifications or Pay Fees

a) Except as otherwise provided in this Section, each issuer of covered securities shall annually file with the Secretary of State a notification and fee as follows:

1. Issuers of securities being offered pursuant to Regulation D, section 506 of the Federal 1933 Act, shall file, no later than 15 days after the first sale of the federally covered securities to residents of this State, Form D together with a $100 fee.

2. Issuers of shelf offerings shall file page one of Form U-1, together with a fee of 1/20th of 1% of the maximum aggregate offering price, but in no event shall the fee be less than $500 nor more than $6,000.

3. A series issuer of securities shall file page one of Form U-1, together with a fee of 1/20th of 1% of the maximum aggregate offering price, but in no event shall the fee be less than $500 nor more than $3,000.

4. Issuers of face amount certificate contracts shall file page one of Form U-1, together with a fee of $1,000.

5. Issuers of open-end investment fund shares shall file page one of Form U-1 or Form 7G, together with a fee of $1,000 plus $100 for each series, class or portfolio.

6. All other issuers of covered securities that are required to file a notification and pay fees to the Secretary of State shall file page one of Form U-1, together with a fee of 1/20th of 1% of the maximum aggregate offering price, but in no event shall the fee be less than $500 nor more than $2,500.

b) In lieu of page one of Form U-1 or Form 7G, the Secretary of State may permit the use of any other uniform form that he or she has adopted by order or this Section.

c) In the event the notification or the full amount of fees required by this Section is not filed with or paid to the Secretary of State, the Secretary of State shall notify the issuer of the deficiency in writing, or by facsimile or electronic transmission (provided that the Securities Department can demonstrate in the normal course of its business that the notice was delivered or transmitted to and received by the issuer or his, her or its designee). In the event the issuer fails to remedy the deficiency within ten business days after receiving notice of the deficiency from the Secretary of State, the Secretary of State may deem that failure to be a refusal and may, until October 11, 1999, require the issuer to register its securities pursuant to subsection A or B of Section 5, 6 or 7 of the Act, as the case may be.

d) The provisions of this Section shall not apply to any security listed or authorized for listing on the New York Stock Exchange or the American Stock Exchange, or that is listed on the National Market System of the Nasdaq Stock Market, or any successor to these entities, or listed or authorized for listing on a national securities exchange, or tier or segment of an exchange, that has listing standards that the federal SEC by rule, on its own initiative or on the basis of petition determines are substantially similar to the listing standards applicable to securities described in this Section, or is a security of the same issuer that is equal in seniority or that is a senior security.

History

• Source: Amended at 33 Ill. Reg. 12817, effective September 8, 2009

14 Ill. Adm. Code 130.370 Automated Quotation System Deemed to Have Substantially Equivalent Standards for Designation as Required By One or More Exchanges Set Forth in Section 3(G) of the Act (Repealed)

History

• Source: Repealed at 20 Ill. Reg. 14185, effective October 21, 1996

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.420 Uniform Limited Offering Exemption Pursuant to Section 4.d of the Act

a) Any offer or sale of securities offered or sold in compliance with the Federal 1933 Act, Regulation D, Rules 230.501-230.503 and 230.505 (17 CFR 230.501-230.503 and 230.505 (May 31, 2011)) and that satisfies the following further conditions and limitations is an exempt transaction.

1. No exemption under this Section shall be available for the securities of any issuer if any of the parties described in the Federal 1933 Act, Regulation A, Rule 230.262 Sections (a), (b) and (c) (17 CFR 230.262(a), (b) and (c) (May 31, 2011)).

A) has filed a registration statement that is subject to a currently effective registration stop order entered pursuant to any state's securities law or the SEC within five years prior to the filing of the notice required under this exemption as required by subsection (b);

B) has been convicted within five years prior to the filing of the notice required under this exemption of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including but not limited to forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

C) is currently subject to SEC or any state administrative enforcement order or judgment entered by that state's securities administrator or the SEC within five years prior to the filing of the notice required under this exemption or is subject to SEC or any state's administrative enforcement order or judgment in which fraud or deceit, including but not limited to making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within five years prior to the filing of the notice required under this exemption;

D) is subject to SEC or any state's administrative enforcement order or judgment that prohibits, denies or revokes the use of any exemption from registration in connection with the offer, purchase or sale of securities;

E) is currently subject to any order, judgment, or decree of any court of competent jurisdiction temporarily or preliminarily restraining or enjoining, or is subject to any order, judgment or decree of any court of competent jurisdiction permanently restraining or enjoining, the party from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within five years prior to the filing of the notice required under this exemption;

2. the prohibitions of subsections (a)(1)(A) through (C) and (E) of this Section shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against such person or if the dealer employing such party is licensed or registered in this State and the Form BD filed with the Securities Department discloses the order, conviction, judgment or decree relating to such person; no person disqualified under this subsection (a)(2) may act in a capacity other than that for which the person is licensed or registered; and

3. any disqualification caused by this Section is automatically waived if the SEC or state securities administrator or agency of the state that created the basis for disqualification determines upon a showing of good cause that it is not necessary under the circumstances that the exemption be denied. It is a defense to a violation of this subsection (a) if the issuer sustains the burden of proof to establish that the person did not know and in the exercise of reasonable care could not have known that a disqualification under this subsection (a) existed.

b) The issuer shall file with the Securities Department a notice on Form D (17 CFR 239.500 (May 31, 2011)):

1. the notice shall be filed no later than 15 days after the receipt of consideration or the delivery of a subscription agreement by an investor in this State that results from an offer being made in reliance upon this exemption and at such other times and in the form required under Regulation D, Rule 230.503 to be filed with the SEC;

2. the notice shall contain an undertaking by the issuer to furnish to the Securities Department, upon written request, the information furnished by the issuer to offerees who are offered or sold a security that is not exempt under any provision of Section 3 of the Act or who are offered or sold a security in a transaction that is not exempt under any provision of Section 4 of the Act;

3. every person filing the initial notice provided for in subsection (b)(1) of this Section shall pay the filing fee pursuant to Section 130.110.

c) In all sales to nonaccredited investors in this State, the issuer and any person acting on its behalf shall have reasonable grounds to believe, and after making reasonable inquiry shall believe, that one of the following conditions is satisfied:

1. the investment is suitable for the purchaser upon the basis of the facts, if any, disclosed by the purchaser as to his or her other security holdings and as to his or her financial situation and needs; for the purpose of this condition only, it may be presumed that if the investment does not exceed 10% of the investor's net worth, it is suitable; and

2. the purchaser, either alone or with his or her purchaser representatives, has such knowledge and experience in financial and business matters that they are capable of evaluating the merits and risk of the prospective investment.

d) A failure to comply with a term, condition or requirement of this exemption will not result in loss of the exemption from the requirements of Section 4.D of the Act for any offer or sale to a particular individual or entity, if the person relying on the exemption shows:

1. the failure to comply did not pertain to a term, condition or requirement directly intended to protect that particular individual or entity; or

2. the failure to comply was insignificant with respect to the offering as a whole; or

3. a good faith and reasonable attempt was made to comply with all applicable terms, conditions and requirements of the exemption.

e) The exemption authorized by this Section shall be known and may be cited as the "Uniform Limited Offering Exemption."

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.436 Procedures for Applying for Trading Authorization Pursuant to Section 4(f)(2) of the Act

a) Any registered dealer who wishes to apply for trading authorization pursuant to Section 4(F)(2) of the Act shall apply on a form and in the manner prescribed by the Secretary.

b) The application shall consist of the following:

1. Illinois Form 4(F)(2), Application for Secondary Trading Authorization;

2. The required non-refundable filing fee as required by Section 130.110;

3. Audited financial statements of the issuer covering its last three fiscal years or such lesser period, but not less than one year, during which the issuer was incorporated or otherwise organized;

4. Illinois Form 4F2-K (otherwise known as the annual report); and

5. Any other information or documents that the applicant may file as a part of the application for secondary trading authorization.

c) The application form shall contain the following information:

1. The name, address and telephone number of the issuer's principal office;

2. The name, address and telephone number of the correspondent to whom notices and communications regarding the application should be sent;

3. The name and address of the registered dealer applicant;

4. A description of the securities for which secondary trading authorization is sought including the current price and number of units or shares outstanding;

5. The year the business was organized, the form of the organization, the state or other jurisdiction where it was organized and affiliation with other business entities;

6. A general description of the issuer's business including the nature and general competitive conditions in the industry;

7. A description of the issuer's property, including the location and general character of the important physical properties or assets of the issuer as referenced in 17 CFR 229.102 (Item 102) (May 31, 2011);

8. A description of any pending or contemplated legal proceedings, other than routine litigation incidental to business, to which the issuer or any of its subsidiaries are a party or of which any property is the subject as referenced in 17 CFR 229.103 (Item 103) (May 31, 2011);

9. A list of the names, addresses and ages of all directors and officers of the issuer including the position held and their business experience and background;

10. The total gross remuneration of all directors and officers of the issuer;

11. A list of the title of class, the name of the beneficial owner, the amount and nature of beneficial ownership and the percent of class for all directors and officers and any person owning more than five percent of any class of the issuer's securities;

12. a description of any transaction or proposed transaction since the issuer's last fiscal year, in which the issuer and any director, officer or beneficial owner of five percent or more of any class of the issuer's securities involves an amount exceeding $60,000;

13. A brief description of the securities to be authorized for secondary trading highlighting materially important provisions with respect to the securities and a description of all other securities issued and outstanding by the issuer including the rights and incidents thereof as referenced in 17 CFR 229.202 (Item 202) (May 31, 2011);

14. The total number of shares or units issued and outstanding, as of the current date, to be authorized for secondary trading;

15. The total number of shareholders and the number of shareholders in Illinois, as well as the number of securities held as of the current date;

16. The most recent bid and asked price of the securities to be authorized for secondary trading, if any, and the date of the bid and asked price;

17. A copy of the Registration Statement or the offering circular, if any, filed under section 3, 4 or 6 of the Federal 1933 Act, as defined in Section 130.200 of this Part, along with the effective date of the Registration Statement or the date on which the offering commenced under an exemption together with the offering price, if any;

18. A description of how the securities were originally sold or issued including the name of each principal underwriter;

19. A list of the states or other jurisdictions in which the securities were sold, indicating whether the securities were registered or sold pursuant to an exemption in each state or jurisdiction;

20. A list of any other states or jurisdictions that have refused after notice and opportunity for hearing, by order or otherwise, to authorize the sale of the securities or have suspended or revoked the right to sell the securities, or any stop order, denial, order to show cause, suspension or revocation order, injunction or restraining order, or similar order entered or issued by any state or other regulatory authority or by any court, concerning the securities covered by the application including a copy of any orders as referenced in 17 CFR 229.103 (Item 103) (May 31, 2011);

21. A list of any states or other jurisdictions in which the securities are pending approval for secondary trading; and

22. A list of any states or other jurisdictions in which the securities are currently eligible for secondary trading.

d) The application shall be signed and notarized. By signing the application the applicant undertakes to file any information, documents and reports required by the Secretary and also represents that the application is made in good faith.

e) A written request for a waiver of any requirement of the form may be submitted to the Secretary as an exhibit to the application. The request shall state, in detail, the reason or reasons why the requirement should be waived.

f) Applications failing to meet the requirements of this Section shall be denied. The Department shall contact the applicant or correspondent in cases in which an application is deficient and afford the party an opportunity to remedy the deficiency.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.440 Procedures for Filing Reports of Sale Under Section 4.g of the Act

a) The issuer, controlling person, or dealer shall file with the Springfield or Chicago office of the Securities Department one copy of the Report of Sale on Illinois Form 4G or Form D executed by a person duly designated by the filing party, accompanied by the filing fee referred to below on or after the date of the first sale made to an Illinois resident in reliance upon Section 4.G of the Act, but no later than twelve months after the date of the first such sale.

b) The filing fee for each Report of Sale required under Section 4.G of the Act shall be in the amount specified in Section 130.110. The Report of Sale shall not be deemed to be filed until the proper filing fee is delivered to the Securities Department.

c) The Securities Department will review a Report of Sale submitted under Section 4.G of the Act and notify the filing party of any deficiencies. A Report of Sale shall not be deemed to be filed unless the information required by Section 130.442 of this Part is included therein without any material deficiency.

d) By filing a Report of Sale, the filing party attests that the sales covered by the Report of Sale have not and will not be made by means of general advertising or general solicitation in this State; the sales of such securities have not and will not be made, commissions, discounts or other remuneration have not and will not be paid, and prospectuses have not and will not be delivered, in each case in excess of those permitted by Section 4.G of the Act; and the filing party will provide a copy of the prospectus, offering circular or other disclosure document, as the case may be, or the name and address of each Illinois purchaser to the Securities Department within 72 hours after written request (which may be made by electronic, facsimile or other similar transmission or delivery).

e) The penalty for failure to file timely shall be in the amount specified in Section 130.110 of this Part.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.441 Calculation of Number of Persons Under Section 4.g or 4.m of the Act

a) For purposes of Section 4.G and 4.M of the Act, any sale or issuance of securities to, or subscription by, two or more persons as joint tenants with right of survivorship shall be deemed to be a sale or issuance to one purchaser or subscriber, as the case may be.

b) The sale of securities under Section 4.G or subscription to purchase securities or issuance of securities under Section 4.M of the Act to any relative, spouse or relative of the spouse of a purchaser or subscriber who has the same principal residence or domicile as the purchaser or subscriber shall not be deemed to be a sale to an additional purchaser or subscriber.

c) Each person shall be counted as one purchaser or subscriber. If, however, a person has been organized for the specific purpose of acquiring the securities offered, then each beneficial owner of equity securities or equity interests in the entity (other than a person as to whom the offer and sale of the securities would have been an exempt transaction under another subsection of Section 4 of the Act, had such securities been offered and sold to such person directly) shall be counted as a separate purchaser or subscriber for the purposes of Section 4.G or 4.M of the Act except to the extent provided in subsections (a) and (b) of this Section.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.442 Report of Sale of Securities Pursuant to Section 4.g of the Act

The Report of Sale of securities sold in this State in reliance upon Section 4.G of the Act shall contain, without limitation, the following:

a) the name, business address and telephone number of the issuer, and as applicable, of the controlling person and dealer;

b) a description of the securities sold to residents of this State; and

c) the date of the initial sale of securities to residents of this State for this reporting period;

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.490 Procedures for Filing Reports of Sale Under Section 4.p of the Act

a)

1. The issuer shall file with the Springfield office of the Securities Department one copy of the Report on Form 4P manually signed by a person duly designated by the filing party:

A) no later than 6 months after the first sale of securities made to an Illinois resident in reliance upon Section 4.P of the Act, or

B) every 6 months after the first sale of securities made to an Illinois resident in reliance upon Section 4.P of the Act until all such sales have been concluded; and

C) no later than 30 days after the date on which the issuer, controlling person or dealer, as the case may be, determines that no further sales of securities will be made to Illinois residents in reliance upon Section 4.P of the Act; provided that such date shall be no later than the date of the last sale of securities pursuant to that offering of which the securities being offered in reliance upon Section 4.P of the Act are a part.

2. Notwithstanding the foregoing, if the sales have been concluded within any 6 month period described in subparagraph (A) or (B) of paragraph (1) and the Report of Sale is filed no later than the end of that period but within the thirty day period described in subparagraph (C) of paragraph (1), then only one Report of Sale need be filed for that period.

b) The filing fee for each Report of Sale required under Section 4.P of the Act shall be 1/10th of 1% of the aggregate dollar amount reported therein, but not less than the minimum nor more than the maximum fee specified in Section 130.110 of this Part. The Report of Sale shall not be deemed to be filed until the proper filing fee therefore is submitted to the Springfield office of the Securities Department.

c) The Secretary of State will review a Report of Sale submitted under Section 4.P of the Act and notify the filing party of any deficiencies. A Report of Sale shall not be deemed to be filed unless the information required by Section 4.P of the Act is included therein without any material deficiency.

d) The Secretary of State may impose, in such cases where appropriate, a penalty for failure to file any Report required under Section 4.P of the Act in a timely manner. The penalty for the first failure to file timely shall be an amount equal to the filing fee for that Report of Sale. The penalty for any subsequent failure to file timely shall be $500.00.

14 Ill. Adm. Code 130.491 Report of Sale of Securities Pursuant to Section 4(p) of the Act

The Report of Sale of securities sold in reliance upon Section 4(P) of the Act shall contain, but not be limited to:

a) the name, address and telephone number of the issuer, and as applicable, of the controlling person and dealer;

b) a description of the securities sold to residents of this State;

c) the total amount of the securities sold to residents of this State in reliance upon Section 4(P) of the Act for the period covered by the Report of Sale and to the date of the Report of Sale;

d) for the sales covered by the Report of Sale, the names and addresses of the purchasers who report to the issuer that they are residents of this State and the dates on which the sales were made;

e) a representation that no commission, discount or other remuneration was paid or given, directly or indirectly, for or on account of the sales covered by the Report of Sale:

f) a representation that as of the date of the Report of Sale;

1. no person owned of record or beneficially securities of the issuer having a value in excess of the lesser of $5,000 or 4% of the equity capitalization of the issuer;

2. the population of the municipality within which the area that is to be redeveloped is located did not exceed 50,000 as of the last United States Census;

3. all officers and directors of the issuer had been residents of such municipality for not less than 3 years immediately preceding the effectiveness of the offering sheet (i.e. disclosure statement) descriptive of the securities covered by the Report of Sale; and

4. no event had occurred which rendered the offering sheet then on file with the Securities Department, including any amendments thereto, misleading, or as the result of which such offering sheet, as amended, omitted to state a material fact necessary to make the statements in the offering sheet, in light of the circumstances, not misleading. Misleading statements would include, but not be limited to, material changes in financial condition, litigation having been filed against the issuer claiming more than 10% of the assets of the issuer, changes in management, and changes in the number of shares outstanding.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.492 Exemption from Registration for Certain Canadian Broker-Dealers and Agents and for Transactions Effected by Certain Canadian Broker-Dealers

a) A broker-dealer who is a resident of Canada and who has no office or other physical presence in this State is exempted from the broker-dealer registration requirements in Section 8 of the Act, provided the broker-dealer:

1. is registered with or is a member of a self-regulatory organization in Canada, stock exchange in Canada or the Bureau des Services Financiers;

2. maintains in good standing its provincial or territorial registration and its registration with or membership in a self-regulatory organization in Canada, stock exchange in Canada or the Bureau des Services Financiers; and

3. effects or attempts to effect transactions in securities only:

A) with or for a person from Canada who is temporarily present in this State with whom the Canadian person had a bona fide business-client relationship before the person entered this State;

B) with or for a person present in this State whose transactions are in a Canadian self-directed tax advantaged retirement account of which the person is the holder or contributor.

b) Salesperson registration under Section 8 of the Act is not required if the salesperson:

1. represents a Canadian broker-dealer acting in accordance with the provisions of subsection (a) of this Section; and

2. is registered and maintains in good standing the agent’s provincial or territorial registration.

c) An offer or sale of a security is exempt from the securities registration requirements of Sections 5, 6, and 7 of the Act if the offer or sale is effected by a Canadian broker-dealer acting in accordance with the provisions of subsection (a) of this Section.

History

• Source: Added at 27 Ill. Reg. 9490, effective June 9, 2003

14 Ill. Adm. Code 130.493 Crowdfunding Pursuant to Section 4.t of the Act - Issuers

a) Duties of the Issuer

For purposes of this Section, "investor" means a purchaser or prospective purchaser, and "internet portal" means a registered internet portal as defined in Section 8d(b) of the Act and required by Section 4.T of the Act and Section 130.494 of this Part.

1. Filing Requirements and Forms

A) Notice Filing. The issuer shall file a notice on Form CF (Crowdfunding Issuer Form) with the Secretary of State not less than 15 days before the earlier of the first offer or sale of securities or the use of any general solicitation with respect to the offering. The Form CF must include the offering statement and all required information and documentation specified on the form.

B) Annual Renewal. The notice filed pursuant to this subsection (a)(1) shall be effective for up to 12 months, subject to annual renewal. The annual renewal shall be filed on Form CF within 30 days before the expiration of the original filing, and shall include a sales report indicating the number of investors in the offering and the number of, and value of, securities sold.

C) Termination of Offering. The issuer shall file Form CF-T with the Secretary of State, and provide a copy to the relevant internet portal, no later than 15 days after the termination of the offering. Termination shall include those offering that are completed for purposes of this exemption.

D) Filing Fees. The filing of Form CF, including the filing of a renewal Form CF and an amended Form CF, shall include the payment of the filing fee of $100 required by Section 18.1 of the Act.

E) Review of Filing. If, upon review of the Form CF, the Secretary of State determines that the form is incomplete, or that the offering should not be permitted, the Secretary of State shall notify the issuer (and the broker, dealer or internet portal if applicable) on or before the initial commencement date of the offering. Absent that notification, the offering is deemed permitted. Nothing in this Part limits the authority of the Secretary of State to investigate, issue orders or enforce any provisions of the Act or rules thereunder with regard to the filing of Form CF and the subject offering.

2. Escrow Agreements and Accounts

A) The issuer shall enter into an escrow agreement with a qualified escrowee, providing that, at a minimum:

i) all funds to be received in connection with the proposed offering shall be delivered to, and held by, the qualified escrowee pursuant to the terms of the escrow agreement; and

ii) the issuer shall not have access to the escrow funds, or any portion of those funds, until the aggregate funds received by the qualified escrowee in connection with the proposed offering equal or exceed the minimum amount of securities to be sold as established by the issuer.

B) Investors shall receive a return of the entirety of their investment funds if the target offering amount is not raised by the deadline date established in the offering materials.

3. Required Disclosures. In additional to all other material disclosures that are required by law or rules, the issuer must disclose the following to investors:

A) Offering Maximum and Minimum Amounts. The issuer shall establish a maximum amount and a minimum amount of securities to be sold and a deadline date for selling the designated minimum amount of securities. This information shall be conspicuously disclosed in any agreement evidencing the investor's subscription agreement to purchase the securities. The minimum amount designated for sale shall be no less than 50% of the maximum amount.

B) Cancellation Rights. An investor may cancel, without penalty, an investment commitment until 5 business days after making the commitment. The issuer shall conspicuously disclose in the investor's subscription agreement this right of cancellation. Upon receipt of the notice after cancellation, the intermediary shall direct the refund of investor funds within 5 business days.

4. General Announcement of Offering. The issuer, through an internet portal or otherwise, may distribute a general announcement preceding the general solicitation or offering that is limited to the following information: a statement that the issuer is conducting an offering in reliance on Section 4T of the Act; the legal identity, business location and website of the issuer; the name and web address (or internet link) of the registered internet portal, broker, funding portal or dealer handling the offering; the maximum and minimum amount of the offering; a one sentence description of the business of the issuer; the telephone number or email address of the representative of the issuer and a statement noting that only Illinois residents are eligible to participate in the offering. An issuer, or person acting on behalf of the issuer, may communicate with investors and potential investors about the terms of the offering through communication channels provided by the internet portal, provided that the issuer identifies itself as the issuer in all communications. Persons acting on behalf of the issuer must identify their affiliation with the issuer in all communications. The issuer (and to the extent an internet portal is used, that internet portal) shall take reasonable measures to limit access to any information concerning the offer or sale of the subject securities to residents of Illinois.

5. Early Completion of Offering. If an issuer reaches the maximum offering amount prior to the deadline identified in its offering materials, the issuer may close the offering on a date earlier than the deadline identified in its offering materials.

6. Material Changes of the Offering. If there is a material change to the terms of the offering or to the information provided by the issuer, the issuer must provide notice of the material changes to the Secretary of State, the relevant internet portal and the investors (communication to investors may occur through the internet portal).

7. Return of Funds if Offering is Not Completed. If an issuer does not complete an offering, the internet portal must, within 5 business days:

A) Notify each investor of the cancellation, disclosing the reason for the cancellation and the amount of funds that the investor is expected to receive;

B) Direct the refund of investor funds;

C) Prevent investors from making investment commitments with respect to that offering on the issuer's internet platform.

8. Investor Qualification

A) Each time before accepting any investment commitment (including any additional investment commitment from the same person), an issuer must have a reasonable basis for believing that the investor satisfies the requirements of Section 4.T of the Act and this Section.

B) The issuer may rely on an investor's representations regarding compliance with the investment limitation requirements concerning the investor's annual income and net worth, and the amount of the investor's other investments made pursuant to Section 4.T of the Act, unless the issuer has reason to question the reliability of the representation. The issuer may obtain the required investor affirmations through the internet portal.

C) The issuer may establish Illinois residency by relying on:

i) a valid Illinois driver's license or official personal identification card issued by the Illinois Secretary of State;

ii) a current Illinois voter registration; or

iii) general property tax records showing the investor owns and occupies property in Illinois as his or her principal residence.

9. Financial Disclosures. The issuer shall provide at least annually to each purchaser, free of charge, financial statements of the issuer, which shall be audited or reviewed by a public accountant that is independent of the issuer. If audited statements or reviewed statements are not available, the issuer shall provide financial statements that are certified by the principal executive officer of the issuer attesting that the financials are fair, complete and accurate. Financial statements shall include blanace sheets, statements of comprehensive income, statements of cash flows, statements of changes in stockholders' equity and notes to the financial statements. The issuer or internet portal shall inform investors when the information becomes available and shall make the information accessible to investors through the issuer's or internet portal's website. The financial statements shall be available no later than 120 days after the end of each fiscal year, and shall remain available until the succeeding financial statements until the earlier of:

A) the date the issuer liquidates or dissolves (other than by administrative dissolution) in accordance with applicable law;

B) the date the issuer, or another party, purchases or repurchases all of the securities issued by the issuer under Section 4T of the Act, including any payment in full of debt securities or any complete redemption of redeemable securities.

b) Disqualifications. No exemption under Section 4.T of the Act and this Section shall be available for a sale of securities if the issuer, any predecessor of the issuer, any affiliated issuer, any director, officer, general partner or managing member of the issuer, any beneficial owner of 20% or more of the issuer's outstanding voting equity securities, calculated on the basis of voting power, any promoter connected with the issuer in any capacity at the time of the sale, any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sales of securities, or any general partner, director, officer or managing member of any such solicitor:

1. Is or has been subject to any of the statutory disqualification provisions set forth in Section 8.E(1) of the Illinois Securities Act; or

2. Has filed a registration statement within the last 5 years that is the subject of a currently effective registration stop order entered by any state securities administrator or the U.S. Securities and Exchange Commission.

History

• Source: Added at 41 Ill. Reg. 451, effective December 28, 2016

14 Ill. Adm. Code 130.494 Crowdfunding Pursuant to Section 4.t of the Act – Internet Portals

a) Definition. "Internet portal" has the meaning ascribed in Section 2.36 of the Act. Additionally, in this Section, when the context so indicates, the term "internet portal" also means the entity maintaining the internet portal.

b) Internet Portals. Internet portals serving as platforms for crowdfunding activity as described in Section 4.T of the Act must be registered with the Secretary of State. Brokers registered under the Securities Exchange Act of 1934, or registered as funding portals under the Securities Act of 1933, or registered as dealers with the Secretary of State, are exempt from registering as internet portals under this subsection (b)(1), but are subject to all other provisions of this Section.

1. Filing Requirements, Forms and Fees

A) Internet portals shall file Form IP with the Secretary of State in accordance with the instructions on the form. The registration shall be effective for one year.

B) The Form IP, including a renewal application or amended form, shall be accompanied by all relevant documentation required by the form and a filing fee of $300, as required by Section 18.1 of the Act.

C) Annual renewal applications shall be filed within 30 days prior to the expiration of the one year registration period by filing Form IP.

D) Amendments or modifications to Form IP shall be filed within 10 days after any information previously submitted on Form IP becoming inaccurate.

E) Withdrawals of registration shall be filed promptly on Form IP-W, in accordance with the instructions on the form, upon ceasing to operate as a funding portal. Withdrawal will be effective on the later of 30 days after receipt of Form IP-W by the Secretary of State (after the internet portal is no longer operational), or by a later date to which the internet portal consents, or by a later date the Secretary of State, by order, may determine based on the public interest or the protection of investors. If a Secretary of State proceeding is pending pursuant to Section 11 of the Act when the application is filed or a proceeding is instituted within 30 days after the application is filed, withdrawal becomes effective at the time and upon the conditions the Secretary of State, by order, determines, based on the public interest and protection of investors. The Secretary of State may deny the withdrawal application if the internet portal's registration is revoked or canceled by the Secretary of State.

2. The internet portal shall make and preserve the records listed in this subsection (b)(2) for 5 years, the first 2 years in an easily accessible place.

A) Records that shall be maintained are:

i) All records related to any investor who purchases or attempts to purchase securities through the internet portal;

ii) All records related to issuers who offer and sell or attempt to offer and sell securities through the internet portal and the control persons of those issuers;

iii) Records of all communications that occur on or through the internet portal's platform;

iv) All records required to demonstrate compliance with the Act and this Part;

v) All notices provided to issuers and investors through the platform or otherwise;

vi) All written agreements (or copies of those agreements) entered into by the internet portal relating to its business as an internet portal;

vii) Summaries of transactions effected through the internet portal;

viii) A log reflecting the progress of each issuer offering, including total dollar amounts raised toward meeting the target offering amount;

ix) Organizational documents and such other documents as are relevant to the business of the internet portal.

B) The records required pursuant to this subsection (b)(2) may be prepared and maintained by a third party on behalf of the internet portal.

3. Communication Channels. An internet portal must provide on its platform communication channels by which persons can communicate with one another and with representatives of the issuer about offerings made available on the internet portal's platform, provided:

A) The internet portal does not participate in these communications other than to establish guidelines for communication and remove abusive or potentially fraudulent communications;

B) The internet portal permits access to view the discussions made in the communication channels to those investors and potential investors who have opened an account with the internet portal and have been vetted as eligible investors;

C) The internet portal restricts posting of comments in the communication channels to those persons who have opened an account with the internet portal on its platform; and

D) The internet portal requires that any person posting a comment in the communication channels clearly and prominently disclose with each posting his or her full name and whether he or she is a founder or an employee of an issuer engaging in promotional activities on behalf of the issuer, or is otherwise compensated, whether in the past or prospectively, to promote the issuer's offering.

4. Notice of Investment Commitment. An internet portal must promptly, upon receipt of an investment commitment from an investor, give or send to the investor a notification disclosing:

A) the dollar amount of the commitment;

B) the price and amount of the securities, if known;

C) the name of the issuer; and

D) the date and time by which the investor may cancel the investment commitment.

5. Confirmation of Transaction. An internet portal must, at or before the completion of a transaction in a security in reliance on Section 4.T of the Act, provide to each investor a notification disclosing:

A) the date of the transaction;

B) the type of security the investor is purchasing;

C) the identity, price and number of securities purchased by the investor;

D) the number of securities sold by the issuer in the transaction and the prices at which the securities were sold;

E) if a debt security, the interest rate and the yield to maturity calculated from the price paid and the maturity date;

F) if a callable security, the first date the security can be called by the issuer; and

G) the manner, including the source and form, in which the internet portal is compensated in connection with offerings and sales of securities.

c) Payments to Third Parties. An internet portal may not compensate any person for providing the internet portal with the personally identifiable information of any investor or potential investor in securities offered or sold in reliance on Section 4.T of the Act.

d) The internet portal shall establish and maintain reasonable measures to limit access to any information concerning an offer or sale of the subject securities (other than the information of the type permitted in connection with a general announcement by the issuer pursuant to the Act and Section 130.493) to only residents of Illinois.

e) The internet portal shall have a reasonable basis for believing that an issuer seeking to offer and sell securities through its portal complies with the provisions of Section 4.T of the Act and Section 130.493. In satisfying the requirement, the portal shall:

1. Conduct reasonable due diligence, including a validation of the issuer's status and a review of the offering documents and such other documentation as necessary to ensure compliance with the Act and Section 130.493;

2. Validate the existence of the required escrow agreement;

3. Complete the due diligence review for each offering to be posted on the internet portal prior to allowing the offering to be posted; and

4. Maintain and preserve all material documents reviewed by the internet portal in connection with its due diligence review.

f) The internet portal shall deny access to its platform to an issuer if the portal has a reasonable basis for believing that the issuer or the offering presents the potential for fraud or otherwise raises investor protection concerns.

g) Any director, officer or partner of an internet portal, or any person occupying a similar status or performing a similar function, may not have a financial interest in an issuer that is offering or selling securities in reliance on Section 4.T of the Act through its portal, nor receive a financial interest in the issuer as compensation for the services provided to the issuer in connection with the offer of sale of the securities. An internet portal may not have a financial interest in an issue that is offering or selling securities in reliance on Section 4.T of the Act through the internet portant unless:

1. the internet portal receives the financial interest from the issuer as compensation for the services provided to, or for the benefit of, the issuer in connection with the offer or sale of the securities being offered or sold in reliance on Section 4.T of the Act through the internet portal's platform; and

2. the financial interest consists of securities with the right of distribution or payment that is equal or junior to the priority and rights of the investors in the offering.

h) An internet portal may waive its compensation and fees in the case of a failed offering. Notwithstanding the waiver, all provisions of the Act and this Part shall apply, except that the waiver shall not be considered a success-based fee structure.

History

• Source: Added at 41 Ill. Reg. 451, effective December 28, 2016

14 Ill. Adm. Code 130.501 Title of Securities

Wherever the title of securities is required to be stated there shall be given such information as will indicate the type and general character of the securities, including the following:

a) In the case of shares, the par or stated value, if any; the rate of dividends, if fixed, and whether cumulative or noncumulative; a brief indication of the preference, if any; and if convertible, a statement to that effect.

b) In the case of funded debt, the rate of interest; the date of maturity, or if the issue matures serially, a brief indication of the serial maturities, such as "maturing serially from 1980 to 1990"; if the payment of principal or interest is contingent, an appropriate indication of such contingency, a brief indication of the priority of the issue; and if convertible, a statement to that effect.

c) In the case of any other kind of security, appropriate information of comparable character.

14 Ill. Adm. Code 130.502 Financial Statement Requirements

For the purpose of this Part and to insure uniform interpretation, the form and content of financial statements, which are to be filed in connection with any filing under the Act, shall conform to 17 CFR 210.1-01 through 17 CFR 210.12-29 (Regulation S-X) (May 31, 2011) and Accounting Series Releases as they relate to the Federal 1933 Act and the Federal 1934 Act.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.503 Disclaimer of Control

If the existence of control is open to reasonable doubt in any instance, the registrant may disclaim the existence of control and any admission thereof; in such case, however, the registrant shall state the material facts pertinent to the possible existence of control.

14 Ill. Adm. Code 130.505 Formal Requirements as to Consents

a) If the name of any accountant, engineer, or appraiser, or any person whose profession gives authority to a statement made by him, has been made any part of the application for registration, or if the person is named as having prepared or certified a report, the written consent of such person shall be filed with the application for registration.

b) All written consents of experts filed with an application for registration pursuant to these rules shall be dated and signed manually. A list of the consents shall be filed with the application for registration. Where the consent of an expert is contained in his report, a reference shall be made in the list to the report containing the consent.

14 Ill. Adm. Code 130.506 Consents Required in Special Cases

a) If any portion of the report of an expert is quoted or summarized as such in the application for registration or in a prospectus, the written consent of the expert shall expressly state that the expert consents to such quotation or summarization.

b) If it is stated that any information contained in the application for registration has been reviewed or passed upon by any persons and that the information is set forth in the application for registration upon the authority of or in reliance upon such persons as experts, the written consents of the persons shall be filed with the application for registration.

14 Ill. Adm. Code 130.507 Application to Dispense with Consent

An application to the Secretary of State to dispense with any written consent of an expert shall be made by the registrant and shall be supported by an affidavit or affidavits establishing that the obtaining of the consent is impracticable or involves undue hardships on the registrant. The application shall be filed and the consent of the Secretary of State shall be obtained prior to the date of registration.

14 Ill. Adm. Code 130.508 Consent to Use of Material Incorporated by Reference

If the Act requires the filing of a written consent to the use of any material in connection with the application for registration, the consent shall be filed with the application for registration even though the material is incorporated therein by reference.

14 Ill. Adm. Code 130.510 Procedures for Registration of Securities by Coordination Under Section 5.a of the Act

a) Filing Requirements

1. Application for registration of securities pursuant to Section 5.A of the Act shall be made by filing the following documents with the Securities Department in Springfield in the form required by Section 5.A(2) of the Act:

A) One copy of the registration statement (without exhibits) that sets fort the title of the securities, price or proposed offering price, and aggregate number of units to be offered by the registration statement on file with the SEC in its most recent form as of the date of the initial filing under Section 5.A of the Act;

B) A completed Application to Register Securities on Form U-1 as provided in Appendix B, executed by the applicant, if a natural person; or by a general partner, if the applicant is a partnership; or by an officer of the applicant, if a corporation; or in other cases by a credible person having knowledge of the facts, setting forth the title of the securities to be registered, the total offering of securities in number and dollar amount, the offering of securities in number and dollar amount to be offered in this State, the offering price or proposed offering price and the proposed maximum aggregate price and the proposed maximum aggregate price for the securities in this State as defined in Section 130.251 and, if the applicant is electing the date of effectiveness of a post-effective amendment filed or to be filed with the SEC as its "effective date" as defined in Section 2.13 of the Act, specifying that date as the "effective date" for purposes of paragraph 6 of the Application;

C) If the applicant is not a registered dealer, the name of at least one registered dealer for the securities being registered (except that, in the case of securities being offered and sold on a delayed or continuous basis pursuant to 17 CFR 230.415 (May 31, 2011), the name of the registered dealer may be furnished no later than the close of business on the second business day following the commencement of sales of the registered securities), or if no registered dealer is participating in the offering, a description of the method by which the securities being registered will be offered and sold in Illinois in compliance with Section 8 of the Act; and

D) The filing fee required by Section 5.C(1) of the Act in the form and amount required by Section 130.110 of this Part.

2. The completed Application to Register Securities on Form U-1 shall constitute the application and the undertaking called for Sections 5.A(2)(c) and 5.A(2)(d), respectively, of the Act, except that:

A) The time period for filing documents described in the undertaking set forth in paragraph 9(b) of the Application shall be deemed to be the seven calendar days after the forwarding of the document to the SEC;

B) Only amendments to the federal registration statement that amend or supplement the registration statement need be filed pursuant to paragraph 9(b)(i) of the Application; and

C) The applicant otherwise shall be required to comply with the undertakings set forth in paragraph 9 of the Application only to the extent required by the Act and this Part.

b) If, prior to the effective date, there was filed with the Securities Department all of the documents and fees specified in subsection (a), registration of securities under Section 5.A of the Act shall become effective automatically on the effective date, provided that:

1. the application for registration is not then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act; and

2. at least one of the following events occurred on or before the effective date:

A) the Securities Department notified the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), that the documents and fees conform to the requirements of the Act and this Part;

B) at least 10 business days have expired from and including the date on which all of the documents and fees specified in subsection (a) were filed with or paid to the Securities Department.

c) If, prior to the effective date, all of the documents specified in subsection (a) were not filed with the Securities Department, the registration under Section 5.A of the Act shall take effect on the date that all of the following conditions are satisfied:

1. All of the documents and fees specified in subsection (a) were filed with or paid to the Securities Department;

2. The application for registration is not then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act;

3. There was filed with the Securities Department a statement from the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), that either:

A) states that no securities that are part of the offering being registered have been sold in this State; or

B) if securities that are part of the offering being registered have been sold in this State, sets forth the name and address of each purchaser of the securities, the dollar amount sold, and the exemption or exemptions from registration under Section 3 or 4 of the Act relied upon in making each sale;

4. At least one of the following events occurred:

A) The Securities Department notified the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), that the documents and fees conform to the requirements of the Act and this Part; or

B) At least 10 business days have expired from and including the date on which all of the documents and fees specified in subsection (a) were filed with or paid to the Securities Department; and

5. There was filed with the Securities Department a statement from the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), dated no earlier than the first business day preceding the date on which the registration under Section 5.A of the Act is to take effect, stating that:

A) The registration statement filed under the Federal 1933 Act, as defined in Section 130.200 of this Part, is then in effect; and

B) The registration statement, including any amendments or supplements, then on file with the Securities Department satisfies the requirements of section 10(a)(3) of the Federal 1933 Act, as defined in Section 130.200 of this Part.

d) The applicant shall file with the Securities Department a notice, in writing (which may be by telegraphic, electronic or facsimile transmission), no later than the close of business on the second business day following the later of the effective date or the date on which the registration under Section 5.A of the Act shall take effect, of:

1. The offering price (provided, that if the offering is to be made on a delayed or continuous basis pursuant to Rule 415 under the Federal 1933 Act, 17 CFR 230.415 as defined in Section 130.200 of this Part, the offering price need only be furnished if known to applicant and if not indicated in documents already on file with the Securities Department); and

2. The date that the registration statement, or, if the applicant is electing the date of effectiveness of a post-effective amendment, that the post-effective amendment became effective under the Federal 1933 Act, as defined in Section 130.200 of this Part.

e) No offering of securities shall be registered under Section 5.A of the Act if, prior to the effective date, all of the securities that are part of the offering being registered have been sold. The Secretary shall require, in any case in which it appears that this subsection (e) may be violated, an affidavit to the effect that securities that are part of the offering remain available for sale.

f) The issuer, controlling person or registered dealer who filed the application may petition the Securities Department, in writing, prior to effectiveness of the registration of the securities under the Federal 1933 Act, as defined in Section 130.200 of this Part, for a waiver of automatic effectiveness of the registration of securities under the Act if such effectiveness would cause the issuer, controlling person or registered dealer to violate any provision of the Act or this Section. The Securities Department shall notify the issuer, controlling person or registered dealer in writing of the Secretary's decision to grant or deny any request for waiver of automatic effectiveness. If the waiver is granted, the registration of securities shall become effective automatically on the date designated in writing by the issuer, controlling person or registered dealer who filed the application, provided that person has satisfied all of the requirements of the Act and this Section.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.520 Procedures for Registration of Securities by Qualification Under Section 5.b of the Act

a) Application for registration of securities pursuant to Section 5.B of the Act shall be made

1. by filing the following documents with the Securities Department in Springfield or Chicago, Illinois in the form required by Section 5.B of the Act:

A) A completed Application to Register Securities on Form U-1, executed by the applicant, if a natural person; or by a general partner, if the applicant be a partnership only; or by an officer of the applicant, if a corporation; or in other cases by an authorized agent of the applicant, setting forth the name and address of the issuer, the title and total amount of the securities to be offered, the amount of the securities to be registered in this State pursuant to the Application, the proposed maximum aggregate price for the securities being registered as defined in Section 130.251 of this Part, and the aggregate underwriting commissions, remuneration or discount;

B) A copy of the prospectus for the securities being registered conforming to the requirements of Section 5.B(3) or 5.B(4) of the Act, as applicable;

C) A copy of the indenture or other instrument if any, under which the securities are to be or have been issued, as amended through the date of filing;

D) A specimen copy of the securities or a copy of the form of the instrument, if any, to evidence the securities;

E) An opinion of counsel as to the legality of the securities;

F) A copy of the underwriting and selling agreements, if any;

G) An undertaking to file promptly with the Secretary of State any and all amendments of and supplements to the prospectus as filed under Section 5.B of the Act, accompanied by the examination fee specified in Section 130.110; and

H) The name of at least one registered dealer for the securities being registered under Section 5.B of the Act, or if no registered dealer is participating in the offering, a description of the method by which the securities being registered will be offered and sold in Illinois in compliance with Section 8 of the Act; and

2. by paying to the Securities Department in Springfield or Chicago, Illinois the examination fee and filing fee required by Sections 5.B(2)(g) and 5.C(1), respectively, of the Act in the form and amount required by Section 130.110.

b) The completed Application to Register Securities on Form U-1 shall constitute the application called for in Section 5.B(1) of the Act.

c) The Secretary of State shall within a reasonable time examine the application and documents filed with him or her, and unless:

1. the Secretary of State makes a determination that the application and documents so filed do not conform to the requirements of Section 5.B of the Act, or

2. the application for registration is then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act, he or she shall register the securities for offer and sale in this State under Section 5.B of the Act.

d) The applicant shall notify the Securities Department in Springfield, in writing (which may be by telegraphic, electronic or facsimile transmission), prior to the time at which the registration under Section 5.B of the Act shall take effect, of the actual offering price(s) for the securities being registered and, if the offering is filed under Regulation A of the Federal 1933 Act, a copy of the notification of SEC clearance within two business after the date of the issuance of such clearance.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.525 Procedures for Registration of Securities by Qualification Under Section 5.b(7) of the Act, Small Company Offering Registration ("scor") on Form U-7

a) To be eligible to use Form U-7, an issuer must comply with each of the following requirements:

1. The issuer must be a corporation or a limited liability company organized under the laws of one of the states or possessions of the United States that engages in or proposes to engage in a business other than petroleum exploration or production or mining or other extractive industries. "Blind pool" offerings and other offerings for which the specific business or properties cannot now be described are ineligible to use Form U-7;

2. The securities may be offered and sold only on behalf of the issuer, and Form U-7 may not be used by any selling security-holder (including underwriters in a firm commitment underwriting) to register the securities for resale;

3. The offering price for common stock (and the exercise price, if the securities are options, warrants or rights for, and the conversion price if the securities are convertible into common stock) must be equal to or greater than $1.00 per share;

4. The issuer may engage salespersons to sell the securities. Commissions, fees, or other remuneration for soliciting any prospective purchaser in this State in connection with the offering may only be paid to persons who are registered as salespersons;

5. Form U-7 shall not be available for the securities of any issuer if the issuer or any of its officers, directors, 10% stockholders, promoters or any salesperson of the securities to be offered, or any officer, director or partner of the issuer:

A) has filed a registration statement that is the subject of a currently effective registration stop order entered pursuant to any state's securities law within five years prior to the filing of the application for registration;

B) has been convicted within five years prior to the filing of the application for registration of any felony or misdemeanor in connection with the offer, purchase or sale of any security or any felony involving fraud or deceit, including, but not limited to, forgery, embezzlement, obtaining money under false pretenses, larceny or conspiracy to defraud;

C) is currently subject to any state administrative enforcement order or judgment entered by that state's securities administrator within five years prior to the filing of the application for registration or is subject to any state's administrative enforcement order or judgment in which fraud or deceit, including but not limited to making untrue statements of material facts and omitting to state material facts, was found and the order or judgment was entered within five years prior to the filing of the application for registration;

D) is subject to any state's administrative enforcement order or judgment that prohibits, denies or revokes the use of any exemption from registration in connection with the subject offer, purchase or sale of securities included in the application for registration; or

E) is currently subject to any order, judgment or decree of any court of competent jurisdiction temporarily or preliminarily restricting, enjoining, or subject to any order, judgment or decree of any court of competent jurisdiction, permanently restraining or enjoining, from engaging in or continuing any conduct or practice in connection with the purchase or sale of any security or involving the making of any false filing with the state entered within five years prior to the filing of the application for registration;

6. The prohibitions of subsections (a)(5)(A), (B), (C) and (E) shall not apply if the person subject to the disqualification is duly licensed or registered to conduct securities related business in the state in which the administrative order or judgment was entered against that person or if the dealer employing thatparty is licensed or registered in this State and the Form BD filed with this State discloses the order, conviction, judgment or decree relating to that person. If any of the circumstances in subsection (a)(5)(B), (C) or (E) has occurred more than five years from the date of the application for registration, these circumstances should be described in response to Question 45 of Form U-7 as a Miscellaneous Factor;

7. Use of Form U-7 is available to any offering of securities by an issuer, the aggregate offering price of which within or outside this State shall not exceed $1,000,000, less the aggregate offering price for all securities sold within the 12 months before the sale of, and during the offering of, the securities under SEC Rule 504 in reliance on any exemption under section 3(b) of the Federal 1933 Act not in violation of section 5(a) of that Act. Form U-7 is not available to a company that is an investment company (including mutual funds) or is subject to the reporting requirements of section 13 or 15(d) of the Federal 1934 Act;

8. The issuer shall file with the SEC a Form D pursuant to Regulation D under the Federal 1933 Act claiming exemption of the offering from registration under the Federal 1933 Act pursuant to Rule 504 under that Act. A copy of the Form D with Illinois signature pages shall be filed with the Securities Department at the same time it is filed with the SEC.

b) Application for registration of securities pursuant to Section 5.B(7) of the Act shall be made by:

1. filing the following documents with the Securities Department in the form required by Section 5.B of the Act:

A) A completed Application to Register Securities on Form U-1, executed by the applicant, if a natural person; or by an officer of the applicant, if a corporation; or in other cases by a credible person having knowledge of the facts, setting forth the name and address of the issuer, the title and total amount of the securities to be offered, the amount of the securities to be registered in this State pursuant to the Application, and the proposed maximum aggregate price for the securities being registered as defined in Section 130.251;

B) A copy of the Form U-7, Disclosure Document, with a response to each question in each paragraph of the Form U-7; if a question is not applicable, the response should so indicate; each response should be clearly and concisely stated and should not include nominal, immaterial or insignificant information;

C) Form of Selling Agency Agreement, if any;

D) Issuer's articles of incorporation or other charter documents and all amendments to those Articles or documents;

E) Issuer's by-laws, as amended to date;

F) Copy of any resolutions by directors setting forth terms and provisions of capital stock to be issued;

G) Any indenture, form of note or other contractual provision containing terms of notes or other debt, or of options, warrants or rights to be offered, if any;

H) Specimen of security to be offered (including any legend restricting resale);

I) Copy of all advertising or other materials, including electronic media and correspondence, directed to or to be furnished investors in the offering;

J) Form of escrow agreement for escrow of proceeds, if any;

K) Form of any subscription agreement for the purchase of securities in the offering;

L) Opinion of counsel as to the legality of the securities to be issued;

M) Consent to inclusion in the disclosure document of tax advisor's opinion or description of tax consequences, if any;

N) Consent to inclusion in the disclosure document of any evaluation of litigation or administrative action by counsel, if any;

O) Schedule setting forth the name and residential street address of each officer, director and principal stockholder;

P) Work sheets showing computations of responses to questions 6, 7(a), 8(a), 8(b) and 17(b) of Form U-7;

Q) Undertaking to file promptly with the Securities Department any and all amendments of and supplements to the disclosure document previously filed under Section 5.B of the Act, accompanied by the examination fee specified in Section 130.110; and

R) Name of the registered dealer who will be selling the securities, if any; or Form U4s for each individual who will be selling the securities, together with the filing fee required by Section 8.C(7) of the Act in the form and amount required by Section 130.110 or a description of the method by which the securities being registered will be offered and sold in Illinois in compliance with Section 8 of the Act.

2. Paying to the Securities Department the examination fee and filing fee required by Section 5.B(2)(g) and 5.C(1), respectively, of the Act in the form and amount required by Section 130.110 of this Part.

c) The Securities Department shall within a reasonable time examine the application and documents filed, and unlessthe Securities Department makes a determination that the application and documents so filed do not conform to the requirements of Section 5.B(7) of the Act and this Section; or the application for registration is then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act, the Department shall declare the Form U-7 effective and register the securities for offer and sale in this State under Section 5.B of the Act.

d) Issuer notification requirements to the Securities Department after the securities are registered:

1. Notification within two business days after the occurrence of any event that requires a material change in Form U-7 and submission of the following:

A) a complete Form U-7 as revised, amended or supplemented, marked to show changes from the previously filed version; and

B) the amendment filing fee as required by Section 5.B(2)(g) of the Act and in the form and amount required by Section 130.110 of this Part;

2. Monthly sales report disclosing the total dollar amount of securities sold in this State, to be filed not later than 10 business days following the end of each month;

3. Final sales report disclosing the total dollar amount of securities sold in this State, to be filed not later than 10 business days following the completion or termination of the offering; and

4. Affidavit of termination, as required pursuant to Section 5.D of the Act, to be filed not later than 30 days following completion or termination of the offering.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.530 Renewal of Registration of Securities Under Section 5.e of the Act

a) An issuer, controlling person or registered dealer shall file an application for renewal of registration of part or all of the securities that remain unsold by filing with the Securities Department, no later than 10 business days prior to the date upon which the registration under Section 5.A of the Act or renewal under Section 5.E of the Act would expire, on Form U-1 executed by an officer of the issuer, controlling person or registered dealer and pay the fee set forth in Section 130.110. The application shall be accompanied by a copy of the prospectus in its most current form.

b) Any application for renewal of registration of securities filed with or fee paid to the Securities Department within nine business days or less prior to the date upon which the registration or renewal would expire shall pay an additional fee set forth in Section 130.110.

c) Any application for renewal of registration of securities filed with or fee paid to the Securities Department on or after the date upon which the registration has expired shall pay an additional fee set forth in Section 130.110 until the application is filed and the renewal fee and all latefees are paid.

d) The renewal of the registration under subsection (a), (b) or (c) shall take effect as of the date that the prior registration or renewal expired.

e) No application for renewal of registration of securities shall be deemed to be filed or take effect if the application, renewal fee or additional fee was filed with or paid to the Securities Department more than one year after the most recent expiration of the registration or renewal of the registration.

f) Prior to the renewal of any registration or renewal, the issuer, controlling person or registered dealer shall file with the Securities Department the name of at least one registered dealer that will be offering or selling the securities or file an application for registration on Form U4 or renewal on Form 8.C(1) for at least one salesperson that the Securities Department will grant registration of, or renewal of registration of, concurrently with the renewal of the registration of the securities and pay to the Securities Department the fee and the additional fee, if any, set forth in Section 130.110.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.531 Computation of Fees

a) At the time of filing an application for registration under Section 5.B of the Act, there shall be paid to the Secretary of State an examination fee as specified in Section 130.110(a) of this Part.

b) Prior to the time of registration under Sections 5.A., 5.B. of the Act, there shall be paid to the Secretary of State a registration fee as specified in Section 130.110(a) of this Part.

c) Where securities are to be offered to existing security holders and the portion, if any, not taken by the security holders is to be reoffered to the general public, the registration fee is to be calculated upon the basis of the proposed offering price to the security holders or the proposed reoffering price to the general public, whichever is higher.

d) Where securities are to be offered in exchange for other securities (except where such exchange results from the exercise of a conversion privilege), the registration fee is to be calculated as follows:

1. Upon the basis of the market value of the securities to be received by the registrant in the exchange as established by bona fide transactions as of a specified date within 7 days of the effective date of the offering.

2. If there is no market for the securities to be received by the registrant in the exchange, the book value of the securities computed as of the latest practicable date prior to the date of registration shall be used, unless the issuer of the securities is in bankruptcy or receivership, in which case one-third of the principal amount, par value or stated value of the securities shall be used.

3. If any cash is to be received or paid in connection with the exchange, the amount thereof shall be deducted from or added to, as the case may be, the value of the securities to be received by the registrant in exchange as computed in accordance with (1) or (2) above.

4. Securities to be offered directly or indirectly in exchange for certificates of deposit shall be deemed to be offered in exchange for the securities represented by the certificates of deposit.

14 Ill. Adm. Code 130.532 Registration of Additional Securities Pursuant to Section 5(c) (2) of the Act

The registration of additional securities that are part of the same offering for which an application for registration is already in effect shall be effected pursuant to Section 5(C)(2) of the Act by filing an amended cover page to the Form U-1 on file with the Securities Department to reflect the increased amount of securities to be registered and paying to the Securities Department the additional fee specified in Section 130.110 of this Part.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.533 Formal Requirements for Amendments Under Section 5 of the Act

Any amendment to an application for registration under Section 5 of the Act shall be filed under cover of an appropriate facing sheet, shall be numbered consecutively in the order in which filed, and shall conform to all pertinent Rules applicable to the original application for registration. Each post-effective amendment which amends a prospectus filed pursuant to Section 5(B) of the Act shall be accomplished by the examination fee specified in Section 130.110 of this Part.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.534 Powers to Amend or Withdraw Registration Statement

All persons signing an application for registration shall be deemed, in the absence of a statement to the contrary, to confer upon the applicant, and upon the correspondent named in the application for registration, the following powers:

a) A power to amend the application for registration:

1. by altering the date of the proposed offering;

2. by filing any required written consent;

3. by correcting typographical errors; or

4. by reducing the amount of securities registered, pursuant to an undertaking contained in the application for registration;

b) A power to make application for the Secretary of State's consent to the filing of an amendment;

c) A power to withdraw the application for registration or any amendment or exhibit thereto;

d) A power to consent to the entry of an order under Section 11 of the Act, waiving notice and hearing, the order being entered without prejudice to the right of applicant, thereafter to have the order vacated upon a showing to the Secretary of State that the application for registration as amended is no longer incomplete or inaccurate on its face in any material respect.

14 Ill. Adm. Code 130.535 Signatures of Amendments

Every amendment to an application for registration shall be executed in the same manner and by the same applicant as in the case of the original application.

14 Ill. Adm. Code 130.536 Delaying Amendments

An amendment altering the proposed date of the public offering may be made by telegram or by letter. Each such telegraphic amendment shall be confirmed within a reasonable time by the filing of one copy which shall be signed. The confirmation shall not be deemed an amendment.

14 Ill. Adm. Code 130.538 Withdrawal of Registration Statement, Amendment or Exhibit Filed Under the Federal 1933 Act

An application for registration or an amendment or exhibit may, prior to registration, be withdrawn by written request with the consent of the Secretary of State. The written request for withdrawal shall state the reasons for the withdrawal. Any previously paid fees related to the application shall not be refunded. All papers comprising the application for registration or amendment, except the application form, most current form of the registration statement filed under the Federal 1933 Act or prospectus and correspondence, shall be destroyed. The application form shall be plainly marked with the date of the consent to withdraw and the following statement: "Withdrawn upon the request of the applicant with the consent of the Secretary of State". The Secretary of State shall deny the request for withdrawal of the application for registration if the Secretary determines that there is a need for investigation pursuant to Section 11 of the Act.

14 Ill. Adm. Code 130.540 Procedure with Respect to Abandoning Registration Statements, Applications for Trading Authorizations and Post-Effective Amendments

a) When an application for registration, authorization to trade or a post-effective amendment to such an application has been on file with the Secretary of State for a period of nine months and has not become effective, the Secretary of State may, in his or her discretion, proceed in the following manner to determine whether the application for registration or authorization to trade or amendment has been abandoned by the applicant. If the application for registration or authorization to trade has been amended, other than for the purpose of delaying the effective date thereof, or if the post-effective amendment has been amended, the nine-month period shall be computed from the date of the latest such amendment.

b) A notice will be sent to the applicant named in the application for registration or authorization to trade, by certified mail, return receipt requested, addressed to the most recent addresses for the applicant reflected in the application for registration or authorization to trade. The notice will inform the applicant that the application for registration or authorization to trade or amendment is out of date and must be either amended to comply with the applicable requirements of the Act or be withdrawn within 30 days after the date of notice or an Order of Abandonment shall be entered.

c) If the applicant fails to respond to such notice by filing a substantive amendment or withdrawing the application for registration or authorization to trade, the Secretary of State may, where consistent with the public interest and the protection of investors, enter an order declaring the application for registration or authorization to trade or amendment thereto abandoned.

d) When such an order is entered by the Secretary of State:

1. the examination fee or filing fee paid upon the filing of the application for registration or the filing fee paid upon the filing of the application for an authorization to trade will not be returned;

2. all papers comprising the application for registration or authorization to trade or amendment, with the exception of the application form, the most current form of the registration statement filed under the Federal 1933 Act or the offering document and correspondence, will be removed from the files of the Secretary of State; and

3. the application form will be plainly marked in the following manner: "Declared abandoned by order dated ."

e) The applicant may request an administrative hearing in writing within 15 days of receipt of the Order of Abandonment. Such request for hearing before the Securities Director, or his or her designee, shall set forth the grounds upon which applicant seeks a hearing.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.550 Additional Fees Under Section 5 of the Act

a) The Secretary shall impose an additional fee for the failure to file with the Securities Department written notice of SEC effectiveness within two (2) business days of the date that the SEC has granted effectiveness. The additional fee for the third through tenth day after SEC effectiveness shall be as set forth in Section 130.110 of this Part.

b) The additional fee for filing written notice of SEC effectiveness after the tenth day after SEC effectiveness shall be as set forth in Section 130.110 of this Part.

c) The Secretary shall waive the additional fee if:

1. the applicant has been granted a waiver of concurrent effectiveness under Section 5(A)(7) of the Act by the Secretary; or

2. the additional fee, if paid, would render the issuer insolvent as defined in Section 130.200 of this Part.

d) For the purposes of this Section, two (2) business days shall mean two (2) business days from and after the date of SEC effectiveness unless the offering is declared effective on a Saturday, Sunday or a holiday. If the date of SEC effectiveness is a Saturday, Sunday or a holiday, two (2) business days means two (2) business days from and after the first business day immediately following the Saturday, Sunday or holiday.

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.570 Legibility of Prospectuses

The body of all printed prospectuses shall be in roman type at least as large as 10-point modern type. However, to the extent necessary for convenient presentation, financial statements and other statistical or tabular data and the notes thereto may be in roman type at least as large as 8-point modern type. All type shall be leaded at least 2 points.

14 Ill. Adm. Code 130.571 Presentation of Information in Prospectuses

a) The information required in a prospectus need not follow the order of the items or other requirements in the form. The information shall not, however, be set forth in such fashion as to obscure any of the required information or any information necessary to keep the required information from being incomplete or misleading. Where an item requires information to be given in a prospectus in tabular form, it shall be given in substantially the tabular form specified in the item.

b) All information contained in a prospectus shall be set forth under appropriate captions or headings reasonably indicative of the principal subject matter set forth thereunder. Except as to financial statements and other tabular data, all information set forth in a prospectus shall be divided into reasonable, short paragraphs or sections.

c) Every prospectus shall include in the forepart thereof a reasonably detailed table of contents showing the subject matter of the various sections or subdivisions of the prospectus and the page number on which each such section or subdivision begins.

d) All information required to be included in a prospectus shall be clearly understandable without the necessity of referring to the particular form or to the Rules. Except as to financial statements and information required in tabular form, the information set forth in a prospectus may be expressed in condensed or summarized form. Financial statements included in a prospectus are to be set forth in comparative form and shall include the notes thereto and the accountant's certificate.

e) Photographic reproductions of management, principal properties, or important products in prospectuses, all appropriately identified, are permissible where they do not tend to be misleading. However, artists', architects' or engineers' conceptions or renderings of uncompleted structures are not permissible since they may be misleading in that there is no assurance of completion of the structure or because of lack of accuracy of the conception or rendering, but accurate maps or surveys are permissible, where appropriate. Established corporate symbols or trademarks may be used, if they do not tend to be misleading.

14 Ill. Adm. Code 130.572 Summaries or Outlines of Documents

Where a summary or outline of the provisions of any document is required, only a brief statement shall be made, in succinct and condensed form, as to the most important provisions of the document. In addition to such statement, the summary or outline may incorporate by reference particular items, sections, or paragraphs of any exhibit and may be qualified in its entirety by such reference. Matter contained in an exhibit may be incorporated by reference in a prospectus only to the extent permitted by this Section.

14 Ill. Adm. Code 130.573 Preparation of Application for Registration

a) Notwithstanding any requirement of the appropriate form to the contrary, a copy of the proposed prospectus may be filed as a part of the application for registration in lieu of furnishing the information in item-and-answer form. Whenever this procedure is followed, either pursuant to this Section or otherwise, the text of the items of the form are to be omitted from the registration statement, as well as from the prospectus, except to the extent provided in paragraph (b) of this section. All general instructions, instructions to items of the form and instructions as to financial statements, exhibits or prospectuses are to be omitted from the application for registration in all cases.

b) Where any items of a form call for information not required to be included in the prospectus, the text of the items together with the answers thereto shall be filed with the prospectus under cover of the facing sheet of the form as a part of the application for registration. If any such item is inapplicable, or the answer thereto is in the negative, a statement to that effect shall be made. Any financial statements not required to be included in the prospectus shall also be filed as a part of the application for registration, unless incorporated by reference.

c) Every application for registration shall include a cross-reference sheet showing the location in the prospectus of the information required to be included in the prospectus in response to the items of the form. If the item is inapplicable, or the answer thereto is in the negative and is omitted from the prospectus, a statement to that effect shall be made in the cross-reference sheet.

14 Ill. Adm. Code 130.574 Incorporation of Certain Information by Reference

a) Where an item calls for information not required to be included in the prospectus, matter contained in any part of the application for registration, other than exhibits, may be incorporated by reference in answer, or partial answer, to such item. Matter contained in an exhibit may be so incorporated to the extent specified in Section 130.593.

b) Any financial statement or part thereof filed with the Secretary of State pursuant to the Act may be incorporated by reference in any application for registration if it substantially conforms to the requirements of the appropriate form and is not required to be included in the prospectus.

14 Ill. Adm. Code 130.575 Form of and Limitation Upon Incorporation by Reference

Material incorporated by reference shall be clearly identified in the reference. An express statement that the specified matter is incorporated by reference shall be made at the particular place in the application for registration where the information is required. Matter shall not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing.

14 Ill. Adm. Code 130.576 Statement Required in Prospectuses

a) There shall be set forth on the outside front cover page of every prospectus the following statement in capital letters printed in boldface roman type at least as large as 10-point modern type and at least 2 points leaded:

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECRETARY OF STATE OF ILLINOIS OR THE STATE OF ILLINOIS, NOR HAS THE SECRETARY OF STATE OF ILLINOIS OR THE STATE OF ILLINOIS PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

or in the alternative, where applicable:

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

b) There shall be set forth on the outside front cover page of every prospectus relating to a registrant under Section 5.B of the Act which:

1. has not been engaged in the business in which it is then engaged for five years, or

2. has not had a net profit in each of the last three years, the following statement in capital letters printed in boldface roman type at least as large as 10-point modern type and at least 2 points leaded:

THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.

c) The Secretary of State may grant a waiver or variance of this legend if a legend of similar wording and type size required by the Securities and Exchange Commission conveys the same thought; if the circumstances of the loss in the last 3 years were attributable to an act of God, or other event over which neither the issuer nor any of its affiliates had control, or if the issuer shall have demonstrated that the loss is non-recurring and has not had a materially adverse effect on its business operations and financial position or that, under all the circumstances, such legend would not be true.

14 Ill. Adm. Code 130.577 Prospectuses Supplementing Preliminary Material Supplied Previously

A prospectus meeting the requirements of Section 12 of the Act may consist of a copy of the latest proposed form of prospectus meeting the requirements of Section 130.244 and a document containing such additional information that both together contain all of the information required to be included in a prospectus for registered securities provided:

a) the proposed form of prospectus is incorporated by reference into and made a part of the document;

b) where the proposed form of prospectus has been sent or given before the effective date of the registration, the document is sent or given not more than 20 days later; and

c) where the proposed form of prospectus is sent or given after the date of registration, the document is attached thereto.

14 Ill. Adm. Code 130.578 Application of Amendments to This Part Governing Contents of Prospectuses

a) The form and contents of any prospectus need conform only to the applicable sections of this Part in effect at the time the registration becomes effective, notwithstanding subsequent amendments to this Part, except as otherwise provided in any such amendment or in paragraph (b) of this Section.

b) When an order entered under Section 11.F of the Act ceases to be effective as to a registration, the form and contents of any prospectus used thereafter for securities covered by the application shall conform to the applicable sections of this Part in effect at the date the order ceases to be effective.

14 Ill. Adm. Code 130.581 Statement as to Stabilizing Required in Prospectuses Filed Under Section 5.b of the Act

a) If the registrant or any of the underwriters knows or has reasonable grounds to believe that there is an intention to over-allot or that the price of any security may be stabilized to facilitate the offering of the registered securities, there shall be set forth, either on the outside front cover page or on the inside front cover page of the prospectus filed under Section 5.B of the Act, a statement in substantially the following form, subject to appropriate modifications where circumstances require. The statement shall be in capital letters, printed in boldface roman type at least as large as 10-point modern type and at least 2 points leaded:

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF (identify each class of securities in which such transactions may be effected) AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

b) If the stabilizing began prior to the effective date of the registration, there shall be set forth in the prospectus the amount of securities bought, the prices at which bought and the period within which they were bought.

14 Ill. Adm. Code 130.582 Contents of Prospectus When Two or More Registrations Are in Effect Under Section 5.b of the Act

When two or more registrations become effective under Section 5.B of the Act for different blocks of securities of the same class, a prospectus which meets the requirements of the Act for use in connection with the securities covered by the latest registration will be deemed to meet the requirements for use in connection with the securities covered by the earlier registration provided such prospectus also contains the information contained in the earlier prospectuses with respect to:

a) the underwriting, marketing and distribution arrangements,

b) the price to the public, underwriting discounts and commissions and proceeds to the registrant, and

c) the application of the proceeds.

14 Ill. Adm. Code 130.590 Identifying Statements

Every application for registration may include as an exhibit a form of identifying statement which complies with Section 130.210(b).

14 Ill. Adm. Code 130.591 Requirements as to Appraisals

a) An appraisal may be required as an exhibit in connection with an offering of securities of an issuer under the Act which:

1. has not been engaged in the business in which it is engaged for five years, and

2. has not had a net profit in each of the last three fiscal years.

b) The appraisal shall bear a dollar valuation as to the assets of the issuer and shall be prepared as of a date not more than 120 days prior to the date on which the appraisal is filed with the Secretary of State.

c) The appraisal of the assets of the issuer shall be prepared by a disinterested qualified person designated by the Secretary of State. Such person shall be a member of a professional appraiser's organization, have past experience in the specific area to be appraised and be in reasonable geographic proximity to the assets to be appraised.

d) An appraiser shall be appointed by the Secretary of State, with written notification to the issuer and the appraiser of the appointment. Arrangements for cost and time will be resolved between the issuer and the appraiser. If an agreement cannot be reached between the two parties as to time and cost of the appraisal, the Secretary of State will select another qualified firm or individual for the appraisal.

e) An issuer may submit names and credentials of firms or individuals, whom it believes are qualified to make an independent appraisal, for consideration by the Secretary of State for appointment.

14 Ill. Adm. Code 130.592 Omission of Substantially Identical Documents

In any case where two or more indentures, contracts, franchises or other documents required to be filed as exhibits are substantially identical in all material respects except as to the parties thereto, the dates of execution or other details, the registrant need file a copy of only one of such documents with a schedule identifying the other documents omitted and setting forth the material details in which the documents differ from the document of which a copy is filed. The Secretary of State may at any time in his discretion require the filing of copies of any documents so omitted.

14 Ill. Adm. Code 130.593 Incorporation of Exhibits by Reference

a) Any document or part thereof filed with the Secretary of State pursuant to any statute, rule or regulation administered by the Secretary of State may be incorporated by reference as an exhibit to any application for registration, provided that the document was not a part of any filing, with the Secretary of State, withdrawn, denied or registered more than 5 years prior to the date of submission of an application for registration.

b) If any modification has occurred in the text of any document incorporated by reference since the filing thereof, the registrant shall file with the reference a statement containing the text of any such modification and the date thereof.

14 Ill. Adm. Code 130.600 Preamble

The Rules contained in this subpart shall apply to issuers of face amount certificate contracts, as that term is defined in Section 2.14 of the Act, whose face amount certificate contracts are or have been registered pursuant to Section 6 of the Act.

14 Ill. Adm. Code 130.610 Procedures for Registration of Face Amount Certificate Contracts by Coordination Under Section 6.a of the Act

a) Filing requirements.

1. Application for registration of Face Amount Certificate Contracts pursuant to Section 6.A of the Act shall be made by filing the following documents with the Securities Department in Springfield in the form required by Section 6.A(2) of the Act:

A) One copy of the registration statement (without exhibits) which sets forth the title of the face amount certificate contracts, price or proposed offering price, and the aggregate number of units to be offered by the registration statement on file with the SEC in its most recent form as of the date of the initial filing under Section 6.A of the Act;

B) A completed Application to Register Securities on Form U-1, executed by the applicant, if a natural person; or by a general partner, if the applicant is a partnership; or by an officer of the applicant, if a corporation; or in other cases by a credible person having knowledge of the facts, setting forth the title of every series, type or class of face amount certificate contracts to be registered pursuant to the Application, and, if the applicant is electing the date of effectiveness of a post-effective amendment filed or to be filed with the SEC as its "effective date" as defined in Section 2.13 of the Act, specifying such date as the "effective date" for purposes of paragraph 6 of the Application;

C) If the applicant is not a registered dealer, the name of at least one registered dealer for the face amount certificate contracts being registered, or if no registered dealer is participating in the offering, a description of the method by which the face amount certificate contracts being registered will be offered and sold in Illinois in compliance with Section 8 of the Act; and

D) The filing fee required by Section 6.C of the Act in the form and amount required by Section 130.110 of this Part.

2. The completed Application to Register Securities on Form U-1 shall constitute the application and the undertaking called for by Sections 6.A(2)(c) and(d), respectively, of the Act, except that:

A) The time period for filing documents described in the undertaking set forth in paragraph 9(b) of the Application shall be deemed to be the seven calendar days after the forwarding thereof to the SEC;

B) Only amendments to the federal registration statement which amend or supplement the registration statement need be filed pursuant to paragraph 9(b)(i) of the Application; and

C) The applicant otherwise shall be required to comply with the undertakings set forth in paragraph 9 of the Application only to the extent required by the Act and this Part.

b) If, prior to the effective date, there shall have been filed with the Securities Department all of the documents and fees specified in subsection (a) of this Section, registration of face amount certificate contracts under Section 6.A of the Act shall become effective automatically on the effective date; provided that:

1. The application for registration is not then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act; and

2. At least one of the following events shall have occurred on or before the effective date:

A) The Securities Department shall have notified the applicant, in writing (which may be by telegraphic or facsimile transmission), that such documents and fees conform to the requirements of the Act and this Part; or

B) At least ten business days shall have expired from and including the date on which all of the documents and fees specified in subsection (a) of this Section have been filed with or paid to the Securities Department.

c) If, prior to the effective date, all of the documents specified in subsection (a) of this Section shall not have been filed with the Securities Department, the registration under Section 6.A of the Act shall take effect on the date that all of the following conditions are satisfied:

1. All of the documents and fees specified in subsection (a) of this Section shall have been filed with or paid to the Securities Department;

2. The application for registration is not then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act; and

3. There shall have been filed with the Securities Department a statement from the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), which either:

A) States that no face amount certificate contracts which are part of the offering being registered have been sold in this State; or

B) If face amount certificate contracts which are a part of the offering have been sold in this State, that sets forth the name and address of each purchaser of such face amount certificate contract, the dollar amount sold, and the exemption or exemptions from registration under Section 3 or 4 of the Act relied upon in making such sale.

4. At least one of the following events shall have occurred:

A) The Securities Department shall have notified the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), that such documents and fees conform to the requirements of the Act and this Part; or

B) At least ten business days shall have expired from and including the date on which all of the documents and fees specified in subsection (a) of this Section have been filed with or paid to the Securities Department; and

5. There shall have been filed with the Securities Department a statement from the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), dated no earlier than the first business day preceding the date on which the registration under Section 6.A of the Act is to take effect, stating that:

A) The registration statement filed under the Federal 1933 Act, as defined in Section 130.200 of this Part, is then in effect; and

B) The registration statement, including any amendments or supplements thereto, then on file with the Securities Department satisfies the requirements of Section 10(a)(3) of the Federal 1933 Act, as defined in Section 130.200 of this Part.

d) The applicant shall file a notice with the Securities Department, in writing (which may be by telegraphic, electronic or facsimile transmission), no later than the close of business on the second business day following the later of the effective date or the date on which the registration under Section 6.A of the Act shall take effect, of the date that the registration statement, or if the applicant is electing the date of effectiveness of a post-effective amendment, that the post-effective amendment, became effective under the Federal 1933 Act, as defined in Section 130.200 of this Part.

e) Any amendment to a registration under Section 6.A of the Act to add any series, type or class of face amount certificate contracts shall be filed with the Securities Department in Springfield prior to the offer or sale of the additional series, type or class of face amount certificate contracts in this State. Such amendment shall be accompanied by the additional registration fee required by Section 6.E of the Act in the form and amount required by Section 130.110 of this Part.

f) The issuer, controlling person or registered dealer who filed the application may petition the Securities Department in writing prior to effectiveness of the registration of the face amount certificate contracts under the Federal 1933 Act, as defined in Section 130.200 of this Part, for a waiver of automatic effectiveness of the registration of the face amount certificate contracts under the Act, if such effectiveness would cause the issuer, controlling person or registered dealer to violate any provision of the Act or this Section. The Securities Department shall notify the issuer, controlling person or registered dealer in writing of the Secretary's decision to grant or deny any request for waiver of automatic effectiveness. If the waiver is granted, the registration of the face amount certificate contracts shall become effective automatically on such date as shall be designated in writing by the issuer, controlling person or registered dealer who filed the application provided that such person has satisfied all of the other requirements of the Act and this Section.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.630 Renewal of Registration of Face Amount Certificate Contracts Under Section 6.f of the Act

a) An issuer, controlling person or registered dealer shall file an application for renewal of registration of part or all of the face amount certificate contracts that remain unsold by filing with the Securities Department, no later than 10 business days prior to the date upon which the registration under Section 6.A of the Act or renewal under Section 6.F of the Act would expire, on Form U-1 executed by an officer of the issuer, controlling person or registered dealer and pay the fee set forth in Section 130.110. The application shall be accompanied by one copy of the prospectus in its most current form.

b) Any application for renewal of registration of face amount certificate contracts filed with or fee paid to the Securities Department within nine business days or less but prior to the date upon which the registration or renewal would expire shall pay an additional fee set forth in Section 130.110.

c) Any application for renewal of face amount certificate contracts filed with, or fee paid to, the Securities Department on or after the date upon which the registration would expire shall pay an additional fee set forth in Section 130.110 until the application is filed and the renewal fee and all late fees are paid.

d) The renewal of the registration under subsection (a), (b) or (c) of this Section shall take effect on the date that the prior registration or renewal expired.

e) No application for renewal of face amount certificate contracts shall be deemed to be filed or take effect if the application, renewal fee or additional fee was filed with or paid to the Securities Department more than one year after the most recent expiration of the registration or renewal of the registration.

f) Prior to the renewal of any registration or renewal, the issuer, controlling person or registered dealer shall file with the Securities Department the name of at least one registered dealer that will be offering or selling the face amount certificate contracts or file an application for registration on Form U4 or renewal on Form 8C(1) for at least one salesperson that the Securities Department will grant registration of, or renewal of registration of, concurrently with the renewal of the registration or renewal of the face amount certificate contracts and pay to the Securities Department the fee and additional fee, if any, set forth in Section 130.110.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.650 Additional Fees Under Section 6 of the Act

a) The Secretary shall impose an additional fee for the failure to file with the Securities Department written notice of SEC effectiveness within two (2) business days of the date that the SEC has granted effectiveness. The additional fee for the third through tenth day after SEC effectiveness shall be as set forth in Section 130.110 of this Part.

b) The additional fee for filing written notice of SEC effectiveness after the tenth day after SEC effectiveness shall be as set forth in Section 130.110 of this Part.

c) The Secretary shall waive the additional fee if:

1. the applicant has been granted a waiver of concurrent effectiveness under Section 6(A)(7) of the Act by the Secretary; or

2. the additional fee, if paid, would render the applicant insolvent as defined in Section 130.200 of this Part.

d) For the purposes of this Section, two (2) business days shall mean two (2) business days from the date of SEC effectiveness unless the offering is declared effective on a Saturday, Sunday or a holiday. If the date of SEC effectiveness is a Saturday, Sunday or a holiday, two (2) business days means two (2) business days after the first business day immediately following the Saturday, Sunday or holiday.

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.700 Preamble

The Rules contained in this Subpart shall apply to all investment companies or investment funds or persons issuing investment fund shares as that term is defined in Section 2.15 of the Act and Section 130.225 of this Part and to all investment fund shares registered pursuant to Sections 5 and 7 of the Act.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.701 Title of Investment Fund Shares Registered Under Section 5 or 7 of the Act

Whenever the title of investment fund shares is required to be stated in an application for registration under Section 5(A) or 7(A) of the Act there shall be given such information as will indicate the type and character of the investment fund shares, including the following:

a) the name of the issuer;

b) the type of shares being offered;

c) the par value of the shares (if any);

d) an indication of whether the company is a series company; and

e) a list of series, portfolios or classes if the company is a series company.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.710 Procedures for Registration of Investment Fund Shares by Coordination Under Section 7.a of the Act

a) Filing requirements

1. Application for registration of investment fund shares pursuant to Section 7.A of the Act shall be made by filing the following documents with the Securities Department in Springfield in the form required by Section 7.A(2) of the Act:

A) One copy of the registration statement (without exhibits) which sets forth the title of the investment fund shares, price or proposed offering price, and the aggregate number of units to be offered by the registration statement on file with the SEC in its most recent form as of the date of the initial filing under Section 7.A of the Act;

B) A completed Application to Register Securities on Form U-1, executed by the applicant, if a natural person; or by a general partner, if the applicant is a partnership; or by an officer of the applicant, if a corporation; or in other cases by a credible person having knowledge of the facts, setting forth the title of the investment fund shares to be offered in this State and, if the applicant is electing the date of effectiveness of a post-effective amendment filed or to be filed with the SEC as its "effective date" as defined in Section 2.13 of the Act, specifying such date as the "effective date" for purposes of paragraph 6 of the Application;

C) If the applicant is not a registered dealer, the name of at least one registered dealer for the investment fund shares being registered, or if no registered dealer is participating in the offering, a description of the method by which the investment fund shares being registered will be offered and sold in Illinois in compliance with Section 8 of the Act; and

D) The filing fee required by Section 7.C of the Act in the form and amount required by Section 130.110 of this Part.

2. The completed Application to Register Securities on Form U-1 shall constitute the application and the undertaking called for by Sections 7.A(2)(c) and(d), respectively, of the Act, except that:

A) The time period for filing documents described in the undertaking set forth in paragraph 9(b) of the Application shall be deemed to be the seven calendar days after the forwarding thereof to the SEC;

B) Only amendments to the federal registration statement which amend or supplement the registration statement need be filed pursuant to paragraph 9(b)(i) of the Application; and

C) The applicant otherwise shall be required to comply with the undertakings set forth in paragraph 9 of the Application only to the extent required by the Act and this Part.

b) If, prior to the effective date, there shall have been filed with the Securities Department all of the documents and fees specified in subsection (a) of this Section, registration of Investment Fund Shares under Section 7.A of the Act shall become effective automatically on the effective date, provided that:

1. The application for registration is not then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act; and

2. At least one of the following events shall have occurred on or before the effective date:

A) The Securities Department shall have notified the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), that such documents and fees conform to the requirements of the Act and this Part; or

B) At least ten business days shall have expired from and including the date on which all of the documents and fees specified in subsection (a) of this Section have been filed with or paid to the Securities Department.

c) If, prior to the effective date, all of the documents specified in subsection (a) of this Section shall not have been filed with the Securities Department, the registration under Section 7.A of the Act shall take effect on the date that all of the following conditions are satisfied:

1. All of the documents and fees specified in subsection (a) of this Section shall have been filed with or paid to the Securities Department;

2. The application for registration is not then the subject of pending proceedings under Section 11.F of the Act or of an order of suspension, denial or prohibition under Section 11 of the Act; and

3. There shall have been filed with the Securities Department a statement from the applicant in writing (which may be by telegraphic, electronic or facsimile transmission), which either:

A) States that no investment fund shares which are a part of the offering being registered have been sold in this State; or

B) If investment fund shares which are a part of the offering have been sold in this State, that sets forth the name and address of each purchaser of such investment fund shares, the dollar amount sold, and the exemption or exemptions from registration under Section 3 or 4 of the Act relied upon in making such sale.

4. At least one of the following events shall have occurred:

A) The Securities Department shall have notified the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), that such documents and fees conform to the requirements of the Act and this Part; or

B) At least ten business days shall have expired from and including the date on which all of the documents and fees specified in subsection (a) of this Section have been filed with the Securities Department; and

5. There shall have been filed with the Securities Department in Springfield a statement from the applicant, in writing (which may be by telegraphic, electronic or facsimile transmission), dated not earlier than the first business day preceding the date on which the registration statement under Section 7.A of the Act is to take effect, stating that:

A) The registration statement filed under the Federal 1933 Act as defined in Section 130.200 of this Part, is then in effect; and

B) The registration statement, including any amendments or supplements thereto, then on file with the Securities Department satisfies the requirements of Section 10(a)(3) of the Federal 1933 Act as defined in Section 130.200 of this Part.

d) The applicant shall file notice with the Securities Department, in writing (which may be by telegraphic, electronic or facsimile transmission), no later than the close of business on the second business day following the later of the effective date or the date on which the registration under Section 7.A of the Act shall take effect, of the date and time that the registration statement, or if the applicant is electing the date of effectiveness of a post-effective amendment, that the post-effective amendment, became effective under the Federal 1933 Act as defined in Section 130.200 of this Part.

e) Any amendment to a registration under Section 7.A of the Act to add any series, class or portfolio of shares of the same rank, general description and characteristics of the investment fund shares previously registered shall be filed with the Securities Department in Springfield prior to the offer or sale of the additional series, class or portfolio of investment fund shares in this State. Such amendment shall be accompanied by the additional registration fee required by Section 7.D of the Act in the form and amount specified in Section 130.110 of this Part.

f) The issuer, controlling person or registered dealer who filed the application may petition the Securities Department in writing prior to the effectiveness of the registration of the investment fund shares under the Federal 1933 Act, as defined in Section 130.200 of this Part, for a waiver of automatic effectiveness of the registration of the investment fund shares under the Act if such effectiveness would cause the issuer, controlling person or registered dealer to violate any provision of the Act or this Section. The Securities Department shall notify the issuer, controlling person or registered dealer in writing of the Secretary's decision to grant or deny any request for waiver of automatic effectiveness. If the waiver is granted, the registration of the investment fund shares shall become effective automatically on such date as shall be designated in writing by the issuer, controlling person or registered dealer who filed the application, provided that such person has satisfied all of the requirements of the Act and this Section.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.715 Amendatory Statement for the Registration of Additional Class or Classes or the Reporting of a Change in Organization or Operations Pursuant to Section 7(d) of the Act

a) Unless and until the registration of investment fund shares is suspended or terminated, the application for registration may be amended by the registrant by filing Illinois Form 7D-7E. The registrant shall file an amendatory statement together with a nonrefundable filing fee set forth in Section 130.110 of this Part for each amendatory statement filed during the registration period.

b) The amendatory statement shall be filed in the following circumstances:

1. if there is a change in the registrant's name or address;

2. if the registrant elects to register an additional class or classes of shares of the same rank, general description and characteristics as the class or classes previously registered and proposed to be offered under like terms, procedures and conditions; or

3. if there is a change in the registrant's plan of operation or organization such as, but not limited to, changes in investment advisers, state of incorporation or investment management policies.

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.730 Renewal of Registration of Investment Fund Shares Under Section 7(g) of the Act

a) An issuer, controlling person or registered dealer shall file an application for renewal of registration of part or all of the investment fund shares which remain unsold by filing with the Securities Department no later than 10 business days prior to the date upon which the registration under Section 7(A) of the Act or renewal under Section 7(G) of the Act would expire on Form 7G or Form U-1 as provided in Appendix B executed by an officer of the issuer, controlling person or registered dealer and paying the fee set forth in Section 130.110. The application shall be accompanied by a copy of the prospectus and Statement of Additional Information in their most current form on file with the SEC.

b) Any application for renewal of registration of investment fund shares filed with or fee paid to the Securities Department within nine business days or less but prior to the date upon which the registration would expire shall pay an additional fee set forth in Section 130.110.

c) Any application for renewal of registration of investment fund shares filed with or fee paid to the Securities Department on or after the date upon which the registration would expire shall pay an additional fee set forth in Section 130.110 until the application is filed and the renewal fee and all such additional fees are paid.

d) The renewal of the registration under subsection (a), (b) or (c) shall take effect on the date that the prior registration or renewal expired.

e) No application for renewal of the registration of investment fund shares shall be deemed to be filed or take effect if the application, renewal fee or additional fee shall have been filed with or paid to the Securities Department more than one year after the most recent expiration of the registration or renewal of the registration.

f) Prior to the renewal of any registration or renewal, the issuer, controlling person or registered dealer shall have filed with the Securities Department the name of at least one registered dealer which will be offering or selling the investment fund shares or have filed an application on Form U4 or renewal on Form 8C(1) for registration for at least one salesperson that the Securities Department will grant registration of or renewal of registration of concurrently with the renewal of the registration or renewal of the investment fund shares and paid to the Securities Department the fee set forth in Section 130.110.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.750 Additional Fees Under Section 7 of the Act

a) The Secretary shall impose an additional fee for the failure to file with the Securities Department written notice of SEC effectiveness within two (2) business days of the date that the SEC has granted effectiveness. The additional fee for the third through tenth day after SEC effectiveness shall be as set forth in Section 130.110 of this Part.

b) The additional fee for filing written notice of SEC effectiveness after the tenth day after SEC effectiveness shall be as set forth in Section 130.110 of this Part.

c) The Secretary shall waive the additional fee if:

1. the applicant has been granted a waiver of concurrent effectiveness under Section 7(A)(7) of the Act; or

2. the additional fee, if paid, would render the applicant insolvent as defined in Section 130.200 of this Part.

d) For the limited purposes of this Section, two (2) business days shall mean two (2) business days from the date of SEC effectiveness unless the offering is declared effective on a Saturday, Sunday or a holiday. If the date of SEC effectiveness is a Saturday, Sunday or a holiday, two (2) business days means two (2) business days after the first business day immediately following the Saturday, Sunday or holiday.

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.771 Acts Which "work or Tend to Work a Fraud or Deceit", in Connection with Offers, Sales or Dispositions of Investment Fund Shares

Each of the following acts shall constitute an act which "works or tends to work a fraud or deceit" when undertaken in connection with the offer, sale or disposition through dealers or salespersons of investment fund shares:

a) the failure to disclose any allowance by the principal underwriter of discounts from the applicable public offering price which

1. are not alike for all dealers, or

2. vary with the amount of sales by dealers, unless such volume discount is granted in connection with volume purchases by investors;

b) the failure to disclose any offer of special bonuses or concessions, whether in cash or merchandise, special advertising or displays, to any dealer or salesperson, which are not available to all dealers or salespersons on the same basis;

c) the failure to disclose any payment to any dealer or salesperson by the representative of any wholesaler or distributor of any concession in excess of the concession listed in the dealer's contract;

d) the failure to disclose any agreement to give any dealer, either directly or indirectly, any amount of brokerage business in addition to the ordinary contractual allowances, and

e) the failure to disclose any agreement among participants in the underwriting group to share in profits or commissions on orders executed with or for the investment company.

14 Ill. Adm. Code 130.805 Exemptions From Registration as an Investment Adviser Under Section 8.A of the Act

The Secretary pursuant to Section 8.A of the Act hereby exempts from registration as an investment adviser:

a) any investment adviser whose only clients in this State are any one or more of the following, whether acting on their own behalf or in some fiduciary capacity:

1. investment companies as defined in the Federal 1940 Investment Company Act, as defined in Section 130.200 of this Part;

2. employee pension or profit-sharing plans or trusts having total assets of not less than $5,000,000;

3. governments and governmental agencies or instrumentalities, and whether acting for itself or as a trustee with investment control; or

4. banks, savings banks, savings institutions, trust companies, insurance companies, building and loan associations and other financial institutions or institutional investors, and any other persons to whom an offer, sale or issuance of a security would be exempt pursuant to Section 4.C, 4.D or 4.H of the Act, provided that such persons maintain a net worth of not less than $1,000,000; and

b) any investment adviser or federal covered investment adviser who during the immediately preceding twelve consecutive months has not had more than five clients in this State in addition to clients of the types specified in subsection (a) of this Section, whether or not such investment adviser or federal covered investment adviser is then present in this State.

History

• Source: Amended at 26 Ill. Reg. 14843, effective September 30, 2002

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.806 Acts Not Requiring a Notification Filing of a Federal Covered Investment Adviser or Registration as an Investment Adviser or Investment Adviser Representative Under Section 8 of the Act

Notwithstanding any other provision of the Act or this Part, an investment adviser or a federal covered investment adviser who transmits or distributes information on available products and services via the nonproprietary, public computer network (commonly known as the "Internet") shall not be deemed to be acting as an investment adviser, a federal covered investment adviser or an investment adviser representative in this State for purposes of Section 8 of the Act provided that:

a) The communication contains a legend clearly stating that the investment adviser, the federal covered investment adviser or investment adviser representative may only transact business in those states where he, she or it is registered or otherwise excluded or exempted from state registration;

b) The sender of the communication has taken reasonable measures to insure that any subsequent interaction between prospective customers or clients residing in states where the investment adviser, the federal covered investment adviser or investment adviser representative is not registered or is not subject to notification filing is limited so as to not otherwise require state investment adviser or investment adviser representative registration or notification filing;

c) The communication does not involve the actual effecting of securities transactions or trades or the rendering of investment advice for compensation over the Internet but is limited to the dissemination of information on products or services; and

d) In the case of an investment adviser representative or a federal covered investment adviser representative, the affiliation with an investment adviser or federal covered investment adviser is prominently disclosed within the communication; the investment adviser or federal covered investment adviser retains the responsibility of reviewing and approving the content of the Internet communication; the investment adviser or federal covered investment adviser has authorized the distribution or dissemination of information on products and services via the Internet communication; and the investment adviser representative or federal covered investment adviser representative is acting within the scope of his, her or its authority in distributing or disseminating the Internet communication.

History

• Source: Added at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.810 Procedures for Registration as a Dealer Under Section 8.b of the Act

No person shall be registered as a dealer unless satisfactory evidence shall have been furnished to the Secretary of the trustworthiness of the applicant and the applicant's officers, directors, partners, principal members or trustees. No person shall be registered as a dealer until that person shall have given evidence of competency to engage in the business of dealing in, buying or selling securities. Every person or officer who sells securities in this State shall be deemed to be a salesperson and must be registered as such in accordance with Section 8.B of the Act.

a) Each applicant for registration as a dealer shall deliver to FINRA Form BD as provided in Appendix C or, if already on file with FINRA, the requisite amendment that indicates that an application is on file in this State and pay to FINRA the registration fee specified in Section 130.110.

b) Each applicant for registration as a dealer shall file with the Securities Department a complete and current application and pay to the Securities Department the branch office fee, if any, specified in Section 130.110. The application shall consist of the following:

1. Schedule E of Form BD listing each branch office in this State, if any;

2. An unaudited balance sheet for the applicant verified by the chief financial officer of the dealer or other person who holds a similar position as of a date not more than 60 days prior to the date that the application is deemed to be filed with the Securities Department and applicable computations which demonstrate compliance with Section 130.826 as of the date of the balance sheet;

3. One copy of the Illinois Form designating each principal of the dealer;

4. One copy of the Illinois Form setting forth the dealer's minimum net capital requirement;

5. If the applicant will not have its principal office in this State and intends to keep the records required under Section 130.825 outside of this State, one copy of the Illinois Form requesting a waiver of the requirement to maintain its records in this State;

6. Page (2) of Form U4 for each officer and director of the dealer, except that for applicants that are members of FINRA, page (2) need only be submitted for those officers and directors for whom a Form U4 has not been filed with the Securities Department on the behalf of the applicant through the CRD; and

7. Any other information or document that the Securities Department may require to determine the dealer's business repute or to clarify statements made in the application for registration.

c) Each person applying for registration as a dealer shall give evidence of competency to engage in the business of dealing in, buying or selling securities by providing the Secretary of State with proof of obtaining a passing score onthe examinations listed in Section 130.822 , to demonstrate to the Secretary that the principal or principals have sufficient knowledge of the securities business and the laws relating to that business. In the case of a person, other than a natural person, filing an application for registration as a dealer, all of the principals who, on behalf of the applicant, participate in or are responsible for the sale of securities in this State are required to take such an examination on behalf of the applicant. Each registered dealer shall amend the list not later than 10 business days after any change of any principal or principals.

d) At or prior to registration of the dealer, there must be on file with the Securities Department, whether through the CRD or otherwise, the following:

1. Proof of passing one or more of the requisite examinations listed in Section 130.822 for each principal required to take the examinations required by subsection (c), unless the Secretary issues an Order waiving the examination requirements pursuant to Section 130.823 and Section 8.B(9) of the Act;

2. Form U4 for each officer and director or each other person performing a similar function of the applicant who is required to register as a salesperson as provided in this Section, and a page (2) of Form U4 for each other officer or director of the applicant;

3. Any and all amendments required to the application and documents filed pursuant to subsection (a), whether as the result of a change in the information provided since the date of filing or otherwise; and

4. In the case of a dealer that is not a member of FINRA, an application for registration of a salesperson on Form U4. The Securities Department shall grant concurrent registration of a salesperson pursuant to such application upon the registration of the dealer unless the dealer is ineligible for registration under Section 8.E(1) of the Act. At least one salesperson must have a registration pending on behalf of a dealer that is a FINRA member with the Securities Department prior to the grant of registration. Notwithstanding the foregoing, any dealer that effects trades solely as a clearing dealer on behalf of other dealers need not register any salesperson.

e) The application and documents on file with the Securities Department with respect to the dealer shall be amended from time to time whenever a change occurs that renders the information contained in the document not accurate in any material respect. The amendment shall be filed with FINRA if the dealer is a member of FINRA, or with the Securities Department if the dealer is not a member of FINRA, within 10 business days after the occurrence of the change.

f) For the limited purpose of this Section and solely to implement a supplemental procedure known as the CRD, a computer based registration system, for the registration and re-registration of dealers and salespersons, the term "in the Office of the Secretary of State", as used in Sections 8.B and 8.C of the Act, and "with the Secretary of State", as used in Section 8.H of the Act, and "with the Securities Department", as used in Section 130.820 of this Part, shall include a filing made with FINRA utilizing the single automated system referred to in this subsection as the CRD.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.811 Procedures for Perfecting an Investment Adviser Exemption Under Section 2.11(6) of the Act (repealed)

History

• Source: Repealed at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.820 Procedures for Renewal and Withdrawal from Registration as a Dealer

a) If a registered dealer elects to withdraw its registration in this State, it shall file a Form BDW with FINRA if the dealer is a member of FINRA, or with the Securities Department if the dealer is not a member of FINRA, indicating its intent.

b) If a registered dealer wishes to renew its registration, it shall file the renewal fee as specified in Section 130.110 with FINRA if the dealer is a member of FINRA, or with the Securities Department if the dealer is not a member of FINRA. Any amended Form BD shall also be filed with FINRA if the dealer is a member of FINRA, or with the Securities Department if the dealer is not a member of FINRA, within 30 days if any material changes occur in the information that was filed with the Securities Department when the dealer applied for registration.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.821 Reporting of Dealer Branch Office Locations and Required Fees

a) Each applicant for registration as a dealer shall file Form BR on the CRD system setting forth the address of each branch office in this State as defined in Section 130.280. The applicant for registration as a dealer shall pay the fee in the amount specified in Section 130.110 for each branch office in this State.

b) Each registered dealer shall file or have filed Form BR on the CRD system on or before December 31 annually setting forth the address of each branch office and pay to the Securities Department in Springfield a fee in the form and amount specified in Section 130.110 for each branch office in this State.

c) No registration of a dealer shall become effective until a separate Form BR of the dealer's branch offices in this State, if any, has been filed on the CRD system and the fee, if any, has been paid.

d) The registered dealer shall amend its application for registration by filing on the CRD system an amended Form BR or initial Form BR within 10 business days after:

1. the opening of any branch office in this State not previously reported; and

2. the closing of any branch office in this State.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.822 Examinations Deemed Satisfactory for Purposes of Determining Sufficient Knowledge of Each Principal Under Section 8.b(9)(a) of the Act Prior to Registration as a Dealer

a) Passage of the Series 24 (formerly Series 40 or Series 00) (General Securities Principal Examination) together with either the Series 63 (Uniform Securities Act Law Examination) or Series 66 (Uniform Combined State Law Examination) conducted by FINRA shall qualify a principal or principals of legal age in this State on behalf of a registered dealer without limitation in this State.

b) Passage of the Series 26, 39 or 53 Examination together with either the Series 63 Examination (Uniform Securities Act Law Examination) or Series 66 (Uniform Combined State Law Examination) conducted by FINRA shall qualify by examination a principal or principals of legal age in this State on behalf of a registered dealer for registration in a limited capacity in this State.

1. The Series 26 Examination (Investment Company/Variable Contracts Products (ICVC) Principal Examination) together with either the Series 63 (Uniform Securities Act Law Examination) or Series 66 (Uniform Combined State Law Examination) shall qualify the registered dealer to offer or sell variable annuities or securities issued by investment companies.

2. The Series 39 (Direct Participation Programs Principal (DPP) Examination) together with either the Series 63 (Uniform Securities Act Law Examination) or Series 66 (Uniform Combined State Law Examination) shall qualify the registered dealer to offer or sell direct participation programs in the form of limited partnerships or joint venture interests in tax shelter programs.

3. The Series 53 (Municipal Securities Principal Examination) together with either the Series 63 (Uniform Securities Act Law Examination) or Series 66 (Uniform Combined State Law Examination) shall qualify the registered dealer to offer or sell securities of municipalities or industrial development revenue obligations.

c) Passage of the Series 8 (General Securities Sales Supervisor Examination or Branch Office Manager (NYSE) Examination) conducted by FINRA shall qualify a principal or principals of legal age in this State on behalf of a registered dealer pursuant to the limitations set forth by FINRA.

d) All scheduling for the examinations referred to in subsections (a), (b) and (c) shall be made with, and fees paid to, an office of FINRA. The applicant for registration as a dealer shall submit in writing satisfactory evidence of passing the examination prior to registration in this State if that information is not available to the Securities Department through the CRD.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.823 Procedure for Requesting Waiver of Dealer, Salesperson, Investment Adviser, Investment Adviser Representative, or Principal Examination Requirements

a) If a person applying for registration as a dealer, salesperson, investment adviser, investment adviser representative, or principal seeks a waiver of the examination requirements as provided in Section 8 of the Act, the request for the waiver shall be in writing on a form and in the manner prescribed by the Secretary.

b) The request for the waiver of the examination requirement shall contain the following information:

1. The business name and address of the dealer (or investment adviser for investment adviser and investment adviser representative applicants or federal covered investment adviser for investment adviser representative applicants) with which the applicant is or will be associated;

2. The official title and connection of the applicant with the dealer (or federal covered investment adviser or investment adviser);

3. The applicant's legal name;

4. The applicant's business address and telephone number;

5. The applicant's residential address and telephone number;

6. The applicant's date of birth;

7. A list of any other names the applicant has used including the dates used, the reason for the name change, and the date the applicant's present name was adopted;

8. The amount of ownership of capital stock or partnership interest of the dealer (or investment adviser) with which the applicant is associated;

9. The nature and tenure of each job the applicant currently holds or has held for 10 years prior to the date of the waiver request. In addition, investment adviser applicants must provide the total aggregate dollar value of investment advisory accounts serviced, whether the applicant had discretionary authority over the accounts, and the total percentage of institutional accounts the applicant serviced of those entities enumerated in Section 4.C of the Act;

10. The applicant's educational history including degrees received;

11. Any professional certifications or designations;

12. Any FINRA or related examinations taken by the applicant;

13. The name, address and business affiliation of three persons to whom the Secretary may address inquiries regarding experience, qualification and standing of the applicant; and

14. A list of where the applicant has been licensed or registered as a dealer, salesperson or investment adviser, including the state or licensing agency, the type of license or registration and the period during which the registration was effective.

c) The request shall be signed and notarized. By signing the waiver request, the applicant is attesting to the following (unless a detailed explanation is attached):

1. The applicant has never had any license or registration as a dealer, investment adviser, investment adviser representative or salesperson, suspended, cancelled or revoked after notice and opportunity for hearing;

2. The applicant has never been temporarily or permanently enjoined from acting as an investment adviser, investment adviser representative, federal covered investment adviser, federal covered investment adviser representative, dealer, salesperson or employee thereof or from engaging in or continuing any conduct or practice in connection with activity as an investment adviser, investment adviser representative, federal covered investment adviser, federal covered investment adviser representative, dealer, salesperson, employee thereof or employee of any investment company, financial institution or insurance company after notice and opportunity for hearing;

3. The applicant has never been convicted of any felony or misdemeanor involving the purchase or sale of any securities or arising out of any conduct as an investment adviser, investment adviser representative, federal covered investment adviser, federal covered investment adviser representative, dealer, salesperson, employee thereof or employee of any investment company, financial institution or insurance company;

4. The applicant has never been permanently or temporarily enjoined from the issuance, offering for sale, sale, promotion, negotiation, advertising or distribution of securities;

5. The applicant has never been named as a defendant in any proceeding arising from a complaint alleging a fraudulent act in any transaction of any kind or character;

6. The applicant has never been found by any state or federal board, body, department or commission to have willfully made any untrue statement of a material fact in any application for registration or license as a dealer, investment adviser or salesperson or in any report required to be filed with the subject body, board, department or commission or under the Federal 1934 Act or to have willfully omitted to state in the application or report any material fact that is required to be stated in an application or report; and

7. The applicant has never been disbarred or suspended from the practice of any profession.

d) After the Securities Department receives the request, the request shall be granted or denied based upon criteria that includes, but is not limited to, education, years of experience in the securities business, past disciplinary history, and prior registration with the SEC, any state securities regulator, or FINRA. The applicant shall be informed in writing of the Securities Department's decision.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.824 Financial Statements to Be Filed by a Registered Dealer

a) Each dealer registered by the Secretary that is not required to file a financial statement with a registered self-regulatory organization shall file a financial statement containing the information required by the Secretary as follows:

1. the financial statement shall be prepared as of an audit date selected by the dealer within each calendar year;

2. the financial statement shall be filed no later than the first day of the fourth month days after the selected audit date;

3. the time period covered by the statement shall be the twelve month period immediately following the date of the most recent audited statement; and

4. should a dealer elect to change its audit date, a written request for variance in accordance with Section 130.190 of this Part from the filing period covered by the statement shall be filed with the Securities Department in Springfield, Illinois. The request shall include the reason or reasons for the change and an affirmation that the dealer is currently in compliance with the requirements set forth under Section 130.826 of this Part. An unaudited statement, which includes a balance sheet and computations showing compliance with the requirements set forth under Section 130.826 of this Part, shall be filed with the Securities Department and shall be as of a current date. The audited statement when filed shall encompass the entire period of time which has elapsed since the date of the most current filing of an audited statement.

b) Each financial statement filed pursuant to subsection (a) of this Section shall be audited by an independent certified public accountant and shall include the following:

1. a signed independent auditor's report;

2. a balance sheet;

3. an income statement;

4. a statement of cash flow;

5. notes to the financial statements, if any;

6. a computation of net capital calculated pursuant to either the aggregate indebtedness or the alternative method;

7. a statement of changes in liabilities subordinated to the claims of general creditors, if any; and

8. a statement of computation for determination of reserve requirements for dealers computed in accordance with 17 CFR 240.15c3-3, as in effect on August 1, 1997 (no subsequent amendments or editions), if any.

The statement shall be accompanied by the cover page, if any, designated by the Securities Department.

c) The Secretary may, require any dealer to file an interim financial statement as of a date selected by the Secretary. The Secretary shall specify whether or not the statement is to be audited by an independent certified public accountant in circumstances including, but not limited to: the company has been in violation of its net capital requirement prescribed in Section 130.826 of this Part; an officer or employee has been convicted of embezzlement or theft of the dealer's funds; the dealer has been charged by a federal or state securities regulator or SRO of falsifying its books and records; and the dealer has merged with another dealer which has a record of past violations of its net capital requirements.

d) If an unaudited interim financial statement is required to be filed by a dealer, the statement shall contain an oath or affirmation that, to the best of the knowledge and the belief of the person making the oath or affirmation:

1. the financial statement and supporting schedules are true and correct, and

2. neither the dealer, nor any partner, officer or director, as the case may be, has a proprietary interest in any account classified solely as that of a customer. The oath or affirmation shall be made before a person duly authorized to administer oaths or affirmations. If the dealer is a sole proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by the general partner in charge of the dealer's financial affairs; or if a corporation, by the dealer's chief financial officer.

e) Each financial statement, except the independent auditors' report, the balance sheet and notes, if any, shall be deemed confidential when filed with the Securities Department. The independent auditors' report, the balance sheet and notes, if any, shall be a matter of public record and available to the public upon written request.

f) Anything to the contrary notwithstanding, all of the information contained in any financial statement shall be available to any federal, state or local law enforcement agency, any state or federal regulator or any self-regulatory organization registered under any federal law upon written request to the Securities Department.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.825 Records Required of Dealers and Customer Fees

a) Every dealer registered by the Secretary of State shall keep the following books and records:

1. blotters (or other records of original entry) containing an itemized daily record of all purchases and sales of securities, all receipts and deliveries of securities (including certificate numbers), all receipts and disbursements of cash and all other debits and credits. The record shall show the account for which each transaction was effected, the name and amount of securities, the unit and aggregate purchase or sale price (if any), the trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered;

2. ledgers (or other records) reflecting all assets and liabilities, income, and expense and capital accounts;

3. ledger accounts itemizing separately as to each cash and margin account of every customer and of the dealer and partners thereof, all purchases, sales, receipts and deliveries of securities and commodities for the account and all other debits and credits to the account;

4. ledgers (or other records) reflecting the following:

A) securities in transfer

B) dividends and interest received

C) securities borrowed and securities loaned

D) monies borrowed and monies loaned (together with a record of the collateral thereof and any substitutions in the collateral)

E) securities failed to receive and failed to deliver;

5. a securities record or ledger reflecting separately for each security as of the clearance dates, all "long" or "short" positions (including securities in safekeeping) carried by the dealer for its account or for the account of its customers or partners and showing the location of all securities long and offsetting position to all securities short and in all cases the name or designation of the account in which each position is carried;

6. a memorandum of each brokerage order, and of any other instruction, given or received for the purchase or sale of securities whether executed or unexecuted. The memorandum shall show the terms and conditions of the order or instructions and of any modification or cancellation thereof, the account for which entered, the time of entry, the price at which executed and, to the extent feasible, the time of execution or cancellation. Orders entered pursuant to the exercise of discretionary power by the dealer, or any employee thereof, shall be so designated. The term "instruction" shall be deemed to include instructions between partners and employees of a dealer. The term "time of entry" shall be deemed to mean the time when such dealer transmits the order or instruction for execution, or, if it is not so transmitted, the time when it is received;

7. a memorandum of each purchase and sale of securities for the account of the dealer showing the price and, to the extent feasible, the time of execution;

8. copies of confirmations of all purchases and sales of securities and copies of notices of all other debits and credits for securities, cash and other items for the account of customers and partners of the dealer;

9. a record in respect of each cash and margin account with the dealer containing the name and address of the beneficial owner; provided that, in the case of a joint account or an account of a corporation, the records are required only in respect of the person or persons authorized to transact business for the account;

10. a record of all puts, calls, spreads, straddles and other options in which the dealer has any direct or indirect interest or which the dealer has granted or guaranteed, containing, at least, an identification of the security and the number of units involved.

b) This Section shall not be deemed to require a member of a national securities exchange to make or keep records of transactions cleared for the member by another member as are customarily made and kept by the clearing member.

c) Every dealer registered by the Secretary of State shall preserve, for a period of not less than 3 years, the first 2 years in an easily accessible place:

1. all check books, bank statements, cancelled checks and cash reconciliations;

2. all bills receivable or payable (or copies thereof), paid or unpaid, relating to the business of the dealer;

3. originals of all communications received and copies of all communications sent by the dealer (including interoffice memoranda and communications) relating to the business of the dealer;

4. all trial balances, computation of aggregate indebtedness and net capital (and working papers in connection therewith), financial statements, branch office reconciliations and internal audit working papers relating to the business of the dealer;

5. all guarantees of accounts and all powers of attorney and other evidence of the granting of any discretionary authority given in respect of any account, and copies of the resolution empowering an agent to act on behalf of a corporation;

6. all written agreements (or copies thereof) entered into by a dealer relating to business of the dealer, including agreements with respect to any account.

d) For a period of not less than 3 years after the closing of any customer's account, any account cards or records which relate to the terms and conditions with respect to the opening and maintenance of the account shall be preserved by every registered dealer.

e) Every registered dealer shall preserve during the life of the enterprise and of any successor enterprise all partnership agreements, certificates or articles or, in the case of a corporation, all articles of incorporation or charter, minute books and stock certificate books.

f) After a record or other documents have been preserved for 2 years, a photograph thereof on film may be substituted therefor for the balance of the required time.

g) Every dealer registered by the Secretary of State shall maintain within this State, in an easily accessible place, all records required by this Section. A written request for the waiver of the provisions of this Section may be made to the Secretary of State to permit any registered dealer to maintain any of the records required by this Section, in some place other than the State of Illinois. In determining whether or not the provisions of this Section should be waived, the Secretary of State shall consider, among other things, whether the main office of the dealer is in a place outside the State of Illinois or whether the dealer clears all or some of its transactions and uses all or some of the bookkeeping facilities of some other dealer whose main office is outside the State of Illinois.

h) The records (or a copy thereof) required by this Section must be maintained in each office in this State, if any, from which the transaction with respect to those records occurred.

i) Every dealer shall disclose in writing to customers at the time of opening an account, any custody, service, maintenance or similar fee that may be charged to the customer and the basis upon which each charge is determined. Customers shall receive written notice at least 45 days prior to the imposition of any new custody, service, maintenance or similar fee, or any changes to existing fees of that nature.

History

• Source: Amended at 20 Ill. Reg. 14185, effective October 21, 1996

14 Ill. Adm. Code 130.826 Registered Dealer Net Capital Requirements

a) Each dealer registered under Section 8 of the Act shall at all times have and maintain net capital no less than the greater of the higher minimum requirement applicable to its ratio requirement under 17 CFR 240.15c3-1 (May 31, 2011). No dealer electing to use the alternative standard shall permit its net capital to be less than the greater of the amount set forth in 17 CFR 240.15c3-1 (May 31, 2011) or 2 percent of the aggregate debit items computed in accordance with 17 CFR 240.15c3-3 (May 31, 2011).

b) In addition to meeting the requirement set forth in subsection (a), a dealer subject to the aggregate indebtedness standard of net capital computation shall maintain the amount specified in 17 CFR 240.15c3-1 (May 31, 2011).

c) Each dealer shall make the applicable computations set forth in subsection (a) in accordance with the provisions of 17 CFR 240.15c3-3 (May 31, 2011) and shall preserve the computations as part of the records required by Section 130.825.

d) The Secretary may exempt a dealer from the requirements of this Section because of the special nature of business or financial position of the dealer and the safeguards that have been established for the protection of customers' funds and securities, and it is not necessary in the public interest or for the protection of investors for the dealer to be subject to the requirements of this Section.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.827 Confirmations

Every dealer, at or before the completion of each transaction with the dealer's customer, shall give or send to the customer written confirmation disclosing:

a) whether the dealer is acting as agent for the customer, or as a dealer for the dealer's own account, or as an agent for some other person;

b) either the name of the person from whom the security was purchased or to whom it was sold for the customer, and the date and time when the transaction took place or the fact that the information will be furnished upon the request of the customer and the source and amount of any commission or other remuneration received or to be received by the dealer in connection with the transaction; and

c) in the case of transactions effected in securities that are non National Market System OTC Securities in reliance upon Section 4(N) of the Act, a statement to the effect that the transaction was effected pursuant to an unsolicited order or offer to buy by the customer, and requesting that the customer return to the dealer a written acknowledgment that the order or offer to buy was unsolicited.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.828 Notice of Materially Adverse Financial Condition Required to Be Filed with the Securities Department by a Registered Dealer

Each registered dealer which discovers it is no longer in compliance thereof with the requirements under Section 130.826 of this Part shall file a notice with the Securities Department within 24 hours of the discovery of such non-compliance. Such notification shall be made by telegraphic communication, facsimile transmission or such other means of delivery.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.829 Investor Protection Requirement of a Dealer Registered Under Section 8 of the Act

a) Each dealer registered or re-registered with the Secretary under Section 8.B of the Act shall be a member in good standing of FINRA, as evidenced by not being under suspension or revocation or having failed to pay dues or assessments; or

b) Each dealer registered or re-registered with the Secretary under Section 8.B of the Act shall be a member in good standing of the Securities Investor Protection Corporation as established in the Securities Investor Protection Act of 1970 (15 USC 78aaa et seq.), as amended, as evidenced by not being under suspension or revocation or having failed to pay dues or assessments, or other equivalent instrumentality of or corporation chartered by the United States that provides investor protection as authorized under federal law, except for the following dealers if they do not hold clients' cash or securities:

1. A dealer whose principal business in the Securities Investor Protection Corporation's determination is conducted outside the United States, its possessions and territories;

2. Any bank (other than a bank organized under the banking laws of the State of Illinois or of the United States) registered as a municipal securities dealer with the SEC, pursuant to 17 CFR 240.15Ba2-1, (May 31, 2011);

3. A government securities dealer registered under 17 CFR 240.15Ca1-1, (May 31, 2011); and

4. A dealer whose business consists exclusively of one or more of the following:

A) the distribution of shares of registered open end investment companies or unit investment trusts registered under Section 8 of the Federal 1940 Investment Company Act, as defined in Section 130.200 of this Part, Section 5 of the Federal 1933 Act, as defined in Section 130.200 of this Part, and Section 5 or 7 of the Act;

B) the sale of variable annuities;

C) the business of insurance; or

D) the business of rendering investment advisory services to one or more investment companies registered under the Federal 1940 Investment Company Act, as defined in Section 130.200, or to insurance company separate accounts.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.830 Registration Exemption for Merger and Acquisition Brokers Pursuant to Section 4(I) of the Act

a) "Control", as used in this Section, means the power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. There is a presumption of control for any person who:

1. is a director, general partner, member or manager of a limited liability company, or officer exercising executive responsibility (or has similar status or functions);

2. has the right to vote 20% or more of a class of voting securities or the power to sell or direct the sale of 20% or more of a class of voting securities; or

3. in the case of a partnership or limited liability company, has the right to receive upon dissolution, or has contributed, 20% or more of the capital.

b) "Eligible Privately Held Company", as used in this Section, means a company meeting both of the following conditions:

1. The company does not have any class of securities registered, or required to be registered, with the U.S. Securities and Exchange Commission (SEC) under section 12 of the Securities Exchange Act of 1934 (15 USC 78l) or with respect to which the company files, or is required to file, periodic information, documents and reports under section 15(d) of that Act (15 USC 78o(d)).

2. In the fiscal year ending immediately before the fiscal year in which the services of the merger and acquisition broker are initially engaged with respect to the securities transaction, the company meets either or both of the following conditions (determined in accordance with the historical financial accounting records of the company):

A) The earnings of the company before interest, taxes, depreciation and amortization are less than $25,000,000.

B) The gross revenues of the company are less than $250,000,000.

3. Inflation Adjustment

A) In regards to inflation, on the date that is five years after the date of the enactment of the rule, and every five years thereafter, each dollar amount in subsection (b)(2) shall be adjusted by:

i) dividing the annual value of the Employment Cost Index for wages and salaries, private industry workers (or any successor index), as published by the Bureau of Labor Statistics, for the calendar year preceding the calendar year in which the adjustment is being made by the annual value of the index (or successor) for the calendar year ending December 31, 2015; and

ii) multiplying such dollar amount by the quotient obtained under subsection (b)(3)(A)(i).

B) In regards to rounding, each dollar amount determined under this subsection (b)(3) shall be rounded to the nearest multiple of $100,000.

c) "Merger and Acquisition Broker", as used in this Section, means any broker and any person associated with a broker engaged in the business of effecting securities transactions solely in connection with the transfer of ownership of an eligible privately held company, regardless of whether that broker acts on behalf of a seller or buyer, through the purchase, sale, exchange, issuance, repurchase or redemption of, or a business combination involving, securities or assets of the eligible privately held company if the broker reasonably believes:

1. that, upon consummation of the transaction, any person acquiring securities or assets of the eligible privately held company, acting alone or in concert, will control and, directly or indirectly, will be active in the management of the eligible privately held company or the business conducted with the assets of the eligible privately held company; and

2. if any person is offered securities in exchange for securities or assets of the eligible privately held company, that person will, prior to becoming legally bound to consummate the transaction, receive or have reasonable access to:

A) the most recent fiscal year-end financial statements of the issuer of the securities as customarily prepared by its management in the normal course of operations and, if the financial statements of the issuer are audited, reviewed or compiled, any related statement by the independent accountant;

B) a balance sheet dated not more than 120 days before the date of the exchange offer; and

C) information pertaining to the management, business, results of operations for the period covered by the foregoing financial statements, and any material loss contingencies of the issuer.

d) "Public Shell Company", as used in this Section, is a company that, at the time of a transaction with an eligible privately held company:

1. has any class of securities registered, or required to be registered, with the SEC under section 12 of the Securities Exchange Act of 1934 or with respect to which the company files, or is required to file, periodic information, documents and reports under section 15(b) of that Act;

2. has no or nominal operations;

3. has:

A) no or nominal assets;

B) assets consisting solely of cash and cash equivalents; or

C) assets consisting of any amount of cash and cash equivalents and nominal other assets.

e) Except as provided in subsections (f) and (g) of this Section, a merger and acquisition broker shall be exempt from registration pursuant to Section 4(I) of the Act.

f) A merger and acquisition broker is not exempt from registration under this Section if the broker does any of the following:

1. Directly or indirectly, in connection with the transfer of ownership of an eligible privately held company, receives, holds, transmits or has custody of the funds or securities to be exchanged by the parties to the transaction.

2. Engages, on behalf of an issuer, in a public offering of any class of securities that is registered, or is required to be registered, with the SEC under section 12 of the Securities Exchange Act of 1934 or with respect to which the issuer files, or is required to file, periodic information, documents and reports under section 15(d) of that Act.

3. Engages, on behalf of any party, in a transaction involving a public shell company.

g) A merger and acquisition broker is not exempt from registration under this Section if that broker is subject to any of the following:

1. Suspension or revocation of registration under section 15(b)(4) of the Securities Exchange Act of 1934 (15 USC 78o(b)(4));

2. A statutory disqualification described in section 3(a)(39) of the Securities Exchange Act of 1934 (15 USC 78c(a)(39));

3. A disqualification under the rules adopted by the SEC under section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (15 USC 77d note); or

4. A final order described in section 15(b)(4)(H) of the Securities Exchange Act of 1934 (15 USC 78o(b)(4)(H)).

h) Nothing in this Section shall be construed to limit any other authority of the Secretary of State to exempt any person, or any class of persons, from any provisions of the Act or this Section.

i) Nothing in this Section shall be construed to limit any other authority of the Secretary of State to enforce other provisions of the Act or this Section.

History

• Source: Added at 40 Ill. Reg. 13248, effective September 1, 2016

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.832 Examinations Deemed Satisfactory for Purposes of Determining Sufficient Knowledge Under Section 8.c(7) of the Act for Registration as a Salesperson

a) Passage of the Series 63 or Series 66 examination, together with either the Series 1, 2, 7, 37, 38, 17 or 47 examination conducted by FINRA, shall qualify a natural person who is 18 years of age for registration on behalf of a dealer, controlling person or issuer as a salesperson without limitation in this State.

b) Passage of the Series 63 or Series 66 examination, together with either the Series 6, 22, 52, 62 or 79 examination conducted by FINRA, shall qualify by examination a natural person who is 18 years of age for registration as a salesperson in a limited capacity in this State, as follows:

1. The Series 6 (Investment Company/Variable Contract Products (ICVC) Representative Examination), together with either the Series 63 or Series 66 examination, shall qualify a salesperson to offer or sell securities issued by investment companies and variable contracts.

2. The Series 22 examination (Direct Participation Program Limited Representative Qualification Examination), together with either the Series 63 or Series 66 examination, shall qualify a salesperson to offer or sell direct participation programs in the form of limited partnerships or joint venture interests in tax shelter programs.

3. The Series 52 examination (Municipal Securities Representative Examination), together with either the Series 63 or Series 66 examination, shall qualify a salesperson to offer and sell securities of municipalities and industrial development revenue obligation.

4. The Series 62 Examination (Corporate Securities Representative Examination), together with either the Series 63 or Series 66 examination, shall qualify a salesperson to offer and sell corporate securities and bonds, real estate investment trusts and mortgage investment trusts.

5. The Series 79 Examination (Investment Banking Representative Examination), together with either the Series 63 or Series 66 examination, shall qualify a salesperson to deal exclusively in investment banking.

c) All scheduling for the examinations referred to in subsections (a) and (b) of this Section shall be made with and fees paid to an office of FINRA. The dealer, controlling person or issuer on whose behalf the salesperson is being registered shall submit in writing satisfactory evidence of passing the examination prior to registration of that person in the State if the information is not available to the Securities Department through the CRD.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.836 Hardship Exemption

a) Temporary hardship exemption.

1. Investment advisers registered or required to be registered under the Act who experience unanticipated technical difficulties that prevent submission of an electronic filing to IARD may request a temporary hardship exemption from the requirements to file electronically.

2. To apply for a temporary hardship exemption, the investment adviser shall file a written request utilizing Form ADV-H with the securities administrator in the state where the investment adviser's principal place of business is located. The request shall be submitted in a form approved by the securities administrator, and it shall be filed no later than one business day after the due date for the filing that is the subject of the request. The investment adviser shall also submit the filing that is the subject of the request in electronic format to IARD no later than seven business days after the filing was due.

3. If the request is in proper form, the temporary hardship exemption shall be deemed effective upon receipt by the securities administrator. Multiple temporary hardship exemption requests within the same calendar year may be disallowed by the Securities Department.

b) Continuing hardship exemption.

1. A continuing hardship exemption shall be granted only if the investment adviser is able to demonstrate that the electronic filing requirements of this regulation are prohibitively burdensome.

2. To apply for a continuing hardship exemption, the investment adviser shall file a written request utilizing Form ADV-H with the securities administrator in the state where the investment adviser's principal place of business is located. The request shall be submitted in a form approved by the securities commissioner, and it shall be filed no later than 20 business days before the due date for the filing that is the subject of the request. If the investment adviser's principal place of business is located in Illinois, the request shall be either granted or denied by the Securities Department within 10 business days after the filing of the request.

3. The exemption shall be effective upon approval by the securities administrator in the state where the investment adviser's principal place of business is located. The time period of the exemption shall be no longer than one year after the date on which the request is filed. If the securities administrator approves the request, the investment adviser shall, no later than five business days after the exemption approval date, submit filings to the IARD in paper form, along with the appropriate processing fees, for the period of time for which the exemption is granted.

c) The decision to grant or deny a request for a hardship exemption shall be made by the securities administrator in the state where the investment adviser's principal place of business is located, and the decision shall be adhered to by the Securities Department.

History

• Source: Added at 26 Ill. Reg. 14843, effective September 30, 2002

14 Ill. Adm. Code 130.837 Transition to Electronic Filing

a) On or before November 1, 2002, each investment adviser who is registered or required to be registered shall submit its Form ADV with the NASD, utilizing the IARD, unless it has been granted a hardship exemption.

b) On or before November 1, 2002, each registered investment adviser or federal covered investment adviser shall file with the NASD, utilizing the IARD, a complete Form U-4 for each investment adviser representative who is registered or required to be registered, unless the investment adviser has been granted a hardship exemption.

c) After November 1, 2002, filing shall be in accordance with Sections 130.838 and 130.839 of this Part.

History

• Source: Added at 26 Ill. Reg. 14843, effective September 30, 2002

14 Ill. Adm. Code 130.838 Procedures for Federal Covered Investment Adviser Notification Filing and Fees Under Section 8.c-5 of the Act

a) Federal covered investment advisers shall file with FINRA, utilizing the IARD, Form ADV. The federal covered investment adviser shall also pay the filing fee specified in Section 130.110.

b) For purposes of annual notification filing, a federal covered investment adviser shall file with FINRA, utilizing the IARD. The federal covered investment adviser shall also pay the filing fee specified in Section 130.110.

c) Amendments to Form ADV shall be filed with FINRA, utilizing the IARD.

d) In the event the federal covered investment adviser changes the form of its organization, it shall pay the fee specified in Section 130.110.

e) A federal covered investment adviser that is no longer eligible for SEC registration shall file an amendment to Form ADV with the SEC and FINRA, utilizing the IARD, indicating it is no longer eligible for SEC registration.

f) In the event the notification or the full amount of fees required by this Section is not filed with or paid to the Secretary of State, the Secretary of State shall notify the federal covered investment adviser of the deficiency in writing, or by facsimile or electronic transmission (provided that the Securities Department can demonstrate in the normal course of its business that the notice was delivered or transmitted to and received by the federal covered investment adviser or its designee). In the event the federal covered investment adviser fails to remedy the deficiency within 10 business days after receiving notice of the deficiency from the Secretary of State, the Secretary of State may deem the failure to remedy as a refusal and require the federal covered investment adviser to register pursuant to Section 8.A and 8.D of the Act.

g) For the limited purpose of this Section and solely for the filings and/or fees submitted to the IARD, the terms "with the Secretary of State" as used in Section 8.C-5, 8.D, 8.D-5 and 8.H of the Act and "with the Securities Department" as used in this Section shall include a filing and/or fee made with FINRA, utilizing the IARD.

h) Annual Notifications

All annual notifications shall expire at the end of the day on December 31 annually.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.839 Procedures for Registration as an Investment Adviser Representative Under Section 8.d-5 of the Act

a) Effective October 1, 2002, each new applicant filing as an investment adviser or federal covered investment adviser shall file with FINRA, utilizing the CRD, a complete Form U4 for each investment adviser representative and pay the filing fee specified in Section 130.110.

b) For purposes of the annual re-registration of investment adviser representatives, each investment adviser and federal covered investment adviser shall file with FINRA, utilizing the CRD, and pay the filing fee specified in Section 130.110.

c) For the purposes of this Section, an investment adviser representative of a federal covered investment adviser shall mean any partner, officer, director (or other person occupying a similar status or performing similar functions), or an employee of a federal covered investment adviser, or any other person who provides investment advice on behalf of the federal covered investment adviser and is subject to the supervision and control of the federal covered investment adviser, if more than 10 percent of the person's clients are natural persons, other than sophisticated clients; and the person has a place of business in the State of Illinois. As used in this subsection, the term "sophisticated client" shall mean a natural person who, immediately after entering into the investment advisory contract with the federal covered investment adviser, has at least $500,000 under management with the federal covered investment adviser or the federal covered investment adviser reasonably believes, immediately prior to entering into the advisory contract, the person has a net worth (together with assets held jointly with a spouse) at the time the contract is entered into of more than $1,000,000.

d) The application on file with the Securities Department shall be amended whenever a change occurs that renders inaccurate any information contained in the application. The amendment shall be filed with FINRA, utilizing the CRD, within 10 business days after the occurrence of the change.

e) In the event the investment adviser representative's activities are terminated, the investment adviser shall file a Form U5 with FINRA, utilizing the CRD, within 30 days after the termination.

f) In the event the investment adviser representative transfers registration from one investment adviser or federal covered investment adviser to another investment adviser or federal covered investment adviser, the new investment adviser or federal covered investment adviser shall file a Form U4 with FINRA, utilizing the CRD, and pay the filing fee specified in Section 130.110.

g) For the limited purpose of this Section and solely for filings and/or fees submitted to the CRD or IARD, the terms "with the Secretary of State", as used in Section 8.C-5, 8.D, 8.D-5 and 8.H of the Act and "with the Securities Department", as used in this Section, shall include a filing and/or fee made with FINRA, utilizing the CRD or IARD.

h) Re-registration

All annual re-registrations of investment adviser representatives shall expire at the end of the day on December 31 annually.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.840 Procedures for Registration as an Investment Adviser Under Section 8.D of the Act

a) Effective October 1, 2002, each new applicant for registration as an investment adviser shall file with FINRA, utilizing the IARD, a complete and current application and pay the filing fee and branch office fee, if any, specified in Section 130.110. The application shall consist of the following:

1. The Revised Uniform Application for Investment Adviser Registration required by 17 CFR 279.1 (May 31, 2011) including Schedule D, which lists all branch offices in this State, if any;

2. One copy of Form U4 for each investment adviser representative on behalf of the applicant and pay the fee specified in Section 130.110.

b) Each applicant for registration as an investment adviser, in addition to the filings required under subsection (a), shall file with the Securities Department the following:

1. A balance sheet for the investment adviser as of a date not more than 60 days prior to the date of the filing of the application. The balance sheet shall be verified and executed by the chief financial officer of the investment adviser, if any, or other person performing a similar function and must contain:

A) an affirmation that the information is true and correct; and

B) a statement disclosing whether the investment adviser retains, or during the term of registration will retain, custody of any client's cash or securities or accept pre-payment of fees in excess of $500 per client and six or more months in advance;

2. One copy of page one of the applicant's most recent Articles of Incorporation or, if a partnership, certificate of assumed name or similar document evidencing the legal name of the applicant;

3. At or prior to registration of the investment adviser, there shall be on file with the Securities Department, whether through the CRD, IARD or otherwise, the following:

A) Proof of passing one or more of the requisite examinations, certifications or designations listed in Section 130.842 for each required principal, unless the Secretary issues an order waiving this requirement pursuant to Section 8.D of the Act; and

B) Any amendments to the application and documents filed pursuant to subsection (a), whether as a result of a change in the information provided since the date of filing or otherwise;

4. One copy of Form U4 for each investment adviser representative who renders investment advice in this State on behalf of the applicant and the fee specified in Section 130.110;

5. One copy of the Illinois Form containing an attestation that the investment adviser has not previously rendered investment advice for compensation in this State, or setting forth a claim of exemption or exclusion;

6. One copy of a written statement manually executed by an officer, partner or principal of the registered dealer consenting to the dual registration as investment adviser and salesperson, if registered as a salesperson in this State; and

7. One copy of Part II of the Revised Uniform Application for Investment Adviser Registration (Form ADV) required by subsection (a)(1).

c) The application and documents on file with the Securities Department with respect to the investment adviser shall be amended from time to time whenever a change occurs that renders any material information contained in those documents not accurate in any material respect. The amendment shall be filed with FINRA, utilizing the IARD, within 10 business days after the occurrence of the change.

d) For purposes of this Section, material information includes, but is not limited to:

1. the name and address of the investment adviser;

2. type of business organization of the investment adviser;

3. disciplinary action concerning the investment adviser;

4. whether the investment adviser has custody of clients' funds or securities or accepts pre-payment of in excess of $500;

5. whether the investment adviser has discretion over clients' portfolios; or

6. whether the investment adviser will give clients Part II of the Uniform Application for Investment Adviser Registration required by subsection (a)(1) or another document containing the same information.

e) For the limited purpose of this Section and solely for the filings and/or fees submitted to the IARD, the terms "with the Secretary of State", as used in Section 8.C-5, 8.D, 8.D-5 and 8.H of the Act, and "with the Securities Department", as used in this Section, shall include a filing and/or fee submitted to FINRA, utilizing the IARD.

f) Annual Re-registration

All new registration applications and re-registration applications shall expire at the end of the day on December 31 annually.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

Chapter I Secretary of State

Part 130 Regulations Under Illinois Securities Law of 1953

14 Ill. Adm. Code 130.841 Reporting of Investment Adviser Branch Office Locations and Required Fees

a) Each investment adviser shall file with the Securities Department with its application for registration a schedule setting forth the address of each branch office in this State as defined in Section 130.280. A Schedule D of the Revised Uniform Application for Investment Adviser Registration required by Section 130.840(a)(1) disclosing each branch office in this State shall be accompanied by the payment of the fee in the form and amount specified in Section 130.110 for each branch office in this State.

b) Each registered investment adviser shall file or have filed with the Securities Department prior to re-registration a schedule setting forth the address of each branch office and pay to the Securities Department in Springfield a fee in the form and amount specified in Section 130.110 for each branch office in this State.

c) No registration or re-registration of an investment advisor shall become effective until theschedule of the investment adviser's branch office has been filed with the Securities Department and the fee, if any, has been paid.

d) The registered investment adviser shall amend its application for registration by filing with the Securities Department in Springfield within 10 business days after:

1. the opening of any branch office in this State not previously reported, setting forth the address of that branch office; and

2. the closing of any branch office in this State, setting forth the address of that branch office.

e) For the limited purpose of this Section and solely for the filings and/or fees submitted to the IARD, the terms "with the Secretary of State" as used in Section 8.C-5, 8.D, 8.D-5, and 8.H of the Act, and "with Securities Department", as used in this Section, shall include a filing and/or fee submitted to FINRA, utilizing the IARD.

f) Annual Re-registration

All new registration applications and re-registration applications shall expire at the end of the day on December 31 annually.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.842 Examinations and Education Programs Deemed Satisfactory for Purposes of Determining Sufficient Knowledge for Each Principal Under Section 8.d.(9) of the Act Prior to Registration as an Investment Adviser

a) Examination Requirements. Any person applying to be registered as an Investment Adviser principal under the Act shall provide the Secretary of State with proof of obtaining a passing score on one of the following examinations:

1. The Uniform Investment Adviser Law Examination (Series 65 examination); or

2. The General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).

b) Grandfathering:

1. Any person who is registered as an investment adviser in any jurisdiction in the United States on May 1, 2000 shall not be required to satisfy the examination requirements for continued registration, except that the Secretary of State may require additional examinations for any person found to have violated any state or federal securities law.

2. Any person who has not been registered in any jurisdiction for a period of two years shall be required to comply with the examination requirements of this Section.

c) Waivers. The examination requirements shall not apply to any person who currently holds one of the following professional designations:

1. Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;

2. Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;

3. Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;

4. Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;

5. Chartered Investment Counselor (CIC) awarded by the Investment Adviser Association; or

6. Any other professional designation as the Secretary of State may recognize by rule or by an order under Section 8 of the Act.

d) Scheduling of the Series 7, 65 or 66 examination shall be arranged by the applicant and fees paid to FINRA.

e) The applicant shall submit in writing to the Securities Department satisfactory proof of the designation or certification referred to in subsection (c) prior to registration as an investment adviser.

f) No person shall be deemed to have sufficient knowledge to act as principal of an investment adviser in this State unless and until he or she is 18 years of age.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.843 Examination and Education Program Requirements for Registration as an Investment Adviser Representative Under Section 8.d-5 of the Act

a) Examination Requirements. Any person applying to be registered as an investment adviser representative under the Act shall provide the Secretary of State with proof of obtaining a passing score on one of the following examinations:

1. The Uniform Investment Adviser Examination (Series 65 examination); or

2. The General Securities Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).

b) Grandfathering:

1. Any person who is registered as an investment adviser in any jurisdiction in the United States on May 1, 2000 shall not be required to satisfy the examination requirements for continued registration, except that the Secretary of State may require additional examinations for any person found to have violated any state or federal securities law.

2. Any individual who has been registered as an investment advisor representative in any state within two years from the date of filing an application for registration shall not be required to retake the examinations in subsection (a) to be eligible for registration.

c) Waivers. The examination requirements shall not apply to any person who currently holds one of the following professional designations:

1. Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;

2. Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;

3. Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;

4. Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;

5. Certified Investment Management Analyst (CIMA) awarded by the Investment & Wealth Institute; or

6. Any other professional designation as the Secretary of State may recognize by rule or by an order under Section 8 of the Act.

d) Scheduling of the Series 7, 65 or 66 examination shall be arranged by the applicant and fees paid to FINRA.

e) The applicant shall submit in writing to the Securities Department satisfactory proof of the designation or certification referred to in subsection (c) prior to registration as an investment adviser representative.

History

• Source: Amended at 49 Ill. Reg. 4061, effective March 19, 2025

14 Ill. Adm. Code 130.844 Statement of Financial Condition to Be Filed by a Registered Investment Adviser Which Retains Custody of Client's Cash or Securities or Accepts Pre-Payment of Fees in Excess of $500.00 Per Client and Six (6) or More Months in Advance and Interim Financial Statements

a) Each registered investment adviser which retains custody of client's cash or securities or accepts pre-payment of fees in excess of $500.00 per client and six (6) or more months in advance shall file a statement of financial condition (balance sheet) and interim financial statements, in such detail as will disclose the nature and amount of assets and liabilities and the net worth of the investment adviser, as follows:

1. the statement shall be filed annually as of the date of its fiscal year end or of an audit date selected by and reported to the Securities Department;

2. the statement shall be filed no later than the first day of the fourth month after the date of its fiscal year end or of the selected audit date;

3. the time period covered by the statement shall be the twelve month period immediately following the date of the most recent audited statement; and

4. should an investment adviser elect to change its audit date, a written request for variance from the filing period covered by the statement shall be filed in accordance with Section 130.190 of this Part with the Securities Department in Springfield, Illinois. The request shall include each reason for the change. An unaudited statement shall be filed with the Securities Department and be as of the date of the investment adviser's selected audit date. If the investment adviser is required to file an audited statement it shall encompass the entire period of time which has elapsed since the most current filing of an audited statement.

5. For purposes of this Section, the term "audit date" shall mean the date selected and reported to the Securities Department by the investment adviser for fulfilling the filing requirement of this Section.

b) The statement of financial condition shall consist of a signed independent auditors' report, a balance sheet and notes to the financial statement, if any. The statement of financial condition shall be accompanied by the cover page, if any, designated by the Securities Department.

c) The Secretary may, at his or her discretion, require any investment adviser to file an interim statement of financial condition as of a date selected by the Secretary. Such statements shall be audited by an Independent Certified Public Accountant if the investment adviser retains custody of any client's cash or securities or accepts pre-payment of fees in excess of $500.00 per client and six (6) or more months in advance.

d) If an unaudited statement of financial condition is filed, the statement shall contain the following oath or affirmation: "I hereby attest that the information contained in this statement of financial condition is true and correct to the best of my knowledge."

1. The oath or affirmation filed by an investment adviser shall be deemed acceptable even though it varies from the language set forth above unless the oath or affirmation does not contain a specific reference that the information is true and correct and unless the Securities Department notifies the investment adviser in writing of its objection.

2. The oath or affirmation shall be made before a person duly authorized to administer oaths or affirmations. If the investment adviser is a sole proprietorship, the oath or affirmation shall be made by the proprietor; if a partnership, by a general partner; or if a corporation, by a duly authorized officer.

e) Each statement of financial condition, except the independent auditors' report, the balance sheet and notes, if any, shall be deemed confidential when filed with the Securities Department. The independent auditors' report, the balance sheet and notes, if any, shall be a matter of public record and available to the public upon written request.

f) Anything to the contrary notwithstanding, all of the information contained in any statement of financial condition shall be available to any federal, state or local law enforcement agency, any state or federal financial regulator or any self-regulatory organization registered under any federal law upon written request to the Securities Department.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.845 Records Required of Investment Advisers

a) Except as provided in subsection (d) of this Section, every investment adviser registered by the Secretary of State shall keep the books and records set out in this Section unless otherwise designated by the Secretary of State:

1. ledgers (or other records) reflecting all assets and liabilities, income and expense, and capital accounts;

2. a record showing all payments received, including date of receipt, purpose and from whom received, and all disbursements, including date paid, purpose and to whom made;

3. a record showing all receivables and payables;

4. records showing separately for each client the securities purchased or sold, and, to the extent it has been made available to the investment adviser, the date and amount of and price at which such purchases or sales were executed. If available to the investment adviser, this record should also show the name of the security dealer who handled the transaction;

5. records showing separately all securities acquired by the clients of the investment adviser and indicating thereon the proper identification of this individual account, the date, amount and price at which such securities were purchased or sold by or for each client; or, in the alternative, a record showing all securities (other than securities enumerated in Section 3.A of the Act) bought or sold by or for the accounts of all clients of the investment adviser in each month, the total number of shares or principal amount of each security bought or sold and the lowest and highest price at which purchases or sales were made during the month;

6. copies of dealer's confirmations of all transactions placed by the investment adviser for any account, and the other dealer's confirmations as may be supplied to the investment adviser by a client or dealer;

7. a list showing all accounts in which the investment adviser is vested with discretionary power, unless the records required by subsections (a)(4) and (5) of this Section are maintained in such manner as to disclose which are discretionary accounts, provided that the provisions of subsections (a)(4) and (5) of this Section shall not apply:

A) to any securities with respect to which the investment adviser renders no services of a supervisory or other nature; or

B) to any securities or transactions which a client declines to disclose to the investment adviser;

and provided further that the provisions of subsections (a)(4), (5), (6) and (7) above shall not apply to the accounts of any investment adviser where the services consist solely of the distribution of written or printed publications on a subscription basis.

b) Additional Records

1. Every investment adviser registered by the Secretary of State shall preserve for a period of not less than 3 years, the first 2 years in an easily accessible place, all records required by subsection (a) of this Section and the following additional records:

A) all check books, bank statements, cancelled checks and cash reconciliations;

B) all bills or statements (or copies thereof), paid or unpaid, relating to the business of such investment adviser;

C) originals of all communications received and copies of all communications sent by such investment adviser relating to the business of the investment adviser;

D) all power of attorneys and other evidence of the granting of any discretionary authority in any account, and copies of resolutions empowering an agent to act on behalf of any client;

E) all written agreements (or copies thereof), entered into by an investment adviser relating to the business of the investment adviser, including agreements with respect to any account, which agreements shall set forth the fees to be charged and the manner of computation and method of payment thereof.

2. For a period of not less than 3 years after the closing of any client's account, all required records relating to such account shall be preserved by every registered investment adviser.

3. Every registered investment adviser shall preserve, during the life of the enterprise and of any successor enterprise, all partnership agreements, certificates or articles, or, in the case of a corporation, all articles of incorporation or charter, minute books and stock certificate books.

4. After a record or other document has been preserved for 2 years, a photograph thereof on film may be substituted for the balance of the required time.

c) Any records required by this Section may be maintained:

1. in such manner that the identity of any client or clients to whom a registered investment adviser renders investment supervisory service is indicated by numerical, alphabetical, code or similar designations, or

2. in duplicate with one set of the records having the identity of any client or clients to whom a registered investment adviser renders investment supervisory service deleted or indicated by numerical, alphabetical, code or similar designation, as may be appropriate to the record required.

d) This Section shall not apply to any investment adviser that is registered or licensed as such in the state in which it maintains its principal place of business and is in compliance with the applicable books and records requirements of the state in which it maintains its principal place of business.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.846 Written Disclosure Statements of a Registered Investment Adviser

a) General Requirement

Unless otherwise provided in this Section, an investment adviser, registered or required to be registered pursuant to Section 8.D of the Act, shall, in accordance with the provisions of this Section, furnish each advisory client and prospective advisory client with a written disclosure statement required by 17 CFR 275.204-3 (May 31, 2011).

b) Delivery

1. An investment adviser, except as provided in subsection (b)(2), shall deliver the statement required by this Section to an advisory client or prospective advisory client:

A) not less than 48 hours prior to entering into any written or oral investment advisory contract with a client or prospective client; or

B) at the time of entering into a contract, if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

2. Delivery of the statement required by subsection (b)(1) need not be made in connection with entering into:

A) an investment company contract; or

B) a contract for impersonal advisory services.

c) Offer to Deliver

1. An investment adviser, except as provided in subsection (c)(2), annually shall, without charge, deliver or offer in writing to deliver upon written request to each of its advisory clients the statement required by this Section.

2. The delivery or offer required by subsection (c)(1) need not be made to advisory clients receiving advisory services solely pursuant to:

A) an investment company contract; or

B) a contract for impersonal advisory services requiring a payment of less than $200.

3. With respect to an advisory client entering into a contract or receiving advisory services pursuant to a contract for impersonal advisory services which requires a payment of $200 or more, an offer of the type specified in subsection (c)(1) shall also be made at the time of entering into an advisory contract.

4. Any statement requested in writing by an advisory client pursuant to an offer required by this subsection (c) must be mailed or delivered within seven days after the receipt of the request.

d) Omission of Inapplicable Information

If an investment adviser renders substantially different types of investment advisory services to different advisory clients, any information required may be omitted from the statement furnished to an advisory client or prospective advisory client if the information is applicable only to a type of investment advisory service or fee that is not rendered or charged, or proposed to be rendered or charged, to that client or prospective client as provided by 17 CFR 275.204-3 (May 31, 2011).

e) Other Disclosures

Nothing in this Section shall relieve any investment adviser from any obligation under the Act or this Part or other federal or State law to disclose any information to its advisory clients or prospective advisory clients not specifically required by this Section.

f) Definitions. For the purpose of this Section:

1. "Contract for impersonal advisory services" means any contract relating solely to the provision of investment advisory services:

A) by means of written material or oral statements that do not purport to meet the objectives or needs of specific individuals or accounts;

B) through the issuance of statistical information containing no expression of opinion as to the investment merits of a particular security; or

C) any combination of the services listed in subsections (f)(1)(A) and (B);

2. "Entering into," in reference to an investment advisory contract, does not include an extension or renewal without material change of any contract that is in effect immediately prior to the extension or renewal; and

3. "Investment company contract" means a contract with an investment company registered under the Federal 1940 Investment Company Act that the requirements of section 15(c) of that Act, as defined in Section 130.200 of this Part.

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.847 Financial and Disciplinary Information That Investment Advisers Must Disclose to Clients

a) It shall constitute a fraudulent, deceptive or manipulative act, practice or course of business within the meaning of Section 12(J)(3) of the Act for any investment adviser to fail to disclose to any client or prospective client all material facts with respect to:

1. A financial condition of the investment adviser such as insolvency or embezzlement, that impairs the ability of the investment adviser to meet contractual commitments to clients, if the investment adviser has discretionary authority (express or implied) or custody over such client's funds or securities, or requires prepayment of advisory fees of more than $500.00 from such client and six (6) months or more in advance; or

2. A legal or disciplinary event that is material to an evaluation of the investment adviser's integrity or ability to meet contractual commitments to clients.

b) It shall constitute a rebuttable presumption that the following legal or disciplinary events involving the investment adviser or a management person of the investment adviser (any of the foregoing being referred to hereafter in this Section as "person") that were not resolved in the person's favor or subsequently reversed, suspended or vacated are material within the meaning of subsection (a)(2) of this Section for a period of ten (10) years from the time of the event:

1. A criminal or civil action in a court of competent jurisdiction in which the person:

A) was convicted, pleaded guilty or nolo contendere ("no contest") to a felony or misdemeanor, or is the named subject of a pending criminal proceeding (any of the foregoing referred to hereafter in this Section as "action"), and such action involved an investment related business; or fraud, false statements, or omissions; or wrongful taking of property; or bribery, forgery, counterfeiting or extortion;

B) was found to have violated or caused the violation of an investment related statute or regulation; or

C) was the subject of any order, judgment or decree permanently or temporarily enjoining the person from, or otherwise limiting the person from, engaging in any investment related activity.

2. Administrative proceedings before the SEC, any other federal regulatory agency or any state agency (any of the foregoing being referred to hereafter in this Section as "agency") in which the person:

A) was found to have caused an investment related business to lose its authorization to do business; or

B) was found to have violated or caused the violation of an investment related statute or regulation and was the subject of an order by the agency denying, suspending or revoking the authorization of the person to act in, or barring or suspending the person's association with, an investment related business.

3. Self Regulatory Organization (SRO) proceedings in which the person:

A) was found to have caused an investment related business to lose its authorization to do business; or

B) was found to have violated or caused the violation of the SRO's rules and was the subject of an order by the SRO barring or suspending the person from membership or from association with other members, or expelling the person from membership, fining the person more than $2,500.00.

c) The information required to be disclosed by subsection (a) of this Section shall be disclosed to clients promptly, and to prospective clients not less than 48 hours prior to entering into any written or oral investment advisory contract, or no later than the time of entering into such contract if the client has the right to terminate the contract without penalty within five (5) business days after entering into the contract.

d) For purposes of this Section:

1. "Management person" means a person with power to exercise, directly or indirectly, a controlling influence over the management or policies of an investment adviser which is a company or to determine the general investment advise given to clients.

2. "Found" means determined or ascertained by adjudication or consent in a final SRO proceeding, administrative proceeding or court action.

3. "Investment related" means pertaining to securities, commodities, banking, insurance or real estate (including, but not limited to, acting as of being associated with a broker, dealer, investment company, investment adviser, government securities broker or dealer, municipal securities dealer, bank, savings and loan association, entity or person required to be registered under the Federal 1974 Act, as defined in Section 130.200 of this Part, or fiduciary).

4. "Involved" means acting or aiding, abetting, causing, counseling, commanding, inducing, conspiring with or failing reasonably to supervise another in doing an act.

5. "Self Regulatory Organization" or "SRO" means any national securities or commodities exchange, registered association or registered clearing agency.

e) For purposes of calculating the ten (10) year period during which events are presumed to be material under subsection (b) of this Section, the date of a reportable event shall be the date on which the final order, judgment or decree was entered, or the date on which any rights of appeal from preliminary orders, judgments or decrees lapsed.

f) Compliance with subsection (b) of this Section shall not relieve any investment adviser from the disclosure obligations of subsection (a) of this Section; compliance with subsection (a) of this Section shall not relieve any investment adviser from any other disclosure requirement under this Part or the Act, or under any other federal or state law.

g) Registered investment advisers may disclose the information required by this Section to clients and prospective clients with the information required by Section 130.846 of this Part; provided that the delivery of the information satisfies the timing of disclosure requirements described in subsection (c) of this Section.

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.848 Advertisements by Investment Advisers

a) It shall be a fraudulent business practice under Section 8 of the Act for any investment adviser registered or required to be registered under the Act, directly or indirectly, to publish, circulate, or distribute in any manner any advertisement:

1. That refers, directly or indirectly, to any testimonial of any kind concerning the investment adviser or concerning any advice, analysis, report or other service rendered by such investment adviser; or

2. That refers, directly or indirectly, to past specific recommendations of an investment adviser that were or would have been profitable to any person; provided, however, that this shall not prohibit an advertisement that sets out or offers to furnish a list of all recommendations made by such investment adviser within the immediately preceding period of not less than one year if the advertisement, and the list, if it is furnished separately:

A) state the name of each security recommended, the date and nature of each recommendation (e.g., whether to buy, sell or hold), the market price at that time, the price upon which the recommendation was to be acted, and the market price of each security as of the most recent practicable date; and

B) contain the following cautionary legend on the first page in print or type as large as the largest print or type used in the body or text: "It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities in this list."; or

3. That represents, directly or indirectly, that any graph, chart, formula or other device being offered can in and of itself be used to determine which securities to buy or sell, or when to buy or sell them; or that represents, directly or indirectly, that any graph, chart, formula or other device being offered will assist any person in making his or her own decisions as to which securities to buy or sell, or when to buy or sell them, without prominently disclosing in the advertisement the limitations and the difficulties with respect to its use; or

4. That contains any statement to the effect that any report, analysis or other service will be furnished free or without charge, unless the report, analysis or other service actually is or will be furnished entirely free and without any condition or obligation, directly or indirectly; or

5. That contains any untrue statement of a material fact, or that is otherwise false or misleading.

b) For the purposes of this Section, the term advertisement shall include any notice, circular, letter or other written communication addressed to more than one person, or any notice or other announcement in any publication or by radio or television, or any electronically available or distributed communication that offers:

1. Any analysis, report, or publication concerning securities, or that is to be used in making any determination as to when to buy or sell any security, or which security to buy or sell; or

2. Any graph, chart, formula, or other device to be used in making any determination as to when to buy or sell any security, or which security to buy or sell; or

3. Any other investment advisory service with regard to securities.

History

• Source: Added at 34 Ill. Reg. 17783, effective November 3, 2010

14 Ill. Adm. Code 130.849 Consumer Information Privacy Provisions

An investment adviser, registered or required to be registered pursuant to Section 8.D of the Act, shall comply with the privacy provisions of subtitle A of Title V of the federal Gramm-Leach-Bliley Act (15 USC 6801-09) and the Federal Trade Commission regulations at 16 CFR 313 (Privacy of Consumer Financial Information).

History

• Source: Added at 34 Ill. Reg. 17783, effective November 3, 2010

14 Ill. Adm. Code 130.850 Account Transactions

a) No dealer or salesperson shall effect transactions for any customer's account which are excessive in size or frequency or unsuitable in view of the financial resources of the customer.

b) No dealer shall effect any transaction of purchase or sales unless immediately after effecting the transaction the dealer makes a record of the transaction which record includes the name of the customer, the name, amount and price of the securities, and the date and time when the transaction took place.

c) Each dealer shall keep or preserve, for at least 3 years, records as the dealer may be required to make pursuant to the provisions of paragraph (b) of this section.

14 Ill. Adm. Code 130.851 Commission, Profit or Other Compensation

No dealer shall charge or receive a commission, profit or other compensation in connection with an order for the sale or purchase of securities unless the securities are exempt or are sold in exempt transactions or are registered under the provisions of the Act.

14 Ill. Adm. Code 130.852 Compensation

a) No registered investment adviser or its representatives shall charge or receive compensation in connection with the giving of investment advice unless the compensation is fair and reasonable and is determined on an equitable basis adequately disclosed to each client in writing.

b) No registered investment adviser or its representatives shall charge or receive compensation in connection with the giving of investment advice that provides for compensation to the investment adviser or its representative on the basis of a share of the capital gains upon, or the capital appreciation of, the funds, or any portion of the funds, of a client, unless the fees are charged in conformance with the provisions set forth in 17 CFR 275.205-3 (September 19, 2011)

History

• Source: Amended at 36 Ill. Reg. 2852, effective February 8, 2012

14 Ill. Adm. Code 130.853 Account Transactions

Effecting or causing to be effected by or for any client's account, any transactions of purchase or sale which are excessive in size or frequency or unsuitable in view of the financial resources and character of the account, shall constitute an act, practice, or course of business on the part of the registered investment adviser or its representative effecting such transactions or causing the transactions to be effected that is fraudulent, deceptive or manipulative.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.854 Use of the Term "investment Counsel"

No registered investment adviser or its representative shall use the title "Investment Counsel" in the conduct of its business nor represent that it is an "investment counsel" nor use the term "investment counsel" as descriptive of its business unless the person is primarily engaged in the business of rendering investment supervisory services.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.855 Use of Senior Certifications and Professional Designations

a) It shall be a fraudulent business practice under Section 8 of the Act for any person to use, in such a way as to mislead any person, a senior specific certification or designation that, in a manner prohibited by subsection (b), indicates or implies that the user has special certification or training in advising or servicing senior citizens or retirees in connection with the offer, sale or purchase of securities, or the provision of advice as to the value of or the advisability of investing in, purchasing or selling securities, directly or indirectly, through publications or writings, or by issuing or promulgating analyses or reports relating to securities.

b) The prohibited use of such certifications or professional designations includes, but is not limited to, the following:

1. use of a certification or professional designation by a person who has not actually earned, or is otherwise ineligible to use, such certification or designation;

2. use of a nonexistent or self-conferred certification or professional designation;

3. use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training or experience that the person using the certification or professional designation does not have; and

4. use of a certification or professional designation that was obtained from a designating or certifying organization that:

A) is primarily engaged in the business of instruction in sales and/or marketing;

B) does not have reasonable standards or procedures for assuring the competency of its designees or certificants;

C) does not have reasonable standards or procedures for monitoring and disciplining its designees or certificants for improper or unethical conduct; or

D) does not have reasonable continuing education requirements for its designees or certificants in order to maintain the designation or certificate.

c) There is a rebuttable presumption that a designating or certifying organization is not disqualified solely for purposes of subsection (b)(4) when the organization has been accredited by:

1. The American National Standards Institute; or

2. The National Commission for Certifying Agencies; or

3. An organization that is on the United States Department of Education's list titled "Accrediting Agencies Recognized for Title IV Purposes" and the designation or credential issued by that organization does not primarily apply to sales and/or marketing.

d) In determining whether a combination of words, or an acronym standing for a combination of words, constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing senior citizens or retirees, factors to be considered shall include:

1. use of one or more words such as "senior", "retirement", "elder" or like words, combined with one or more words such as "certified", "registered", "chartered", "adviser", "specialist", "consultant", "planner" or like words, in the name of the certification or professional designation; and

2. the manner in which those words are combined.

e) For purposes of this Section, a certification or professional designation does not include a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency, when that job title indicates seniority or standing within the organization, or specifies an individual's area of specialization within the organization. For purposes of this subsection (e), the term "financial services regulatory agency" includes, but is not limited to, an agency that regulates broker-dealers, investment advisers or investment companies, as defined by the Investment Company Act of 1940 (15 USC 80a-51 through 80a-58).

f) Nothing in this Section shall limit the Secretary's authority to enforce existing provisions of the Act.

History

• Source: Added at 33 Ill. Reg. 12817, effective September 8, 2009

14 Ill. Adm. Code 130.860 Additional Fees Under Section 8 of the Act

a) The additional fee for the failure by a registered dealer or investment adviser to file or file timely any required statement of financial condition or financial statement shall be as set forth in Section 130.110 of this Part.

b) The additional fee for the second and subsequent failure by a registered dealer or investment adviser to file or file timely a statement of financial condition or financial statement shall be as set forth in Section 130.110 of this Part.

c) The additional fee for the failure by a registered dealer or investment adviser to file or file timely any other post-registration document required under Section 8 of the Act or this Part shall be as set forth in Section 130.110 of this Part.

d) The additional fee for the second and subsequent failure by a registered dealer or investment adviser to file or file timely any other post-registration document required under Section 8 of the Act or this Part shall be as set forth in Section 130.110 of this Part.

e) The Secretary, at his or her discretion, may waive or reduce the amount of any additional fee set forth above in this Section if the registered dealer or investment adviser demonstrates by competent evidence that:

1. in the case of a registered investment adviser, payment of the additional fee would render it insolvent; or

2. in the case of a registered dealer, payment of the additional fee would cause it to be in violation of the requirements set forth in Section 130.826 of this Part.

f) The failure by a registered dealer or investment adviser to file the required document with the Securities Department and pay any additional fee or fees set forth in this Section within ten (10) business days after prior written notice thereof by the Securities Department shall constitute a fraudulent business practice under Section 8(E)(1)(b) of the Act.

g) For the purposes of this Section, competent evidence means a balance sheet prepared as of a current date and executed and verified by the chief financial officer of the investment adviser.

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.872 Procedure with Respect to Abandoned Dealer Applications

a) When an application for registration has been on file with the Secretary of State for a period of six months and has not become registered, the Secretary of State shall proceed in the manner determined by this Section as to whether the application for registration has been abandoned by the applicant. If the application for registration has been amended, other than for the purpose of delaying the registration thereof, the six month period shall be computed from the date of the latest such amendment.

b) A notice will be sent to the applicant, by registered mail, return receipt requested, addressed to the most recent address for the applicant. The notice will inform the applicant that the application for registration or amendment is out of date and must be either amended, completed to comply with the applicable requirements of the Act, or be withdrawn, or an Order of Abandonment will be entered by the Secretary of State within 30 days after the date of the notice.

c) If the applicant fails to respond to such notice by filing an amendment, completing or withdrawing the application for registration within 30 days, the Secretary of State may enter an order declaring the application for registration abandoned.

d) The applicant may within 15 days of receipt of the Order of Abandonment request in writing a hearing which request shall set forth the grounds upon which the applicant seeks a hearing.

e) When an Order of Abandonment is entered, all papers comprising the application for registration, with the exception of the application form and correspondence, will be removed from the files of the Secretary of State.

14 Ill. Adm. Code 130.873 Procedure with Respect to Abandoned Investment Adviser Applications

a) When an application for registration has been on file with the Secretary of State for a period of six months and has not become registered, the Secretary of State shall proceed in the manner determined by this Section as to whether the application for registration has been abandoned by the applicant. If the application for registration has been amended, other than for the purpose of delaying the registration thereof, the six month period shall be computed from the date of the latest such amendment.

b) A notice will be sent to the applicant, by registered mail, return receipt requested, addressed to the most recent address for the applicant. The notice will inform the applicant that the application for registration or amendment, including all of the applications for registration of investment adviser representatives, is out of date and must be either amended, completed to comply with the applicable requirements of the Act, or be withdrawn, or an Order of Abandonment will be entered by the Secretary of State within 30 days after the date of the notice.

c) If the applicant fails to respond to such notice by filing an amendment, completing or withdrawing the application for registration within 30 days, the Secretary of State may enter an Order declaring the application for registration abandoned.

d) The applicant, within 15 days after the receipt of the Order of Abandonment, may request in writing a hearing which request shall set forth the grounds upon which the applicant seeks a hearing.

e) When an Order of Abandonment is entered all papers comprising the application for registration, with the exception of the application forms and correspondence, will be removed from the files of the Secretary of State.

History

• Source: Amended at 21 Ill. Reg. 15892, effective December 1, 1997

14 Ill. Adm. Code 130.874 Business Continuity and Succession Planning

Every investment adviser shall establish, implement and maintain written procedures relating to a Business Continuity and Succession Plan. The plan shall be based upon the facts and circumstances of the investment adviser's business model, including the size of the firm, types of services provided, and number of locations of the investment adviser. The plan shall provide for at least the following:

a) The protection, backup and recovery of books and records.

b) Alternate means of communication with customers, key personnel, employees, vendors, service providers (including third-party custodians) and regulators, including, but not limited to, providing notice of a significant business interruption or the death or unavailability of key personnel or other disruptions or cessation of business activities.

c) Office relocation in the event of temporary or permanent loss of a principal place of business.

d) Assignment of duties to qualified responsible persons in the event of the death or unavailability of key personnel.

e) Otherwise minimizing service disruptions and client harm that could result from a significant business interruption.

History

• Source: Added at 40 Ill. Reg. 13248, effective September 1, 2016

14 Ill. Adm. Code 130.881 Continuing Education Requirements for Investor Adviser Representatives

The following requirements are deemed necessary to establish an investment adviser representative's continuing qualifications to act as an IAR under Section 8 of the Act. (See 815 ILCS 5/8(D-5)(5) and (6).)

a) Continuing Education. Every IAR registered under Section 8 of the Act must complete the following IAR continuing education requirements each reporting period:

1. IAR Ethics and Professional Responsibility Requirement. An IAR must complete six credits of IAR ethics and professional responsibility content offered by an authorized provider, with at least three hours covering the topic of ethics; and

2. IAR Products and Practice Requirement. An IAR must complete six credits of IAR products and practice content offered by an authorized provider.

b) Compliance for Salesperson of FINRA-Registered Broker-Dealer. An IAR who is also a registered salesperson of a FINRA member broker-dealer, and who complies with FINRA's continuing education requirements, is considered to be in compliance with subsection (a)(2) above for each applicable reporting period, provided FINRA's continuing education content meets all the following baseline criteria:

1. The continuing education content focuses on compliance, regulatory, ethical, and sales practices standards;

2. The continuing education content is derived from state and federal investment advisory statutes, rules and regulations; securities industry rules and regulations; and accepted standards and practices in the financial services industry; and

3. The continuing education content requires that its participants demonstrate proficiency in the subject matter of the educational materials.

c) IAR Continuing Education Reporting. Every IAR is responsible for ensuring that the authorized provider reports to the IARD the IAR's completion of the applicable IAR continuing education requirements.

d) No Carry-Forward. An IAR who completes credits of continuing education in excess of the amount required for the reporting period may not carry forward excess credits to a subsequent reporting period.

e) Failure to Complete or Report. An IAR who fails to comply with this Section by the end of a reporting period will renew as "CE Inactive" at the close of the calendar year in this State until the IAR completes and reports all required IAR continuing education credits for all reporting periods as required by this Section. An IAR who is "CE Inactive" at the close of the next calendar year is not eligible for IAR registration, or renewal of an IAR registration.

f) Granting Variances. The Securities Director may grant variances from this Part in individual cases when the Securities Director finds that:

1. The provision from which the variance is granted is not statutorily mandated;

2. No party will be injured by the granting of the variance; and

3. The rule from which the variance is granted would, in that particular case, be unreasonable or unnecessarily burdensome.

g) Home State. An IAR registered or required to be registered in this State who is also registered as an IAR in the individual's home state is considered to be in compliance with this Section provided that both of the following are true:

1. The IAR's home state has continuing education requirements that are at least as stringent as this Section; and

2. the IAR is in compliance with the home state's IAR continuing education requirements.

h) Unregistered Periods. An IAR who was previously registered under the Act and became unregistered must complete IAR continuing education for all reporting periods that occurred between the time that the IAR became unregistered and when the person became registered again under the Act, unless the IAR takes and passes the examinations specified in Section 130.832 for salespersons, or Section 130.843 for IARs.

History

• Source: Added at 49 Ill. Reg. 4061, effective March 19, 2025

14 Ill. Adm. Code 130.882 Examination Validity Extension Program for Investment Adviser Representatives and Salespersons

a) For Investment Adviser Representatives. Notwithstanding the examination requirements of Section 130.843, an individual who terminates registration as an IAR may maintain the validity of the representative's Series 65/Uniform Investment Adviser Law Examination ("Series 65 Examination") or the IAR portion of the Series 66/Uniform Combined State Law Examination ("Series 66 Examination"), as applicable, without being employed by or associated with an investment adviser or federal-covered investment adviser for a maximum of five years following termination of the individual's IAR registration if the individual meets all of the following:

1. The individual previously took and passed the examination for which continuing validity is sought under this Part;

2. The individual was registered as an IAR for at least one year immediately preceding termination of the IAR registration;

3. The individual was not subject to a statutory disqualification as defined in Section 3(a)(39) of the Federal 1934 Act while registered as an IAR or at any period after termination of the representative's IAR registration;

4. The individual elects to participate in the Exam Validity Extension Program ("EVEP") under this subsection (a) within two years from the effective date of the termination of the individual's IAR registration;

5. The individual does not have a deficiency under the IAR continuing education program set forth in Section 130.881 at the time the individual's IAR registration becomes ineffective;

6. The individual completes annually, on or before December 31 of each calendar year in which the person participates in the IAR-EVEP:

A) six credits of IAR CE ethics and professional responsibility content offered by an authorized provider, including at least three hours covering the topic of ethics; and

B) six credits of IAR CE products and practice content offered by an authorized provider; and

7. An individual who elects to participate in EVEP is required to complete credits required by subsection (a)(6) for each calendar year that elapses after the individual's IAR registration became ineffective regardless of when the individual elects to participate in EVEP.

b) For IARs Duly Registered as Salespersons. An individual who was duly registered for at least one year as both an IAR and a salesperson at the time the person's registrations terminated, and who complies with FINRA's Maintaining Qualification Program under FINRA Rule 1240(c), will be deemed in compliance with subsection (a)(6)(B) for purposes of continuing IAR examination validity.

c) For Salespersons. An individual who was registered as a salesperson with a FINRA-member securities dealer for at least one year at the time the salesperson's registrations terminated, and who complies with FINRA's Maintaining Qualification Program under FINRA Rule 1240(c), will be deemed to have met the requirements for maintaining the validity of all examinations taken and passed that relate to registrations held at the time the registrations terminated, for a maximum period of five years following termination of those registrations.

History

• Source: Added at 49 Ill. Reg. 4061, effective March 19, 2025

14 Ill. Adm. Code 130.1001 Service of Process Upon the Secretary of State

a) Any process, notice or demand to be served upon the Secretary of State under the Act shall be made by delivering personally to the Securities Director, or any employee of the Securities Department designated by the Securities Director to accept such service on behalf of the Secretary of State, or by sending by registered mail or certified mail, return receipt requested, a copy of the process, notice or demand to the Securities Department. Additional Procedures for service are specified in the Act in the following Sections:

1. Service upon any person who has filed a consent to service of process upon the Secretary of State under the Act, second paragraph of Section 10.A.(2) of the Act;

2. Service upon any person who, by virtue of having offered, sold or delivered securities in this State which are neither registered nor covered by an exemption from registration, shall have appointed the Secretary of State as agent for service of process, Section 10.B.(2) of the Act; and

3. Service of a copy of a complaint in a private civil action, Section 13.G.(2) of the Act.

b) Service of any process, notice or demand under this Section shall be made with the Springfield or Chicago office of the Securities Department during regular business hours as specified in Section 130.100 of this Part.

c) At the time of any service upon the Secretary of State pursuant to Section 10 of the Act, there shall be paid a fee in the amount specified in Section 130.110, which shall not be returnable in any event. Each process, notice or demand shall be submitted with a separate payment.

d) The Securities Department shall keep a record of all the processes, notices and demands received by it, which shall show the date of service.

14 Ill. Adm. Code 130.1100 Preamble

The Rules contained in this Subpart shall govern every hearing before the Securities Department. The purpose of this Subpart is to provide for the orderly determination of rights, duties and privileges of parties appearing before the Secretary or his or her representatives under procedures assuring such parties due process of law.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1101 Qualifications and Duties of the Hearing Officer

a) The hearing officer shall meet the following standards and qualifications:

1. be of high integrity and of good personal repute;

2. be admitted to practice law in the State of Illinois and be a member in good standing of the Bar of Illinois for at least three years; and

3. be familiar with the Rules contained in this Part and the Act.

b) A hearing officer shall rule on procedure and the admissibility of evidence and shall make findings of fact, conclusions of law and recommendations.

c) The final decision in all hearings shall be made by the Secretary or his or her designated representative after consideration of the findings of fact, conclusions of law, and recommendations of the hearing officer.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1102 Notice of Hearing

a) The Notice of Hearing shall include:

1. A statement of the time, place and nature of the hearing;

2. A statement of the legal authority, and jurisdiction under which the hearing is held;

3. A short and plain statement of the matters alleged;

4. A statement of financial sanction or relief sought; and

5. A concise statement to each respondent that:

A) the respondent may be represented by legal counsel, may present evidence, may cross-examine witnesses and otherwise participate;

B) failure by any respondent to appear shall constitute default by such respondent; and

C) delivery of notice to the designated representative of any respondent constitutes service upon such respondent.

b) Unless otherwise required, and except for subsection (c) of this Section, each respondent shall be given a Notice of Hearing at least 45 days prior to the first date set for any hearing hereunder. Once such notice is given, the Securities Department shall notify each respondent in writing at the last known address of each respondent of any subsequent hearing date.

c) In the case of a request for hearing by a respondent on a Temporary Order of Prohibition or Suspension, such request shall immediately toll any time limitations on the effectiveness of the Temporary Order of Prohibition or Suspension for 60 days from the date the request is received by the Department and each respondent shall be given a Notice of Hearing which shall state that by requesting a hearing the respondent agrees to a tolling of the time limitation on the effectiveness of the Temporary Order of Prohibition or Suspension for 60 days from the date the request is received by the Department.

d) When a respondent timely requests a hearing on a Temporary Order of Suspension or Prohibition pursuant to Section 11(F)(2) of the Illinois Securities Law of 1953, or Stop Order or Order of Denial under Section 11(F)(4) of the Act issued by the Secretary, the Securities Department shall issue a Notice of Hearing in the form prescribed herein.

e) Any contention that improper notice was given shall be deemed waived unless it is raised by the respondent in its answer, special appearance, or other responsive pleading.

f) Proper notice is given by depositing a Notice of Hearing with the United States Postal Service, either by certified or registered mail, return receipt requested, or by the personal service, to the last known address of the respondent.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1103 Institution of a Contested Case by the Securities Department

A contested case is instituted by the Securities Department when a Notice of Hearing is mailed to a respondent at the respondent's last known address by registered or certified mail, return receipt requested, or personal service is obtained upon a respondent.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1104 Requirement to File an Answer

a) In each contested case instituted by the Securities Department, each respondent shall file with the Securities Department an Answer, Special Appearance pursuant to Section 130.1107 of this Part, or other responsive pleading within 30 days after the service of the Notice of Hearing or within ten days after each amended Notice of Hearing which materially alters the Notice of Hearing, such as an addition or deletion of parties or counts, or within ten days after service of a Notice of Hearing issued pursuant to Section 130.1102(d) of this Part. Each Answer shall be in writing, signed by each respondent or the respondent's representative, and shall contain a specific response to each allegation in the Notice of Hearing or each new allegation contained in a materially altered Notice of Hearing and set forth affirmative defenses, if any. The response shall either admit or deny each allegation, or shall state that the respondent has insufficient information to admit or deny the allegation. Every allegation not explicitly denied is admitted, unless the respondent states in his or her answer that he or she has no knowledge thereof sufficient to form a belief, and attaches an affidavit of the truth of the want of knowledge, or unless the respondent has had no opportunity to deny.

b) Failure, by the respondent, to timely file an answer, a special appearance pursuant to Section 130.1107 of this Part, or other responsive pleading shall be deemed an admission of the allegations contained in the Notice of Hearing and waives the respondent's right to a hearing. The Hearing Officer shall make a recommendation that an appropriate order be entered wherein, in addition to any other sanctions, respondent be held in default.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1105 Amendment or Withdrawal of the Notice of Hearing

a) The Notice of Hearing may be amended at any time. An Amended Notice of Hearing may be filed in the same manner as a Notice of Hearing, or it may be presented to the hearing officer and each respondent during the course of the hearing. A continuance may be granted by the hearing officer whenever the amendment materially alters the Notice of Hearing, and where a respondent demonstrates that any respondent would otherwise be unable to properly prepare an Answer to the Amended Notice of Hearing or prepare any respondent's case.

b) A Notice of Hearing may be withdrawn without prejudice by the Securities Department at any time prior to the hearing. After a hearing has begun, a Notice of Hearing may be withdrawn only upon written notice to, and concurrence by the hearing officer.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1106 Representation

a) Any individual may appear personally on his or her own behalf.

b) A party or witness may be represented by an attorney licensed in Illinois or any law student licensed under Supreme Court Rule 711 (Ill. Rev. Stat. 1987, ch. 110A, par. 711). Attorneys admitted to practice in states other than the State of Illinois may appear and be heard by special leave of the Hearing Officer appointed to conduct the hearing, upon the attorney's verbal representations or written documentation as to the attorney's admittance. Attorneys who appear in a representative capacity must file a written notice of appearance setting forth:

1. The name, business address and telephone number of the attorney; and

2. The name and address of the party or witness represented.

c) A corporation may be represented by an officer.

d) A partnership may be represented by any general partner.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1107 Special Appearance (repealed)

History

• Source: Repealed at 33 Ill. Reg. 12817, effective September 8, 2009

14 Ill. Adm. Code 130.1108 Substitution of Parties

A hearing officer may, upon motion by a party, order a substitution of parties in cases such as a successor entity, death, incompetency, bankruptcy assignments, marriage and legal disability.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1109 Failure to Appear

Failure to appear, by the respondent, at the time and place set for hearing shall be deemed a waiver of the right to present evidence, argue, object or cross-examine witnesses, or otherwise participate at the hearing. After presentation by the Securities Department of proof that the respondent was given proper notice and jurisdiction of the Secretary has been established, the Hearing Officer shall strike any answer or other pleading filed, if any, by the party failing to appear and make a recommendation to the Secretary that a finding of default and an appropriate order be entered. Where the Securities Department fails to appear, the Notice of Hearing shall be dismissed.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1110 Motions

a) Motions shall be made in writing, unless otherwise allowed by the Hearing Officer during the course of a hearing. Written motions shall be limited to the following:

1. To request a Hearing Officer's recommendation for dismissal of a Notice of Hearing for failure to state facts which, if true, would form a sufficient basis for the issuance of an Order or other sanctions;

2. To request sanctions in accordance with Section 130.1130 of this Part;

3. To request dismissal of a Notice of Hearing where the Securities Department's case has been concluded without sufficient evidence having been presented to form a basis for the issuance of an Order or other sanction;

4. To request a continuance, or extension of time, upon good cause shown in accordance with Section 130.1111(a) of this Part;

5. To request that a Hearing Officer be disqualified from the hearing, for prejudice;

6. To request that an Order of the Hearing Officer entered prior to the conclusion of a hearing be vacated or modified;

7. To request separation of cases joined by the Securities Department;

8. To request consolidation of cases or parties;

9. To request an Order limiting a request for discovery;

10. To request that a Hearing Officer be disqualified from conducting, or continuing to conduct, an assigned hearing pursuant to Section 130.1132 of this Part.

b) When any motion is filed, the Hearing Officer may allow oral or written argument or both if this is deemed necessary to a fuller understanding of the issues presented. Where facts are alleged as a basis for the request which are not a part of the record in the case, an affidavit shall be attached to the motion setting forth such facts.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1111 Requirements Relating to Continuances

a) A request for continuance of a hearing shall be subject to the discretion of the Hearing Officer.

1. Such continuance may be granted, for good cause shown, provided the request is received by the Hearing Officer and each party or authorized representative of record not less than five days prior to the latest hearing date unless good cause for a continuance is shown prior to or during the hearing or between hearing dates due to the absence of material evidence, sudden unavailability of counsel, sudden illness of a party or an essential witness, ongoing settlement negotiations, or other similar reasons. Such request may be in writing.

2. Oral requests for continuances shall not be granted unless made during the hearing for good cause.

3. Good cause includes, but is not limited to, service in the armed forces, or serious illness relating to either party, that party's authorized representative of record, or essential witnesses, or sudden unavailability of counsel.

b) A continuance, when granted, shall state a date certain, not more than 60 days from the prior scheduled hearing date at which time the hearing shall reconvene.

c) Continuances may be granted for the purposes of allowing the parties to complete discovery requests made pursuant to Section 130.1115 of this Part, but only where upon "Good Cause" shown, in accordance with Section 130.1111(a) of this Part, discovery could not be completed prior to the scheduled date for hearing.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1112 Rules of Evidence

a) The Hearing Officer shall have authority to conduct the hearing, to administer oaths, to examine witnesses, to rule upon the admissibility of evidence, and to subpoena witnesses or documents at the request of any party.

b) Irrelevant, immaterial or unduly repetitious evidence shall be excluded. The rules of evidence and privilege as applied in civil cases in the Circuit Courts of this State shall be followed. However, evidence not admissible under such rules of evidence may be admitted (except where precluded by statute) if it is of a type commonly relied upon by reasonably prudent men in the conduct of their affairs in accordance with Section 10-40 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, par. 1010-40). Objections to evidentiary offers may be made and shall be noted in the record. Subject to these requirements, when a hearing will be expedited and the interests of the parties will not be prejudiced, any part of the evidence maybe received in written form. Subject to the evidentiary requirements of this Section, a party may conduct cross-examination required for a full and fair disclosure of the facts.

c) Notice may be taken of matters of which the Circuit Courts of this State may take judicial notice. In addition, notice may be taken of generally recognized technical or scientific facts within the agency's specialized knowledge. Parties shall be notified either before or during the hearing, or be reference in preliminary reports or otherwise, of the material noticed, including any staff memoranda or data, and they shall be afforded an opportunity to contest the material so noticed. The agency's experience, technical competence and specialized knowledge may be utilized in the evaluation of the evidence.

History

• Source: Section 130.1112 renumbered from Section 130.1111 and amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1113 Form of Papers

All papers filed or submitted to the Securities Department in a contested case shall be typewritten, on 8½ by 11 inch white paper. The first page of each document shall set forth the name of each of the respondents and the file number assigned to the case by the Securities Department. All pleadings must be signed by the party filing the same or his, her or its authorized representative or attorney, and shall contain the party's business address and telephone number. A copy of any pleading shall be filed with the hearing officer, and the original served upon the attorney of record of the Securities Department.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1114 Bill of Particulars (repealed)

History

• Source: Repealed at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1115 Discovery

a) Discovery shall not be the subject of motions presented to the Hearing Officer, except as provided in Section 130.1110 of this Part.

b) Upon written request served on the opposing party, any party shall be entitled to:

1. The name, business and home addresses and telephone number, if available, of each witness who may be called to testify;

2. Copies of each document which may be offered as evidence; and

3. A description of any other evidence which may be offered.

c) The above information shall be provided within ten business days after service of a written request.

d) Upon written request of a party, during discovery a party shall be entitled to:

1. Any exculpatory evidence in a party's possession. Exculpatory evidence is any evidence which tends to support the opposing party's position or to call into question the credibility of an opposing party's witness; and

2. Copies of any investigative report which purports to be a memorandum of interview of the respondent.

e) Upon a written request served on the respondent at any time after a Notice of Hearing is filed, or at any stage of the hearing, the respondent will be required to produce within ten days after service of a written request non privileged documents, books, records or other evidence which relate to the issues set forth in the Notice of Hearing.

f) No file of a Securities Department investigator or attorney shall be subject to discovery except as stated in subsection (d) of this Section relating to exculpatory evidence and memoranda of interviews of a respondent.

g) In accordance with Section 130.1118 of this Part, in large or complex cases, at the discretion of the Hearing Officer, a pre-hearing conference with the parties and the Hearing Officer may be scheduled in appropriate cases for one or more of the purposes set forth in Section 130.1118 of this Part. Consistent with the expedited nature of administrative hearings, the Hearing Officer shall, at the pre-hearing conference establish the extent of and schedule for the production of relevant documents and other information, including the deposition of witnesses.

h) Subject to constitutional privileges and to grants of confidentiality under common law and statutes, a party may serve on any other party a written request for the admission by the latter of the truth of any specified relevant fact set forth in the request or for the admission of genuineness of any relevant documents described in the request. Copies of the documents shall be served with the request unless copies have already been furnished. The failure of a party to respond to a request by either an admission or a sworn denial within ten days after service shall be deemed to be an admission thereof.

i) When information or documents are withheld from disclosure or discovery on a claim that they are confidential or privileged pursuant to a common law or statute, any such claim shall be made expressly and shall be supported by a description of the nature of the documents, communication, or things not produced or disclosed and the exact privilege that is being claimed.

j) If a party, after being served with a request to admit the genuineness of any documents or the truth of any matters of fact, serves a sworn denial thereof, and the party requesting the admissions thereafter proves the genuineness of the document or the truth of the matter of fact, the requesting party may apply to the Hearing Officer for an order requiring the other party to pay the requesting party the reasonable expenses incurred in making the proof, including reasonable attorney's fees. Upon finding good cause by the Hearing Officer the order shall be made.

k) A party has a duty to timely supplement or amend any prior answer or response to discovery requests whenever new or additional information subsequently becomes known to that party.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1116 Examination of Witnesses

a) A party may conduct examinations or cross-examinations without rigid adherence to formal rules of evidence, in order to obtain a full and fair disclosure of facts bearing upon matters in issue, in accordance with Section 12 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1987, ch. 127, par. 1012).

b) If the hearing officer determines that a witness is hostile or unresponsive, the hearing officer may authorize the examination by the party calling him or her as if under cross-examination in accordance with Impeachment of Witnesses – Hostile Witness (Ill. Rev. Stat. 1987, ch. 110A, par. 238(b)).

c) The Securities Department may call any adverse party as a witness without vouching for his or her credibility and proceed to examine such adverse party as if under cross-examination. Any party calling a witness, upon a showing that he or she called the witness in good faith and is surprised by his or her testimony, may impeach that witness by evidence of prior inconsistent statements in accordance with Impeachment of Witnesses – Hostile Witness (Ill. Rev. Stat. 1987, ch. 110A, par. 238(b)).

d) Oral evidence shall be taken only on oath or affirmation.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1117 Subpoenas

a) Subpoenas for the attendance of witnesses from any place in the State of Illinois, or for the production of books, papers, accounts or documents at a hearing in a pending proceeding, shall be issued by the Securities Department upon its own motion, and shall be issued upon application in writing by any party.

b) Applications for subpoenas to compel the production of books, papers, accounts or documents desired shall be verified, and shall specify the books, papers, accounts or documents desired and the material or relevant facts to be proved by them.

c) The costs for the preparation and service of each subpoena and the payment of witness fees shall be borne by the requesting party.

d) The cost to prepare each subpoena shall be $10.00 and shall be payable to the Secretary of State prior to the issuance of the subpoena. The cost to serve each subpoena shall be the same as provided to Sheriffs in Section 4-12001 of the Counties Code, certified December 13, 1989 (Ill. Rev. Stat., ch. 34, par. 4-12001 (P.A. 86-962)) and Section 4-5001 of the Counties Code, certified December 13, 1989 (Ill. Rev. Stat., ch. 34, par. 4-5001 (P.A. 86-962)). Notwithstanding, if the Securities Department elects to mail a subpoena the cost shall be $5.00 plus the actual cost of certified or registered mail, return receipt requested, payable to the Secretary of State prior to the issuance of the subpoena. Witness fees shall be the same as provided for in Section 47 of an Act concerning fees and salaries, and to classify the several counties of this State with reference thereto. Approved March 29, 1872 (Ill. Rev. Stat. ch. 53, par. 65) relating to witnesses attending trial in the Circuit Courts of Illinois.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1118 Pre-Hearing Conferences

Upon written request to the Hearing Officer by the Securities Department or any respondent, the parties may be directed by the Hearing Officer to appear at a specified date, time and place for a pre-hearing conference, that may be held telephonically, prior to the date set for hearing in the particular proceeding or, without notice on the date and at the place set for such hearing and prior to the commencement thereof or during the course of such hearing, for the purpose of formulating issues and considering:

a) The simplification of issues;

b) The necessity or desirability of amending the pleadings for the purpose of clarification, amplification or limitation with respect to matters alleged in any Notice of Hearing;

c) The possibility of making admissions or stipulations of fact to the end of avoiding the unnecessary introduction of evidence;

d) The limitation of the number of witnesses;

e) The propriety of prior mutual exchange between or among parties of prepared testimony or exhibits; and

f) Any other matters that may aid in the disposition of the hearing.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1119 Record of a Pre-Hearing Conference

Action taken at each pre-hearing conference pursuant to Section 130.1118 of this Part shall be made part of the record at the hearing by the hearing officer, unless the parties file a written stipulation as to such matters or agree to a statement thereof made on the record.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1120 Hearings

The sequence to be followed for each contested case is as follows:

a) Pre-Hearing Conference – Optional. The purposes of which are set out in Section 130.1118 of this Part; and

b) Hearings

1. Preliminary matters – Motions, attempts to narrow issues or limit evidence;

2. Opening Statements – The party initiating the hearing proceeds first;

3. Case in Chief – Evidence and witnesses are presented by the party initiating the hearing. As a witness' testimony is completed, he or she is subject to cross-examination;

4. Defense (including affirmative defense) – Evidence and witnesses may be presented by the opposing parties;

5. Rebuttal;

6. Closing Statements – The party bearing the burden of proof proceeds first, then the opposing party, then a final reply by the party bearing the burden of proof; and

7. Hearing Officer's Report consisting of: a statement of matters officially noticed, proposed findings of fact, proposed conclusions of law, and proposed recommendation as to disposition by the hearing officer.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1121 Record of Proceedings

a) At each hearing, except as otherwise provided herein, a permanent and complete record of the proceedings shall be taken at the Securities Department's expense by electronic means or by a "shorthand reporter" as such term is defined in the Illinois Certified Shorthand Reporters Act of 1984 (Ill. Rev. Stat. 1987, ch. 111, par. 6204).

b) The Securities Department upon request of a party shall arrange for the shorthand reporter to provide for such copies of the transcript as any other party may require and at such time as it may require same, provided that such other party shall pay directly to the shorthand reporter the payment for the cost of the transcript including one copy thereof to be furnished the Securities Department for its use in any proceeding for Administrative Review as hereinafter provided, or otherwise.

c) The requirement set forth in subsection (a) of this Section is not applicable in any case where all respondents have either defaulted, or submitted documents only, and the Securities Department presents no evidence through witness testimony.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1122 Record of Hearing

a) The record in a contested case shall include:

1. All pleadings (which shall include all orders or notices of hearing and responses thereto, admissions, stipulations of facts, motions and rulings thereon and in the case of an agreed settlement, stipulation and consent and a consent order);

2. All documentary evidence, if any;

3. A statement of matters officially noticed, if any;

4. A transcript of the proceedings, if required;

5. Any opinion, report or recommendation of the hearing officer to the Secretary;

6. The findings of fact conclusions of law and recommendations of the hearing officer;

7. Any offers of proof, objections and rulings thereon, objections or exceptions to the findings of fact, conclusions of law and recommendations of the hearing officer or, objections to portions of the proposed findings of fact, proposed conclusions of law and proposed recommendations of the hearing officer; and

b) The findings of fact, conclusions of law and Order of the Secretary, shall constitute a final administrative decision within the provisions of the Administrative Review Law (Ill. Rev. Stat. 1987, ch. 110, pars. 3-101 et seq.).

c) The record shall be certified by the Securities Department upon any complaint for administrative review. An index of the record, with each page of the record numbered in sequence, shall be prepared by the Securities Department.

History

• Source: Amended at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1123 Orders

a) The Hearing Officer shall prepare proposed findings of fact, conclusions of law, and recommendations to the Secretary. The proposed findings of fact and conclusions of law shall be stated separately.

b) Any Order of the Secretary issued without a hearing pursuant to a summary or temporary order as provided under Section 11(E) of the Illinois Securities Law of 1953 or Section 5-45(c) and Section 5-65(1) of the Business Opportunity Sales Law of 1995 or Section 10-55(e) of the Illinois Business Brokers Act of 1995 or Section 15-55(e) of the Illinois Loan Brokers Act of 1995 shall advise the respondent that any action for judicial review of the final order must be commenced within 35 days from the date a copy of the Order is served upon the party seeking review, pursuant to the provisions of the Administrative Review Law.

c) The Order of the Secretary shall be the decision of the Securities Department upon issues contested or stipulated to at the hearing, or presented at a hearing in which the respondent defaults, or alleged in an Order which may be made final without a hearing pursuant to Section 11(F)(4) of the Illinois Securities Law of 1953, or alleged in a summary or temporary order which may be made final without a hearing pursuant to Section 11(E) or 11(F) of the Illinois Securities Law of 1953 or Section 5-45(c) and Section 5-65(1) of the Business Opportunity Sales Law of 1995 or Section 10-55(e) of the Illinois Business Brokers Act of 1995 or Section 15-55(e) of the Illinois Loan Brokers Act of 1995; or upon issues which are resolved without a hearing pursuant to Section 10-25(c) of the Illinois Administrative Procedure Act [5 ILCS 100/10-25(c)].

d) The Secretary after reviewing the hearing record may:

1. accept or reject in whole or in part the proposed findings of fact, proposed conclusions of law or the proposed recommendations of the Hearing Officer;

2. require the submission of additional information, documentation or testimony;

3. order the Hearing Officer to conduct a rehearing; or

4. order the Hearing Officer to conduct an additional hearing upon becoming aware of newly discovered evidence.

e) In addition to any other sanctions, a default order shall be entered against the respondent, where the respondent fails to appear for the hearing at the scheduled time and date, and has failed to request or been granted a continuance in accordance with Section 130.1111 of this Part.

f) A final order of the Secretary shall be in writing. A copy of the final order shall be delivered or mailed by registered or certified mail, return receipt requested, to each party or his, her or its representative or attorney at such person's last known address.

g) The final order of the Secretary shall constitute a final administrative decision within the provisions of the Administrative Review Law.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1124 Burden of Proof

Except as provided in Section 15 of the Illinois Securities Law of 1953 or Section 5-20 of the Business Opportunities Sales Law of 1995, the burden of proof is upon the Securities Department in all cases initiated by the Securities Department.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1125 Stipulations

Parties may by stipulation agree upon any facts involved in the proceeding. The facts stipulated shall be considered as evidence in the proceeding, provided that the hearing officer may require proof of any fact by evidence, such as where parties are not represented by counsel. After all parties have completed the presentation of their evidence, the hearing officer may call the Securities Department for further material or relevant evidence upon any issue. The Department's experience, technical competence and specialized knowledge may be utilized by the hearing officer in the evaluation of the evidence.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1126 Open Hearings

Hearings shall be open to the public and may not be recorded by the public or any respondent by any electronic means other than as set forth in Section 130.1121 of this Part.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1127 Corrections to the Transcript

Suggested corrections to the transcript of record may be offered within ten days after the transcript is made available to the parties in the proceeding, unless the hearing officer permits suggested corrections to be offered thereafter. Suggested corrections shall be served upon, or brought to the attention of, each party or attorney therefor whose appearance is of record, the official shorthand reporter, and the hearing officer. If suggested corrections are not objected to, the hearing officer shall direct the corrections to be made and the manner of making them. In case the parties disagree on suggested corrections, they may be heard by the hearing officer, who shall then determine the manner in which the record shall be changed, if at all.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1128 Imposition of Fines

a) The fines allowed by Section 11(E)(4) of the Act may be imposed in cases where the imposition of a suspension or revocation of the registration of any securities registered under Sections 5, 6 or 7 of the Act or of a respondent's registration under Section 8 of the Act would create an undue burden on the respondent in light of the nature of the violation or violations; where the respondent has been enriched unjustly; when the violation or violations of the respondent are egregious or repetitive or involve many people.

b) The imposition of fines is not limited to the above described situations.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1129 Application for Hearing to Present Newly Discovered Evidence

a) Any party who receives a final order of the Secretary may within ten days after receipt of the final order file an application in writing with the Secretary or his or her designee requesting that a hearing be granted to present newly discovered evidence. The application shall be supported by affidavit specifying the reason such evidence was unavailable at the time of hearing.

b) Any application by a party for a hearing to present newly discovered evidence shall only stay the effective date of the Order entered by the Secretary for the purpose of filing for an administrative review under the Administrative Review Law.

c) If a timely application for a hearing to present newly discovered evidence is made, the time for filing an administrative review complaint shall begin to run upon the issuance of the Secretary's Order disposing of the respondent's application.

History

• Source: Amended at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1130 Failure to Comply with Order or Rules

If a party, or any person at the instance of or in collusion with a party, unreasonably refuses to comply with any provision of Section 130.1115 of this Part after being ordered by the Hearing Officer to comply, or fails to comply with any order entered pursuant to this Part, the Hearing Officer, on motion, may enter such orders as are just, including among others, the following:

a) That further proceedings be stayed until the order or rule is complied with;

b) That the offending party be debarred from filing any other pleading relating to any issue to which the refusal or failure relates;

c) That a witness be barred from testifying concerning that issue;

d) That, as to the claims or defense asserted to which that issue is material, a recommendation for a final order by default be entered against the offending party or that his action be dismissed with or without prejudice; or

e) That any portion of his pleadings relating to that issue be stricken and, if thereby made appropriate, Findings of Fact and Conclusions of Law be entered as to that issue.

In lieu of or in addition to the foregoing, the Hearing Officer may order that the offending party pay the reasonable expenses including attorney's fees incurred by any party as a result of the misconduct.

History

• Source: Added at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1131 Application to Vacate an Order Issued Due to Default

a) Any party who receives an order, based on a failure to answer or otherwise plead, or a failure to appear at the hearing, may within ten days after receipt of the order file an application in writing with the Secretary of State or his designee requesting that the order be vacated. The application shall be supported by an affidavit specifying the reason the party was unable to file an answer, otherwise plead, or appear at the hearing.

b) Upon good cause shown, the Secretary of State may issue an order vacating the default order, granting an extension to file an answer, and setting a date for a new hearing or supplemental hearing. If a supplemental hearing is ordered, the Secretary of State may order that the evidence presented at the previous hearing, including testimony of witnesses, may be considered by the Hearing Officer without the need for presenting the evidence at the supplemental hearing.

c) Any application by a party to vacate an order issued due to default shall only stay the effective date of the order entered by the Secretary of State for the purpose of filing an administrative review under the Administrative Review Law [735 ILCS 5/Art. III]. If the party's application to vacate is denied by the Secretary, the Order of Default shall be considered the final order for purposes of the Administrative Review Law.

d) If a timely application to vacate an order issued due to default is made, the time for filing an administrative review complaint shall begin to run upon the issuance of the Secretary's order disposing of the application to vacate an order issued due to default.

History

• Source: Added at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1132 Disqualification of a Hearing Officer

a) A Hearing Officer assigned to a hearing may, upon written request to and approval of the Secretary of State, recuse himself or herself.

b) Whenever any party believes a Hearing Officer for any reason should be disqualified from conducting, or continuing to conduct, a proceeding assigned to him or her, such party may file a motion to disqualify the Hearing Officer, setting forth by affidavit the alleged grounds for disqualification. The Hearing Officer shall have seven business days after filing of the motion within which to enter a written ruling. A copy of the ruling shall be served upon all parties. The Secretary of State may, on his or her own motion, review rulings denying or granting a motion for disqualification.

History

• Source: Added at 22 Ill. Reg. 1933, effective January 1, 1998

14 Ill. Adm. Code 130.1520 Request for Non-Binding Statements

a) Required information and format.

1. All requests for non-binding statements shall be in writing and be accompanied by the fee set forth in Section 130.110 of this Part. The request shall be filed with the Securities Department and shall contain the following:

A) A brief summary of the Sections of the Act and of the Rules to which the request pertains;

B) A detailed factual representation concerning every relevant aspect of the proposed transactions, such as names of affected parties, type and description of securities, details regarding the transactions, each claim of exemption, if any, and reasoning in support of each such claim. Requests should be limited to the particular situation, and should not attempt to include every possible type of situation which may arise in the future;

C) A discussion of current statutes, rules and legal principles relevant to the facts set forth;

D) A statement setting forth the person's own opinion in the matter and the basis for such opinion; and

E) A representation that the transaction in question has not been commenced and will not commence for at least 30 days.

2. The Securities Department will not respond to requests for non-binding statements involving the anti-fraud provisions of the Act or the Rules thereunder.

3. The Securities Department will not respond to requests for non-binding statements with respect to transactions which have already taken place.

4. The Securities Department will not respond to requests based upon hypothetical facts or involving unnamed parties.

b) Review procedure under the Act.

1. The Securities Department's review of requests for non-binding statements may require an in-depth examination of the information presented and the applicable law. Therefore a considerable time period may elapse before the statement is issued.

2. After a review of the relevant facts presented, in light of existing judicial, legislative and administrative history, the Securities Department may issue its finding as to the applicability of the Act to the situation presented in the form of a non-binding statement stating that it will recommend that no enforcement action be initiated against the parties involved if all the facts are true and complete. Facts or conditions different than those presented may require different conclusions and persons other than those requesting the statement should not rely on the statement.

c) Availability of non-binding statements issued by the Department.

1. The Securities Department will maintain an index by statutory Section(s) involved and chronologically of all non-binding statements issued.

2. Copies of such statements may be reviewed in the Securities Department's Springfield office and copies thereof obtained upon payment of the cost of duplication as set forth in Section 130.110 of this Part.

History

• Source: Added at 14 Ill. Reg. 5188, effective March 26, 1990

14 Ill. Adm. Code 130.1661 Investors Syndicate of America, Inc.

a) The Secretary of State recognizes that the face amount certificate contracts registered prior to January 1, 1984, under The Illinois Securities Law of 1953 by Investors Syndicate of America, Inc. are defined by the issuer as "Face Amount Certificates" and the issuer thereof is qualified as a registered investment company under the Investment Company Act of 1940 and maintains, under the rules and regulations of the Federal Securities and Exchange Commission, a deposit of securities with a qualified institution which deposit would be applicable to all contract liability established and accruing on such "Face Amount Certificates" outstanding with persons residing in Illinois. Accordingly, the Secretary of State recognizes the Central Deposit established and maintained by Investors Syndicate of America, Inc. pursuant to the rules and regulations of the Federal Securities and Exchange Commission in lieu of and in substitution for the deposit presently being maintained with the Secretary of State under Section 6 of The Illinois Securities Loan of 1953 as in effect at the time of registration and hereby authorizes the transfer of all securities, except the minimum deposit of $50,000 as prescribed under Section 6 of the Act as in effect at the time of registration, to the Central Deposit.

b) Investors Syndicate of America, Inc. is to continue to furnish to the Secretary of State all reports and statements required by Section 6 of the Act as in effect at the time of registration and is directed to furnish to the Secretary of State an annual statement prepared and certified by an independent certified public accountant, showing all deposits required to be maintained for the benefit of holders of contracts issued by Investors Syndicate of America, Inc., the amounts of such deposits, the contract liability applicable to each state of the United States, including the State of Illinois, against which such deposits are maintained in the Central Deposit and various state depositories, if applicable.

14 Ill. Adm. Code 130.1662 State Bond and Mortgage Company

a) The Secretary of State recognizes that the face amount certificate contracts registered prior to January 1, 1984, under The Illinois Securities Law of 1953 by State Bond and Mortgage Company are defined by the issuer as "Face Amount Certificates" and the issuer thereof is qualified as a registered investment company under the Investment Company Act of 1940 and maintains, under the rules and regulations of the Federal Securities and Exchange Commission, a deposit of securities with a qualified institution which deposit would be applicable to all contract liability established and accruing on such "Face Amount Certificates" outstanding with persons residing in Illinois. Accordingly, the Secretary of State recognizes the Central Deposit established and maintained by State Bond and Mortgage Company pursuant to the rules and regulations of the Federal Securities and Exchange Commission in lieu of, and in substitution for, the deposit presently being maintained with the Secretary of State under Section 6 of the Act as in effect at the time of registration, and hereby authorizes the transfer of all securities, except the minimum deposit of $50,000 as prescribed under Section 6 as in effect at the time of registration, to the Central Deposit.

b) State Bond and Mortgage Company is to continue to furnish to the Secretary of State all reports and statements required by Section 6 of the Act as in effect at the time of registration and is directed to furnish to the Secretary of State an annual statement, prepared and certified by an independent certified public accountant, showing all deposits required to be maintained for the benefit of holders of contracts issued by State Bond and Mortgage Company, the amounts of such deposits, the contract liability applicable to each state of the United States, including the State of Illinois, against which such deposits are maintained in the Central Deposit and various state depositories, if applicable.

14 Ill. Adm. Code 130.1701 Inspection of Applications

All applications for which exemption from registration under Section 4.F(2) of the Act have been approved and for which registration under Sections 5, 6 and 7 of the Act have been granted are available for public inspection during business hours at the Springfield or Chicago offices of the Securities Department of the Secretary of State upon advance written request.

14 Ill. Adm. Code 130.1702 Inspection of Dealer, Salesperson and Investment Adviser Records

Records of all registered dealers, salespersons and investment advisers are available for public inspection during the business hours at the Springfield or Chicago offices of the Securities Department of the Secretary of State upon advance written request.

14 Ill. Adm. Code 130.1703 Non-Public Distribution of Information

a) Information or documents obtained by employees of the Secretary of State in the course of any examination or investigation pursuant to Section 11 of the Act shall, unless made a matter of public record, be deemed confidential. Employees are hereby prohibited from making such confidential information or documents or any other non-public records of the Secretary of State available to anyone other than an employee of the Secretary of State, or other governmental agency, unless the Secretary of State authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest.

b) Information contained in the single automated system, referred to as the Central Registration Depository, concerning dealers and salespersons registered with any State, other than the State of Illinois, shall not be deemed to be filed with the Secretary of State.

14 Ill. Adm. Code 130.APPENDIX A Uniform Consent to Service of Process

FORM U-2-UNIFORM CONSENT TO SERVICE OF PROCESS

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned,_____________________________ , (a corporation Organized under the laws of the State of _______________________) (a partnership) (an individual) (other ______________________ ) for the purpose of complying with the laws of the State of ___________________relating to either the registration or sale of securities, hereby irrevocably appoints __________________________, and the successors in such office, its attorney in the State of _________________ upon whom may be served any notice, process or pleading in any action or proceeding against it arising out of or in connection with the sale of securities or out of violation of the aforesaid laws of said State; and the undersigned does hereby consent that any such action or proceeding against is may be commenced in any court of competent jurisdiction and proper venue within said State by service of process upon said officer with the same effect as if the undersigned was organized or created under the laws of said State and had lawfully been served with process in said State.

It is requested that a copy of any notice, process or pleading served hereunder be mailed to:

(Name and Address)

Dated ___________________, 19.

By:

Title

By:

Title

CORPORATE ACKNOWLEDGEMENT

STATE OF

)

ss.

COUNTY OF

)

On this _________ day of _____________, 19, before me __________________ the undersigned officer, personally appeared __________________and __________________, known personally to me to be the ____________________________ President and __________________________ Secretary, respectively, of the above named corporation, and that they, as such officers, being authorized so to do, executed the foregoing instrument for the purposes therein contained, by signing the name of the corporation by themselves as such officers.

Notary Public

My Commission expires:

(NOTARIAL SEAL)

INDIVIDUAL OR PARTNERSHIP ACKNOWLEDGEMENT

STATE OF

)

ss.

COUNTY OF

)

On this ______ day of_________________, 19_____, before me, _________________, the undersigned officer, personally appeared ________________ to me personally known and known to me to be the same person(s) whose name(s) is (are) signed to the foregoing instrument, and acknowledged the execution thereof for the uses and purposes therein set forth.

IN WITNESS WHEREOF I have hereunto set my hand and official seal.

Notary Public

My Commission expires:

(NOTARIAL SEAL)

History

• Source: Added at 14 Ill. Reg. 884, effective 12/30/89

14 Ill. Adm. Code 130.APPENDIX B Uniform Application to Register Securities

UNIFORM APPLICATION TO REGISTER SECURITIES

Application to

of the State of

pursuant to Section

of the

.

Name and address of Issuer and principal office in this state:

Name, address and telephone number of correspondent to whom notices and communications regarding this application may be sent:

Name and address of applicant:

Registration or acceptance for filing is sought for the following described securities in the amounts indicated:

Total Offering

Offering in this State

Offering Price or Proposed Offering Price

No. of Shares or Units

Amount

No. of Shares or Units

Amount

Description of Securities

$

$

Totals

$

$

Indicate the maximum commission to be charged:________%

Amount of filing and examination fees which are enclosed: $______ $______

A Registration Statement was filed with the Securities and Exchange

Commission on

and (became) (will become)

(date)

effective on

(date)

(a)

List the states in which it is proposed to offer the securities for sale to the public.

(b)

List the states, if any, in which the securities are eligible for sale to the public.

(c)

List the states, if any, which have refused, by order or otherwise, to authorize sale of the securities to the public, or have revoked or suspended the right to sell the securities, or in which an application has been withdrawn.

Submitted herewith as a part of this application are the following documents (documents on file may be incorporated by reference):

(a)

One copy of the Registration Statement and two copies of Prospectus in the latest form on file under the Securities Act of 1933.

(b)

Underwriting Agreement, Agreement among Underwriters, and Selected Dealers Agreement.

(c)

Indenture.

(d)

Issuer's charter or articles of incorporation as amended to date.

(e)

Issuer's by-laws as amended to date.

(f)

Signed copy of opinion of counsel filed with Registration Statement pursuant to the Securities Act of 1933.

(g)

Specimen (type of security)

(h)

Consent to service of process accompanied by appropriate corporate resolution.

(i)

If an earning computation or similar requirement is required to be met in this state, attach a separate sheet as an exhibit showing compliance.

(j)

One copy of all advertising matter to be used in connection with the offering.

(k)

Others (list each):

The applicant hereby applies for registration or acceptance for filing of the above described securities under the law cited above and in consideration thereof agrees so long as the registration remains in effect that it will:

(a)

Advise the above named state authority of any change prior to registration in this state in any of the information contained herein or in any of the documents submitted with or as a part of this application.

(b)

File with the above named state authority within two business days after filing with the Securities and Exchange Commission (i) any amendments other than delaying amendments to the federal registration statement, designating the changed, revised or added material or information by underlining the same; and (ii) the final prospectus, or any further amendments or supplements thereto.

(c)

Notify the above named state authority within two business days (i) upon the receipt of any stop order, denial, order to show cause, suspension or revocation order, injunction or restraining order, or similar order entered or issued by any state or other regulatory authority or by any court, concerning the securities covered by this application or other securities of the issuer currently being offered to the public; and (ii) upon the receipt of any notice of effectiveness of said registration by the Securities and Exchange Commission.

(d)

Notify the above named state authority at least two business days prior to the effectiveness of said registration with the Securities and Exchange Commission of (i) any request by the issuer or applicant to any other state or regulatory authority for permission to withdraw any application to register the securities described herein; and (ii) a list of all states in which applications have been filed where the issuer or applicant has received notice from the state authority that the application does not comply with state requirements and cannot or does not intend to comply with such requirements.

(e)

Furnish promptly all such additional information and documents in respect to the issuer or the securities covered by this application as may be requested by the above named state authority prior to registration or acceptance for filing.

Date

Name of Applicant

By

(Name and Title)

STATE OF

)

ss.

COUNTY OF

)

The undersigned

, being first duly sworn, deposes and says:

That he has executed the foregoing application for and on behalf of the applicant

named therein; that he is

of such applicant and is fully authorized

to execute and file such application; that he is familiar with such application; and that to the best of his knowledge, information and belief the statements made in such application are true and the documents submitted therewith are true copies of the originals thereof.

Name

Subscribed and sworn to before me this _____day of __________________, 19 _____

NOTARY PUBLIC

In and for the County of

State of

My Commission Expires:

(Notarial Seal)

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.APPENDIX C Uniform Application for Broker-Dealer Registration

Page 1

(Execution Page)

(Revised 6-88)

UNIFORM APPLICATION FOR BROKER-DEALER REGISTRATION

OFFICIAL USE

WARNING

Failure to keep this form current and to file accurate supplementary information on a timely basis, or the failure to keep accurate books and records or otherwise to comply with the provisions of law applying to the conduct of business as a broker-dealer would violate the Federal securities laws and the laws of the jurisdictions and may result in disciplinary, administrative, injunctive or criminal action.

INTENTIONAL MISSTATEMENTS OR OMISSIONS OF THE FACTS MAY CONSTITUTE CRIMINAL VIOLATIONS

APPLICATION

AMENDMENT

FIRM CRD NO.

Exact name, principal business address, mailing address, if different, and telephone number of applicant:

A.

Full name of applicant (If sole proprietor, state last, first, and middle name)

B.

IRS Empl. Ident. No.:

C.

Name under which business is conducted, if different:

D.

If name of business is hereby amended, state previous name:

E.

Firm main address:

(Number and Street)

(City)

(State)

(Zip Code)

Mailing Address, if different:

F.

Telephone Number:

G.

(Area Code)

(Telephone Number)

CONTACT EMPLOYEE

EXECUTION: For the purpose of complying with the laws of the State(s) designated in Item 2 relating to either the offer or sale of securities or commodities, the undersigned and applicant hereby certify that the applicant is in compliance with applicable state surety bonding requirements and irrevocably appoint the administrator of each of those State(s) or such other person designated by law, and the successors in such office, attorney for the applicant in said State(s) upon whom may be served any notice, process, or pleading in any action or proceeding against the applicant arising out of or in connection with the offer or sale of securities or commodities, or out of the violation or alleged violation of the laws of those State(s), and the applicant hereby consents that any such action or proceeding against the applicant may be commenced in any court of competent jurisdiction and proper venue within said State(s) by service of process upon said appointee with the same effect as if applicant were a resident in said State(s) and had lawfully been served with process in said State(s).

The applicant consents that service of any civil action brought by or notice of any proceeding before the Securities and Exchange Commission or any self-regulatory organization in connection with the applicant's broker-dealer activities, or of any application for a protective decree filed by the Securities Investor Protection Corporation, may be given by registered or certified mail or confirmed telegram to the applicant's contact employee at the main address, or mailing address if different, given in Item 1G.

The undersigned, being first duly sworn, disposes and says that he has executed this form on behalf of, and with the authority of, said applicant. The undersigned and applicant represent that the information and statements contained herein, including exhibits attached hereto and other information filed herewith, all of which are made a part hereof, are current, true, and complete. The undersigned and applicant further represent that to the extent any information previously submitted is not amended, such information is currently accurate and complete.

Date

Name of Applicant

By:

Signature and Title

Subscribed and sworn before me this

day of

,

19

by

My commission expires

County of

State of

This page must always be completed in full with original, manual signature and notarization.

To amend, circle item(s) being amended.

DO NOT WRITE BELOW THIS LINE . . . . FOR OFFICIAL USE ONLY

To amend, circle question numbers amended and file with a completed Execution page (Page 1).

Page 2

OFFICIAL USE

Applicant Name

Date

From CRD No.:

To be registered with the following (designate) "1" Initial Registration, "2" Pending, "3" Already Registered. If any license, registration or membership listed herein is of a restricted nature, explain fully on Schedule D.

SECURITIES & EXCHANGE COMMISSION

SRO

ASE

BSE

CBOE

CSE

MSE

NASD

NYSE

PHLX

PSE

OTHER (Specify)

JURISDICTION

AL

AK

AZ

AR

CA

CO

CT

DE

DC

FL

GA

HI

ID

IL

IN

IA

KS

KY

LA

ME

MD

MA

MI

MN

MS

MO

MT

NE

NV

NH

NJ

NM

NY

NC

ND

OH

OK

OR

PA

RI

SC

SD

TN

TX

UT

VT

VA

WA

WV

WI

WY

PR

Date of formation

Applicant's fiscal year ends

Place of filing

for

(MM/DD/YY)

(MM/DD/YY)

Corporation - Complete Schedule A

Partnership - Complete Schedule B

Sole Proprietorship - Complete Schedule C

Other (Specify)

Complete Schedule C

If applicant is a sole proprietor, state full residence address and social security number.

Social Security No.:

(Number and Street)

(City)

(State)

(Zip Code)

Is applicant a successor to a registered broker-dealer?

YES

NO

If "yes", explain on Schedule D

If "yes", state

A.

Date of succession

B.

Full Name, IRS Empl Ident No. SEC File No. and Firm CRD No. of predecessor broker-dealer

Name

IRS Empl Ident No

FIRM CRD No

SEC File Number

A.

Does any person not named in Item 1 of Schedules A, B or C, directly or indirectly through agreement or otherwise, exercise or have the power to exercise control over the management or policies of applicant?.................................................................................................................

YES

NO

1

(If yes, state on Schedule D the exact name of each person (if individual, state last, first, and middle names) and describe the agreement or other basis through which such person exercises or has the power to exercise control)

B.

Is the business of applicant wholly or partially financed, directly or indirectly, by any person not named in Item 1, or Schedules A, B or C in any manner other than by (1) a public offering of securities made pursuant to the Securities Act of 1933. (2) credit extended in the ordinary course of business by suppliers, banks and others, or a satisfactory subordination agreement as defined in Rule 15c3-1 under the Securities Exchange Act of 1934 (17 CFR 240 15c3-1)?...............................................................................

YES

NO

2

(If yes, state on Schedule D the exact name (last, first, middle) of each person and describe the agreement or arrangement through which such financing is made available, including the amount thereof).

To amend, circle question numbers amended and file with a completed Execution page (Page 1).

Page 3

OFFICIAL USE

Applicant Name:

Date:

Firm CRD No.:

Definitions

●

Control affiliate – An individual or firm that directly or indirectly controls, is under common control with, or is controlled by the applicant. Included are any employees identified in Schedules A, B or C of this form as exercising control. Excluded are any employees who perform clerical, administrative, support or similar functions; or who, regardless of title, perform no executive duties or have no senior policy making authority.

●

Investment or investment-related – Pertaining to securities, commodities, banking, insurance, or real estate (including, but not limited to, acting as or being associated with a broker-dealer, investment company, investment adviser, futures sponsor, bank, or savings and loan association).

●

Involved – Doing an act or aiding, abetting, counseling, commanding, inducing, conspiring with or failing reasonably to supervise another in doing an act.

A.

In the past ten years has the applicant or control affiliate been convicted of or pleaded guilty or nolo contendere ("no contest") to:

(1)

a felony or misdemeanor involving:

investment or an investment-related business,

fraud, false statements or omissions,

wrongful taking of property, or

bribery, forgery, counterfeiting or extortion?.......................................................................

YES

NO

3

YES

NO

(2)

any other felony? ..........................................................................................................

4

B.

Has any court:

(1)

in the past ten years enjoined the applicant or a control affiliate in connection with any investment-related activity?..............................................................................................

YES

NO

5

(2)

ever found that the applicant or a control affiliate was involved in a violation of investment- related statutes or regulations?.........................................................................................

YES

NO

6

C.

Has the U.S. Securities and Exchange Commission or the Commodity Futures Trading Commission ever:

YES

NO

(1)

found the applicant or a control affiliate to have made a false statement or omission?...............

7

(2)

found the applicant or a control affiliate to have been involved in a violation of its regulations or statutes?........................................................................................................................

YES

NO

8

(3)

found the applicant or a control affiliate to have been a cause of an investment-related business having its authorization to do business denied, suspended, revoked or restricted?.....................................................................................................................

YES

NO

9

(4)

entered an order denying, suspending or revoking the applicant's or a control affiliate's registration or otherwise disciplined it by restricting its activities?............................................

YES

NO

10

D.

Has any other Federal regulatory agency or any state regulatory agency:

(1)

ever found the applicant or a control affiliate to have made a false statement or omission or been dishonest unfair, or unethical?...............................................................................

YES

NO

11

(2)

ever found the applicant or a control affiliate to have been involved in a violation of investment regulations or statutes?.....................................................................................................

YES

NO

12

(3)

ever found the applicant or a control affiliate to have been a cause of an investment-related business having its authorization to do business denied, suspended, revoked, or restricted?.....................................................................................................................

YES

NO

13

(4)

in the past ten years entered an order against the applicant or a control affiliate in connection with investment-related activity?...............................................................................................

YES

NO

14

(5)

ever denied, suspended, or revoked the applicant's or a control affiliate's registration or license, prevented it from associating with an investment-related business, or otherwise disciplined it by restricting its activities?.......................................................................................................

YES

NO

15

To amend, circle question numbers amended and file with a completed Execution page (Page 1).

Page 4

OFFICIAL USE

Applicant Name:

Date:

Firm CRD No.:

(6)

ever revoked or suspended the applicant's or a control affiliate's license as an attorney or accountant?.....................................................................................................................

YES

NO

16

E.

Has any self-regulatory organization or commodities exchange ever:

YES

NO

(1)

found the applicant or a control affiliate to have made a false statement or omission?.................

17

YES

NO

(2)

found the applicant or a control affiliate to have been involved in a violation of its rules?.........................

18

(3)

found the applicant or a control affiliate to have been the cause of an investment-related business having its authorization to do business denied, suspended, revoked or restricted?........

YES

NO

19

(4)

disciplined the applicant or a control affiliate by expelling or suspending it from membership, by barring or suspending its association with other members, or by otherwise restricting its activities?...................................................................................................................

YES

NO

20

YES

NO

F.

Has any foreign government, court, regulatory agency, or exchange ever entered an order against the applicant or a control affiliate related to investments or fraud?.........................................

21

YES

NO

G.

Is the applicant or a control affiliate now the subject of any proceeding that could result in a "yes" answer to parts A-F of this item?.........................................................................................

22

YES

NO

H.

Has a bonding company denied, paid out on, or revoked a bond for the applicant?.............................

23

YES

NO

I.

Does the applicant have any unsatisfied judgments or liens against it?.............................................

24

J.

Has the applicant or a control affiliate of the applicant ever been a securities firm or a control affiliate of a securities firm that has been declared bankrupt, had a trustee appointed under the Securities Investor Protection Act, or had a direct payment procedure begun?...................................

YES

NO

25

ITEM 7 INSTRUCTIONS

If a "yes" answer on Item 7 involves:

●

the applicant broker-dealer, or an individual without a Form U-4 (individual registration) in the CRD,

give the details on Schedule D.

●

an individual with a Form U-4 (individual registration) in the CRD, attach any necessary Form U-4

amendments to the Form BD. The CRD will update the Forms U-4 and BD.

For each "yes" to Item 7, give the following details of any court or regulatory action:

●

the broker-dealer and individuals named,

●

the title and date of the action,

●

the court or body taking the action, and

●

a description of the action.

Does applicant:

A.

Have any arrangement with any other person, firm or organization under which:

YES

NO

(1)

Any of the accounts or records of applicant are kept or maintained by such person, firm or organization?...............................................................................................................

26

(2)

Such other person, firm or organization (other than a bank or satisfactory control location as defined in paragraph (c) of Rule 15c3-3 under the Securities Exchange Act of 1934, 17 CFR 240.15c3-3) holds or maintains funds or securities of applicant or of any of its customers?.....................................................................................................................

YES

NO

27

YES

NO

B.

Have any arrangements with any other broker or dealer under which applicant refers or introduces customers to such other broker or dealer?....................................................................

28

(If the answer to any question of Item 8 is "yes", furnish as to each such arrangement the full name and principal business address of the other person, firm, organization, and the summary of each such arrangement on Schedule D.)

To amend, circle question numbers amended and file with a completed Execution page (Page 1).

Page 5

OFFICIAL USE

Applicant Name:

Date:

Firm CRD No.:

YES

NO

Does applicant control, is applicant controlled by, or is applicant under common control with, directly or indirectly, any partnership, corporation, or other organization engaged in the securities or investment advisory business? ............

29

(If "yes," state full name and principal business address of such partnership, corporation, or other organization and describe the nature of control on Schedule D. See instructions for definition of control.)

Check types of business engaged in (or to be engaged in, if not yet active) by applicant. Do not check any category which accounts for

or is expected to account for less than 10% of annual revenue from the securities or investment advisory business.

A.

Exchange member engaged in exchange commission business ...................................................................

EMC

B.

Exchange member engaged in floor activities ............................................................................................

EMF

C.

Broker or dealer making inter-dealer markets in corporate securities over-the-counter .....................................

IDM

D.

Broker or dealer retailing corporate securities over-the-counter .....................................................................

BDR

E.

Underwriter or selling group participant (corporate securities other than mutual funds ......................................

USG

F.

Mutual fund underwriter or sponsor ..........................................................................................................

MFU

G.

Mutual fund retailer ................................................................................................................................

MFR

H.

1. U.S. government securities dealer .......................................................................................................

GSD

2. U.S. government securities broker .......................................................................................................

GSB

I.

Municipal securities dealer ......................................................................................................................

MSD

J.

Municipal securities broker ......................................................................................................................

MSB

K.

Broker or dealer selling variable life insurance or annuities...........................................................................

VLA

L.

Solicitor of savings and loan accounts.......................................................................................................

SSL

M.

Real estate syndicator.............................................................................................................................

RES

N.

Broker or dealer selling oil and gas interests...............................................................................................

OGI

O.

Put and call broker or dealer or option writer...............................................................................................

PCB

P.

Broker or dealer selling securities of only one issuer or associated issuers (other than mutual funds)...........................

BIA

Q.

Broker or dealer selling securities of non-profit organizations (e.g., churches, hospitals)....................................

NPB

R.

Investment advisory services...................................................................................................................

IAD

S.

Broker or dealer selling tax shelters or limited partnerships...........................................................................

TAP

T.

Other (give details on Schedule D)............................................................................................................

OTH

To amend, circle question numbers amended and file with a completed Execution page (Page 1).

Page 6

OFFICIAL USE

Applicant Name:

Date:

Firm CRD No.:

YES

NO

A.

Does applicant effect transactions in commodity futures, commodities, or commodity options as a broker for others or dealer for its own account?.......................................................................................

30

YES

NO

B.

Does applicant engage in any other non-securities business? (If "yes," describe each other business briefly on Schedule D.) ................................................................................................

31

YES

NO

Is applicant applying for or continuing an existing registration solely as a government securities broker or dealer?.............................................................................................................................................

32

Notice of Government Securities Activities

YES

NO

A.

Is applicant acting or intending to act as a government securities broker or dealer in addition to other broker-dealer activities? (Do not answer "Yes" if applicant answered "yes" to Question 12.).................

33

YES

NO

B.

Is applicant ceasing its activities as a government securities broker or dealer? (Do not answer "Yes" unless previously answered "yes" to Question 13A.)......................................................................

34

To amend, complete the schedule in full in accordance with the instructions below and file with a completed Execution page (Page 1).

Schedule A of FORM BD

Official Use

FOR CORPORATIONS

Applicant Name

(Answers in response to Item 3 of Form BD.)

Date:

Firm CRD No.:

This form requests information on the owners and executive officers of the applicant.

Please complete for:

A.

each Chief Executive Officer, Chief Financial Officer, Chief Operations Officer, Chief Legal Officer, Chief Compliance Officer, director, and individuals with similar status or functions, and

B.

every person who is directly, or indirectly through intermediaries, the beneficial owner of 5% or more of any class of equity security of the applicant.

If a person covered by 2(B) above owns applicant indirectly through intermediaries, list all intermediaries and below them, if they are not public reporting companies under Sections 12 or 15(d) of the Securities Exchange Act of 1934 but are:

A.

corporations, give their shareholders who own 5% or more of a class of equity security, or

B.

partnerships, give their general partners or any limited special partners who have contributed 5% or more of the partnership's capital.

If the intermediary's shareholders or partners listed under 3 above are not individuals, continue up the chain of ownership listing their 5% shareholders, general partners, and 5% limited or special partners until individuals are listed.

Ownership codes are:

NA – 0 up to 5%

B – 10% up to 25%

D – 50% up to 75%

A – 5% up to 10%

C – 25% up to 50%

E – 75% up to 100%

Asterisk (*) names reporting a change in title, status, stock ownership, partnership interest, or control. Double asterisk (**) names new on this filing.

Check "Control Person" column if person has "control" as defined in the instructions to this form.

Applicants indicating an options business in Item 10 must enter "SROP" for their Senior Registered Options Principal and "CROP" for their Compliance Registered Options Principal in the "Title or Status" column.

FULL NAME

Beginning Date

Title

or

Status

Ownership Code

Control Person

CRD Number or, if none, Social Security Number

Official Use Only

Last

First

Middle

Mo.

Yr.

01

02

03

04

05

06

07

08

09

10

11

12

List below the names reported in the most recent previous filing under this item that are being deleted:

FULL NAME

Ending Date

CRD Number or, if none, Social Security Number

Last

First

Middle

Mo.

Yr.

To amend, complete the schedule in full in accordance with the instructions below and file with a completed Execution page (Page 1).

Schedule B of FORM BD

Official Use

FOR PARTNERSHIPS

Applicant Name

(Answers in response to Item 3 of Form BD.)

Date:

Firm CRD No.:

This form requests information on the owners and executive officers of the applicant.

Please complete for all general partners and those limited and special partners who have contributed directly, or indirectly through intermediaries, 5% or more of the partnership's capital.

If a person covered by 2 above owns applicant indirectly through intermediaries, list all intermediaries and below them, if they are not public reporting companies under Sections 12 or 15(d) of the Securities Exchange Act of 1934 but are:

A.

corporations, give their shareholders who own 5% or more of a class of equity security, or

B.

partnerships, give their general partners or any limited special partners who have contributed 5% or more of the partnership's capital.

If the intermediary's shareholders or partners listed under 3 above are not individuals, continue up the chain of ownership listing their 5% shareholders, general partners, and 5% limited or special partners until individuals are listed.

Ownership codes are:

NA – 0 up to 5%

B – 10% up to 25%

D – 50% up to 75%

A – 5% up to 10%

C – 25% up to 50%

E – 75% up to 100%

Asterisk (*) names reporting a change in title, status, stock ownership, partnership interest, or control. Double asterisk (**) names new on this filing.

Check "Control Person" column if person has "control" as defined in the instructions to this form.

Applicants indicating an options business in Item 10 must enter "SROP" for their Senior Registered Options Principal and "CROP" for their Compliance Registered Options Principal in the "Title or Status" column.

FULL NAME

Beginning Date

Title

or

Status

Ownership Code

Control Person

CRD Number or, if none, Social Security Number

Official Use Only

Last

First

Middle

Mo.

Yr.

01

02

03

04

05

06

07

08

09

10

11

12

List below the names reported in the most recent previous filing under this item that are being deleted:

FULL NAME

Ending Date

CRD Number or, if none,

Last

First

Middle

Mo.

Yr.

Social Security Number

To amend, complete the schedule in full in accordance with the instructions below and file with a completed Execution page (Page 1).

Schedule C of FORM BD

Official Use

FOR APPLICANTS OTHER THAN

PARTNERSHIPS AND CORPORATIONS

Applicant Name:

(Answers in response to Item 3 of Form BD.)

Date:

Firm CRD No.:

This form requests information on the owners and executive officers of the applicant.

Please complete for each person, including trustees, who participates in directing or managing the applicant.

Give each listed person's title or status, and describe the nature of their authority and their beneficial interest in applicant. Sole proprietors must be identified in the "Title or Status" column.

Asterisk (*) names reporting a change in title, status, stock ownership or partnership interest. Double asterisk (**) names new on this filing.

Applicants indicating an options business in Item 10 must enter "SROP" for their Senior Registered Principal and "CROP" for their Compliance Registered Options Principal in the "Title or Status" column.

FULL NAME

RELATIONSHIP

CRD Number or, if none, Social Security Number

Description of Authority and Beneficial Interest

Beginning Date

Title or Status

Last

First

Middle

Mo.

Yr.

List below the names reported in the most recent previous filing under this item that are being deleted:

FULL NAME

Ending Date

CRD Number or, if none, Social Security Number

Last

First

Middle

Mo.

Yr.

When amending Form BD, provide complete detail for the Item(s) being amended. File with a completed Execution page (Page 1).

Schedule D of FORM BD

Official Use

Applicant Name:

Date:

Firm CRD No.:

(Use this Schedule to report details of affirmative responses to questions on Form BD.)

Item of Form (Identify)

Answer

Schedule E of FORM BD

Applicant Name:

Date:

Firm CRD No.:

INSTRUCTIONS FOR SCHEDULE E: Initial filings must report all business locations other than the main office. Amendments must include only those branch offices to be added or amended. Complete addresses, including zip code, are to be listed at all times.

Use the following codes in the Nature of Change Column:

To request registration of a new branch office, enter "A".

To report a branch office closing, enter "B".

To report a change of address list the old address immediately followed by the new address; enter "C" next to the old address and "D" next to the new address.

To report a change in supervisor, enter "S".

Place one asterisk (*) under the OSJ column to report designation of a branch as an office of supervisory jurisdiction.

Place a double asterisk (**) under the OSJ column to eliminate designation of a branch as an office of supervisory jurisdiction.

Complete Address

of Branch Office

Name and CRD No.

of Supervisor

OSJ

Nature of

Change

Effective

Date

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

14 Ill. Adm. Code 130.APPENDIX D Subordinated Loan Agreement for Equity Capital

SUBORDINATED LOAN AGREEMENT

SL-1

AGREEMENT BETWEEN:

Lender

(Name)

(Street Address

(City)

(State)

(Zip)

AND

Broker-Dealer

(Name)

(Street Address)

(City)

(State)

(Zip)

NASD ID NO.:

DATE FILED:

NASD

SUBORDINATED LOAN AGREEMENT

AGREEMENT dated

to be effective

between

(the "Lender") and

(the "Broker-Dealer).

In consideration of the sum of $

and subject to the terms and

conditions hereinafter set forth, the Broker-Dealer promises to pay to the Lender or

assigns on

(the "Scheduled Maturity Date") (the last day of the month

at least one year from the effective date of this Agreement) at the principal office

of the Broker-Dealer the aforedescribed sum and interest thereon payable at the rate of

percent per annum from the effective date of this Agreement, which date

shall be the date so agreed upon by the Lender and the Broker-Dealer unless otherwise determined by the National Association of Securities Dealers, Inc. ("NASD"). This Agreement shall not be considered a satisfactory subordinated agreement pursuant to the provisions of 17 CFR 240.15c3-1d unless and until the NASD has found the Agreement acceptable and such Agreement has become effective in the form found acceptable.

The cash proceeds covered by this Agreement shall be used and dealt with by the Broker-Dealer as part of its capital and shall be subject to the risks of the business. The Broker-Dealer shall have the right to deposit any cash proceeds of the Subordinated Loan Agreement in an account or accounts in its own name in any bank or trust company.

The Lender irrevocably agrees that the obligations of the Broker-Dealer under this Agreement with respect to the payment of principal and interest shall be and are subordinate in right of payment and subject to the prior payment or provision for payment in full of all claims of all other present and future creditors of the Broker-Dealer arising out of any matter occurring prior to the date on which the related Payment Obligation (as defined herein) matures consistent with the provisions of 17 CFR 240.15c3-1 and 240.15c3-1d, except for claims which are the subject of subordinated agreements which rank on the same priority as or are junior to the claim of the Lender under such subordination agreements.

I. PERMISSIVE PREPAYMENTS (OPTIONAL)

At the option of the Broker-Dealer, but not at the option of the Lender, payment of all or any part of the "Payment Obligation" amount hereof prior to the Scheduled Maturity Date may be made by the Broker-Dealer only upon receipt of the prior written approval of the NASD, but in no event may any prepayment be made before the expiration of one year from the date this Agreement became effective. No prepayment shall be made if, after given effect thereto (and all payments of Payment Obligations under any other subordinated agreements then outstanding, the maturity or accelerated maturity of which are scheduled to fall due either within six months after the date such prepayment is to occur or on or prior to the date on which the Payment Obligation hereof is scheduled to mature, whichever date is earlier), without reference to any projected profit or loss of the Broker-Dealer, either aggregate indebtedness of the Broker-Dealer would exceed 1000 percent of its net capital or such lesser percent as may be made applicable to the Broker-Dealer form time to time by the NASD, or a governmental agency or self-regulatory body having appropriate authority, or if the Broker-Dealer is operating pursuant to paragraph (f) of 17 CFR 240.15c3-1, its net capital would be less than 5 percent of aggregate debit items computed in accordance with 17 CFR 240.15c3-3a, or, if registered as a futures commission merchant, 7 percent of the funds required to be segregated pursuant to the Commodity Exchange Act and the regulations thereunder, (less the market value of commodity options purchased by option customers on or subject to the rules of a contract market, provided, however, the deduction for each option customer shall be limited to the amount of customer funds in such option customer's account,) if greater, or its net capital would be less than 120 percent of the minimum dollar amount required by 17 CFR 240.15c3-1 including paragraph (f), if applicable, or such greater dollar amount as may be made applicable to the Broker-Dealer by the NASD, or a governmental agency or self-regulatory body having appropriate authority.

II. SUSPENDED REPAYMENTS

(a) The Payment Obligation of the Broker-Dealer shall be suspended and shall not mature, if after giving effect to such payment (together with the payment of any Payment Obligation of the Broker-Dealer under any other subordination agreement scheduled to mature on or before such Payment Obligation) the aggregate indebtedness of the Broker-Dealer would exceed 1200 percent of its net capital or such lesser percent as may be made applicable to the Broker-Dealer from time to time by the NASD, or a governmental agency or self-regulatory body having appropriate authority, or if the Broker-Dealer is operating pursuant to paragraph (f) of 17 CFR 240.15c3-1, its net capital would be less than 5 percent of aggregate debit items computed in accordance with 17 CFR 240.15c3-3a, or, if registered as a futures commission merchant, 6 percent of the funds required to be segregated pursuant to the Commodity Exchange Act and the regulations thereunder, (less the market value of commodity options purchased by option customers on or subject to the rules of a contract market, provided, however, the deduction for each option customer shall be limited to the amount of customer funds in such option customer's account,) if greater, or its net capital would be less than 120 percent of the minimum dollar amount required by 17 CFR 240.15c3-1 including paragraph (f), if applicable, or such greater dollar amount as may be made applicable to the Broker-Dealer by the NASD, or a governmental agency or self-regulatory body having appropriate authority.

(b) (OPTIONAL) The Broker-Dealer agrees that if its obligation to pay the principal amount hereof is suspended for a period of six months, the Broker-Dealer will thereupon commence a rapid and orderly complete liquidation of its business. The date on which the liquidation commences shall be the maturity date for each subordination agreement of the Broker-Dealer then outstanding.

III. LENDER'S RIGHT TO ACCELERATE THE MATURITY OF THE PAYMENT OBLIGATION (OPTIONAL)

By written notice to the Broker-Dealer at its principal office and to the NASD, no sooner than six months after the effective date of this Agreement, the Lender may accelerate such Payment Obligation together with accrued interest or compensation, to a date not earlier than six months after giving of such accrued interest or compensation shall remain subordinate as required by the provisions of 17 CFR 240.15c3-1 and 240.15c3-1d.

IV. ACCELERATED MATURITY OF THE SUBORDINTION AGREEMENT UPON THE OCCURRENCE OF AN EVENT OF ACCELERATION (OPTIONAL)

By prior written notice delivered to the Broker-Dealer at its principal office and to the NASD upon the occurrence of any Event of Acceleration (as defined herein), given no sooner than six months from the effective date of this Agreement, the Lender may accelerate such Payment Obligation to the last business day of a calendar month not less than six months after the receipt of such notice by both the Broker-Dealer and the NASD. If, upon such accelerated maturity, the Payment Obligation of the Broker-Dealer is suspended pursuant to paragraph II of this Agreement, and liquidation of the Broker-Dealer has not commenced on or prior to such accelerated maturity date, such Agreement shall mature on the day immediately following such accelerated maturity date and, in any event, the Payment Obligations of the Broker-Dealer with respect to all other subordination agreements then outstanding shall also mature at the same time. Events of Acceleration which may be included shall be limited to:

(a) Failure to pay interest or any installment of principal on this Agreement as scheduled;

(b) Failure to pay when due other money obligations of a specified material amount;

(c) Discovery that any material, specified representation or warrant of the broker-dealer which is included in this Agreement and on which this Agreement was based or continued was inaccurate in a material respect at the time made; or

(d) The following specified and clearly measurable event(s), which the Lender and Broker-Dealer agree (i) is a significant indication that the financial position of the Broker-Dealer has changed materially and adversely from agreed upon specified norms; or (ii) could materially and adversely affect the ability of the Broker-Dealer to conduct its business as conducted on the effective date of the subordination agreements; or (iii) is a significant change in the senior management or in the general business conducted by the Broker-Dealer form the date this Agreement became effective; or (iv) constitute continued failure to perform agreed-upon covenants included in this Agreement relating to the maintenance and reporting by the Broker-Dealer of its financial position or relating to the conduct of its business.

The events of Acceleration as discussed in paragraph (a) through (d) with respect to this Agreement are enumerated below:

V. ACCELERATED MATURITY OF THE SUBORDINATION AGREEMENT UPON THE OCCURRENCE OF AN EVENT OF DEFAULT (OPTIONAL)

(a) If the liquidation of the business of the Broker-Dealer has not already commenced, the Payment Obligation shall mature, together with accrued interest or compensation, upon the occurrence of an Event of Default, as hereinafter defined.

(b) Further, if liquidation of the business of the Broker-Dealer has not already commenced, the rapid and orderly liquidation of the business of the Broker-Dealer shall then commence upon the happening of an Event of Default, and the date of said Event of Default shall be the date on which the Payment Obligations of the Broker-Dealer with respect to all other subordination agreements then outstanding shall mature.

Events of Default which may be included shall be limited to:

(i) The filing of an application by the Securities Investor Protection Corporation for a decree adjudicating that customers of the Broker-Dealer are in need of protection under the Securities Investor Protection Act of 1970 and the failure of the Broker-Dealer to obtain the dismissal of such application within 30 days;

(ii) The aggregate indebtedness of the Broker-Dealer exceeding 1500 percent of its net capital or, in the case of a Broker-Dealer which has elected to operate under paragraph (f) of 17 CFR 240.15c-1, its net capital computed in accordance therewith is less than 2 percent of its aggregate debit items computed in accordance with 17 CFR 240.15c3-3a, or, if registered as a futures commission merchant, 4 percent of the funds required to be segregated pursuant to the Commodity Exchange Act and the regulations thereunder, (less the market value of commodity options purchased by option customers on or subject to the rules of a contract market, provided, however, the deduction for each option customer shall be limited to the amount of customer funds in such option customer's account,) if greater, throughout a period of 15 consecutive business days, commencing on the day the Broker-Dealer first determines and notifies the Lender and the NASD, or the NASD or the Commission first determines and notifies the Broker-Dealer of such fact;

(iii) Revocation by the Commission of the registration of the Broker-Dealer;

(iv) Suspension by the NASD (without reinstatement within 10 days) or revocation of the Broker-Dealer's status as a member thereof; and,

(v) Receivership, insolvency, liquidation pursuant to the Securities Investor Protection Act of 1970 or otherwise, bankruptcy, assignment for the benefit of creditors, reorganization whether or not pursuant to bankruptcy laws, or any other marshalling of the assets and liabilities of the Broker Dealer.

VI. NOTICE OF MATURITY OR ACCELERATED MATURITY

The Broker-Dealer shall immediately notify the NASD if, after giving effect to all payments of Payment Obligations under subordination agreements then outstanding which are then due or mature within six months without reference to any projected profit or loss of the Broker-Dealer, wither the aggregate indebtedness of the Broker-Dealer would exceed 1200 percent of its net capital, or in the case of a Broker-Dealer operating pursuant to paragraph (f) of 17 CFR 240.15c3-1, its net capital would be less than 5 percent of aggregate debit items computed in accordance with 17 CFR 240.15c3-3a, or, if registered as a futures commission merchant, 6 percent of the funds required to be segregated pursuant to the Commodity Exchange Act and the regulations thereunder, (less the market value of commodity options purchased by option customers on or subject to the rules of a contract market, provided, however, the deduction for each option customer shall be limited to the amount of customer funds in such option customer's account,) if greater, and in either case, if its net capital would be less than 120 percent of the minimum dollar amount required by 17 CFR 240.15c3-1 including paragraph (f), if applicable, or such greater dollar amount as may be made applicable to the Broker-Dealer by the NASD, or a governmental agency or self-regulatory body having appropriate authority.

VII. BROKER-DEALERS CARRYING THE ACCOUNTS OF SPECIALISTS AND MARKET MAKERS IN LISTED OPTIONS

A Broker-Dealer who guarantees, endorses, carries or clears specialist or market-maker transactions in options listed on a national securities exchange or facility of a national securities association shall not permit a reduction, prepayment or repayment of the unpaid principal amount if the effect would cause the equity required in such specialist or market-maker accounts to exceed 1000 percent of the Broker-Dealer's net capital or such percent as may be made applicable to the Broker-Dealer from time to time by the NASD or a governmental agency or self-regulatory body having appropriate authority.

VIII. BROKER-DEALERS REGISTERED WITH CFTC

If the Broker-Dealer is a futures commission merchant or introductory broker as that term is defined in the Commodity Exchange Act, the Organization agrees, consistent with the requirements of 1.17(h) of the regulations of the CFTC (17 CFR 1.17(h)), that:

(a) Whenever prior written notice by the Broker-Dealer to the NASD is required pursuant to the provisions of this Agreement, the same prior written notice shall be given by the Broker-Dealer to (i) the CFTC at its principal office in Washington, D.C., attention Chief Accountant of Division of Trading and Markets, and/or (ii) the commodity exchange of which the Organization is a member and which is then designated by the CFTC as the Organization's designated self-regulatory organization the "DSRO");

(b) Whenever prior written consent, permission or approval of the NASD is required pursuant to the provisions of this Agreement, the Broker-Dealer shall also obtain the prior written consent, permission or approval of the CFTC (and/or of the DSRO); and,

(c) Whenever the Broker-Dealer receives written notice of acceleration of maturity pursuant to the provisions of this Agreement, the Broker-Dealer shall promptly give written notice thereof to the CFTC at the address above stated and/or to the DSRO.

IX. SUBORDINATION OR ACCRUED INTEREST PAYABLE (OPTIONAL)

The Lender and the Borrower hereby elect to have all eligible accrued interest payable on this loan considered as additional subordinated capital for purposes of computing net capital, subject to the terms and conditions set forth in the instructions. The amount of accrued interest payable per month is $ _______________ and the aggregate total of all eligible monthly amounts will be $____________.

(Borrower's Initials)

(Date)

(Lender's Initials)

(Date)

X. GENERAL

This Agreement shall not be subject to cancellation by either the Lender or the Broker-Dealer, and no payment shall be made, nor the Agreement terminated, rescinded, or modified by mutual consent or otherwise if the effect thereof would be inconsistent with the requirements of 17 CFR 240.15c3-1 and 240.15c3-1d.

The Agreement may not be transferred, sold, assigned, pledged, or otherwise encumbered or otherwise disposed of, and no lien, charge or other encumbrance may be created thereon without the prior written consent of the NASD.

In the event of the appointment of a receiver or trustee of the Broker-Dealer or in the event of its insolvency, liquidation pursuant to the Securities Investor Protection Act of 1970 or otherwise, bankruptcy, assignment for the benefit of creditors, reorganization whether or not pursuant to bankruptcy laws, or any other marshaling of the assets and liabilities of the Broker-Dealer, the Payment Obligation of the Broker-Dealer shall mature, and the holder hereof shall not be entitled to participate or share, ratably or otherwise, in the distribution of the assets of the Broker-Dealer until all claims of all other present and future creditors of the Broker-Dealer, whose claims are senior hereto, have been fully satisfied.

The Lender irrevocably agrees that the loan evidenced hereby is not being made in reliance upon the standing of the Broker-Dealer as a member organization of the NASD or upon the NASD surveillance of the Broker-Dealer's financial position or its compliance with the By-Laws, rules and practices of the NASD. The Lender has made such investigation of the Broker-Dealer and its partners, officers, directors and stockholders as the Lender deems necessary and appropriate under the circumstances. The Lender is not relying upon the NASD to provide any information concerning or relating to the Broker-Dealer and agrees that the NASD has no responsibility to disclose to the Lender any information concerning or relating to the Broker-Dealer which it may now, or at any future time, have.

The term "Broker-Dealer" as used in this Agreement shall include the broker-dealer, its heirs, executors, administrators, successors, and assigns.

The term "Payment Obligation" shall mean the obligation of the Broker-Dealer to repay cash loaned to it pursuant to this Subordinated Loan Agreement.

The provisions of this Agreement shall be binding upon the Broker-Dealer and the Lender and their respective heirs, executors, administrators, successors and assigns.

Any controversy arising out of or relating to this Agreement may be submitted to and settled by arbitration pursuant to the By-Laws and rules of the NASD. The Broker-Dealer and the Lender shall be conclusively bound by such arbitration.

This instrument embodies the entire agreement between the Broker-Dealer and Lender and no other evidence of such agreement has been or will be executed without the prior written consent to the NASD.

This Agreement shall be deemed to have been made under, and shall be governed by, the laws of the State of ___________________ in all respects.

IN WITNESS WHEREOF the parties have set their hands and seal this ______ day of ________________________, 19 ____.

(Name of Broker-Dealer)

By

L.S.

(Authorized Person)

L.S.

(Lender)

FOR NASD USE ONLY

ACCEPTED BY

(Name)

(Title)

*EFFECTIVE DATE:

LOAN NUMBER:

SUBORDINATED LOAN AGREEMENT

LENDER'S ATTESTATION

It is recommended that you discuss the merits of this investment with an attorney, accountant or some other person who has knowledge and experience in financial and business matters prior to executing this Agreement.

1. I have received and reviewed NASD Form SLD, which is a reprint of Appendix D of 17 CFR 240.15c3-1, and am familiar with its provisions.

2. I am aware that the funds or securities subject to this Agreement are not covered by the Securities Investor Protection Act of 1970.

3. I understand that I will be furnished financial statements pursuant to SEC Rule 17a-5(c).

4. On the date this Agreement was entered into, the broker-dealer carried funds or securities for my account. (State Yes or No) ____________

5. Lender's business relationship to the broker-dealer is: _________________

6. If not a partner or stockholder actively engaged in the business of the broker-dealer, acknowledge receipt of the following:

a. Certified audit and accountant's certificate dated ____________.

b. Disclosure of financial and/or operational problems since the last certified audit which required reporting pursuant to SEC Rule 17a-11. (If no such reporting was required, state "none")

c. Balance sheet and statement of ownership equity dated ___________.

d. Most recent computation of net capital and aggregate indebtedness or aggregate debit items dated ____, reflecting a net capital of $ and a ratio of ____________.

e. Debt/equity ratio as of _____________________ of _____________.

f. Other disclosures: _______________________________________.

Dated:

L.S.

(Lender)

History

• Source: Added at 14 Ill. Reg. 884, effective December 30, 1989

Part 135 Regulations Under the Business Opportunity Sales Law of 1995

14 Ill. Adm. Code 135.50 Definitions of Terms as Used in the Act and the Rules

a) As used in this Part, unless the context otherwise requires, the term:

"Act" means the Business Opportunity Sales Law of 1995 [815 ILCS 602] and this Part.

"Advertising" means any circular, prospectus, advertisement, or other material or any communication by radio, television, pictures or the transmittal or sending of any communication via the non-proprietary, nonprofit, public computer network (commonly known as the "Internet") or similar means used in connection with an offer or sale of any business opportunity.

"Affiliate" of, or a person "affiliated" with, a specified person means a person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

"Applicant" means the person making application for registration.

"Consideration" as set forth in Section 5-35(a) of the Act includes, without limitation, fully refundable deposits and postdated checks.

"Date of filing" means the date that all of the required documents are received by the Securities Department and all the required fees are paid to the Secretary of State. A document shall not be deemed to be filed if any material information required by the Act or this Part is omitted or the document is illegible.

"Director" means any director of a corporation or any person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Employee" does not include a director, trustee or officer.

"Federal Banking Act of 1933" means the Federal Banking Act of 1933 (12 U.S.C. 227), and the Rules and Regulations thereunder as in effect on January 1, 1996.

"Hearing" means a proceeding conducted by the Securities Department in which the rights, privileges, immunities, duties or obligations of any person or party are required by law to be determined by the Secretary of State only after opportunity for a hearing.

"Initial payment" as set forth in Section 5-10(b) of the Act:

shall include any form of a payment which evidences a financial obligation on the part of the purchaser, including, without limitation, a lump sum payment or a note evidencing installment debt;

shall include any form of payment or payments required to start the business opportunity; that are made during a period from any time before and within six months after commencing operation of the purchaser's business opportunity, in whatever form, inclusive of payment for, without limitation, services, supplies, sales material, samples and inventory (inclusive of shipping and handling costs); and

does not include any cash payment by any purchaser not exceeding $500 if the payment is made for the not-for-profit sale of demonstration equipment, material or samples, or the payment is made for product inventory sold to the purchaser at a bona fide wholesale price.

"Material", when used to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which there is a substantial likelihood that a reasonable person would consider important.

"Officer" means the president; any vice president in charge of a principal business unit, division or function; the secretary; the treasurer; any principal financial officer, comptroller or principal accounting officer; any other officer performing a principal policy-making function and any other person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Principal" means any officer, director, partner, member, trustee or manager who is responsible for the supervision and management of the daily business operations in this State of a business opportunity required to be registered under the Act.

"Purchaser" means a person who enters into a contract or agreement for the acquisition of a business opportunity or a person to whom an offer to sell a business opportunity is directed.

"Rules" refers to all rules adopted by the Secretary of State pursuant to the Act.

"Secretary of State" means the Securities Department of the Office of the Secretary of State or the Securities Director or his or her designee, as the case may be.

"Section" refers to a Section of this Part unless a reference to the Act is specifically made.

b) A Section in this Part which defines a term without express reference to the Act or to this Part or to a portion thereof or hereof defines such term for all purposes as used both in the Act and in this Part. Terms defined in the Act and not defined in this Part have the meanings given them in the Act.

History

• Source: Amended at 22 Ill. Reg. 9571, effective May 20, 1998

14 Ill. Adm. Code 135.100 Exemption by Order

a) Pursuant to Section 5-10(h) of the Act, the Secretary of State may by Order exempt the sale of business opportunities from the requirements of the Act. The Secretary of State will consider whether to issue such an Order upon receipt of the following submissions:

1. a cover letter describing the basis for the exemption by referencing to this Section and to Section 5-10(h) of the Act;

2. a description and business history of the applicant, the amount and form of payment and any additional fees, costs or charges relating to the business opportunity for which an exemption is being sought;

3. a description of the applicant's litigation history as stated in Section 5-35(b)(6)(A) and (7) of the Act;

4. a description of any bankruptcy petition filed by or against the applicant, its officers, directors or predecessors within the last ten years;

5. a copy of the contract or agreement of sale relating to the business opportunity which is sought to be subject to the order of exemption;

6. copies of any promotional materials relating to the business opportunity for which an exemption is being sought;

7. a list of all sales and advertisements in Illinois for the past five years;

8. a list of administrative agencies which have issued or denied exemptions, along with copies of the exemptions and any opinions relating thereto;

9. a statement of the number of units sold, in the prior twelve month period, as business opportunities by the applicant in the United States and in Illinois;

10. a statement of the number of business opportunities the applicant intends to offer for sale in Illinois in the following 12 month period;

11. a copy of any prospectus or other offering circular used by the applicant in the offer or sale of the subject business opportunity; and

12. a certification of facts.

b) Exemption requests will be granted only when in the public interest. An exemption will be considered in the public interest under the following circumstances:

1. the applicant intends to sell no more than two business opportunities in Illinois in the ensuing twelve months;

2. the litigation and bankruptcy history described in subsections (a)(3) and (4) of this Section is not materially adverse to the interest of the prospective business opportunity purchasers;

3. the applicant agrees to provide the business opportunity purchasers with disclosure as required by Section 5-35(b) of the Act or Section 135.350 of this Part; and

c) Orders granting an exemption pursuant to this Section shall remain in effect for 12 months.

History

• Source: Amended at 22 Ill. Reg. 9571, effective May 20, 1998

14 Ill. Adm. Code 135.300 Complete Filing

A complete filing within the meaning of Section 5-30(d)(2) of the Act is a filing which includes:

a) a completed and current application on IL BSOP Form 5-25 and payment to the Securities Department of all appropriate fees as specified in Section 135.2110 of this Part. The application shall be accompanied by the following:

1. a disclosure document with a current financial statement, without any material deficiencies or material omissions in disclosure. The applicant may utilize IL BSOP Form 5-35(b) and IL BSOP Form 5-35;

2. a consent to service of process for the applicant on Illinois Form BO05, unless the applicant is a corporation organized or authorized to transact business under the laws of this State; and

3. a surety bond in the amount of $25,000, if required. The applicant may utilize IL BSOP Form 5-50.

b) Upon the grant of registration of a business opportunity, the Securities Department shall issue to the business opportunity proof of registration as evidence of such registration.

c) The application and documents on file with the Securities Department with respect to the business opportunity shall be amended whenever a change occurs which renders the information contained therein not accurate in any material respect. Such amendment shall be filed with the Securities Department within ten business days after the occurrence of the change.

d) An applicant may request that certain information in its application be kept confidential. The Securities Department shall honor such request if the information is personal in nature or if public access to the information is not reasonably necessary to further the purposes of the Act.

14 Ill. Adm. Code 135.301 Procedures for Withdrawal of Pending Application or Termination of Registration of a Business Opportunity

If the seller of a business opportunity elects to withdraw its pending application prior to registration in this State, or if the seller of a registered business opportunity wishes to terminate its registration in this State, it shall provide written notice to the Securities Department indicating such intent. Any fees paid shall not be returnable in any event.

14 Ill. Adm. Code 135.302 Procedure with Respect to Abandoning Incomplete Applications for Registration of a Business Opportunity

a) When an incomplete application for registration of a business opportunity has been on file with the Secretary of State for a period of six months, the Secretary of State may, in his or her discretion, proceed in the following manner to determine whether the application for registration has been abandoned by the applicant.

b) A notice will be sent to the applicant named in the application for registration, by certified mail, return receipt requested, addressed to the most recent address reflected in the application for registration. The notice will inform the applicant that the application for registration is incomplete and one of the following must be done within 30 days after the date of the Notice:

1. the deficiencies must be corrected and filed; or

2. written intent to complete, within a specified period, must be filed to comply with the applicable requirements of the Act; or

3. a request must be filed for withdrawal of the pending application.

c) Should the applicant fail to respond to such notice by filing the information or document necessary to correct the deficiencies or withdrawing the application for registration, the Secretary of State shall enter an order declaring the application for registration abandoned.

d) When such an order is entered by the Secretary of State:

1. the filing fee paid upon the filing of the application for registration will not be returned; and

2. the records of the Secretary of State will be marked to indicate that the application for registration was abandoned and the date of the order.

e) The applicant may request an administrative hearing in writing within 15 days after receipt of the Order of Abandonment. A request for hearing shall set forth the grounds upon which the applicant petitions for a hearing.

14 Ill. Adm. Code 135.303 Procedures for Renewal of Registration of a Business Opportunity Under Section 5-30(e) of the Act

a) If the seller of a registered business opportunity wishes to renew its registration, it shall file with the Securities Department a completed and current IL BSOP Form 5-25 together with the renewal application filing fee as specified in Section 135.2110 of this Part.

b) Any amendment(s) shall also be filed with the Securities Department within ten business days if any material change occurs in the information that was filed with the Securities Department when the business opportunity applied for registration.

c) Any application for renewal of registration of a business opportunity filed with or fees paid to the Securities Department within 9 business days or less prior to the date upon which the registration or renewal would expire shall pay an additional fee set forth in Section 135.2110 of this Part.

d) Upon receipt of the renewal fees the Securities Department shall issue to the seller of the business opportunity the proof of renewal as evidence of such registration.

14 Ill. Adm. Code 135.350 Disclosure Document

The Secretary of State deems the following disclosure formats to be in full compliance with the disclosure requirements of Section 5-35 of the Act. No format other than the following or the format described in Section 5-35(b) of the Act shall be utilized. The different permissible formats may not be intermingled.

a) The Uniform Franchise Offering Circular (UFOC) in accordance with the Federal Trade Commission Regulation Rule, entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" (16 CFR 436) as in effect on January 1, 1996 (no subsequent amendments or editions); or

b) The disclosure requirements of the Federal Trade Commission Regulation Rule, entitled "Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures" (16 CFR 436) as in effect on January 1, 1996 (no subsequent amendments or editions).

14 Ill. Adm. Code 135.351 Additional Required Disclosure from Seller-Guarantors

In addition to filing the information specified in Section 5-35(b) of the Act, sellers who guarantee the business opportunity shall be required to provide the following information as an addendum to the disclosure document including a description of the nature of the guarantee, including, without limitation, the source of funds and other obligations and contingent and off-balance sheet obligations, which, if matured or liquidated, could impair the ability of the guarantor to perform.

14 Ill. Adm. Code 135.352 Required Amendments to Disclosure Filing

In addition to filing the most current disclosure document at the time of application for registration or renewal pursuant to Section 5-30 of the Act, or for an exemption by order pursuant to Section 135.100 of this Part, sellers shall be required to amend the filing with the following information:

a) the most recent annual report of financial condition shall be due no later than the first day of the fourth month following the date of the audited financials; and

b) material changes or amendments to the information provided in the disclosure document shall be reported to the Secretary of State no later than ten business days after the seller should reasonably have known of the occurrence of such change or amendment.

History

• Source: Amended at 22 Ill. Reg. 9571, effective May 20, 1998

14 Ill. Adm. Code 135.353 Material Change

A change in the information contained in the disclosure document is material within the meaning of Section 135.352(b) and 135.300(c) of this Part if there is a substantial likelihood that a reasonable prospective purchaser would consider it significant in making a decision to purchase or not purchase the business opportunity. Including, without limitation:

a) any increase or decrease in the initial or continuing fees charged by the seller;

b) a change of more than 15 percent in the number of requests for refund or rescission or other mode of termination or cancellation of business opportunities sold which were received by the seller in the most recent quarter since the effective date of the current disclosure document;

c) a change in the seller's management;

d) a change in the seller's or purchaser's obligations under the contract or agreement of sale or related agreements;

e) a decrease in the seller's income of more than 25% or net worth of more than 25%; or

f) additional litigation or a significant change in the status of litigation, including, without limitation:

1. the filing of a complaint, or amendment thereto, alleging or involving violations of any business opportunity or franchise law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or breach of contract;

2. the entry of any injunctive or restrictive order relating to any business opportunity; or the entry of any injunction under any federal, state, Canadian or Mexican business opportunity, franchise, securities, anti-trust trade regulation or trade practice law; and

3. the entry of a judgment that has or would have any significant financial impact on the seller. Such a judgment is considered to have a significant financial impact if it equals 15 percent or more of the current assets of the seller and its subsidiaries on a consolidated basis.

14 Ill. Adm. Code 135.356 Additional Fees

a) The additional fee for the failure by a registered business opportunity to file or file timely any other post-registration document required under this Part shall be as set forth in Section 135.2110 of this Part.

b) The additional fee for the second and subsequent failure by a registered business opportunity to file or file timely any other post-registration document required under this Part shall be as set forth in Section 135.2110 of this Part.

c) The failure by a registered business opportunity to file the required document with the Securities Department and pay any additional fee or fees set forth in this Section within ten business days after written notice by the Securities Department shall constitute a fraudulent business practice under Section 15- 95(3) of the Act.

14 Ill. Adm. Code 135.500 Minimum Net Worth or Surety Bond Requirement

a) In lieu of the minimum net worth requirement set forth in Section 5-50 of the Act, the seller may post a surety bond issued by a surety company authorized to do business in this State. The surety bond shall:

1. be in an amount equivalent to the aggregate of the amount of outstanding guarantees on sales made in this State within the meaning of Section 5-80 of the Act;

2. shall remain in effect for the duration of the guarantee(s) or representation(s) giving rise to the surety bond requirement; and

3. shall be in favor of this State for the benefit of purchasers.

b) Any sale made in this State within the meaning of Section 5-80 of the Act which makes use of representations of guarantee pursuant to Section 5-5.10(a)(4) of the Act when the seller knows or reasonably should know that the guarantee is not covered or is insufficiently covered in the aggregate with other guarantees of the seller, is a per se violation of Section 5-95(3) of the Act.

History

• Source: Amended at 22 Ill. Reg. 9571, effective May 20, 1998

14 Ill. Adm. Code 135.501 Report of Sale Requirements

a) Report of sale subject to seller's guarantee. Sellers who or which make use of the representation provided in Section 5-5.10(a)(4) of the Act that the purchaser will derive income from the business which exceeds the price paid to the seller, and who or which post a surety bond in lieu of the net worth requirement, shall file reports of all sales in this State within ten business days after consummation of the sale.

b) Consummation of sale, for the purpose of subsection (a) of this Section, shall include, without limitation:

1. the execution of a contract of sale which binds the purchaser; or

2. the payment of the purchase price by the agreed upon method of payment.

14 Ill. Adm. Code 135.700 Hearings

Any hearing required pursuant to the Act or by this Part shall be held pursuant to 14 Ill. Adm. Code 130, Subpart K: Procedures For Administrative Hearings.

14 Ill. Adm. Code 135.800 Service of Process Upon the Secretary of State

a) Any process, notice or demand to be served upon the Secretary of State under the Act shall be made by delivering personally to the Securities Director, or any employee of the Securities Department designated by the Securities Director to accept such service on behalf of the Secretary of State, or by sending by registered mail or certified mail, return receipt requested, a copy of the process, notice or demand to the Securities Department. Procedures for service are specified in the Act in the following Sections:

1. Service upon any person who has filed a consent to service of process upon the Secretary of State under the Act, Section 5-80(e) of the Act;

2. Service upon any person who, by virtue of having offered, sold or delivered a business opportunity in this State which is neither registered nor covered by an exemption from registration, shall have appointed the Secretary of State as agent for service of process, Section 5-80(e) of the Act; and

3. Service of a copy of a complaint in a private civil action.

b) Service of any process, notice or demand under this Section shall be made at the Springfield or Chicago office of the Securities Department during regular business hours as specified in Section 135.2100 of this Part.

c) At the time of any service upon the Secretary of State pursuant to Section 5-80(e) of the Act, there shall be paid a fee in the amount specified in Section 135.2110 of this Part, which shall not be returnable in any event. Each process, notice or demand shall be submitted with a separate payment.

d) The Securities Department shall keep a record, which shall show the date of service, of all the processes, notices and demands received.

14 Ill. Adm. Code 135.801 Scope of the Law (repealed)

History

• Source: Repealed at 22 Ill. Reg. 9571, effective May 20, 1998

14 Ill. Adm. Code 135.950 Fraudulent Practices

It shall be a violation of Section 5-95 of the Act for any person, in connection with the offer or sale of any business opportunity in this State sold pursuant to the exemptions granted under Section 5-10(a), (c) or (d) of the Act, directly or indirectly:

a) to employ any device, scheme or artifice to defraud;

b) to make any untrue statement of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

c) to engage in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person.

14 Ill. Adm. Code 135.1300 Request for Non-Binding Statements

a) Required Information and Format.

1. All requests for non-binding statements shall be in writing and be accompanied by the fee set forth in Section 135.2110 of this Part. The request shall be filed with the Securities Department and shall contain the following:

A) A brief summary of the Sections of the Act and of this Part to which the request pertains;

B) A detailed factual representation concerning every relevant aspect of the proposed transaction, such as the names of affected parties, type and description of business opportunity, details regarding the transactions, each claim of exemption, if any, and reasoning in support of each such claim. Requests should be limited to the particular situation, and should not attempt to include every possible type of situation which may arise in the future;

C) A discussion of current statutes, rules and legal principles relevant to the facts set forth;

D) A statement setting forth the person's own opinion in the matter and the basis for such opinion; and

E) A representation that the transaction in question has not been commenced and will not commence for at least 30 days.

2. The Securities Department will not respond to requests for non-binding statements involving the anti-fraud provisions of the Act or the Rules.

3. The Securities Department will not respond to requests for non-binding statements with respect to transactions which have already taken place.

4. The Securities Department will not respond to requests based upon hypothetical facts or involving unnamed parties.

b) Review procedure. After a review of the relevant facts presented, in light of existing judicial, legislative and administrative history, the Securities Department may issue its finding as to the applicability of the Act to the situation presented in the form of a non-binding statement stating that it will recommend that no enforcement action be initiated against the parties involved if all the facts are true and complete. Facts or conditions different than those presented may require different conclusions and persons other than those requesting the statement should not rely on the statement.

c) Availability of non-binding statements issued by the Department.

1. The Securities Department will maintain an index by statutory Section(s) involving all non-binding statements issued.

2. Copies of such statements may be reviewed in the Securities Department's Springfield office and copies thereof may be obtained upon payment of the cost of duplication as set forth in Section 135.2110 of this Part.

14 Ill. Adm. Code 135.1400 Inspection of Business Opportunity Records

Records of all registered business opportunities are available for public inspection during the business hours at the Springfield or Chicago office of the Securities Department of the Secretary of State upon written request.

14 Ill. Adm. Code 135.1401 Non-Public Distribution of Information

Information or documents obtained by employees of the Secretary of State in the course of any examination or investigation pursuant to Section 5-60 of the Act shall, unless made a matter of public record, be deemed confidential. Employees are hereby prohibited from making such confidential information or documents or any other non-public records of the Secretary of State available to anyone other than an employee of the Secretary of State, or other governmental agency, unless the Secretary of State authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest.

14 Ill. Adm. Code 135.2100 Business Hours of the Securities Department

a) The principal office of the Securities Department at Jefferson Terrace, Suite 300A, 300 W. Jefferson Street, Springfield IL 62702 is open each day, except Saturdays, Sundays and holidays, from 8:00 a.m. to 4:30 p.m. Central Standard Time or Central Daylight Savings Time, whichever is currently in effect in Springfield.

b) An office of the Securities Department at 69 West Washington Street, Suite 1220, Chicago, Illinois 60602 is open each day, except Saturdays, Sundays and holidays, from 8:30 a.m. to 5:00 p.m. Central Standard Time or Central Daylight Savings Time, whichever is currently in effect in Chicago.

History

• Source: Amended at 33 Ill. Reg. 12834, effective September 8, 2009

14 Ill. Adm. Code 135.2101 Computation of Time

The time within which an act under the Act shall be done shall be computed by excluding the first day and including the last, unless the last day is a Saturday, Sunday or holiday as defined or fixed in any statute now or hereafter in force in this State, and then it shall also be excluded. If the day succeeding such Saturday, Sunday or holiday is also a Saturday, Sunday or holiday, then such succeeding day shall also be excluded.

14 Ill. Adm. Code 135.2110 Payment of Fees

a) Fees under the Act are as follows:

Section 5-10

Order of Exemption/Filing Fee

$300

Section 5-30

Initial Disclosure Document Filing Fee

$300

Section 5-30(e)

Renewal Filing Fee

$300

Renewal Late Fee

$100*

Fee to Report a Material Change to Required Disclosure pursuant to Section 135.352(b) of this Part

$25

Business Opportunity Fee to report a change in its form of organization or change of its name

$20

Fee for the failure to file or file timely any required document or information

$250

Fee for each subsequent failure to file or file timely any required document or information

$500

Section 5-75(d)

Non-Binding Statement

$75

Section 5-80(d)

Service of Process (when served upon the Secretary)

$10

Certificate

$10

Certified Copy of Document

$10 plus

Each Page Certified

$ .50

Duplication of Documents

each Page Duplicated

$ .50

Additional fee for payment of fee returned to the Securities Department due to insufficient funds or for a similar reason

$50

*If the renewal application is filed within 9 business days preceding the expiration of the current registration.

b) All payments of fees, except for payment of administrative fines under the Act, as set forth below, shall be made by check, money order, certified check, bank cashier's check, or indicia of forms of electronic transfer of funds payable to the "Secretary of State". No third party check or money order endorsed over to the Secretary of State shall be accepted as payment of any fee. All payments for administrative fines under the Act, in excess of $500, except for a person registered under Section 5-10 or 5-30 of the Act, shall be made by money order, certified check or bank cashier's check.

c) Any person whose payment of fees is returned to the Securities Department due to insufficient funds or for a similar reason shall pay to the Secretary of State the amount of fee owed plus an additional fee as set forth in this Section for each payment returned. This fee shall include the fee required by 5 ILCS 290/10.

d) The Secretary of State shall require any person to make payment of fees in the form of a money order, certified check or bank cashier's check if any previous payment of fees has been returned to the Securities Department due to insufficient funds or for a similar reason.

e) All payment of fees under this Act shall be deemed to be filed and the fees paid upon receipt by the Securities Department, provided that the fee paid is not less or more than five dollars of the amount due.

14 Ill. Adm. Code 135.2120 Place of Filing

All applications for registration or exemption from registration and other papers filed with the Securities Department or the Secretary of State pursuant to the Act shall be filed at Lincoln Tower, Suite 200, 520 South Second Street, Springfield, Illinois 62701 or 69 West Washington Street, Suite 1220, Chicago, Illinois 60602. Such material may be filed by delivery to the Securities Department, through the mail or otherwise.

History

• Source: Amended at 26 Ill. Reg. 14862, effective September 30, 2002

14 Ill. Adm. Code 135.2130 Date of Filing

a) The date of filing of any document required to be filed with the Securities Department shall be the date of delivery of the document and any required fee to the Securities Department in Springfield or Chicago, Illinois, as specified in Section 135.2120 of this Part.

b) A document may not be deemed to be filed with the Secretary of State unless all requirements of the Act and this Part with respect to such filing have been complied with and the required fee has been paid.

History

• Source: Amended at 22 Ill. Reg. 9571, effective May 20, 1998

14 Ill. Adm. Code 135.2140 Requirements as to Proper Form

Any document filed with the Securities Department pursuant to the Act shall be prepared in accordance with the form, if any, prescribed by the Securities Department. Any such document shall be deemed to be filed on the proper form unless objection to the form is made by the Securities Department.

14 Ill. Adm. Code 135.2141 Additional Information

In addition to the information expressly required to be included in an application for registration, the applicant shall include other material information which may be necessary to make the required statements truthful.

14 Ill. Adm. Code 135.2143 Information Unknown or Not Reasonably Available

Information required need be given only insofar as it is known or reasonably available to the applicant. If any required information is unknown and not reasonably available to the applicant, either due to unreasonable effort or expense, or because it rests within the knowledge of another person not affiliated with the applicant, the information may be omitted, subject to the following conditions:

a) The applicant shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof.

b) The applicant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

14 Ill. Adm. Code 135.2144 Requirements as to Paper, Printing and Language

a) Application for registration shall be filed on good quality, unglazed, white paper, 8½ by 11 inches in size, insofar as practicable. However, tables, charts, maps and financial statements may be on larger paper, if folded to that size, and the disclosure statement may be on smaller paper but not less than 7½ by 9 inches in size.

b) The application for registration, and all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed or typewritten. However, the application or any portion thereof may be prepared by any similar process which, in the opinion of the Secretary of State, produces copies suitable for permanent record. All copies of the material shall be clear, easily readable and suitable for repeated photocopying. Debits in credit categories and credits in debit categories shall be designated to be clearly distinguishable as such on photocopies.

c) The application for registration shall be in the English language. If any exhibit or other paper or document filed with the application for registration is in a foreign language, it shall be accompanied by a translation into the English language.

14 Ill. Adm. Code 135.2145 Number of Copies – Signatures

a) One copy of the completed application for registration, manually signed by the applicant, including exhibits and all other papers and documents filed as a part of the application, shall be filed with the Secretary of State.

b) If any name is signed to the application for registration pursuant to a power of attorney, copies of the power of attorney shall be filed with the application for registration. In addition, in the case of a corporate applicant, if the name of any officer signing on behalf of the applicant, or attesting to the applicant's seal, is signed pursuant to a power of attorney, copies of a resolution of the applicant's board of directors authorizing the signature shall be filed with the application for registration.

14 Ill. Adm. Code 135.2190 Provisions for Granting of Variance from Rules

The Secretary of State or his or her designee may grant variances from this Part in individual cases where he determines that:

a) the provision from which the variance is granted is not statutorily mandated;

b) no party will be injured by granting the variance; and

c) the Section from which the variance is granted would, in the particular case, be unnecessarily burdensome.

Part 140 Regulations Under the Illinois Business Brokers Act of 1995

14 Ill. Adm. Code 140.50 Scope of the Law (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.51 Definitions of Terms Used in the Act and the Rules

a) As used in the Act and this Part, unless the context otherwise requires, the term:

"Act or Law" means the Illinois Business Brokers Act of 1995 [815 ILCS 307].

"Advertising" means any circular, disclosure statement, advertisement, or other material or any communication by radio, television, pictures or the transmittal or sending or of any communication via the non-proprietary, nonprofit, public computer network (commonly known as the "Internet") or similar means.

"Affiliate" of, or a person "affiliated" with, a specified person means a person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

"Applicant" means the person making application for registration.

"Branch Office":

Branch office means any office, residence or other place or location in this State where the business of a registered business broker is conducted and which is owned or controlled by, or operated directly, or indirectly for the benefit of, the registered business broker and where the business of the business broker is conducted by a principal, agent or employee for such registered business broker.

The principal office located in this State of the registered business broker shall not be considered a branch office.

Except as otherwise provided in this Section, each office, residence or other place or location where business is being conducted in this State on behalf of a registered business broker shall be considered a branch office for the registered business broker.

"Date of Filing" means the date that all of the required documents are received by the Securities Department and all the required fees are paid to the Secretary of State. A document shall not be deemed to be filed if any material information required by the Act or this Part is omitted or the document is illegible.

"Director" means any director of a corporation or any person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Domicile" means, when applied to a business, that entity's principal place of business and, where applicable, that entity's place of incorporation.

"Dominant Element of a Transaction" as used in Section 10-5.15 of the Act means any transaction in which (1) 50% or more of the purchase price or 50% or more of the net asset value of the business being sold is real estate; or (2) real estate is an integral part of the business being sold. The percentage of the transaction made up of the purchase price or net asset value of the real estate shall be based upon the reasonable expectation of the person potentially acting as a business broker and the client at the time the brokerage contract or agreement for services is entered into; or (3) real estate is the single largest part of the transaction.

"Employee" does not include a director, trustee or officer.

"Federal Banking Act of 1933" means the Federal Banking Act of 1933 (12 U.S.C. 227), and the Rules and Regulations thereunder as in effect on January 1, 1996.

"Hearing" means a proceeding conducted by the Securities Department in which the rights, privileges, immunities, duties or obligations of any person or party are required by law to be determined by the Secretary of State only after opportunity for a hearing.

"Insolvency" means the rendering of a business broker financially unable to perform any contractual obligations of its business brokering duties.

"Offer or Offer to Sell" includes every attempt to dispose of a business for value or solicitation of an offer to purchase a business.

"Officer" means the president; any vice president in charge of a principal business unit, division or function; the secretary; the treasurer; any principal financial officer, comptroller or principal accounting officer; any other officer performing a principal policy-making function and any other person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Ongoing Business" means an existing business that, for at least six months prior to the offer, has been operated from a specific, but not necessarily the same, location, has been open for business to the general public and has substantially all of the equipment and supplies necessary to operate the business.

"Principal" means any officer, director, partner, member, trustee, or manager who is responsible for the supervision and management of the daily business operations in this State of a business broker required to be registered under the Act.

"Proposed Client" means any person who has executed a disclosure statement which he or she received from a business broker and returned or caused to be returned to the business broker.

"Real Estate" means and includes leaseholds, as well as any other interest or estate in land, whether corporeal, incorporeal, freehold or non-freehold, and whether the real estate is situated in Illinois or elsewhere.

"Rules" refers to all rules adopted by the Secretary of State pursuant to the Act.

"Sale or Sell" means every contract or agreement of sale, contract to sell, or the disposition of a business or interest in a business for value.

"Secretary of State" means the Securities Department of the Office of the Illinois Secretary of State or the Secretary of State or the Securities Director, or his or her designee, as the case may be.

"Section" refers to a Section of this Part unless a reference to the Act is specifically made.

b) A Section of this Part which defines a term without express reference to the Act or to this Part or to a portion thereof or hereof defines such term for all purposes as used both in the Act and in this Part. Terms defined in the Act and not defined in this Part have the meanings given them in the Act.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.100 Procedures for Registration as a Business Broker Under Section 10-10 of the Act

No person shall be registered as a business broker unless such person submits a completed application as set forth in this Section.

a) Each applicant for registration as a business broker shall file with the Secretary of State Securities Department a completed and current application on Illinois Form BB01 and pay to the Securities Department all appropriate fees as specified in Section 140.2110 of this Part. The application shall be accompanied by the following:

1. A Consent to Service of Process for the applicant on Illinois Form BB10, unless the applicant is a corporation organized or authorized to transact business under the laws of this State;

2. The disclosure document required under Section 10-30(b) of the Act or Section 10-30(b)(1) of the Act and Section 140.302 or 140.303 of this Part (provided however a contract does not need to accompany the disclosure document);

b) Upon the grant of registration of a business broker, the Securities Department shall issue to the business broker proof of registration as evidence of such registration;

c) The application and documents on file with the Securities Department with respect to the business broker shall be amended whenever a change occurs which renders the information contained therein not accurate in any material respect. Such amendment shall be filed with the Securities Department within ten business days after the occurrence of the change; and

d) An applicant may request that certain information in its application be kept confidential. The Securities Department shall honor such request if the information is personal in nature or if public access to the information is not reasonably necessary to further the purposes of the Act.

14 Ill. Adm. Code 140.120 Procedures for Withdrawal of Pending Application or Termination of Registration as a Business Broker

If a business broker elects to withdraw its pending application prior to registration in this State, or if a registered business broker wishes to terminate its registration in this State, it shall provide written notice to the Securities Department indicating such intent. Any fees paid shall not be returnable in any event.

14 Ill. Adm. Code 140.130 Procedure with Respect to Abandoning Incomplete Applications for Registration as a Business Broker

a) When an incomplete application for registration as a business broker has been on file with the Secretary of State for a period of six months, the Secretary of State may, in his or her discretion, proceed in the following manner to determine whether the application for registration has been abandoned by the applicant.

b) A notice will be sent to the applicant named in the application for registration, by certified mail, return receipt requested, addressed to the most recent address reflected in the application for registration. The notice will inform the applicant that the application for registration is incomplete and one of the following must be done within 30 days after the date of the Notice:

1. the deficiencies must be corrected and filed; or

2. written intent to complete within a specified period must be filed to comply with the applicable requirements of the Act; or

3. a request must be filed for withdrawal of the pending application.

c) Should the applicant fail to respond to such notice by filing the information or document necessary to correct the deficiencies or withdrawing the application for registration, the Secretary of State shall enter an order declaring the application for registration abandoned.

d) When such an order is entered by the Secretary of State:

1. the filing, examination and registration fees paid upon the filing of the application for registration will not be returned; and

2. the records of the Secretary of State will be marked to indicate that the application for registration was abandoned and the date of the order.

e) The applicant may request an administrative hearing in writing within 15 days after receipt of the Order of Abandonment. A request for hearing shall set forth the grounds upon which the applicant petitions for a hearing.

14 Ill. Adm. Code 140.200 Procedures for Renewal of Registration as a Business Broker Under Section 10-20 of the Act

a) If a registered business broker wishes to renew its registration, it shall file with the Securities Department the preprinted Illinois Form BB04 together with the renewal filing and examination fee and branch office fee, if any, as specified in Section 140.2110 of this Part.

b) Any amendment(s) shall also be filed with the Securities Department within ten business days if any material change occurs in the information that was filed with the Securities Department when the business broker applied for registration.

c) Any application for renewal of registration of a business broker filed with or fees paid to the Securities Department within 29 days or less prior to the date upon which the registration or renewal would expire shall pay an additional fee set forth in Section 140.2110 of this Part.

d) Upon receipt of the renewal fees the Securities Department shall issue to the business broker proof of renewal as evidence of such registration.

History

• Source: Amended at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.300 When Disclosure Statement Must Be Provided

a) Except as provided in Section 10-30.5 of the Act, a business broker shall provide a disclosure statement, pursuant to Section 10-30 of the Act, which shall be consistent in all material respects with this Section, to any client or proposed client at least seven days before the earlier of:

1. The time such client or proposed client signs a contract for the services of the business broker; or

2. The time the business broker receives any consideration for the contract.

b) As used in this Part and in the Act, the term "client" does not include a person who is under no obligation to compensate the business broker under any circumstances.

c) The Secretary of State recommends that business brokers have each client and proposed client sign and date an acknowledgment of receipt when the disclosure statement is provided to clients and proposed clients.

History

• Source: Amended at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.301 Purpose of Disclosure; Substantial Compliance

a) The Secretary of State has determined that the disclosure statement and waiting period requirements of the Act should be interpreted and enforced so as to further the objective of the Act. That objective is to ensure that clients and proposed clients of business brokers have full disclosure of the material terms in the business broker's contract with the client, have an opportunity to review those terms and, at the client's request, have an attorney review the contract.

b) Where a business broker has reasonably tried to comply with the provisions of this Part, such broker shall be deemed to have complied with Section 10-30 of the Act if the client or proposed client has been provided with all material information required by this Part and has had a reasonable opportunity to review and consider the information, to review the business broker's contract, and to have the business broker's contract reviewed by an attorney.

c) The Secretary of State recommends that business brokers have each client or proposed client sign and date an acknowledgment of receipt when the disclosure statement is provided to clients and proposed clients.

14 Ill. Adm. Code 140.302 Contents of Disclosure Statement

The disclosure statement shall contain the following information:

a) Nothing except the following language in at least 10-point boldface capital letters shall appear on the cover page (an example is set forth in Section 140.303):

1. DISCLOSURES REQUIRED BY LAW;

2. THE SECRETARY OF STATE HAS NOT REVIEWED AND DOES NOT APPROVE, RECOMMEND, ENDORSE OR SPONSOR ANY BUSINESS BROKERAGE CONTRACT. THE INFORMATION CONTAINED IN THIS DISCLOSURE HAS NOT BEEN VERIFIED BY THE SECRETARY OF STATE; AND

3. IF YOU HAVE ANY QUESTIONS, SEE AN ATTORNEY BEFORE YOU SIGN A CONTRACT OR AGREEMENT.

b) On the following pages, the information as set forth in Section 10-30(b) of the Act shall be provided including (an example is set forth in Section 140.303):

1. The name and form of organization of the business broker, the names under which the business broker has done, is doing, or intends to do business, and the name of any parent organization or affiliate of the broker;

2. The names, addresses, and titles of the business broker's officers, directors, trustees, general partners, general managers, principal executives, and any other person performing similar duties;

3. A full and detailed description of the actual services that the business broker undertakes to perform for the proposed client; and

4. A specific statement of the circumstances under which the business broker will be entitled to obtain or retain consideration from the party with whom the business broker has entered into a contract.

c) The information in subsections (b)(3) and (b)(4) of this Section need not be set out on the disclosure statement if the business broker's contract is provided with the disclosure statement.

14 Ill. Adm. Code 140.303 Providing the Contract with the Disclosure Statement

a) Because the purpose of the disclosure statement is to provide full information about the material terms of the business broker's contract with the client, the Secretary of State encourages business brokers to include a copy of the contract with the disclosure statement. When the contract is provided to the client with the disclosure statement, the disclosure statement need not contain either:

1. the full and detailed description of the actual services that the business broker undertakes to perform; or

2. a specific statement of the circumstances under which the business broker will be entitled to obtain or retain consideration from the party with whom the business broker has entered into a contract.

b) The following is an example of a cover page which, if prepared as follows and accurate in all material respects, will be deemed to comply with the Act (important: nothing except the following language in at least 10-point boldface capital letters shall appear on the cover page):

1. DISCLOSURES REQUIRED BY LAW;

2. THE SECRETARY OF STATE HAS NOT REVIEWED AND DOES NOT APPROVE, RECOMMEND, ENDORSE OR SPONSOR ANY BUSINESS BROKERAGE CONTRACT. THE INFORMATION CONTAINED IN THIS DISCLOSURE HAS NOT BEEN VERIFIED BY THE SECRETARY OF STATE; AND

3. IF YOU HAVE ANY QUESTIONS, SEE AN ATTORNEY BEFORE YOU SIGN A CONTRACT OR AGREEMENT.

c) The following is an example of page two (this is not a form):

The information regarding the Business Broker's organization, principals, services and fees is being provided in this Disclosure Statement pursuant to the Illinois Business Brokers Act of 1995 [815 ILCS 307/10-30(b)].

THE BUSINESS BROKER CONTRACT (OR FEE AGREEMENT) IS PROVIDED WITH THIS DISCLOSURE STATEMENT AND IS AN INTEGRAL PART OF THIS DISCLOSURE STATEMENT.

READ BOTH THIS DISCLOSURE STATEMENT AND THE CONTRACT OR AGREEMENT CAREFULLY. YOU ARE ENCOURAGED TO HAVE THE CONTRACT OR AGREEMENT REVIEWED BY AN ATTORNEY.

Organization

Organization Name:

Type:

Business Name (if different):

Address:

Name(s) under which Business Broker has done business:

Parents/Affiliates:

List of Business Broker's officers, directors, trustees, general partners, general managers, principal executives and others performing similar duties:

President:

Address:

Vice President:

Address:

Principal:

Address:

Services

The actual services that the Business Broker undertakes to perform are set forth in the Business Broker Contract (or Fee Agreement). Those are the only services that the Business Broker is obligated to provide.

Client's Obligations

The circumstances under which you will be obligated to pay the Business Broker (or the Business Broker will be permitted to retain money you have paid) are set forth in the Business Broker Contract (or Fee Agreement). READ THE CONTRACT OR AGREEMENT CAREFULLY.

CLIENT ACKNOWLEDGMENT:

I received this Disclosure Statement and a copy of the Business Broker Contract (or Fee Agreement) on the date set forth below.

Date:

Client Signature:

Client Name (printed):

14 Ill. Adm. Code 140.304 Providing the Contract to Client (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.400 Hearings

Any hearing required pursuant to the Act or by this Part shall be held pursuant to 14 Ill. Adm. Code 130, Subpart K: Procedures for Administrative Hearings.

14 Ill. Adm. Code 140.750 Records Required of Business Brokers

a) Each business broker agreement or contract shall be given a unique identifying account number and all instruments or documents relating to that agreement or contract must bear this number. Every business broker registered by the Secretary of State shall keep and maintain for a period of six years from the date of its agreement or contract with the client in the business broker's principal office in this State the following records:

1. A business broker agreement or contract register that consists of a chronological listing of all business broker agreements or contracts that have been entered into. For each business broker agreement or contract the register shall contain the following:

A) The account number;

B) The date of the agreement or contract;

C) The name of the client or proposed client;

D) The amount of fees charged, if any; and

E) The cost and type of insurance required, if any.

2. A file for each client or proposed client shall contain the following:

A) The name, address and telephone number of the client or proposed client;

B) A copy of the signed business broker agreement or contract;

C) A copy of any other papers or instruments used in connection with the business broker agreement or contract that are signed by the client or proposed client, including a copy of the disclosure document required by Section 10-30 of the Act that contains an acknowledged receipt by the client or proposed client; and

D) The amount of the business broker's fee that the client has paid; and, if there is an unpaid balance, the status of any collection efforts.

No file need be kept for a buyer client or proposed buyer client where no fee, expense reimbursement, retainer or other charge was incurred and no transaction was consummated.

3. All receipts from or for the account of clients or proposed clients and all disbursements to or for the account of clients or proposed clients, recorded so that the transactions are readily identifiable.

4. A copy of the following:

A) All advertisements, pamphlets, circulars, letters, articles or communications published in any newspaper, magazine, periodical or the transmittal or sending of any communication via the non-proprietary, nonprofit, public computer network (commonly known as the "Internet") which discuss the business broker;

B) Scripts of any recording or radio or television announcement which discuss the business broker; and

C) Any sales kit or literature used or to be used in solicitation of clients.

b) Every registered business broker shall preserve during the life of its business organization and of any successor thereto all partnership agreements, certificates or articles and amendments thereto or, in the case of a corporation, all certificates and articles of incorporation or charter or amendments thereto, minute books and stock certificate books.

c) Every business broker registered by the Secretary of State shall maintain within this State, in an easily accessible place, all records required by this Section or the Act. All records required to be maintained under this Section or the Act must be separate or readily identifiable from the records of any other business that is conducted in the office of the business broker. A written request for a waiver of the provisions of this Section may be made to the Secretary of State to permit any registered business broker to maintain any of the records required by this Section or the Act outside the State of Illinois. In determining whether the provisions of this Section should be waived, the Secretary of State shall consider, without limitation, whether the main office of the business broker is outside the State of Illinois or whether the business broker uses all or some of the bookkeeping facilities of some other business broker whose main office is outside the State of Illinois.

d) For the purpose of this Section, if advertisements are made through the use of the United States mail or similar means of delivery, or broadcast over radio or television or similar means of broadcast, or transmitted or sent via the Internet then only one representative copy of the advertisement is required to be maintained by the business broker, together with the dates of printing, broadcast or transmission (if known) and the names and addresses of the recipients.

History

• Source: Amended at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.800 Previous and Ongoing Agreements or Contracts and Transactions Not Affected (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.801 Burden of Proof

In any administrative, civil or criminal proceeding related to the Act, the burden of proving an exemption, an exception from a definition or an exclusion from the Act is upon the person claiming it.

14 Ill. Adm. Code 140.802 Exemption for Franchises (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.803 Exemptions from Waiting Period and Disclosure Requirements Pursuant to Section 10-30 of the Act

A business broker shall be entitled to rely upon a statement executed by the client that:

a) the client is in one of the categories enumerated in Section 10-30.5(a)(1) through (5) of the Act. Illinois Form BB02 may be utilized by the business broker for this purpose; or

b) the client had an attorney review the business broker's contract with the client. Illinois Form BB03 may be utilized by the business broker for this purpose.

History

• Source: Amended at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.804 Exemption for Attorneys (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.805 Exemption for Certified Public Accountants (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.806 Other Persons Exempt from the Act and This Part (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.807 Transactions Exempt from the Act and This Part (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.808 Exemption for Real Estate Brokers and Real Estate Salespersons – Services Incidental to a Real Estate Brokerage Agreement (repealed)

History

• Source: Repealed at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.810 Exemption for Loan Broker Agreements or Contracts from the Business Brokers Act of 1995

A loan broker agreement or contract, made pursuant to and in compliance with the Illinois Loan Brokers Act of 1995 [815 ILCS 175] between a client and a registered loan broker, which contains a promise by, or obligation of, a loan broker to procure or assist in procuring a loan for business financing or the purchase of a business for the client, is exempt from this Act.

History

• Source: Added at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.1000 Service of Process Upon the Secretary of State

a) Any process, notice or demand to be served upon the Secretary of State under the Act shall be made by delivering personally to the Securities Director, or any employee of the Securities Department designated by the Securities Director to accept such service on behalf of the Secretary of State, or by sending by registered mail or certified mail, return receipt requested, a copy of the process, notice or demand to the Securities Department. Procedures for service are specified as follows:

1. Service upon any person who has filed a consent to service of process upon the Secretary of State;

2. Service upon any person who, by virtue of acting as a business broker in this State which is neither registered nor covered by an exemption from registration, shall have appointed the Secretary of State as agent for service of process; and

3. Service of a copy of a complaint in a private civil action.

b) Service of any process, notice or demand under this Section shall be made at the Springfield or Chicago office of the Securities Department during regular business hours as specified in Section 140.2100 of this Part.

c) At the time of any service upon the Secretary of State there shall be paid a fee in the amount specified in Section 140.2110 of this Part, which shall not be returnable in any event. Each process, notice or demand shall be submitted with a separate payment.

d) The Securities Department shall keep a record, which shall show the date of service of all the processes, notices and demands received.

14 Ill. Adm. Code 140.1150 Procedures for Filing a Notice of Lien or Amendment to a Notice of Lien Under Section 10-115 of the Act

a) A business broker who is filing a notice of lien must file Form UCC 1, Financing Statement, with the Uniform Commercial Code Division, together with the filing fee, as specified by 810 ILCS 5/9-403 through 9-406. The form must contain the following information:

1. Name of business broker, business broker file number and address in the section marked as secured party;

2. Name of purchaser and address labeled "Name of purchaser and address" in the section marked as "debtor" if the lien is against the purchaser, otherwise in the section marked as "secured party";

3. Name of seller and address labeled "Name of seller and address" in the section marked as "debtor" if the lien is against the seller, otherwise in the section marked as "secured party";

4. In the section marked as "this financing statement covers the following types (or items) of property:"

A) A legend in bold capital letters stating as follows: "NOTICE OF BUSINESS BROKER LIEN";

B) Name of business and address;

C) Description of business;

D) Total dollar amount claimed; and

E) A detailed description of business assets to which the lien applies that reasonably identifies those assets. The description may include, but is not limited to, addresses, legal descriptions, inventory and serial numbers. Failure to describe an asset(s) shall not affect the validity of a lien.

b) The form shall be signed by the business broker or a person authorized to sign on behalf of the business broker.

c) A business broker may file an amendment to an existing Notice of Lien by filing Form UCC 3, together with the Amendment to Notice of Lien fee in the amount specified by 810 ILCS 5/9-403 through 9-406.

d) A Notice of Lien may not be filed by a business broker who is unregistered or whose registration has been denied, suspended or revoked. A Notice of Lien filed by a business broker whose registration currently or subsequently is denied, suspended or revoked is immediately terminated.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.1152 Procedures to Terminate a Notice of Lien Prior to the Two Year Expiration

a) A business broker may terminate a Notice of Lien that was filed prior to January 1, 2001 with the Securities Department or after January 1, 2001 with the Uniform Commercial Code Division prior to the two year termination by filing Form UCC 3 with the Uniform Commercial Code Division. This form must contain the following information:

1. Name of business broker and business broker file number;

2. Name of purchaser;

3. Name of seller;

4. Name of business;

5. Date Notice of Lien was filed with the Illinois Securities Department or Uniform Commercial Code Division; and

6. Reason for release and date of such occurrence.

b) The form shall be signed by the business broker or a person authorized to sign on the behalf of the business broker.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.1200 Request for Non-Binding Statements

a) Required Information and Format.

1. All requests for non-binding statements shall be in writing and be accompanied by the fee set forth in Section 140.2110 of this Part. The request shall be filed with the Securities Department and shall contain the following:

A) A brief summary of the Sections of the Act and of the Rules to which the request pertains;

B) A detailed factual representation concerning every relevant aspect of the proposed transaction, such as the names of affected parties, details regarding the transactions, each claim of exemption, if any, and reasoning in support of each such claim. Requests should be limited to the particular situation, and should not attempt to include every possible type of situation which may arise in the future;

C) A discussion of current statutes, rules and legal principles relevant to the facts set forth;

D) A statement setting forth the person's own opinion in the matter and the basis for such opinion; and

E) A representation that the transaction in question has not been commenced and will not commence for at least 30 days.

2. The Securities Department will not respond to requests for non-binding statements involving the anti-fraud provisions of the Act or the Rules.

3. The Securities Department will not respond to requests for non-binding statements with respect to transactions which have already taken place.

4. The Securities Department will not respond to requests based upon hypothetical facts or involving unnamed parties.

b) Review procedure. After a review of the relevant facts presented, in light of existing judicial, legislative and administrative history, the Securities Department may issue its finding as to the applicability of the Act to the situation presented in the form of a non-binding statement stating that it will recommend that no enforcement action be initiated against the parties involved if all the facts are true and complete. Facts or conditions different than those presented may require different conclusions and persons other than those requesting the statement should not rely on the statement.

c) Availability of non-binding statements issued by the Department.

1. The Securities Department will maintain a chronological index by statutory Section(s) involving all non-binding statements issued.

2. Copies of such statements may be reviewed in the Securities Department's Springfield or Chicago office and copies thereof may be obtained upon payment of the cost of duplication as set forth in Section 140.2110 of this Part.

History

• Source: Amended at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.1400 Inspection of Business Broker Records

a) Records of all registered business brokers are available for public inspection during the business hours at the Springfield or Chicago office of the Securities Department of the Secretary of State upon written request.

b) Each request for information on file with the Securities Department regarding a registered business broker shall be made in writing and delivered to the Springfield or Chicago office of the Securities Department of the Secretary of State. The request may be delivered by United States mail, private courier, hand, facsimile or electronic transmission or any similar type of delivery or transmission.

c) The request shall include the name, address and telephone number of the person making the request, and a statement setting forth the reason that the person is initiating the request. The Secretary of State or his or her designee shall maintain for six calendar years each written request for disclosure of information.

d) The Securities Department shall notify each registered business broker in writing within seven calendar days after its receipt of a request for disclosure of information on file.

e) No information on file with the Securities Department regarding any social security number, contract with a client or any terms of a contract, the name or address of any contracting client or the address or telephone number of any office of the business broker (except the principal office) shall be made available to the public.

History

• Source: Amended at 23 Ill. Reg. 3059, effective March 1, 1999

14 Ill. Adm. Code 140.1401 Non-Public Distribution of Information

Information or documents obtained by employees of the Secretary of State in the course of any examination or investigation pursuant to Section 10-45 of the Act shall, unless made a matter of public record, be deemed confidential. Employees are hereby prohibited from making such confidential information or documents or any other non-public records of the Secretary of State available to anyone other than an employee of the Secretary of State, or other governmental agency, unless the Secretary of State authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest.

14 Ill. Adm. Code 140.2100 Business Hours of the Securities Department

a) The principal office of the Securities Department at Jefferson Terrace, Suite 300A, 300 W. Jefferson Street, Springfield IL 62702 is open each day, except Saturdays, Sundays and holidays, from 8:00 a.m. to 4:30 p.m. Central Standard Time or Central Daylight Savings Time, whichever is currently in effect in Springfield.

b) An office of the Securities Department at 69 West Washington Street, Suite 1220, Chicago, Illinois 60602 is open each day, except Saturdays, Sundays and holidays, from 8:30 a.m. to 5:00 p.m. Central Standard Time or Central Daylight Savings Time, whichever is currently in effect in Chicago.

History

• Source: Amended at 33 Ill. Reg. 12839, effective September 8, 2009

14 Ill. Adm. Code 140.2101 Computation of Time

The time within which an act under the Act shall be done shall be computed by excluding the first day and including the last, unless the last day is a Saturday, Sunday or holiday as defined or fixed in any statute now or hereafter in force in this State, and then it shall also be excluded. If the day succeeding such Saturday, Sunday or holiday is also a Saturday, Sunday or holiday, then such succeeding day shall also be excluded.

14 Ill. Adm. Code 140.2110 Payment of Fees

a) Fees under the Act are as follows:

Section 10-10

Filing, Examination and Registration Fee

$200

(plus $50 for each person who is engaged in business brokering on behalf of the business brokerage firm in excess of 2)

Branch Office Fee

$20

(if in excess of 2 branch offices in this State)

Section 10-20

Renewal Filing and Examination Fee

$200

(plus $50 for each person who is engaged in business brokering on behalf of the business brokerage firm in excess of 2)

Renewal Branch Office Fee

$20

(if in excess of 2 branch offices in this State)

Renewal Late Fee

$100

(if the renewal application is filed within 29 days preceding the expiration of the current registration)

Business Broker Fee to report a change in its form of organization or change of its name

$20

Service of Process (when served upon the Secretary)

$10

Section 10-50

Certificate

$10

Certified Copy of Document

$10 plus

Each Page Certified

$.50

Section 10-115

Notice of Lien

As specified in the Uniform Commercial Code [810 ILCS 5/9-403 through 9-406]

Amendment to Notice of Lien

As specified in the Uniform Commercial Code [810 ILCS 5/9-403 through 9-406]

Non-Binding Statement

$75

Duplication of Documents Each Page Duplicated

$.50

Additional fee for payment of fee returned to the Securities Department due to insufficient funds or for a similar reason

$50

b) All payments of fees, except for payment of administrative fines and Notices of Liens pursuant to Section 10-115 under the Act, as set forth below, shall be made by check, money order, certified check, bank cashier's check, or indicia of forms of electronic transfer of funds payable to the "Secretary of State". No third party check or money order endorsed over to the Secretary of State shall be accepted as payment of any fee. All payments for administrative fines, in excess of $500, under the Act, except for a person registered under Section 10-10 or 10-20 of the Act, shall be made by money order, certified check or bank cashier's check.

c) Any person whose payment of fees is returned to the Securities Department due to insufficient funds or for a similar reason shall pay to the Secretary of State the amount of fee owed plus an additional fee as set forth in this Section for each payment returned. This fee shall include the fee required by 5 ILCS 290/10.

d) The Secretary of State shall require any person to make payment of fees in the form of a money order, certified check, or bank cashier's check if any previous payment of fees has been returned to the Securities Department due to insufficient funds or for a similar reason.

e) All payment of fees under the Act, except Notices of Liens under Section 10-115 of the Act, shall be deemed to be filed and the fees paid upon receipt by the Securities Department, provided that the fee paid is not less or more than $5 of the amount due.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.2120 Place of Filing

All applications for registration or exemption from registration and other papers, except Notices of Liens under Section 10-115 of the Act, filed with the Securities Department or the Secretary of State pursuant to the Act shall be filed at Lincoln Tower, Suite 200, 520 South Second Street, Springfield, Illinois 62701 or 69 West Washington Street, Suite 1220, Chicago, Illinois 60602. Such material may be filed by delivery to the Securities Department, through the mail or otherwise.

History

• Source: Amended at 26 Ill. Reg. 14867, effective September 30, 2002

14 Ill. Adm. Code 140.2130 Date of Filing

a) The date of filing of any document required to be filed, except Notices of Liens under Section 10-115 of the Act, with the Securities Department shall be the date of delivery of the document and any required fee to the Securities Department in Springfield or Chicago, Illinois, as specified in Section 140.2120 of this Part.

b) A document may not be deemed to be filed with the Secretary of State unless all requirements of the Act and this Part with respect to such filing have been complied with and the required fee has been paid.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.2140 Requirements as to Proper Form

Any document, except Notices of Liens under Section 10-115 of the Act, filed with the Securities Department pursuant to the Act shall be prepared in accordance with the form, if any, prescribed by the Securities Department. Any such document shall be deemed to be filed on the proper form unless objection to the form is made by the Securities Department.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.2141 Additional Information

In addition to the information expressly required to be included in an application for registration, the applicant shall include other material information which may be necessary to make the required statements truthful.

14 Ill. Adm. Code 140.2142 Additional Exhibits

The applicant may file exhibits in addition to those required by the appropriate form, except Notices of Liens pursuant to Section 10-115 of the Act. The exhibits shall be marked to indicate the subject matters to which they refer.

History

• Source: Amended at 25 Ill. Reg. 1779, effective January 10, 2001

14 Ill. Adm. Code 140.2143 Information Unknown or Not Reasonably Available

Information required need be given only insofar as it is known or reasonably available to the applicant. If any required information is unknown and not reasonably available to the applicant, either due to unreasonable effort or expense, or because it rests within the knowledge of another person not affiliated with the applicant, the information may be omitted, subject to the following conditions:

a) The applicant shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof.

b) The applicant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

14 Ill. Adm. Code 140.2144 Requirements as to Paper, Printing and Language

a) Application for registration shall be filed on good quality, unglazed, white paper, 8½ by 11 inches in size, insofar as practicable.

b) The application for registration, and all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed or typewritten. However, the application or any portion thereof may be prepared by any similar process which, in the opinion of the Secretary of State, produces copies suitable for permanent record. All copies of the material shall be clear, easily readable and suitable for repeated photocopying. Debits in credit categories and credits in debit categories shall be designated to be clearly distinguishable as such on photocopies.

c) The application for registration shall be in the English language. If any exhibit or other paper or document filed with the application for registration is in a foreign language, it shall be accompanied by a translation into the English language.

14 Ill. Adm. Code 140.2145 Number of Copies – Signatures

a) One copy of the completed application for registration, manually signed by the applicant, including exhibits and all other papers and documents filed as a part of the application, shall be filed with the Secretary of State.

b) If any name is signed to the application for registration pursuant to a power of attorney, copies of the power of attorney shall be filed with the application for registration. In addition, in the case of corporate applicant, if the name of any officer signing on behalf of the applicant, or attesting to the applicant's seal, is signed pursuant to a power of attorney, copies of a resolution of the applicant's board of directors authorizing the signature shall be filed with the application for registration.

14 Ill. Adm. Code 140.2190 Provisions for Granting of Variance from Rules

The Secretary of State or his or her designee may grant variances from this Part in individual cases where he or she determines that:

a) The provision from which the variance is granted is not statutorily mandated;

b) No party will be injured by granting the variance; and

c) The Section from which the variance is granted would, in the particular case, be unnecessarily burdensome.

Part 145 Regulations Under the Illinois Loan Brokers Act of 1995

14 Ill. Adm. Code 145.50 Scope of the Law

The Illinois Loan Brokers Act of 1995 [815 ILCS 175] shall apply only when the person engaged or sought to be engaged by the loan broker is domiciled in this State or, when the company or business seeking to borrow, has its principal office in this State, or the Loan Broker is located in this State.

History

• Source: Amended at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.51 Definitions of Terms as Used in the Act and the Rules

a) As used in this Part, unless the context otherwise requires, the term:

"Act" means the Illinois Loan Brokers Act of 1995 [815 ILCS 175] and this Part.

"Advertising" means any advertisement, or other similar materials or writings or any communication by radio, television, facsimile transmission, electronic transmission, pictures or the transmittal or sending of any communication via the non-proprietary, nonprofit, public computer network (commonly known as the "Internet") or similar means.

"Affiliate" of, or a person "affiliated" with, a specified person means a person who, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified.

"Applicant" means the person making application for registration.

"Date of filing" means the date that all of the required documents are received by the Securities Department and all the required fees are paid to the Secretary of State. A document shall not be deemed to be filed if any information required by the Act or this Part is omitted or the document is illegible.

"Director" means any director of a corporation or any person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Employee" does not include a director, trustee or officer.

"Federal Banking Act of 1933" means the Federal Banking Act of 1933 (12 U.S.C. 227) and the Rules and Regulations thereunder as in effect on January 1, 1996.

"Hearing" means a proceeding conducted by the Securities Department in which the rights, privileges, immunities, duties or obligations of any person or party are required by law to be determined by the Secretary of State only after opportunity for a hearing.

"Interest" as delineated in Section 15-60 of the Act means the rate of interest set forth in 815 ILCS 205.

"Loan Broker" does not mean or include any person described in Section 15-5.15(b) of the Act or any person authorized to do business under the Residential Mortgage License Act of 1987 or exempt from licensure as provided for in the Residential Mortgage License Act of 1987 or any person authorized to do business in Illinois and regulated by the Commissioner of Savings, Real Estate Professionals and Mortgage Finance, also known as the Commissioner of Savings and Residential Finance.

"Material", when used to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which there is a substantial likelihood that a reasonable person would consider important.

"Officer" means the president; any vice president in charge of a principal business unit, division or function; the secretary; the treasurer; any principal financial officer, comptroller or principal accounting officer; any other officer performing a principal policy-making function; and any other person performing similar functions with respect to any organization whether incorporated or unincorporated.

"Principal" means any officer, director, partner, member, trustee or manager who is responsible for the supervision and management of the daily business operations in this State of a loan broker required to be registered under the Act.

"Rules" refers to all rules adopted by the Secretary of State pursuant to the Act.

"Secretary of State" means the Securities Department of the Office of the Secretary of State or the Secretary of State or the Securities Director or his or her designee, as the case may be.

"Section" refers to a Section of this Part unless a reference to the Act is specifically made.

b) A Section of this Part which defines a term without express reference to the Act or to this Part or to a portion thereof or hereof defines such term for all purposes as used both in the Act and in this Part. Terms defined in the Act and not defined in this Part have the meaning given them in the Act.

History

• Source: Amended at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.150 Procedures for Registration as a Loan Broker Under Section 15-15 of the Act

No person shall be registered as a loan broker unless such person submits a completed application as set forth in this Section.

a) Each applicant for registration as a loan broker shall file with the Secretary of State Securities Department a completed and current application on IL LB Form 15-10 and pay to the Securities Department all appropriate fees as specified in Section 145.2110 of this Part. The application shall be accompanied by the following:

1. A Consent to Service of Process for the applicant on Illinois Form LB15, unless the applicant is a corporation organized or authorized to transact business under the laws of this State;

2. The disclosure statement required under Section 15-30(b) of the Act or Section 15-30(b)(1) of the Act; and

3. Evidence of the bond required under Section 15-15(b) of the Act consisting of a certificate from the issuing bonding authority.

The Securities Department shall review the application in a timely manner and notify the applicant in writing of any material deficiencies.

b) Upon the grant of registration of a loan broker, the Securities Department shall issue to the loan broker proof of registration as evidence of such registration;

c) The application and documents on file with the Securities Department with respect to the loan broker shall be amended whenever a change occurs which renders the information contained therein not accurate in any material respect. Such amendment shall be filed with the Securities Department within ten business days after the occurrence of the change; and

d) An applicant may request that certain information in its application be kept confidential. The Securities Department shall honor such request if the information is personal in nature or if public access to the information is not reasonably necessary to further the purposes of the Act.

14 Ill. Adm. Code 145.151 Procedures for Withdrawal of Pending Application or Termination of Registration as a Loan Broker

If a loan broker elects to withdraw its pending application prior to registration in this State, or if a registered loan broker wishes to terminate its registration in this State, it shall provide written notice to the Securities Department indicating such intent. Any fees paid shall not be returnable in any event.

14 Ill. Adm. Code 145.152 Procedure with Respect to Abandoning Incomplete Applications for Registration as a Loan Broker

a) When an incomplete application for registration as a loan broker has been on file with the Secretary of State for a period of six months, the Secretary of State may, in his or her discretion, proceed in the following manner to determine whether the application for registration has been abandoned by the applicant.

b) A notice will be sent to the applicant named in the application for registration, by certified mail, return receipt requested, addressed to the most recent address reflected in the application for registration. The notice will inform the applicant that the application for registration is incomplete and one of the following must be done within 30 days after the date of the Notice:

1. the deficiencies must be corrected and refiled; or

2. written intent to complete, within a specified period, must be filed to comply with the applicable requirements of the Act; or

3. a request must be filed for withdrawal of the pending application.

c) Should the applicant fail to respond to such notice by filing the information or document necessary to correct the deficiencies or withdrawing the application for registration, the Secretary of State shall enter an order declaring the application for registration abandoned.

d) When such an order is entered by the Secretary of State:

1. the filing, examination and registration fees paid upon the filing of the application for registration will not be returned; and

2. the records of the Secretary of State will be marked to indicate that the application for registration was abandoned and the date of the order.

e) The applicant may request an administrative hearing in writing within 15 days after receipt of the Order of Abandonment. A request for hearing shall set forth the grounds upon which the applicant petitions for a hearing.

14 Ill. Adm. Code 145.200 Procedures for Renewal of Registration as a Loan Broker Under Section 15-20 of the Act

a) If a registered loan broker wishes to renew its registration, it shall file with the Securities Department a completed and current IL LB Form 15-10 together with the renewal application filing fee and examination fee as specified in Section 145.2110 of this Part. The Securities Department shall review the renewal application in a timely manner and notify the applicant in writing of any material deficiencies.

b) Any amendment(s) shall also be filed with the Securities Department within ten business days if any material change occurs in the information that was filed with the Securities Department when the loan broker applied for registration.

c) Any application for renewal of registration of a loan broker filed with or fees paid to the Securities Department within 29 days or less prior to the date upon which the registration or renewal would expire shall pay an additional fee set forth in Section 145.2110 of this Part.

d) Upon receipt of the renewal fees the Securities Department shall issue to the loan broker proof of renewal as evidence of such registration.

14 Ill. Adm. Code 145.300 When Disclosure Statement Must Be Provided (repealed)

History

• Source: Repealed at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.301 Purpose of Disclosure; Substantial Compliance

a) The Secretary of State has determined that the disclosure statement and waiting period requirements of the Act should be interpreted and enforced so as to further the objective of the Act. That objective is to ensure that borrowers of loan brokers have full disclosure of the material terms in the loan broker's contract with the borrower, have an opportunity to review those terms and, at the borrower's request, have an attorney review the contract.

b) Where a loan broker has reasonably tried to comply with the provisions of this Part, such broker shall be deemed to have complied with Section 15-30 of the Act if the borrower has been provided with all material information required by this Part and has had a reasonable opportunity to review and consider the information, to review the loan broker's contract, and to have the loan broker's contract reviewed by an attorney.

c) The Secretary of State recommends that loan brokers have each borrower sign and date an acknowledgment of receipt when the disclosure statement is provided to the borrower.

14 Ill. Adm. Code 145.302 Contents of Disclosure Document (repealed)

History

• Source: Repealed at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.303 Providing the Contract with the Disclosure Statement

a) The purpose of the disclosure statement is to provide full information about the material terms of the loan broker's contract with the borrower, therefore, the Secretary of State encourages loan brokers to include a copy of the contract with the disclosure statement. When the contract is provided to the borrower with the disclosure statement, the disclosure statement need not contain either:

1. the full and detailed description of the actual services that the loan broker undertakes to perform; or

2. a specific statement of the circumstances under which the loan broker will be entitled to obtain or retain consideration from the party with whom the loan broker has entered into a contract.

b) The following is an example of a cover page which, if prepared as follows and accurate in all material respects, will be deemed to comply with the Act (important: nothing except the following language in at least 10-point boldface capital letters shall appear on the cover page):

1. DISCLOSURES REQUIRED BY LAW;

2. THE SECRETARY OF STATE HAS NOT REVIEWED AND DOES NOT APPROVE, RECOMMEND, ENDORSE OR SPONSOR ANY LOAN BORKERAGE CONTRACT. THE INFORMATION CONTAINED IN THIS DISCLOSURE HAS NOT BEEN VERIFIED BY THE SECRETARY OF STATE; AND

3. IF YOU HAVE ANY QUESTIONS, SEE AN ATTORNEY BEFORE YOU SIGN A CONTRACT OR AGREEMENT.

c) The following is an example of page two (this is not a form):

The information regarding the Loan Broker's organization, principals, services and fees is being provided in this Disclosure Statement pursuant to the Illinois Loan Brokers Act of 1995 [815 ILCS 175/15-30(b)].

THE LOAN BROKER CONTRACT (OR FEE AGREEMENT) IS PROVIDED WITH THIS DISCLOSURE STATEMENT AND IS AN INTEGRAL PART OF THIS DISCLOSURE STATEMENT.

READ BOTH THIS DISCLOSURE STATEMENT AND THE CONTRACT OR AGREEMENT CAREFULLY. YOU ARE ENCOURAGED TO HAVE THE CONTRACT OR AGREEMENT REVIEWED BY AN ATTORNEY.

Organization

Organization Name:

Type:

Business Name (if different):

Address:

Name(s) under which Loan Broker has done business:

Parents/Affiliates:

List of Loan Broker's officers, directors, trustees, general partners, general managers, principal executives and others performing similar duties:

President:

Address:

Vice President:

Address:

Principal:

Address:

How long has the Loan Broker conducted business:

Services

The actual services that the Loan Broker undertakes to perform are set forth in the Loan Broker Contract (or Fee Agreement). Those are the only services that the Loan Broker is obligated to provide.

Borrower's Obligations

The circumstances under which you will be obligated to pay the Loan Broker (or the Loan Broker will be permitted to retain money you have paid) are set forth in the Loan Broker Contract (or Fee Agreement). READ THE CONTRACT OR AGREEMENT CAREFULLY.

BORROWER ACKNOWLEDGMENT:

I received this Disclosure Statement and a copy of the Loan Broker Contract (or Fee Agreement) on the date set forth below.

Date:

Borrower Signature:

Borrower Name (printed):

History

• Source: Added at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.304 Providing the Contract to Borrower

The borrower shall have the right to retain a copy of the executed contract for the services of a loan broker. The borrower's copy of the contract shall be provided to the borrower when the contract is executed, if feasible and the borrower so requests. Otherwise, the contract shall be mailed or otherwise sent to the borrower within one week after the execution thereof. No account number is required on the borrower's copy of the contract.

14 Ill. Adm. Code 145.400 Hearings

Any hearing required pursuant to the Act or by this Part shall be held pursuant to 14 Ill. Adm. Code 130, Subpart K: Procedures For Administrative Hearings.

14 Ill. Adm. Code 145.750 Records Required of Loan Brokers

a) Each loan broker agreement or contract shall be given a unique identifying account number and all instruments or documents relating to that agreement or contract must bear this number. Every loan broker registered by the Secretary of State shall keep and maintain for a period of six years from the date of its agreement or contract with the borrower in the loan broker's principal office in this State the following records:

1. A loan broker agreement or contract register that consists of a chronological listing of all loan broker agreements or contracts that have been entered into. For each loan broker agreement or contract the register shall contain the following:

A) The account number;

B) The date of the agreement or contract;

C) The name of the borrower;

D) The amount of fees charged, if any; and

E) The cost and type of insurance required, if any.

2. A file for each borrower shall contain the following:

A) The name, address and telephone number of the borrower;

B) A copy of the signed loan broker agreement or contract;

C) A copy of any other papers or instruments used in connection with the loan broker agreement or contract that are signed by the borrower, including a copy of the disclosure document required by Section 15-30 of the Act that contains an acknowledged receipt by the borrower;

D) If a loan was obtained for the borrower, the name, address and telephone number of the lender;

E) If a loan is accepted by the borrower, a copy of the signed loan agreement or contract, if made available to the loan broker; and

F) The amount of the loan broker's fee that the borrower has paid; and, if there is an unpaid balance, the status of any collection efforts.

3. All receipts from or for the account of borrowers and all disbursements to or for the account of borrowers, recorded so that the transactions are readily identifiable.

4. A general ledger that shall be posted at least monthly, and a trial balance sheet and profit and loss statement prepared within 30 days after the Secretary of State's request for information.

5. A copy of the following:

A) All advertisements, pamphlets, circulars, letters, articles or communications used to solicit borrowers that were published in any newspaper, magazine or periodical or transmitted or sent via the non-proprietary, nonprofit, public computer network (commonly known as the "Internet");

B) Scripts of any recording or radio or television announcement used or to be used to solicit borrowers; and

C) Any sales kit or literature used or to be used to solicit borrowers.

b) After a record or other documents have been preserved for two years, an accurate copy on any form of information retrieval device may be substituted therefor for the balance of the required time.

c) All records required to be maintained under this Section or the Act must be separate or readily identifiable from the records of any other business that is conducted in the office of the loan broker. A written request for a waiver of the provisions of this Section may be made to the Secretary of State to permit any registered loan broker to maintain any of the records required by this Section or the Act outside the State of Illinois. In determining whether the provisions of this Section should be waived, the Secretary of State shall consider, without limitation, whether the main office of the loan broker is outside the State of Illinois or whether the loan broker uses all or some of the bookkeeping facilities of some other loan broker whose main office is outside the State of Illinois.

14 Ill. Adm. Code 145.800 Previous and Ongoing Agreements or Contracts and Transactions Not Affected

All loan broker agreements or contracts and transactions between a loan broker and its borrowers which do not comply with the Act of this part, if entered into prior to January 1, 1996, shall be deemed to be valid and enforceable, notwithstanding this Part or the Act.

History

• Source: Added at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.802 Exemption for Franchises

Persons registered pursuant to the Illinois Franchise Disclosure Act of 1987 [815 ILCS 705] (and their employees) are exempt from the requirements of the Act as to: offers and sales in connection with such franchising activities; or assisting any of their franchisees in the offer or sale of a franchise by any such franchisee for its own account, regardless of whether the sale is effected by or through such registered persons.

14 Ill. Adm. Code 145.803 Exemptions from Waiting Period and Disclosure Requirements Pursuant to Section 15-30 of the Act (repealed)

History

• Source: Repealed at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.805 Exemption for the Designation of Certified Turnaround Professional (ctp)

Any individual who has the designation of Certified Turnaround Professional (CTP) by the Association for Certified Turnaround Professional, while engaged in the practice of a Certified Turnaround Professional and whose service in relation to the loan broker transaction is incidental to his or her practice, is exempt from the requirements of this Act.

History

• Source: Added at 22 Ill. Reg. 7233, effective April 15, 1998

14 Ill. Adm. Code 145.806 Exemption for Business Broker Agreements or Contracts from the Loan Brokers Act of 1995

A business broker agreement or contract, made pursuant to and in compliance with the Illinois Business Brokers Act of 1995 [815 ILCS 307] between a client and a registered business broker, which contains a promise by, or obligation of, a business broker to procure or assist in procuring a loan for business financing or the purchase of a business for the client is exempt from this Act.

14 Ill. Adm. Code 145.1000 Service of Process Upon the Secretary of State

a) Any process, notice or demand to be served upon the Secretary of State under the Act shall be made by delivering personally to the Securities Director, or any employee of the Securities Department designated by the Securities Director to accept such service on behalf of the Secretary of State, or by sending by registered mail or certified mail, return receipt requested, a copy of the process, notice or demand to the Securities Department. Procedures for service are specified in the Act in the following Sections:

1. Service upon any person who has filed a consent to service of process upon the Secretary of State;

2. Service upon any person who, by virtue of acting as a loan broker in this State which is neither registered nor covered by an exemption from registration, shall have appointed the Secretary of State as agent for service of process; and

3. Service of a copy of a complaint in a private civil action.

b) Service of any process, notice or demand under this Section shall be made at the Springfield or Chicago office of the Securities Department during regular business hours as specified in Section 145.2100 of this Part.

c) At the time of any service upon the Secretary of State there shall be paid a fee in the amount specified in Section 145.2110 of this Part, which shall not be returnable in any event. Each process, notice or demand shall be submitted with a separate payment.

d) The Securities Department shall keep a record which shall show the date of service of all the processes, notices and demands received.

14 Ill. Adm. Code 145.1200 Request for Non-Binding Statements

a) Required Information and Format.

1. All requests for non-binding statements shall be in writing and be accompanied by the fee set forth in Section 145.2110 of this Part. The request shall be filed with the Securities Department and shall contain the following:

A) A brief summary of the Sections of the Act and of the Rules to which the request pertains;

B) A detailed factual representation concerning every relevant aspect of the proposed transaction, such as the names of affected parties, details regarding the transactions, each claim of exemption, if any, and reasoning in support of each such claim. Requests should be limited to the particular situation, and should not attempt to include every possible type of situation which may arise in the future;

C) A discussion of current statutes, rules and legal principles relevant to the facts set forth;

D) A statement setting forth the person's own opinion in the matter and the basis for such opinion; and

E) A representation that the transaction in question has not been commenced and will not commence for at least 30 days.

2. The Securities Department will not respond to requests for non-binding statements involving the anti-fraud provisions of the Act or the Rules.

3. The Securities Department will not respond to requests for non-binding statements with respect to transactions which have already taken place.

4. The Securities Department will not respond to requests based upon hypothetical facts or involving unnamed parties.

b) Review procedure. After a review of the relevant facts presented, in light of existing judicial, legislative and administrative history, the Securities Department may issue its finding as to the applicability of the Act to the situation presented in the form of a non-binding statement stating that it will recommend that no enforcement action be initiated against the parties involved if all the facts are true and complete. Facts or conditions different than those presented may require different conclusions and persons other than those requesting the statement should not rely on the statement.

c) Availability of non-binding statements issued by the Department.

1. The Securities Department will maintain a chronological index by statutory section(s) involving all non-binding statements issued.

2. Copies of such statements may be reviewed in the Securities Department's Springfield office and copies thereof may be obtained upon payment of the cost of duplication as set forth in Section 145.2110 of this Part.

14 Ill. Adm. Code 145.1400 Inspection of Loan Broker Records

Records of all registered loan brokers are available for public inspection during the business hours at the Springfield or Chicago office of the Securities Department of the Secretary of State upon written request.

14 Ill. Adm. Code 145.1401 Non-Public Distribution of Information

Information or documents obtained by employees of the Secretary of State in the course of any examination or investigation pursuant to Section 15-45 of the Act shall, unless made a matter of public record, be deemed confidential. Employees are hereby prohibited from making such confidential information or documents or any other non-public records of the Secretary of State available to anyone other than an employee of the Secretary of State, or other governmental agency, unless the Secretary of State authorizes the disclosure of such information or the production of such documents as not being contrary to the public interest.

14 Ill. Adm. Code 145.2100 Business Hours of the Securities Department

a) The principal office of the Securities Department at Jefferson Terrace, Suite 300A, 300 W. Jefferson Street, Springfield IL 62702 is open each day, except Saturdays, Sundays and holidays, from 8:00 a.m. to 4:30 p.m. Central Standard Time or Central Daylight Savings Time, whichever is currently in effect in Springfield.

b) An office of the Securities Department at 69 West Washington Street, Suite 1220, Chicago, Illinois 60602 is open each day, except Saturdays, Sundays and holidays, from 8:30 a.m. to 5:00 p.m. Central Standard Time or Central Daylight Savings Time, whichever is currently in effect in Chicago.

History

• Source: Amended at 33 Ill. Reg. 12845, effective September 8, 2009

14 Ill. Adm. Code 145.2101 Computation of Time

The time within which an act under the Illinois Loan Broker Act of 1995, [815 ILCS 175] shall be done shall be computed by excluding the first day and including the last, unless the last day is a Saturday, Sunday or holiday as defined or fixed in any statute now or hereafter in force in this State, and then it shall also be excluded. If the day succeeding such Saturday, Sunday or holiday is also a Saturday, Sunday or holiday, then such succeeding day shall also be excluded.

14 Ill. Adm. Code 145.2110 Payment of Fees

a) Fees under the Act are as follows:

Section 15-15

Application Filing Fee

$300

Examination Fee

$50

Registration Fee

$10

Section 15-20

Renewal Application Filing Fee

$300

Examination Fee

$50

Renewal Late Fee

$100*

Loan Broker Fee to report a change in its form of organization or change of its name

$20

Service of Process (when served upon the Secretary of State)

$10

Section 15-50

Certificate

$10

Certified Copy of Document

$10 plus

Each Page Certified

$ .50

Non-Binding Statement

$75

Duplication of Documents

Each Page Duplicated

$ .50

Additional fee for payment of fee returned to the Securities Department due to insufficient funds or for a similar reason

$50

*If the renewal application is filed within 29 days preceding the expiration of the current registration.

b) All payments of fees, except for payment of administrative fines under the Act, as set forth below, shall be made by check, money order, certified check, bank cashier's check, or indicia of forms of electronic transfer of funds payable to the "Secretary of State". No third party check or money order endorsed over to the Secretary of State shall be accepted as payment of any fee. All payments for administrative fines, except for a person registered under Section 15-15 or 15-20 of the Act shall be made by money order, certified check or bank cashier's check.

c) Any person whose payment of fees is returned to the Securities Department due to insufficient funds or for a similar reason shall pay to the Secretary of State the amount of fee owed plus an additional fee as set forth in this Section for each payment returned. This fee shall include the fee required by 5 ILCS 290/10.

d) The Secretary of State shall require any person to make payment of fees in the form of a money order, certified check or bank money order if any previous payment of fees has been returned to the Securities Department due to insufficient funds or for a similar reason.

e) All payment of fees under the Act shall be deemed to be filed and the fees paid upon receipt by the Securities Department, provided that the fee paid is not less or more than five dollars of the amount due.

14 Ill. Adm. Code 145.2120 Place of Filing

All applications for registration or exemption from registration and other papers filed with the Securities Department or the Secretary of State pursuant to the Act shall be filed at Springfield or Chicago, Illinois. Such material may be filed by delivery to the Securities Department, through the mail or otherwise.

14 Ill. Adm. Code 145.2130 Date of Filing

a) The date of filing of any document required to be filed with the Securities Department shall be the date of delivery of the document and any required fee to the Securities Department in Springfield or Chicago, Illinois, as specified in Section 145.2120 of this Part, or if a document or fee is sent by United States registered mail, certified mail or certificate of mailing, a record authenticated by the United States Postal Service of such registration, certification or certificate shall be considered competent evidence that the document or fee was mailed on the date shown on the record.

b) A document may not be deemed to be filed with the Secretary of State unless all requirements of the Act and this Part with respect to such filing have been complied with and the required fee has been paid.

14 Ill. Adm. Code 145.2140 Requirements as to Proper Form

Any document filed with the Securities Department pursuant to the Act shall be prepared in accordance with the form, if any, prescribed by the Securities Department. Any such document shall be deemed to be filed on the proper form unless objection to the form is made by the Securities Department.

14 Ill. Adm. Code 145.2141 Additional Information

In addition to the information expressly required to be included in an application for registration, the applicant shall include other material information which may be necessary to make the required statements truthful.

14 Ill. Adm. Code 145.2143 Information Unknown or Not Reasonably Available

Information required need be given only insofar as it is known or reasonably available to the applicant. If any required information is unknown and not reasonably available to the applicant, either due to unreasonable effort or expense, or because it rests within the knowledge of another person not affiliated with the applicant, the information may be omitted, subject to the following conditions:

a) The applicant shall give such information on the subject as it possesses or can acquire without unreasonable effort or expense, together with the sources thereof.

b) The applicant shall include a statement either showing that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to the person for the information.

14 Ill. Adm. Code 145.2144 Requirements as to Paper, Printing and Language

a) Application for registration shall be filed on good quality, unglazed, white paper, 8½ by 11 inches in size, insofar as practicable.

b) The application for registration, and all papers and documents filed as a part thereof, shall be printed, lithographed, mimeographed or typewritten. However, the application or any portion thereof may be prepared by any similar process which, in the opinion of the Secretary of State, produces copies suitable for permanent record. All copies of the material shall be clear, easily readable and suitable for repeated photocopying.

c) The application for registration shall be in the English language. If any exhibit or other paper or document filed with the application for registration is in a foreign language, it shall be accompanied by a translation into the English language.

14 Ill. Adm. Code 145.2145 Number of Copies – Signatures

a) One copy of the completed application for registration, manually signed by the applicant, including exhibits and all other papers, if any, and documents filed as a part of the application, shall be filed with the Securities Department.

b) If any name is signed to the application for registration pursuant to a power of attorney, a copy of the power of attorney shall be filed with the application for registration. In addition, in the case of a corporate applicant, if the name of any officer signing on behalf of the applicant, or attesting to the applicant's seal, is signed pursuant to a power of attorney, a copy of a resolution of the applicant's board of directors authorizing the signature shall be filed with the application for registration.

14 Ill. Adm. Code 145.2190 Provisions for Granting of Variance from Rules

The Secretary of State or his or her designee may grant variances from this Part in individual cases where he or she determines that:

a) the provisions from which the variance is granted is not statutorily mandated;

b) no party will be injured by granting the variance; and

c) the Section from which the variance is granted would, in the particular case, be unnecessarily burdensome.

Part 150 Business Corporation Act

14 Ill. Adm. Code 150.10 Applicability

This Subpart shall apply to all hearings conducted pursuant to the Business Corporation Act of 1983 [805 ILCS 5].

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.20 Definitions

"Act" shall mean the Business Corporation Act of 1983 (Ill. Rev. Stat. 1991, ch. 32, par. 1.01 et seq.) [805 ILCS 5].

"Applicant" or "Petitioner" is the party who, by written request seeks or applies for any relief from the Department under the provisions of the Business Corporation Act of 1983, or otherwise from any rule, regulation, order, or determination of the Office.

"Contested case" means any adjudicatory proceeding conducted by the Office in which the legal rights, privileges, immunities, duties, or obligations of any person or party are required by law or regulation to be determined by the Secretary of State after an opportunity for a hearing.

"Department" means the Department of Business Services of the Office of the Secretary of State of Illinois.

"Director" means the Director or Acting Director of the Department.

"Division" means the Corporation Division of the Department.

"Hearing" means a proceeding conducted by the Department of Business Services of the Secretary of State in which the rights, privileges, immunities, duties or obligations of any person or party are required by law to be determined by the Secretary of State only after opportunity for a hearing.

"Hearing Officer" means the presiding official(s) designated by the Department of Business Services of the Secretary of State to conduct a hearing or anyone designated by the Department of Business Services to hear evidence. The hearing officer must be admitted to practice law in the State of Illinois and must be a member in good standing of the Bar of Illinois.

"Office" refers to the Office of the Secretary of State and not to any particular department, address, or location.

"Party" means any person named or admitted as a participant in any hearing conducted pursuant to these rules, including the Office and Department.

"Person" includes any individual, corporation, partnership, association, or firm legally capable of either seeking the action of the Office or being the subject of said action.

"Respondent" means a person against whom a complaint or petition is filed, or who, by reason of interest in the subject matter of a petition or application or the relief sought therein, is made a respondent or to whom an order or complaint is directed by the Department initiating a proceeding.

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.30 Right to Counsel

a) Any party may appear and be heard through an attorney at law licensed to practice in the State of Illinois.

1. Attorneys admitted to practice in states other than the State of Illinois may appear and be heard by special leave of the Hearing Officer appointed to conduct the hearing, upon the attorney's verbal representation or written documentation as to the attorney's admission to the practice of law.

2. A natural person may appear and be heard on his or her own behalf.

3. A corporation, association, or partnership may appear and present evidence by any bona fide officer, employee, or representative.

b) Only an attorney properly licensed shall represent anyone else in any hearing in any matter involving the exercise of legal skill or knowledge. The standards of conduct shall be the same as before the Courts of the State of Illinois.

14 Ill. Adm. Code 150.40 Appearance of Attorney

An attorney appearing in a representative capacity shall file with the Department a written notice of appearance identifying himself by name, address, and telephone number, and identifying the party represented.

14 Ill. Adm. Code 150.50 Special Appearance

Prior to filing any other pleading or motion, a special appearance may be made either in person or by attorney for the limited purpose of objecting to jurisdiction. Every appearance not expressly designated a special appearance shall be deemed to be a general appearance. If the reasons for objecting to jurisdiction are not apparent from the papers on file in the proceeding, the special appearance shall be supported by affidavit setting forth the reasons. In ruling upon any objection at any hearing, the Hearing Officer will consider all matters apparent from the papers on file, affidavits submitted by any party, and any other evidence adduced upon disputed issues of fact. No determination of any issue of fact in connection with the objection is a determination of the merits of the case or any aspect thereof. A ruling adverse to the movant does not preclude the making of any motion of defense which might otherwise have been made. If the Hearing Officer sustains the objection, an appropriate order shall be entered of record. Error in ruling against the objection is not waived by the objector's taking part in further proceedings in the matter.

14 Ill. Adm. Code 150.60 Substitution of Parties or Attorneys

A Hearing Officer will, upon motion, order a substitution of parties or attorneys when attorneys have withdrawn or been replaced by a party, or the proposed new party is the successor in interest to the previous party.

14 Ill. Adm. Code 150.70 Commencement of Action; Notice of Hearing

a) A contested case is commenced by the Office, either at the request of the applicant or on the Office's initiative, by service of a Notice of Hearing upon the respondent at the last known address of the respondent on the records of the Department.

b) The Notice of Hearing shall include:

1. The names and addresses of all known parties and respondent, or the Department initiating said hearing, or the fact that the hearing is at the request of the Petitioner or applicant.

2. The time, date, and place of hearing;

3. The name of the Hearing Officer;

4. A short and concise statement of facts, (as distinguished from conclusions of law or a mere recitation in the words of the statute) alleging the act or acts done by each Petitioner or, where appropriate, Respondent; the time, date, and place each such act was done; and the rule, statute, or constitutional provision, if any, alleged to have been violated, or otherwise involved in the proceeding; and the relief sought by the petitioning party;

5. A concise statement to each party that:

A) Such party may be represented by legal counsel; may present evidence; may cross-examine witnesses and otherwise participate in the hearing.

B) Failure to so appear shall constitute a default, unless such party has, upon due notice to other parties moved for and obtained a continuance from the Hearing Officer.

C) Delivery of notice to the designated representative of a party constitutes service upon said party.

D) Upon delivery of notice in a multi-party contested case, the Department shall not participate in any ex-parte consultation leading to disposition of the case with any one party without giving prior notice of any opportunity to participate in such consultation to all other parties.

14 Ill. Adm. Code 150.80 Motions

All motions shall be made in writing and shall set forth the relief or order sought and shall be filed with the Department at least twenty-four hours before the time of the hearing so they can be considered by the Hearing Officer. Motions based on matter which does not appear of record shall be supported by affidavit. Motions may be presented by a party to obtain appropriate relief, such as to dismiss the proceedings, to add necessary parties, or to extend time for compliance with an order.

14 Ill. Adm. Code 150.90 Form of Papers

All papers filed in any proceeding shall be legibly written, or typewritten, on white paper using one side of the paper only. They shall contain a caption showing the title of the proceeding with a case number. All papers must be signed by the party filing the same or his authorized representative or attorney, and shall contain his address and telephone number. An original and one copy shall be filed by each party.

14 Ill. Adm. Code 150.100 Conduct of Hearings

a) All hearings conducted in any proceeding shall be open to the public.

b) The Hearing Officer shall have authority to conduct the hearing, to rule on all motions, to administer oaths, to subpoena witnesses or documents at the request of any party, to examine witnesses, and to rule upon the admissibility of testimony and evidence.

c) The rules of evidence shall be as authorized by Section 10-40(a) of the Illinois Administrative Procedure Act [5 ILCS 100/10-40(a)].

d) Official notice will be taken as authorized by Section 10-40(c) of the Illinois Administrative Procedure Act [5 ILCS 100/10-40(c)].

e) Upon written request made, at least ten business days prior to the hearing, a party shall furnish to other parties a list of the names and addresses of prospective witnesses, and/or furnish written answers to a written demand for a bill of particulars.

f) Any party or his representative shall have the right, upon written motion made at least ten business days prior to the hearing, to inspect any relevant documents in the possession of or under the control of any other party and to interview parties or persons having knowledge of relevant facts, subject to any statutory or constitutional privileges. Interviews of persons and inspection of documents shall be at times and places reasonable for the person and for the custodian of the document. Discovery depositions are not authorized, required or permitted in these administrative hearings.

g) Oral evidence shall be taken only on oath or affirmation.

h) Parties may agree by stipulation upon any facts involved in the hearing. The facts stipulated shall be considered as evidence in the hearing.

i) Each party shall have the right to request the subpoena of and to call and to examine witnesses; to introduce exhibits and to cross-examine witnesses on any matter relevant to the issues, even though that matter was not covered in the direct examination. Application to the Hearing Officer assigned for subpoenas duces tecum shall specify the books, papers, and documents desired to be produced.

j) A party may serve on any other party a written request for the admission by the latter of the truth of any specified relevant fact set forth in the request or for the admission of genuineness of any relevant documents described in the request. Copies of the documents shall be served with the request unless copies have already been furnished.

k) Upon the opening of the hearing, the Hearing Officer shall allow the parties to make opening statements. Opening statements may be reserved by a party until the start of that party's case. Upon the close of the hearing each party may make a closing statement orally and/or by written brief at the discretion of the Hearing Officer, incorporating arguments of fact and law. A written brief will be required when the facts and issues are deemed complicated by the Hearing Officer, and there is a need for parties to plead their cases in writing for the record.

l) In the hearing of any case, any party or his agent may be called and examined as if under cross-examination at the instance of any adverse party. The party calling for the examination is not bound thereby, but may rebut the testimony thus given by counter-testimony and may impeach the witness by proof of prior inconsistent statements. If the Hearing Officer determines that a witness is hostile or unwilling, the witness may be examined by the party calling him as if under cross-examination. The party calling an occurrence witness may, upon showing that he called the witness in good faith but is surprised by his testimony, impeach the witness by proof of prior inconsistent statements.

m) Each party shall have the right to rebut the evidence against him; to appear in person; and to be represented by counsel. If a party does not testify in his own behalf, he or she may be called by the Secretary of State's representative and examined as if under cross-examination, but shall not be compelled to incriminate himself or herself.

n) Upon order of the Hearing Officer and upon at least five business days notice to other parties, any party, including the Department, may cause at his or its expense, a deposition of any witness to be taken for use as evidence in a contested case, when the witness is not available, for example, due to distance, time, cost to the party using the testimony, sickness, infirmity, imprisonment, the witness being out of state or similar factors. The deposition shall be taken in the manner provided by law for evidence depositions in civil actions in the Circuit Courts of Illinois. Any party may direct written interrogatories to any other party. Interrogatories must be restricted to the subject matter of the case, to avoid undue detail, and to avoid the imposition of any unnecessary burden or expense on the answering party. Written interrogatories shall be served on the opposing party no later than 15 business days before the hearing. Objection to answers or refusals to answer shall be heard on motion at the hearing before the Hearing Officer who shall rule on the objection or refusal. Answers shall be sworn. If an answer to an interrogatory may be obtained from documents in the possession or control of the party on whom the interrogatories were served, it shall be a sufficient answer to specify the documents and make them available to the inquiring party to inspect and copy at the asking party's expense.

o) At the request of any party or upon his own motion in a complicated case, the Hearing Officer will call a prehearing conference. At the conference, the parties, or their representatives shall appear as the Hearing Officer directs to consider:

1. The simplification of the issues;

2. Amendments to the grounds for action;

3. The possibility of obtaining admissions and stipulations of fact and of documents which will avoid unnecessary proof;

4. The limitation of the number of expert witnesses;

5. Any other matters which may aid in the disposition of the contested case.

p) Upon the conclusion of a prehearing conference, the Hearing Officer shall enter an order which recites any action taken, any agreements made by the parties as to any of the matters considered, and the issues to be heard.

q) The burden of proof is upon the applicant for any relief in a hearing. The standard of proof is the preponderance of the evidence.

r) All exhibits for any party shall be clearly marked for identification and as admitted into evidence by the Hearing Officer.

s) Report of Proceedings.

1. The Department shall, at its expense, have present at each hearing, an electronic recording device or a qualified court reporter, for the purpose of making a permanent and complete report of the proceedings, to-wit: evidence admitted or tendered and not admitted, testimony, offer of proof, objections, remarks of the Hearing Officer and of parties and/or their representatives, and all rulings of the Hearing Officer.

2. Upon request and at his own expense any party may have a copy of said report of proceedings, from said court reporter, or transcribed from the electronic device by the Department at the statutory rate as set forth in 805 ILCS 5.

t) A request for continuance of a hearing is directed to the sound discretion of the Hearing Officer to whom the case has been assigned for hearing. Such continuance will be granted, for good cause shown, provided the request is received by the Department and other parties not less than five days prior to the hearing date unless good cause is shown during the hearing for a continuance due to the need for new evidence, sudden unavailability of counsel, sudden illness of a party, or similar reasons. Such request shall be in writing and shall set forth the grounds alleged therefor. Oral requests for continuances shall not be granted unless made during the hearing for good cause. "Good cause" is shown when a Petitioner or Respondent demonstrates a real and compelling need for additional time. "A real and compelling need" includes, but is not limited to, service in the armed forces or serious illness, relating to either party or that party's attorney.

u) No formal hearing shall be continued "generally". A continuance, when granted, shall state a date certain, not more than sixty (60) days from the prior hearing date at which time the hearing shall reconvene.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.110 Orders

a) The Department shall prepare a written order and opinion for all final determinations, which shall include the Findings of Fact, Conclusions of Law, Recommendations of the Hearing Officer, and the Order of the Secretary.

b) The Hearing Officer shall prepare the Findings of Fact, Conclusions of Law, and Recommendations to the Secretary. The Findings of Fact and Conclusions of Law must be stated separately.

c) The Order of the Secretary of State shall be the decision of the Office upon the application for relief.

d) The Department shall notify all parties or their agents personally or by mail of the Findings of Fact, Conclusions of Law, Recommendations, and the Order, within 180 calendar days after the end of the hearings.

e) Orders of Default shall be entered against the petitioner or respondent, as the case may be, where the petitioner or respondent fails to appear for the hearing at the scheduled time, and has failed to request, or has not been granted a continuance in accordance with Section 150.100(t) and (u).

14 Ill. Adm. Code 150.120 Record of Hearings

a) The record of the hearing in a contested case shall include:

1. All pleadings (including all pre-hearing and post-hearing notices and responses thereto, admissions, stipulations of facts, motions, and rulings thereon);

2. All evidence admitted;

3. A statement of matters officially noticed;

4. A transcript of the proceedings;

5. The Findings of Fact, Conclusions of Law, and Recommendation of the Hearing Officer.

6. The Order of the Secretary of State, which shall constitute a final administrative decision within the provisions of the Administrative Review Law [805 ILCS 5/Art. III].

7. All staff memoranda or data submitted to the Hearing Officer in connection with his or her consideration of the case. F4F2

8. Any communication prohibited by Section 10-60 of the Illinois Administrative Procedure Act [5 ILCS 100/10-60], but such communication shall not form the basis for any finding of fact. F4F2

b) The record shall be certified by the Hearing Officer or Director upon any complaint for administrative review. An index of the record, with each page of the record numbered in sequence, shall be prepared by the Department.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.130 Invalidity

If any part of this Subpart shall be held invalid by a court of competent jurisdiction, such holding shall not affect the remaining parts thereof.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.200 Annual List of Corporations

a) The annual list of corporations shall contain the list of all corporations registered in the State of Illinois, both foreign and domestic during a calendar year, as shown on the records of the Department of Business Services of the Office of the Secretary of State.

b) All requests for the annual list shall be sent to the Director of the Department of Business Services at Room 328, Howlett Building, Springfield, Illinois 62756.

c) The fee for the annual list shall be equal to the cost of publishing plus postage, not to exceed $200. The fee shall be paid by certified check or money order. No fee shall be charged to local governments, State departments or agencies.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.210 Monthly List of Corporations

a) The monthly list of newly formed corporations shall consist of the daily lists compiled for the previous calendar month. (Ill. Rev. Stat. 1991, ch. 32, par. 1.25) [805 ILCS 5/1.25]

b) Local governments or state departments desiring to receive the monthly list of corporations shall request such list in writing, directed to the Director of the Department of Business Services, Room 328, Howlett Building, Springfield, Illinois 62756.

c) The fee for the monthly list shall be $180.00 per year, payable by check or money order for a 12 month subscription or $15.00 per month for the balance of a subscription term, unless a fee exemption in Section 1.25 of the Business Corporation Act of 1983 (Ill. Rev. Stat. 1991, ch. 32, par. 1.25) [805 ILCS 5/1.25] exists.

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.220 Daily List of Corporations

a) The daily list of newly formed corporations, business and not-for-profit, shall be published by the Department of Business Services.

b) All requests to subscribe to the daily list shall be sent to the Director of the Department of Business Services, Room 328, Howlett Building, Springfield, Illinois 62756.

c) The charge for the subscription to the daily list of corporations shall be $318 for a 12 month subscription or $26.50 per month for the balance of the subscription term based on a calendar year, payable by certified check or money order by all subscribers, except local governments or state departments and agencies.

History

• Source: Amended at 21 Ill. Reg. 16173, effective December 1, 1997

14 Ill. Adm. Code 150.230 Computer Access to Information

a) Computer connections by non-Department users.

1. Computer terminal connections to the Secretary's computer may be provided to other State agencies. This service may be made available at no charge so long as the requesting agency incurs all costs and so long as the service does not substantially increase costs or network traffic on the Secretary's computer.

2. Fees for information supplied by means of computer connections between the Secretary of State's computers and those of any other agency, corporation, or person may be paid on a daily or monthly basis for all information delivered during that day or month, as determined by the Secretary and the agency or person to be the economically simplest way of billings. The proper fee shall be determined by negotiation between the agency or commercial user and the Director based upon telephone line charges, rental or purchase fees for terminals, and any other appropriate factors, such as statutory fees (see 805 ILCS 5/15.10) for certain types of information and the requirements of this Subpart.

3. Computer terminal connection may be allowed to commercial users provided that all costs are borne by the commercial user. The allowance of computer terminal connections shall be contingent upon the best interests of the Office of the Secretary of State, which is based upon the volume of requests received, the cost-effectiveness of providing the information through computer terminal connections as opposed to other methods, and other factors which may impede the operations of the Office of the Secretary of State. This service will be suspended at any time, should the connection interfere with the Secretary's internal work schedules and processing.

b) Corporate information is available for purchase from the Department in the following specific formats only.

1. All purchase requests shall be submitted in writing to the Director. Payment shall be made to the Department before delivery of the information to the purchaser. No refunds will be made after the request is approved by the Director. Payment shall be made by check or money order, made payable to the "Secretary of State". If the purchaser wants the information on computer tape, the purchaser shall supply a computer tape or tapes compatible with the Secretary's equipment.

2. The only formats of corporate information for purchase on computer tape are the master business corporation list and the master not for profit corporation list. The master business corporation list format includes the file number, state of origin, date of incorporation or qualification, the corporate name, the registered agent's name and registered office address, the name of the incorporator (if the corporation is newly formed) or the name and address of the president and secretary of the corporation, the years in which the two previous annual reports were filed, the types of stock, the amount of paid-in capital and the assumed corporate names. (The information available by means of a computer connection shall include all of the above, and also the microfilm roll and image number, and the amount of franchise tax paid.) The fee for this list shall be $1,500.00. Information concerning the master not for profit corporation list is found at 14 Ill. Adm. Code 160.12.

3. The Department makes available for purchase to commercial users the master business and not for profit corporation lists (as stated in subsections (b)(1) and (2) above), and the assumed name file, together with a daily update list of newly formed corporations (business and not for profit), and a monthly list of newly formed corporations, all of which information is only available for purchase as a whole unit, to be known as the "Daily Transmittal Package (DTP)". In addition to the total fee for the two active corporate files of $3,000.00, the commercial purchasers shall pay to the Department: a fee of $72.00 per day to create tapes of updates and new transactions, transmitted daily to the purchasers; a fee of $137.00 per month to create computer tapes to update the corporate files on a monthly basis; a monthly maintenance fee of $310.00; a staff reimbursement cost of $35.00 per hour for any additional programming; and any telephone charges to transmit the information to the commercial purchaser. Payments to the Department shall be made monthly. The commercial purchaser shall enter into a written agreement for a term of not less than 2 years duration, nor more than 5 years, encompassing other terms and conditions as are deemed appropriate by the commercial purchaser and the Department, or by Illinois law. The commercial purchaser shall provide a computer terminal for the use of the Department to ascertain the correctness of the corporate information as presented by the commercial purchaser to the public.

4. The commercial purchaser shall not resell to any other purchaser the information obtained from the Department in the same form or format in which it is obtained from the Department. No other corporate information in quantity shall be sold or otherwise made available for purchase or for free. This subsection does not prevent a member of the public from making inquiries or purchases of information concerning an individual corporation in which he or she is specifically interested. However, any person requesting information arranged by a specific field of the formats shall be referred to all commercial vendors of corporate information who have obtained the information pursuant to subsection 3, and the Department shall not provide the corporate information to the requester. The Department shall not state any preference of commercial vendor to the requester, but shall provide all names and addresses of the commercial vendors to the requester.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.240 Abstracts of Corporate Record

a) An abstract of corporate record of a corporation shall consist of a hard copy print-out of the information shown on the computer records of the Department of Business Services of the Office of the Secretary of State.

b) All requests for abstracts of corporate records shall be in writing shall be sent to the Department of Business Services, Room 328, Howlett Building, Springfield, Illinois 62756. Attention: Abstracts.

c) The fee for each abstract of corporate record shall be $5.00 and must accompany the written request.

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.250 Invalidity

If any part of this Subpart shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts thereof.

14 Ill. Adm. Code 150.300 Errors or Defects

a) Matters deemed "errors" or "defects" for which a statement of correction may be filed are facts that have been misreported in a document filed with the Secretary of State's Office and do not include any other matter which in retrospect is considered a mistake or which as to the action reported reflects a subsequent event.

b) Matters deemed errors or defects in original articles of incorporation are: typographical errors in the names of the first board of directors (but not such as to substitute or delete a person or part); errors in the number of shares proposed to be issued; or errors in the amount of consideration to be received for the initial issue of shares. Any other matters shall not be the subject of a statement of correction but, in an appropriate case, shall be dealt with by articles of amendment.

c) Matters deemed errors or defects in an application for an original or amended certificate of authority of a foreign corporation and for which a statement of correction may be filed are: typographical errors in the corporate name which is not the same as the name shown on the certified copy; errors in the names or addresses of the directors, the officers, or the principal office; errors in the number of shares issued or in the amount of the paid-in capital.

d) Matters deemed errors or defects for which a statement of correction may be filed in a reservation of transfer of corporate name, an application to adopt, change or cancel an assumed corporate name, an application for registration or renewal of corporate name (foreign), a statement of change or notice of resignation of registered agent/office, or an application for reinstatement not including the corporate or assumed corporate name are those in the personal names or addresses reported therein, but not those alleged errors which would substitute or delete a person or party or address.

History

• Source: Amended at 31 Ill. Reg. 9469, effective July 16, 2007

14 Ill. Adm. Code 150.305 Financial Data as Support Documentation

a) Any statement of correction which may result in a refund or adjustment of more than $5,000.00 must be accompanied by a financial statement by a certified public accountant explaining in detail the financial and accounting basis for the petition. This statement must explain when, by whom, and through what process the original error or mistake was made, and the true financial facts at the time of original filing of documents by the corporation.

b) Internal Revenue forms for corporate taxes, state tax forms for corporate taxes, corporate balance sheets, and other corporate financial reports shall be submitted if requested by the Department to show the validity of the statements contained in the petition.

History

• Source: Section repealed, new Section added at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.310 Invalidity

If any part of this Subpart shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts thereof.

14 Ill. Adm. Code 150.400 Preliminary Determination of Availability

Requests for searches of the records of the Secretary of State, Department of Business Services for a preliminary determination of the availability of a proposed name will only be accepted through the Springfield office of the Department. Requests may be made over the counter, by letter, or by telephone and will be answered by the same method; however, no more than three searches may be requested by a single telephone call. A preliminary determination of availability shall be informational only and shall not be deemed a final determination for any purpose.

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.405 Final Determination of Availability

A final determination whether a proposed name is available as a corporate name shall be made only upon payment of the proper fees as listed in Section 15.10 of the Act (Ill. Rev. Stat. 1991, ch. 32, par. 15.10) [805 ILCS 5/15.10] and the submission of a document required or permitted to be filed with the Secretary of State, stamped and filed with the Department of Business Services, which necessitates such a determination. (Ill. Rev. Stat. 1991, ch. 32, pars. 4.05 to 4.25) [805 ILCS 5/4.05 to 4.25]

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.410 Response as to Basis of Unavailability

Any final determination or any preliminary determination under this subpart that indicates a proposed name is unavailable shall specify a reason therefor when a document has been properly submitted or when a request in writing has been made, and has specifically requested that a reason for unavailability be stated. Only one reason for unavailability need be stated and, when appropriate, only one conflicting name need be set forth. Any stated reason for unavailability made with respect to a preliminary determination shall be informational only and shall not be deemed a final determination for any purpose.

14 Ill. Adm. Code 150.415 Reconsideration Procedure

An applicant may request reconsideration of a final determination that a proposed name is unavailable, by making a written request addressed to the Director, Room 328, the Howlett Building, Springfield, Illinois, 62756. The applicant shall attach to his request a copy of the written final determination made rejecting the name, and shall include a statement of the reasons upon which the applicant seeks approval of the name. The applicant may include material in support of the request for reconsideration. This reconsideration procedure shall not apply to any request for a preliminary determination of availability. Only after the Director's determination of unavailability shall an applicant be entitled to a hearing pursuant to Subpart A of this Part.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.420 Effect of Final Determination

A final determination under this subpart that a corporate name is available is concerned solely with the administrative convenience of the Department of Business Services, and does not warrant the name selected or guarantee the unqualified use of the name without regard to the rights of other parties. The Secretary of State does not pass upon the legality of a corporate name by merely permitting incorporation, qualification, reservation or registration under a name. A final determination of corporate name unavailability is not based on deceptiveness, confusing similarity or other such considerations derived from unfair competition and trademark law.

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.425 Applicability

The provisions of this subpart shall be applicable to all corporations, which are, or will or may become subject to the provisions of the Business Corporation Act of 1983 [805 ILCS 5].

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.430 Availability of Names: Statutory Requirements

A proposed corporate name shall comply with the applicable provisions of the Business Corporation Act of 1983 [805 ILCS 5], the General Not For Profit Corporation Act [805 ILCS 105], the Professional Service Corporation Act [805 ILCS 10], the Medical Corporation Act [805 ILCS 15], the Close Corporation Act [805 ILCS 5/Art. 2A], and any other statute of this State which may prohibit or restrict corporate names.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.435 Standards - Conflicting Names

A corporate name shall be distinguishable upon the record of the Secretary of State, Department of Business Services, from the name or assumed name of any domestic corporation or limited liability company organized under the Limited Liability Company Act, whether profit or not for profit, existing under any Act of this State or of the name or assumed name of any foreign corporation or foreign limited liability company registered under the Limited Liability Company Act, whether profit or not for profit, authorized to transact business in this State, or a name the exclusive right to which is, at the time, reserved or registered in the manner provided in the Act or Section 1-15 of the Limited Liability Company Act.

History

• Source: Amended at 27 Ill. Reg. 550, effective December 27, 2002

14 Ill. Adm. Code 150.440 Distinguishable – Defined

A corporate name is distinguishable when containing a difference from other names on the record when the corporate name distinguishability is recognizable by the Secretary of State or his/her designee by means of sight.

History

• Source: Amended at 31 Ill. Reg. 9469, effective July 16, 2007

14 Ill. Adm. Code 150.445 Matters Not Considered

Only the proposed name and the names of active corporations and active limited liability companies, and domestic corporations that have been administratively dissolved for less than three years, on record are considered in determining name availability. Among the matters not considered are:

a) the purpose, location or relative size of the business;

b) the intent of the applicant;

c) any consent by a corporation bearing a similar title;

d) the names of unincorporated entities;

e) the common law or statutory law of unfair competition, unfair trade practices, trade marks, trade names, service marks, service names, copyrights or any other right to the exclusive use of names or symbols;

f) the names of corporations or limited liability companies not on record with the Secretary of State;

g) whether or not the public may be likely to be deceived or misled by the resemblance of the proposed name to the name of other corporations or limited liability companies;

h) whether or not an existing corporation or limited liability company may possibly be injured by a resemblance to the proposed name;

i) any criteria of sound, including, but not limited to, phonetics derived from deliberate misspelling or otherwise.

History

• Source: Amended at 32 Ill. Reg. 12039, effective July 16, 2008

14 Ill. Adm. Code 150.450 Differences

Corporate names are deemed not to be distinguishable when a comparison of the names reveals no difference except for:

a) one or more of the terms "corporation", "company", "incorporated", "limited", or "limited liability company" or an acceptable abbreviation thereof, regardless of where in the name such term may appear;

b) the inclusion or omission of punctuation, articles of speech, conjunctions, contractions (or symbols thereof), or a letter or letters;

c) an abbreviation versus a spelling out of a word; a different tense of a word; or the use of the singular as opposed to the plural of a word.

History

• Source: Amended at 32 Ill. Reg. 12039, effective July 16, 2008

14 Ill. Adm. Code 150.455 Surnames

A surname shall be considered a "word". Where a corporate name consists of a surname without a given name or initials, it is treated in the same manner as other words for application of this subpart. A person may use his or her own name in a corporate name, but the corporate name must still be distinguishable from other corporate names.

14 Ill. Adm. Code 150.460 Alphabet Names

Where a name or unit of a name consists of initials only or letters of the alphabet, the combination of initials or letters of the alphabet will be treated as a "word" in the same manner as other words for application of the subpart.

History

• Source: Added at 10 Ill. Reg. 5146, effective March 21, 1986

14 Ill. Adm. Code 150.465 Government Affiliation

No name may falsely imply governmental affiliation.

14 Ill. Adm. Code 150.470 Restricted and Professional Words

a) Words which are subject to restrictions on their use in a corporate name include, but are not limited to, the following and any variation thereof: Trust, Pawners, Cooperative, Housing, Engineering, Insurance, Bank, Bankers, Banking, Union, Surety, Underwriters, Assurance, Reinsurance, Indemnity, Casualty, Guaranty, Gaurantee, Guarantor, Trustee and Fiduciary or any other prohibited term.

b) However, "Banks", "Banker", or "Banking" may be used in a corporate name if, at the time of filing of the articles of incorporation, application for certificate of authority by a foreign corporation, or an amendment to either of these documents to change the corporate name, the corporation or incorporators give the Department a letter signed by the Commissioner of Banks and Trusts of Illinois granting permission to use these words, pursuant to the standards set forth in the Illinois Banking Act, Section 46 [205 ILCS 5/46].

1. The corporation using any of these aforementioned words must not be engaged in the banking business, but may be a bank holding company.

2. The use of these words shall be allowed if the corporation is not doing financial business and otherwise prohibited word is a person's proper name, e.g. "Robert Banks".

c) The Department will prohibit the incorporation of corporations which seek to use names or have purposes which violate Sections 3.05 and 4.05(a)(2) of the Act. This prohibition does not apply to names or purposes specifically authorized by these rules.

History

• Source: Amended at 18 Ill. Reg. 7783, effective May 15, 1994

14 Ill. Adm. Code 150.475 Acceptable Characters of Print

The Corporate name must consist of letters of the English alphabet, Arabic or Roman numerals, and/or symbols capable of being readily reproduced by the Office of the Secretary of State [805 ILCS 5/4.05(a)(6)].

a) Letters of the English alphabet include upper case or capital letters only; no distinction as to type face or font is recognized.

b) Arabic numerals include: 0,1,2,3,4,5,6,7,8,9

c) Roman numeral characters include: I, V, X, L, C, D, M

d) Symbols recognized by the Secretary of State include: ! @ # $ % & * ( ) - = + : " ; ' / ? , .

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.480 Invalidity

If any part of this Subpart shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts thereof.

14 Ill. Adm. Code 150.485 Improper Names

The corporate name or assumed corporate name shall not contain any word or words that create a connotation that is offensive to good taste and decency.

History

• Source: Added at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.490 Assumed Corporate Names

When a foreign corporation is authorized to transact business in Illinois and its true corporation name is not available for use, the corporation must comply with Sections 4.05(a)(1) and 4.15 of the Business Corporation Act. [805 ILCS 5]

History

• Source: Added at 46 Ill. Reg. 14348, effective July 27, 2022

14 Ill. Adm. Code 150.500 Preamble

For purposes of this Part, service of process on the Secretary of State shall refer to any service to be had on the Secretary of State in his or her capacity as an agent for service on corporations as required by the provisions of the Business Corporation Act of 1983 [805 ILCS 5].

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.510 Manner of Service

a) Any process, notice or demand to be served under this Part shall be made upon the Secretary of State, or the Director of the Department of Business Services, or any employee of the Department designated by the Director to accept such service for him or her, in the following manner:

1. Service shall comply with the provisions of the Civil Practice Law in all respects (Ill. Rev. Stat. 1991, ch. 110, pars. 2-201 and 2-212) [735 ILCS 5/2-201 and 2-212], the Federal Rules of Civil Procedure (28 USCA) or any administrative rules of service, as may be appropriate.

2. The affidavit of compliance required by Section 5.25 of the Business Corporation Act of 1983 to be appended to the process, notice or demand to be served, containing the information described in subsection (b) herein, shall be signed by the person instituting the action, suit or proceeding or by an attorney of record and the signature of the affiant, without more, shall constitute the affirmation or acknowledgment, under penalties of perjury, that the affidavit is the act or deed of the affiant and that the facts stated therein are true.

b) The affidavit of compliance shall state:

1. the title of the court or administrative agency;

2. the title of the case, showing the names of the first named plaintiff and the first named defendant;

3. the number of the case;

4. the title of the instrument;

5. the name of the corporation to be served;

6. the basis for service on the Secretary of State;

7. the address to which the instrument is to be sent (by registered or certified mail) by the affiant;

8. the name, address and telephone number of the attorney of record for the plaintiff or other affiant.

c) The service of process in lawsuits against corporations is governed by Section 5.25 of the Business Corporation Act of 1983 (Ill. Rev. Stat. 1991, ch. 32, par. 5.25) [805 ILCS 5/5.25].

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.520 Place of Service

Service of any process, notice or demand made under this Part shall be had with the Department of Business Services either at Room 328, Howlett Building, Springfield, Illinois 62756, or at 69 W.Washington St., Room 1240, Chicago IL 60602.

History

• Source: Amended at 27 Ill. Reg. 550, effective December 27, 2002

14 Ill. Adm. Code 150.530 Payment of Fees

At the time of any service under this Part, there shall be paid a fee of $10, payable by check or money order to the "Illinois Secretary of State." Each process, notice or demand shall be submitted with a separate payment.

14 Ill. Adm. Code 150.540 Invalidity

If any part of this Subpart shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts thereof.

14 Ill. Adm. Code 150.600 Payment of Fees, Franchise Tax and License Fee

All payments of fees, franchise taxes, license fees and penalties with respect to original articles of incorporation, applications for original certificates of authority and applications for reinstatement of domestic or foreign corporations shall be by money order, certified check, cashier's check or a check drawn on the account of an Illinois licensed attorney or certified public accountant, payable to the "Secretary of State." All other payments may be made by personal or business firm check, payable to the "Secretary of State". Any check that is returned by the bank to the Secretary of State’s Office for any reason will immediately void the transaction for which it was intended and the Secretary of State will treat the filing event as never occurring.

History

• Source: Amended at 27 Ill. Reg. 550, effective December 27, 2002

14 Ill. Adm. Code 150.610 Definitions

For the purpose of computing franchise taxes and license fees as provided in Sections 15.40, 15.55 and 15.70 of the Business Corporation Act of 1983 [805 ILCS 5/15.40, 15.55 and 15.70] the words and phrases in this Section shall have the meaning set forth herein.

a) "Property" means gross assets, including all real, personal tangible and intangible property, without qualification.

b) "Business" means gross receipts, from whatever source derived.

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.620 Annual Report

Pursuant to Section 14.05 of the Business Corporation Act of 1983 (Ill. Rev. Stat. 1991, ch. 32, par. 14.05) [805 ILCS 5/14.05], the annual report of domestic or foreign corporation, to be filed in calendar year 1986 and thereafter, shall include the state or country under the laws of which the corporation is organized, the date of incorporation or qualification, and the period of its duration.

History

• Source: Amended at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.621 Confidentiality of Annual Report Financial Data

The Secretary and the Department shall keep confidential all corporate revenue and expense data contained on annual reports and applications for certificates of authority to do business filed with the Department as required by Section 1.40 of the Act. Such information shall not be released to any person, entity, government agency, or corporation except upon presentation to the Department of a valid and certified court order, issued by a court with jurisdiction over the corporation whose report is sought, directing the Department to release reported information. Any fee for copies must be paid at the same time of request by the party seeking the report. (Such confidentiality is pursuant to Section 1.40 of the Act, because the financial information is being given to the Department in response to interrogatories on the annual report form and the forms for applying for a certificate of authority.)

History

• Source: Added at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.630 Shares Having a Par Value

The consideration received at the time of the issuance of shares or, in the case of shares issued as a share dividend, the amount added or transferred to the paid-in capital for or on account of the issuance of shares cannot be less than the aggregate par value of the shares issued, and at no time shall the paid-in capital be an amount less than the aggregate par value of all issued shares.

History

• Source: Amended at 31 Ill. Reg. 9469, effective July 16, 2007

14 Ill. Adm. Code 150.631 Amended Annual Report

a) A corporation may amend its most recently filed annual report to denote any subsequent changes in the names and addresses of its officers and directors, principal place of business and/or status as a minority or female owned business. The amended annual report must set forth the information required in Section 14.05(a), (b), (c), (d), (e), (f), (g) and (i) of the Business Corporation Act.

b) An amended annual report shall not take the place of any document, statement or report otherwise required to be filed by the Business Corporation Act.

c) The filing fee for an amended annual report will be the amount set forth in Section 15.10(o) of the Business Corporation Act.

History

• Source: Added at 31 Ill. Reg. 9469, effective July 16, 2007

14 Ill. Adm. Code 150.632 Officers and Directors – Qualifications

An officer and/or director of a domestic or foreign corporation, incorporated or authorized to transact business in this State, must be a natural person and 18 years of age or older.

History

• Source: Added at 46 Ill. Reg. 14348, effective July 27, 2022

14 Ill. Adm. Code 150.640 Invalidity

If any part of this Subpart shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts thereof.

History

• Source: Added at 10 Ill. Reg. 5146, effective March 21, 1986

14 Ill. Adm. Code 150.700 Interpretive Comments Applicable Generally

The annotations in the Illinois Business Corporation Act Annotated, with forms, Third Edition, as supplemented, copyright 1975 (no subsequent dates or editions), prepared by the Chicago Bar Association, to the extent that they continue to apply to those Sections of the Act which remain in effect, are also adopted and incorporated by reference herein, pursuant to Section 5-75 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1991, ch. 127, par. 1005-75) [5 ILCS 100/5-75]. A copy of this book, in three volumes, is available for inspection in the Department's Springfield office, or Chicago Bar Association, 321 South Plymouth Court, Chicago, Illinois 60604.

AGENCY NOTE: The Department shall employ the official comments of the Corporate Acts Advisory Committee of the Secretary of State on the Illinois Business Corporation Act of 1983 as guidelines in administering and interpreting the Act. Copies of the comments are available from:

Business Services Department

Office of the Secretary of State

Room 328, Howlett Building

Springfield, Illinois 62756

(217)782-6961

History

• Source: Added at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.705 Paid-in Capital

The phrase "paid-in capital represented by shares acquired and cancelled" contained in Section 9.20(a)(1)(i) of the Act shall mean the actual cost of the re-acquired shares paid by the corporation, or decrease in paid-in capital, to the corporation from the acquisition of shares. Except, in the case of a wholly owned subsidiary created and funded totally from the assets of the parent corporation, the merger of the subsidiary back into the parent corporation shall not result in the totalling of the paid-in capital of the parent and subsidiary corporations as to corporate funds or assets that were not created previously by one of the merging corporations and transferred to the other corporation. The surviving corporation must demonstrate, by competent financial evidence presented to the Department, the history of the financial transactions between the parent and subsidiary corporation. If the request of the corporation is denied, it may seek relief pursuant to Subpart A of this Part.

History

• Source: Amended at 31 Ill. Reg. 9469, effective July 16, 2007

14 Ill. Adm. Code 150.710 Advice to the Public

The Department staff will not provide legal advice to any member of the public concerning the Act, or the best or better words or phrases to place in the forms provided by the Department for use under the Act.

History

• Source: Added at 17 Ill. Reg. 11571, effective July 15, 1993

14 Ill. Adm. Code 150.720 Incorporating Licensed Professionals

a) Authorized Corporate Structure

The following professionals may incorporate using only the corporate structures indicted on this list:

1. The Business Corporation or Professional Corporation Act may be used by these professions:

PROFESSION

STATUTORY REFERENCE

Roofer

225 ILCS 335

Architecture

225 ILCS 305

Professional Engineering

225 ILCS 325

Structural Engineering

225 ILCS 340

Land Surveyors

225 ILCS 330

Landscape Architect

225 ILCS 315

Pharmacist

(Pharmacy may be a BCA, but the pharmacist himself may only be a PC)

225 ILCS 85

Real Estate Broker

225 ILCS 455

Marriage and Family Therapists

225 ILCS 55

Private Security Guard, Private Detectives, and Private Alarm Contractors

(Person shall be PC if detective, but agency can be BCA)

225 ILCS 445

Detection of Deception Examiners

225 ILCS 430

Collection Agencies

225 ILCS 425

2. The Professional Corporation Act, in its statement of intent, specifically states that it was enacted to allow licensed professionals to use this form of corporate structure.

PROFESSIONAL CORPORATIONS

STATUTORY REFERENCE

Athletic Trainer

225 ILCS 5

Barbers

(BCA can be formed to own barber shops, but licensed barber can only form PC)

225 ILCS 410

Professional Boxing & Wrestling

225 ILCS 105

A)

Promoters

B)

Contestants

C)

Seconds

D)

Referees

E)

Judges

F)

Managers

G)

Trainers

H)

Timekeepers

Cosmetologists

(BCA can be formed to own barber shops, but licensed barber can only form PC)

225 ILCS 410/3

Esthetician

225 ILCS 410

Nail Technicians

225 ILCS 410

Funeral Directors/Embalmer

(Any person can form a business corporation to own a funeral home, but the operation of a funeral home is limited to a licensed funeral director)

225 ILCS 41

Speech-Language Pathologists and Audiologists

225 ILCS 110

Physicians, including osteopath psychiatrist and chiropractor

225 ILCS 60

Dentists (Dental Hygienists)

225 ILCS 25

Podiatrist

225 ILCS 100

Psychologist

225 ILCS 15

Physical Therapist

225 ILCS 90

Occupational Therapist

225 ILCS 75

Clinical Social Workers

25 ILCS 20

Interior Design

225 ILCS 310

Nutritionists and Dieticians

225 ILCS 30

Pharmacist

225 ILCS 85

Nurses

225 ILCS 65

Public Accountants

225 ILCS 450

Shorthand Reporters

225 ILCS 415

Veterinarians

225 ILCS 115

Nursing Home Administrators

225 ILCS 70

Attorneys

Supreme Court Rules 721

Optometrist

225 ILCS 80

Chiropractor

225 ILCS 60

Doctors

225 ILCS 60

This list was developed in coordination with the Department of Professional Regulation. The corporate purposes will include the following language prescribed in subsections (b) and (c) of this Section.

b) Required language in incorporation documents for Professional Corporations.

1. Names

A professional corporation shall adopt a name consisting of the full or last name of one or more of its shareholders; except that if not prohibited by law, rules of a regulating authority or the cannons of ethics of the professional concerned, a professional corporation may adopt a fictitious name. If the corporation does adopt a fictitious name or continues to use the name of a deceased shareholder or the name of a member of a predecessor organization, it shall file with the county clerk of the county where its principal place of business is located under the Assumed Business Name Act [805 ILCS 405]. It shall be permissible for a professional corporation to continue to use the name of a deceased shareholder for a period of one year after his death without recording the name of the corporation with the county clerk as hereinabove provided. A professional corporation may continue to use the name of a shareholder who voluntarily withdraws from the corporation if the withdrawing shareholder files with the regulating authority his written permission for the continued use of his name by the professional corporation. This permission shall remain in effect until written revocation has been received by the regulating authority from the former shareholder.

The corporation name shall end with the word "Chartered" or "Limited" or the abbreviation "Ltd.", or with the words "Professional Corporation" or the abbreviation "Prof. Corp." or the initials "P.C.".

2. Purpose

Professional Corporation: To practice the profession of rendering that type of professional service and services ancillary thereto.

Professional Service will be rendered from the following address: (address of the corporation)

3. Attorney's Under the Professional Service Corporation Act

The Articles of Incorporation of a Professional Service Corporation which is to be engaged in the practice of law must also contain, in the Articles, the following statement:

"All shareholders shall be jointly and severally liable for the acts, errors and omissions of the shareholders and other employees of the corporation, arising out of the performance of professional services by the corporation while they are shareholders."

c) Required language in incorporation documents for Medical Corporations.

1. Names

The corporate name shall end with the word "Chartered" or "Limited" or the abbreviation "Ltd." or the words "Service Corporation" or the abbreviation "S.C."

2. Purpose

Medical Corporation: To own, operate and maintain an establishment for the study, diagnosis and treatment of human aliments and injuries, whether physical or mental, and to promote medical, surgical and scientific research and knowledge; provided that medical or surgical treatment, consultation or advice may be given by employees of the corporation only if they are licensed pursuant to the Medical Practice Act [225 ILCS 60].

History

• Source: Amended at 20 Ill. Reg. 7026, effective May 8, 1996

14 Ill. Adm. Code 150.725 Corporation Acting as an Incorporator

A corporation acting as an incorporator must set forth its corporate name and state or country of incorporation on the articles of incorporation. A duly authorized officer of the corporation acting as the incorporator must sign the articles of incorporation and print his or her name and title beneath the signature.

History

• Source: Added at 29 Ill. Reg. 14047, effective September 1, 2005

Chapter I Secretary of State

Part 150 Business Corporation Act

14 Ill. Adm. Code 150.730 Business Hours

In Springfield, the Department of Business Services business hours are 8:00 a.m. to 4:30 p.m., Monday through Friday, except holidays.

History

• Source: Added at 29 Ill. Reg. 14047, effective September 1, 2005

14 Ill. Adm. Code 150.735 Electronic Filing

Documents transmitted for filing electronically must include the name of the person making the submission. Such inclusion shall constitute the affirmation or acknowledgement of the person, under penalties of perjury, that the instrument is his or her act and deed or the act and deed of the corporation, as the case may be, and that the facts stated in the submission are true. Compliance with this Section shall satisfy the signature provisions of Section 1.10 of the Business Corporation Act of 1983, which shall otherwise apply.

History

• Source: Added at 30 Ill. Reg. 12961, effective July 11, 2006

14 Ill. Adm. Code 150.740 Extension of Filing and Secretary of State Deadlines

Filing of Organizational Documents, Annual Reports, and Other Business Entity Materials

a) All organizational documents, annual reports, and other business entity materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes shall be filed with the Business Services Department, Howlett Building, Room 350, Springfield IL 62756 or 69 West Washington, Suite 1240, Chicago IL 60602.

b) Pursuant to the powers vested in him by Section 5(7) of the Secretary of State Act, the Secretary of State hereby extends for the duration of the disaster proclaimed by the Governor in Gubernatorial Proclamation number 2020-038, issued on March 9, 2020, as extended by subsequent proclamations, and for a period of 90 days thereafter, the filing deadlines for materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes and that were due to be filed on or after March 17, 2020. This extension period may be rescinded by the Secretary of State through the adoption of an emergency rule. Business organizations are required to pay the statutory amounts to the Secretary of State when materials are filed, including franchise tax, penalties, interest, filing fees, and other charges required to be paid, without regard to the application of the filing extension deadline of this Section.

c) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 1.45 of the Business Corporations Act (BCA) that require the Secretary of State to, within 10 days after any of the documents subject to Section 1.45 are delivered to the Secretary for filing, give written notice of his or her disapproval of the documents are suspended for the duration of the disaster proclaimed in Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process these documents as expeditiously as possible.

d) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 15.95 of the BCA that require the Secretary of State to provide expedited services upon request are suspended for the duration of the disaster proclaimed in the Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process the expedited documents within 24 hours or as soon as possible thereafter. For purposes of filing dates, the date the document was submitted for filing will be the document's filing date.

History

• Source: Amended at 45 Ill. Reg. 7145, effective May 28, 2021

Part 160 General Not for Profit Corporations

14 Ill. Adm. Code 160.10 Definitions

"Department" shall mean the Department of Business Services of the Office of the Secretary of State.

"Director" shall mean the Director of the Department.

"NFP" shall mean the General Not for Profit Corporation Act of 1986 [805 ILCS 105].

"Secretary" shall mean the Secretary of State of Illinois.

History

• Source: Amended at 20 Ill. Reg. 7045, effective May 8, 1996

14 Ill. Adm. Code 160.11 Office Location and Business Hours

a) The documents to incorporate an Illinois not for profit corporation shall be filed at the following address:

Department of Business Services

Room 328, Howlett Building

Springfield, Illinois 62756.

b) The business hours are 8:00 a.m. to 4:30 p.m., Monday through Friday, excluding holidays.

History

• Source: Amended at 20 Ill. Reg. 7045, effective May 8, 1996

14 Ill. Adm. Code 160.12 Sale of Information

a) The master not for profit corporation list computer format includes the file number, the corporate name, the date of incorporation or qualification, the registered agent's name and the registered office address, the duration of the corporation, and the years in which the two previous annual reports were filed. The information available by means of a computer connection shall include all of the above. The fee for this list is $1,500.00. No other corporate information in quantity shall be sold or otherwise made available for purchase or for free. This subsection does not prevent a member of the public from making inquires or purchases of information concerning an individual corporation in which he or she is specifically interested. However, any person requesting information arranged by a specific field of the formats shall be referred to all commercial vendors of corporate information who have obtained the information (pursuant to 14 Ill. Adm. Code 150.230(b)(3)), and the Department shall not provide the corporate information to the requester. The Department shall not state any preference of commercial vendor to the requester, but shall provide all names and addresses of the commercial vendors to the requester.

b) The list of condominium associations is available once per year in CD ROM form for a fee of $150.00 per disc, payable by certified check or money order to the "Secretary of State". The sets may be ordered in writing from the Director. When the purchaser's request is approved by the Director and the fee paid, no refunds shall be made.

History

• Source: Amended at 42 Ill. Reg. 16917, effective September 5, 2018

14 Ill. Adm. Code 160.13 Fees

All payments of fees with respect to original articles of incorporation, applications for original certificates of authority and applications for reinstatement of domestic or foreign corporations shall be by money order, certified check, cashier's check or a check drawn on the account of an Illinois attorney or certified public accountant, payable to the "Secretary of State." All other payments may be made by personal or business firm check, payable to the "Secretary of State."

History

• Source: Amended at 20 Ill. Reg. 7045, effective May 8, 1996

14 Ill. Adm. Code 160.14 Abstracts and Records

a) An abstract of corporate record of a corporation shall consist of a hard copy print-out of the information shown on the computer records of the Department of Business Services of the Office of the Secretary of State.

b) All requests for abstracts of corporate records shall be in writing and shall be sent to the following address:

Department of Business Services

Room 328, Howlett Building

Springfield, Illinois 62756

Attention: Abstracts

c) The fee for each abstract of corporate record shall be $5.00 and must accompany the written request.

History

• Source: Amended at 20 Ill. Reg. 7045, effective May 8, 1996

14 Ill. Adm. Code 160.15 Hearings

The rules for formal administrative hearings at 14 Ill. Adm. Code 150.Subpart A, shall apply to all administrative hearings conducted under the NFP.

14 Ill. Adm. Code 160.16 Names

The rules governing use of corporate names found at 14 Illinois Administrative Code 150, Subpart D, shall apply to the use of names under the NFP.

14 Ill. Adm. Code 160.17 Service of Process

The rules at 14 Ill. Adm. Code 150.Subpart E, shall apply to the service of process under the NFP.

14 Ill. Adm. Code 160.18 Electronic Filing

Documents transmitted for filing electronically must include the name of the person making the submission. Such inclusion shall constitute the affirmation or acknowledgement of the person, under penalties of perjury, that the instrument is his or her act and deed or the act and deed of the corporation, as the case may be, and that the facts stated in the submission are true. Compliance with this Section shall satisfy the signature provisions of Section 101.10 of the General Not For Profit Corporation Act of 1986, which shall otherwise apply.

History

• Source: Added at 30 Ill. Reg. 12966, effective July 11, 2006

14 Ill. Adm. Code 160.19 Errors or Defects

a) Matters deemed "errors" or "defects" for which a statement of correction may be filed are facts that have been misreported in a document filed with the Secretary of State's Office and do not include any other matter that, in retrospect, is considered a mistake or that, as to the action reported, reflects a subsequent event.

b) Matters deemed errors or defects in original articles of incorporation are: typographical errors in the names of the first board of directors (but not such as to substitute or delete a person or part). Any other matters shall not be the subject of a statement of correction but, in an appropriate case, shall be dealt with by articles of amendment.

c) Matters deemed errors or defects in an application for an original or amended authority of a foreign corporation and for which a statement of correction may be filed are: typographical errors in the corporate name that result in the name differing from the name shown on the certified copy; errors in the names or addresses of the directors, the officers, or the principal office.

d) Matters deemed errors or defects for which a statement of correction may be filed in a reservation of transfer of corporate name, an application to adopt, change or cancel an assumed corporate name, an application for registration or renewal of corporate name (foreign), a statement of change or notice of resignation of registered agent/office, or an application for reinstatement not including the corporate name or assumed corporate name are those in the personal names or addresses reported in the documents, but not those alleged errors that would substitute or delete a person or party or address.

History

• Source: Added at 31 Ill. Reg. 8549, effective June 15, 2007

14 Ill. Adm. Code 160.20 Amended Annual Report

a) A corporation may amend its most recently filed annual report to denote any subsequent changes in the names and addresses of its officers and directors, principal place of business and/or status as a Condominium Association, Homeowner's Association or Cooperative Housing Corporation. The amended annual report must set forth the information required in Section 114.05 of the General Not For Profit Corporation Act of 1986 (the Act).

b) An amended annual report shall not take the place of any document, statement or report otherwise required to be filed by the Act.

c) The filing fee for an amended annual report will be the amount set forth in Section 115.10(m) of the Act.

History

• Source: Added at 31 Ill. Reg. 8549, effective June 15, 2007

Chapter I Secretary of State

Part 160 General Not for Profit Corporations

14 Ill. Adm. Code 160.21 Officers and Directors – Qualifications

The requirements governing officers and directors at 14 Ill. Adm. Code 150.632 shall apply to officers and directors under the General Not For Profit Corporation Act.

History

• Source: Added at 46 Ill. Reg. 14354, effective July 27, 2022

14 Ill. Adm. Code 160.30 Extension of Filing and Secretary of State Deadlines

Filing of Organizational Documents, Annual Reports, and Other Business Entity Materials

a) All organizational documents, annual reports, and other business entity materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes shall be filed with the Business Services Department, Howlett Building, Room 350, Springfield IL 62756 or 69 West Washington, Suite 1240, Chicago IL 60602.

b) Pursuant to the powers vested in him by Section 5(7) of the Secretary of State Act, the Secretary of State hereby extends for the duration of the disaster proclaimed by the Governor in Gubernatorial Proclamation number 2020-038, issued on March 9, 2020, as extended by subsequent proclamations, and for a period of 90 days thereafter, the filing deadlines for materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes and that were due to be filed on or after March 17, 2020. This extension period may be rescinded by the Secretary of State through the adoption of an emergency rule. Business organizations are required to pay the statutory amounts to the Secretary of State when materials are filed, including penalties, filing fees, and other charges required to be paid, without regard to the application of the filing extension deadline of this Section.

c) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 101.45 of the General Not For Profit Corporation Act of 1986 (NFP) that require the Secretary of State to, within 10 days after any of the documents subject to Section 101.45 are delivered to the Secretary for filing, give written notice of his or her disapproval of the documents are suspended for the duration of the disaster proclaimed in Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process these documents as expeditiously as possible.

d) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 115.20 of the NFP that require the Secretary of State to provide expedited services upon request are suspended for the duration of the disaster proclaimed in the Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process the expedited documents within 24 hours or as soon as possible thereafter. For purposes of filing dates, the date the document was submitted for filing will be the document's filing date.

History

• Source: Amended at 45 Ill. Reg. 7152, effective May 28, 2021

Part 166 Uniform Partnership Act (1997)

14 Ill. Adm. Code 166.10 Prohibited Terms in Title

The name of a limited liability partnership shall not contain the terms "Corporation", "Corp.", "Incorporated", "Inc.", "Company", or "Co."

14 Ill. Adm. Code 166.15 Improper Names

The name of a limited liability partnership shall not contain any word or words that create a connotation that is offensive to good taste.

14 Ill. Adm. Code 166.20 Definitions

In addition to the definitions contained in Section 101 of the Uniform Partnership Act [805 ILCS 206/101], the following definitions shall apply:

"Abstracts of Record" shall consist of a hard copy printout of the information shown on the computer records of the Department of Business Services of the Office of the Secretary of State.

"Department" shall mean the Department of Business Services of the Office of the Secretary of State.

"Director" shall mean the Director of the Department of Business Services.

"Interrogatories" shall mean a written request for information to ascertain whether a limited liability partnership has complied with the provisions of the UPA.

"LLP" shall mean a Limited Liability Partnership.

"Secretary" shall mean the Secretary of State of Illinois.

"UPA" shall mean the Uniform Partnership Act (1997) [805 ILCS 206].

"UPA Section" shall mean the unit of the Department that administers the provisions of the UPA.

History

• Source: Amended at 33 Ill. Reg. 9129, effective July 6, 2009

14 Ill. Adm. Code 166.25 Applicability

The provisions of this Part shall be applicable to all limited liability partnerships that are, will be or may become subject to the provisions of the UPA.

History

• Source: Amended at 33 Ill. Reg. 9129, effective July 6, 2009

14 Ill. Adm. Code 166.30 Filing Location

a) All documents required to be filed with the Secretary of State pursuant to the UPA shall be filed with the Department.

b) Documents submitted for filing in Springfield, the Department's headquarters, shall be filed at the following address:

Department of Business Services

Uniform Partnership Act Section

Room 357, Howlett Building

Springfield, Illinois 62756

c) Documents submitted by mail for filing should be sent to the Department's Springfield office.

14 Ill. Adm. Code 166.35 Business Hours

The Department of Business Services business hours are 8:00 a.m. to 4:30 p.m. in Springfield, Monday through Friday, except holidays.

Chapter I Secretary of State

Part 166 Uniform Partnership Act (1997)

14 Ill. Adm. Code 166.40 Filing Requirements

a) All entities, other than natural persons, serving as partners in limited liability partnerships or foreign limited liability partnerships must provide evidence of existence upon request of the Secretary of State. The evidence shall be provided in the formats set forth in this subsection (a). All other entities not specifically addressed shall provide proof of existence in the manner prescribed by this subsection that most appropriately applies to their entity format.

1. Corporations, limited liability companies, limited partnerships and limited liability partnerships serving as partners in limited liability partnerships or foreign limited liability partnerships shall provide either a Certificate of Existence or a Certificate of Good Standing duly authenticated by the proper officer from the state or country of domicile.

2. General partnerships serving as partners in limited liability partnerships or foreign limited liability partnerships shall provide a statement of information that includes the names and addresses of all the partners, the state of formation, the date of formation, and the address of the records office. The statement shall be sworn to, dated and executed by one of the general partners.

3. Trusts serving as partners in limited liability partnerships shall provide evidence of existence, including the name of the trust, the date of its creation, the names of all trustees, the state of location of the trust, and that the trust is currently in full force and effect. The statement shall be dated and executed by a trustee.

4. Estates serving as partners in limited liability partnerships shall provide evidence of existence by a copy of the relevant court order, dated and executed.

b) When filing its statement of foreign qualification pursuant to UPA Section 1103, a foreign limited partnership shall submit an original certificate of existence or good standing issued within the preceding 30 days by its state of jurisdiction or formation.

c) Documents transmitted for filing electronically must include the name of the person making the submission. The inclusion shall constitute the affirmation or acknowledgement of the person, under penalties of perjury, that the instrument is his or her act and deed or the act and deed of the limited liability partnership, as the case may be, and that the facts stated in the submission are true. Compliance with this Section shall satisfy the signature requirements of UPA Section 105.

History

• Source: Amended at 35 Ill. Reg. 8226, effective May 13, 2011

14 Ill. Adm. Code 166.45 Additional Requirements for Forms

a) All documents required by this Act to be filed in the Office of the Secretary of State shall be made on the most recent version of forms prescribed and furnished by the Secretary of State. The Secretary of State employs the following forms:

1. Form UPA 303 Statement of Partnership Authority (see 805 ILCS 206/303);

2. Form UPA 304 Statement of Denial (see 805 ILCS 206/304);

3. Form UPA 704 Statement of Dissociation (see 805 ILCS 206/704);

4. Form UPA 805 Statement of Dissolution of Statement of Partnership Authority (see 805 ILCS 206/805);

5. Form UPA 907 LLP/LP Statement of Merger (see 805 ILCS 206/907);

6. Form UPA 908 LLP/LLC Statement of Merger (see 805 ILCS 206/908);

7. Form UPA 1001 Limited Liability Partnership Statement of Qualification (see 805 ILCS 206/1001);

8. Form UPA 1001(e)/1101(f) Statement of Withdrawal (see 805 ILCS 206/1001(e) and 1102(f));

9. Form UPA 1001(h)/1102(g) Statement of Amendment (see 805 ILCS 206/1001(h) and 1102(g));

10. Form UPA 1003(D) Application for Renewal of Domestic Limited Liability Partnership (see 805 ILCS 206/1003);

11. Form UPA 1003(F) Renewal Statement of Foreign Limited Liability Partnership (see 805 ILCS 206/1003);

12. Form UPA 1004 Reinstatement of Limited Liability Partnership Status (see 805 ILCS 206/1004);

13. Form UPA 1005 Resignation of Agent for Service of Process upon a Limited Liability Partnership (see 805 ILCS 206/1005);

14. Form UPA 1102 Limited Liability Partnership Statement of Foreign Qualification (see 805 ILCS 206/1102);

15. Form UPA 1103 Affidavit of Compliance for Service on Secretary of State (see 805 ILCS 206/1103(e) and 14 Ill. Adm. Code 166.70);

16. Form UPA 1106 Resignation of Agent for Service of Process upon a Foreign Limited Liability Partnership (see ILCS 206/1106).

b) Fees for the above forms can be found at 805 ILCS 206/108.

c) All documents filed with the Department shall contain the federal employer identification number of the limited liability partnership with respect to which the document was filed.

d) All documents and attachments submitted by a limited liability partnership shall be typewritten on 8½ x 11" white paper.

History

• Source: Amended at 37 Ill. Reg. 12568, effective July 17, 2013

Chapter I Secretary of State

Part 166 Uniform Partnership Act (1997)

14 Ill. Adm. Code 166.50 Renewal Reports

a) The Secretary of State shall renew the registration of any limited liability partnership upon payment of the required fee, providing the submission of the renewal statement required by Section 1003 of the UPA is postmarked no later than the expiration date.

b) A renewal statement must be filed pursuant to Section 1003 of the UPA. Timely submitted renewals that require revisions or changes shall be granted a 30 day extension.

14 Ill. Adm. Code 166.55 Payment of Fees

All payments of fees with respect to the filing of statements of qualification (domestic) and statements of foreign qualification shall be by money order, certified check, cashier's check, or a check drawn on the account of an Illinois licensed attorney or certified public accountant, made payable to the "Secretary of State", or by a credit card, a debit card or an electronic funds transfer. All other payments may be made by entity check, payable to the "Secretary or State". Any check that is returned by the bank to the Secretary of State's Office for any reason will immediately void the transaction for which it was intended and the Secretary of State shall treat the filing event as never occurring.

14 Ill. Adm. Code 166.60 Sale of Information

a) Information concerning any limited liability partnership shall be available to the public from the Department of Business Services upon written request, or by telephone or in person, or, if technology is available, on line through interactive computer.

b) Information in the form of an abstract of record concerning the limited liability partnerships on file with the Department shall be printed from the computer file of the Department and shall consist of the limited liability partnership name, its date of qualification, its registered agent, the address of the office at which the records are maintained, the foreign jurisdiction where formed (if applicable), the date of filing with the Department, and the file number assigned by the Department. The fee for each abstract of record shall be $25.

c) Copies of all documents pertaining to limited liability partnerships on file with the Department are available:

1. upon written request and payment of the required fee.

2. by telephone request with advance payment using a credit card, a debit card or an electronic funds transfer.

3. in person and with payment of the required fee at the Department's address set forth in Section 166.30.

d) Computer connections by non-Department users:

1. Computer terminal connections to the Secretary's computer may be provided to other State agencies. This service may be made available at no charge so long as the requesting agency incurs all costs and so long as the service does not substantially increase costs or network traffic on the Secretary's computer.

2. Computer terminal connections may be allowed to commercial users provided that all costs are borne by the commercial user. The allowance of computer terminal connections shall be contingent upon the best interests of the Office of the Secretary of State, cost-effectiveness of providing the information through computer terminal connections as opposed to other methods, and other factors that may impede the operations of the Office of the Secretary of State. This service will be suspended at any time should the connection interfere with the Secretary's internal work schedules and processing.

3. Fees for information supplied by means of computer connections between the Secretary of State's computers and those of any other agency, corporation, or person may be paid on an annual basis for all information delivered during that year, as determined by the Secretary and the agency or person to be the economically simplest way of billing. The proper fee shall be determined by negotiation between the agency or commercial user and the Director based upon telephone line charges, rental or purchase fees for terminals, and any other appropriate factors, such as the statutory fees set forth at 805 ILCS 206/108 for certificates of information, and the requirements of this Part.

4. No users may print any list or abstract from the computer connection. Lists of UPA information including the names and information for all limited liability partnerships may only be purchased pursuant to the provisions of this Part. Computer connections are to be used only to look up information. No changes on the Department's UPA files may be made by any computer connection user.

e) Terms and conditions for computer maintained UPA information:

1. The information supplied by the Department to other agencies, commercial users, or other persons shall be in the abstract format only, as specified in subsection (b) of this Section.

2. The fee for the entire file of current and expired limited liability partnerships shall be determined in accordance with the provisions of subsection (d)(3) of this Section. If the file is purchased on computer disc or tape, the purchaser shall supply the Department with computer disc, discs, tape or tapes, compatible with the Secretary's computer equipment, on to which discs or tapes the information shall be transferred.

3. All purchase requests shall be submitted in writing to the Director. Payment shall be made to the Department before delivery of the information to the purchaser. No refunds will be made after the request is approved by the Director. Payment shall be made by check or money order payable to the "Secretary of State", or by credit or debit card.

4. All commercial or other type purchasers shall sign a written agreement setting forth the terms and conditions required by Illinois law, and as may be deemed appropriate after negotiation between the Department and the purchaser.

5. The commercial purchaser shall not resell to any other purchaser the information obtained from the Department in the same form or format in which it is obtained from the Department. Resale of information in the same form or format shall result in cancellation of access to information by the Department. The commercial purchaser may sell the information to the subscribers of its computer or business information services only as information specific to an individual limited partnership, as needed by the subscriber.

History

• Source: Amended at 33 Ill. Reg. 9129, effective July 6, 2009

14 Ill. Adm. Code 166.65 Refunds

Refunds for overpayments exceeding $5 shall be paid by the Department upon request.

14 Ill. Adm. Code 166.70 Service of Process

a) For the purposes of the UPA, the procedures set forth in this Section shall apply.

b) Any process, notice or demand to be served under this Part shall be made upon the Secretary, the Director, or any employee of the Department designated by the Director to accept such service for him or her, in the following manner:

1. service shall comply with the provisions of Part 2 of the Code of Civil Procedure [735 ILCS 5/Art. II, Part 2], the Federal Rules of Civil Procedure (FRCP Rule 4), or any administrative rules of service, as may be appropriate.

2. an affidavit of compliance must be appended to the process, notice or demand to be served, containing the information described in subsection (c), shall be signed by the person instituting the action, suit or proceeding or by an attorney of record, and the signature of the affiant, without more, shall constitute the affirmation or acknowledgement, under penalties of perjury, that the affidavit is the act or deed of the affiant and that the facts stated in the affidavit are true.

c) The affidavit of compliance shall state:

1. the title of the court or administrative agency.

2. the title of the case, showing the names of the first named plaintiff and the first named defendant.

3. the number of the case.

4. the title of the instrument.

5. the title of the limited liability partnership to be served.

6. the basis for service on the Secretary.

7. the address to which the instrument is to be sent (by registered or certified mail) by the affiant.

8. the name, address and telephone number of the attorney of record for the plaintiff or other affiant.

d) Service of any process, notice or demand made under this Part shall be made with the Department at the address set forth in Section 166.30.

e) The Department shall maintain original file copies, which shall be in paper form or an acceptable archival medium, and originals may be discarded upon verification of archival medium (microfilm or electronic imaging) and upon approval by the State Records Commission (see 5 ILCS 160/16).

f) The fee for the service provided by the Department under subsection (e) shall be $25.

14 Ill. Adm. Code 166.75 Interrogatories

a) The Secretary of State may propound to any limited liability partnership subject to the provisions of the UPA, and to any partner, such interrogatories as may be reasonably necessary and proper to enable the Secretary to ascertain whether the limited liability partnership has complied with all the applicable provisions of the UPA and this Part. The interrogatories shall be answered within 30 days after mailing, or within such additional time as shall be fixed by the Secretary, and the answers shall be full and complete, and shall be made in writing and under oath. If the interrogatories are directed to a person, they shall be answered by him or her; if directed to a limited liability partnership, they shall be answered by the partners. The Secretary need not file any document to which the interrogatories relate until the interrogatories are answered and not then if the answers disclose that the document is not in conformity with the UPA and this Part. The Secretary of State shall certify to the Attorney General, for such action as the Attorney General may deem appropriate, all interrogatories and answers that disclose a violation of the UPA or this Part.

b) Interrogatories propounded by the Secretary of State and the answers shall not be open to public inspection, nor shall the Secretary disclose any facts or information obtained, except insofar as official duty may require them to be made public or in the event the interrogatories or the answers are required for evidence in any criminal proceeding or in any other action by the State.

14 Ill. Adm. Code 166.80 Right to Counsel

a) Hearing procedures will be governed by 14 Ill. Adm. Code 150, Subpart A.

b) Any party may appear and be heard through an attorney at law licensed to practice in the State of Illinois.

1. Attorneys admitted to practice in states other than the State of Illinois may appear and be heard upon the attorney's verbal representation of written documentation as to the attorney's admittance, pursuant to an order pro hac vice, entered by a judge of the circuit court of the county in which the hearing is conducted, as provided in Supreme Court Rule 707.

2. A natural person may appear and be heard on his or her own behalf.

3. A corporation, limited liability company, association or partnership may appear and present evidence by any bonafide officer, employee or representative.

c) Only an attorney properly licensed shall represent anyone else in any hearing in any matter involving the exercise of legal skill or knowledge. The standards of conduct shall be the same as before the Courts of the State of Illinois.

History

• Source: Amended at 33 Ill. Reg. 9129, effective July 6, 2009

Chapter I Secretary of State

Part 166 Uniform Partnership Act (1997)

14 Ill. Adm. Code 166.85 Extension of Filing Deadlines

Filing of Organizational Documents, Annual Reports, and Other Business Entity Materials

a) All organizational documents, annual reports, and other business entity materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes shall be filed with the Business Services Department, Howlett Building, Room 350, Springfield IL 62756 or 69 West Washington, Suite 1240, Chicago IL 60602.

b) Pursuant to the powers vested in him by Section 5(7) of the Secretary of State Act, the Secretary of State hereby extends for the duration of the disaster proclaimed by the Governor in Gubernatorial Proclamation number 2020-038, issued on March 9, 2020, as extended by subsequent proclamations, and for a period of 90 days thereafter, the filing deadlines for materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes and that were due to be filed on or after March 17, 2020. This extension period may be rescinded by the Secretary of State through the adoption of an emergency rule. Any fees for late filings of materials shall be waived for materials subject to this Section.

c) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 1209 of the Uniform Partnership Act that require the Secretary of State to provide expedited services upon request are suspended for the duration of the disaster proclaimed in the Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process the expedited documents within 24 hours or as soon as possible thereafter. For purposes of filing dates, the date the document was submitted for filing will be the document's filing date.

History

• Source: Added at 44 Ill. Reg. 14030, effective August 17, 2020

Part 171 Uniform Limited Partnership Act (2001)

14 Ill. Adm. Code 171.10 Prohibited Terms in Title

The name of a limited partnership or limited liability limited partnership or the assumed name of a limited partnership or limited liability limited partnership shall not contain the terms "Corporation", "Corp.", "Incorporated", "Inc.", "Company", or "Co.".

History

• Source: Amended at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.15 Improper Names

The name of a limited partnership or limited liability limited partnership or the assumed name of a limited partnership or limited liability limited partnership shall not contain any word or words that create a connotation that is offensive to good taste. By way of example only, prohibited words and phrases include, but are not limited to, profanity, those that are likely to be considered slurs based on race, ethnicity, sexual orientation or gender, or those that otherwise defame a person or group of persons.

History

• Source: Amended at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.20 Assumed Names

a) A limited partnership or limited liability limited partnership may adopt, change, renew or cancel an assumed name by filing an application with the Department and paying the fee stated at Section 1302(b)(5) of the ULPA. The application shall contain the name of the limited partnership or limited liability limited partnership, the file number, and the assumed name to be adopted, changed, renewed, or cancelled.

b) The application to adopt, change, or cancel an assumed name shall be on a separate form from the application to renew an assumed name.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.25 Definitions

In addition to the definitions contained in Section 102 of the Uniform Limited Partnership Act (2001) the following definitions shall apply:

"Abstracts of Limited Partnerships" shall consist of a hard copy print-out of the information shown on the computer records of the Department of Business Services of the Office of the Secretary of State.

"Department" shall mean the Department of Business Services of the Office of the Secretary of State.

"Director" shall mean the Director of the Department of Business Services.

"Interrogatories" shall mean a written request for information to ascertain whether a limited partnership or a limited liability limited partnership has complied with the provisions of the ULPA.

"Secretary" shall mean the Secretary of State of Illinois.

"ULPA" shall mean the Uniform Limited Partnership Act (2001) [805 ILCS 215].

"ULPA Section" shall mean the unit of the Department that administers the ULPA.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

Chapter I Secretary of State

Part 171 Uniform Limited Partnership Act (2001)

14 Ill. Adm. Code 171.30 Applicability

The provisions of this Part shall be applicable to all limited partnerships and limited liability limited partnerships that are or that will or may become subject to the provisions of the Uniform Limited Partnership Act (2001).

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.35 Filing Location

a) All documents required to be filed with the Secretary of State pursuant to the ULPA shall be filed with the Department.

b) Documents submitted for filing in Springfield, the Department's headquarters, shall be filed at the following address:

Department of Business Services

Limited Partnership Section

Room 357, Howlett Building

Springfield, Illinois 62756

c) Documents submitted by mail for filing should be sent to the Department's Springfield office.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.40 Business Hours

The Department of Business Services business hours are 8:00 a.m. to 4:30 p.m. in Springfield, Monday through Friday, except holidays.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.45 Filing Requirements

a) All entities, other than natural persons, serving as general partners in limited partnerships must provide evidence of existence upon request of the Secretary of State. The evidence shall be provided in the formats set forth in this subsection (a). All other entities not specifically addressed shall provide proof of existence in the manner prescribed by this subsection that most appropriately applies to their entity format.

1. Corporations, limited liability companies, limited partnerships and limited liability limited partnerships serving as general partners in limited partnerships or foreign limited partnerships shall provide either a Certificate of Existence or a Certificate of Good Standing duly authenticated by the proper officer from the state or country of domicile.

2. General partnerships serving as general partners in limited partnerships shall provide a statement of information that includes the names of the partnership, the state of formation, the country of formation, the date of formation, the address at which the records of the partnership are kept, and the names and addresses of all partners. The statement shall be sworn to, dated and executed by one of the general partners.

3. Trusts serving as general partners in limited partnerships shall provide to the Secretary of State evidence of existence, including the name of the trust, the date of its creation, the name of all trustees, the state of location of the trust, and that the trust is currently in full force and effect. The statement shall be dated and executed by a trustee.

4. Estates serving as general partners in limited partnerships shall provide the Secretary of State evidence of existence by a copy of the relevant court order, dated and executed.

b) When filing its admission to transact business pursuant to ULPA Section 901, any foreign limited partnership shall submit an original certificate of existence issued by its state or jurisdiction of formation within the preceding 30 days. The Department shall reject any proposed filing that does not contain the certificate of existence or good standing by the state or jurisdiction of formation.

c) Documents transmitted for filing electronically must include the name of the person making the submission. The inclusion shall constitute the affirmation or acknowledgement of the person, under penalties of perjury, that the instrument is his or her act and deed or the act and deed of the limited liability company, as the case may be, and that the facts stated in the submission are true. Compliance with this Section shall satisfy the signature requirements of ULPA Section 204, which shall otherwise apply.

History

• Source: Amended at 35 Ill. Reg. 8233, effective May 13, 2011

14 Ill. Adm. Code 171.50 Additional Requirements for Forms

a) All documents required by the ULPA to be filed in the Office of the Secretary of State shall be made on the most recent version of forms prescribed and furnished by the Secretary of State. Fees for the forms can be found at 805 ILCS 215/1302. The Secretary of State employs the following forms:

1. Form LP 108.5 Application to Adopt, Change or Cancel an Assumed Name (see 805 ILCS 215/108.5);

2. Form LP 108.5(e) Assumed Name Renewal Application (see 805 ILCS 215/108.5(e));

3. Form LP 109 Application to Reserve Name, Cancellation of Reserved Name, Transfer of Reserved Name (see 805 ILCS 215/109);

4. Form LP 115 Change of Designated Office or Agent for Service of Process (see 805 ILCS 215/115);

5. Form LP 116 Resignation of Agent for Service of Process (see 805 ILCS 215/116);

6. Form LP 117 Affidavit of Compliance for Service on Secretary of State (see 805 ILCS 215/117);

7. Form LP 201 Certificate of Limited Partnership (see 805 ILCS 215/201);

8. Form LP 202 Amendment to the Certificate of Limited Partnership (see 805 ILCS 215/202);

9. Form LP 202-RECE Restated Certificate of Limited Partnership (see 805 ILCS 215/202);

10. Form LP 203 Statement of Termination of the Certificate of Limited Partnership (see 805 ILCS 215/203);

11. Form LP 207 Statement of Correction (see 805 ILCS 215/207);

12. Form LP 210 Annual Report (see 805 ILCS 215/210);

13. Form LP 810/906.5 Application for Reinstatement (see 805 ILCS 215/810);

14. Form LP 902 Application for Certificate of Authority (see 805 ILCS 215/902);

15. Form LP 902.5 Amended Application for Certificate of Authority (see 805 ILCS 215/902);

16. Form LP 906.5 Reinstatement Following Revocation (see 805 ILCS 215/906.5);

17. Form LP 907 Cancellation of Certificate of Authority (see 805 ILCS 215/907);

18. Form LP 1104 Articles of Conversion (see 805 ILCS 215/1104);

19. Form LP 1108 Articles of Merger (see 805 ILCS 215/1108).

b) All documents filed with the Department, except the original certificates of limited partnership and applications for admission of a foreign limited partnership shall contain the file number assigned to the partnership by the Department.

c) All documents and attachments submitted by a limited partnership or limited liability partnership shall be typewritten on 8½ x 11" white paper.

History

• Source: Amended at 37 Ill. Reg. 12573, effective July 17, 2013

Chapter I Secretary of State

Part 171 Uniform Limited Partnership Act (2001)

14 Ill. Adm. Code 171.55 Payment of Fees

All payments of fees with respect to the filing of certificates of limited partnership or limited liability limited partnership (domestic) and certificates of admission (foreign) shall be by money order, certified check, cashier's check, or a check drawn on the account of an Illinois licensed attorney or certified public accountant, made payable to the "Secretary of State", or by a credit card, a debit card or an electronic fund transfer. All other payments may be made by entity check, payable to the "Secretary or State". Any check that is returned by the bank to the Secretary of State's Office for any reason will immediately void the transaction for which it was intended and the Secretary of State shall treat the filing event as never occurring.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.60 Sale of Information

a) Information concerning any limited partnership or limited liability limited partnership shall be available to the public from the Department of Business Services upon written request, or by telephone or in person, or, if technology is available, on line through interactive computer.

b) Information in the form of an abstract of record concerning the limited partnerships or limited liability limited partnerships on file with the Department shall be printed from the computer file of the Department, and shall consist of the limited partnership or limited liability limited partnership name, its date of formation, any assumed name, its registered agent, the address of the office at which the records are maintained, the foreign jurisdiction where formed (if applicable), the date of filing with the Department, and the file number assigned by the Department. The fee for each abstract of record requested on a routine basis shall be $25. If expedited service is requested pursuant to Section 1308 of the ULPA, an additional $20 will be required.

c) Copies and fees:

1. Copies of all documents pertaining to limited partnerships or limited liability limited partnerships on file with the Department are available:

A) upon written request and payment of the required fee;

B) by telephone request with advance payment using a credit card, a debit card or an electronic funds transfer;

C) in person and with payment of the required fee at the Department's address as set forth in Section 171.35.

2. The fee for copies and certification of any documents is established in Section 1302 of the ULPA, and the expedited fee, if applicable, for copies is established in Section 1308 of the ULPA.

d) Computer connections by non-Department users:

1. Computer terminal connections to the Secretary's computer may be provided to other State agencies. This service may be made available at no charge so long as the requesting agency incurs all costs and so long as the service does not substantially increase costs or network traffic on the Secretary's computer.

2. Computer terminal connection may be allowed to commercial users provided that all costs are borne by the commercial user. The allowance of computer terminal connections shall be contingent upon the best interests of the Office of the Secretary of State, cost-effectiveness of providing the information through computer terminal connections as opposed to other methods, and other factors that may impede the operations of the Office of the Secretary of State. This service will be suspended at any time should the connection interfere with the Secretary's internal work schedules and processing.

3. Fees for information supplied by means of computer connections between the Secretary of State's computers and those of any other agency, corporation, or person may be paid on an annual basis for all information delivered during that year, as determined by the Secretary and the agency or person to be the economically simplest way of billing. The proper fee shall be determined by negotiation between the agency or commercial user and the Director based upon telephone line charges, rental or purchase fees for terminals, and any other appropriate factors, such as the statutory fees set forth at Sections 1302 and 1308 of the ULPA, for certificates of information and requirements of this Part.

4. No users may print any list or abstract from the computer connection. Lists of ULPA information including the names and information concerning all limited partnerships may only be purchased pursuant to the provisions of this Part. Computer connections are to be used only to look up information. No changes on the Department's ULPA files may be made by any computer connection user.

e) Terms and conditions for computer maintained ULPA information:

1. The information supplied by the Department to other agencies, commercial users, or other persons, shall be in the abstract format only, as specified in subsection (b) of this Section.

2. The fee for the entire file of current and dissolved limited partnerships and assumed names shall be determined in accordance with the provisions of subsection (d)(3) of this Section. If the file is purchased on computer disc or tape, the purchaser shall supply the Department with computer discs or tapes compatible with the Secretary's computer equipment on to which the information shall be transferred.

3. All purchase requests shall be submitted in writing to the Director. Payment shall be made to the Department before delivery of the information to the purchaser. Payment shall be made by check or money order payable to the "Secretary of State" or by credit or debit card.

4. All commercial or other type purchasers shall sign a written agreement setting forth the terms and conditions required by Illinois law, and as may be deemed appropriate after negotiation between the Department and the purchaser.

5. The commercial purchaser shall not resell to any other purchaser the information obtained from the Department in the same form or format in which it is obtained from the Department. Resale of information in the same form or format shall result in cancellation of access to information by the Department. The commercial purchaser may sell the information to the subscribers of its computer or business information services only on the basis of each limited partnership as needed by the subscriber.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.65 Refunds

Refunds for overpayments exceeding $5 shall be paid by the Department upon request.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.70 Service of Process

a) For the purposes of the ULPA, the procedures set forth in this Section shall apply.

b) Any process, notice or demand to be served under this Part shall be made upon the Secretary, or the Director, or any employee of the Department designated by the Director to accept such service for him or her, in the following manner:

1. Service shall comply with the provisions of Part 2 of the Code of Civil Procedure [735 ILCS 5/Art. II, Part 2], the Federal Rules of Civil Procedure (FRCP Rule 4), or any administrative rules of service, as may be appropriate.

2. The affidavit of compliance required by Section 117 of the ULPA to be appended to the process, notice or demand to be served, containing the information described in subsection (b), shall be signed by the person instituting the action, suit or proceeding or by an attorney of record, and the signature of the affiant, without more, shall constitute the affirmation or acknowledgement, under penalties of perjury, that the affidavit is the act or deed of the affiant and that the facts stated in the affidavit are true.

c) The affidavit of compliance shall state:

1. the title of the court or administrative agency;

2. the title of the case, showing the names of the first named plaintiff and the first named defendant;

3. the number of the case;

4. the title of the instrument;

5. the title of the limited partnership to be served;

6. the basis for service on the Secretary;

7. the address to which the instrument is to be sent (by registered or certified mail) by the affiant;

8. the name, address and telephone number of the attorney of record for the plaintiff or other affiant.

d) Service of any process, notice or demand made under this Part shall be made with the Department at the address set forth in Section 171.35.

e) At the time of any service under this Part, there shall be paid a fee of $50 (see Section 1302 of the ULPA), payable by check or money order to the "Secretary of State". Each process, notice or demand shall be submitted with separate payment.

f) The Department shall maintain original file copies, which shall be in paper form or an acceptable archival medium, and originals may be discarded upon verification of archival medium (microfilm or electronic imaging) and upon approval by the State Records Commission (see 5 ILCS 160/16).

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.75 Interrogatories

a) The Secretary of State may propound to any limited partnership or limited liability limited partnership subject to the provisions of the ULPA, and to any partner, such interrogatories as may be reasonably necessary and proper to enable the Secretary to ascertain whether the limited partnership or limited liability limited partnership has complied with all the applicable provisions of the ULPA and this Part. The interrogatories shall be answered within 30 days after their mailing, or within such additional time as shall be fixed by the Secretary, and the answers shall be full and complete, and shall be made in writing and under oath. If the interrogatories are directed to a person, they shall be answered by him or her. If directed to a limited partnership or limited liability limited partnership, they shall be answered by the general partners or limited partners. The Secretary need not file any document to which the interrogatories relate until the interrogatories are answered as required by this subsection and not then if the answers disclose that the document is not in conformity with the provisions of the ULPA and this Part. The Secretary of State shall certify to the Attorney General, for such action as the Attorney General may deem appropriate, all interrogatories and answers that disclose a violation of any of the provisions of the ULPA and this Part.

b) Interrogatories propounded by the Secretary of State and the answers to those interrogatories shall not be open to public inspection, nor shall the Secretary disclose any facts or information obtained from interrogatories or answers, except insofar as official duty may require them to be made public or in the event the interrogatories or the answers are required for evidence in any criminal proceeding or in any other action by the State.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.80 Right to Counsel

a) Hearing procedures will be governed by 14 Ill. Adm. Code 150, Subpart A.

b) Any party may appear and be heard through an attorney at law licensed to practice in the State of Illinois.

1. Attorneys admitted to practice in states other than the State of Illinois may appear and be heard upon the attorney's verbal representation or written documentation as to the attorney's admittance, pursuant to an order pro hac vice, entered by a judge of the circuit court of the county in which the hearing is conducted, as provided in Supreme Court Rule 707.

2. A natural person may appear and be heard on his or her own behalf.

3. A corporation, limited liability company, association or partnership may appear and present evidence by any bona fide officer, employee or representative.

c) Only an attorney properly licensed shall represent anyone else in any hearing in any matter involving the exercise of legal skill or knowledge. The standards of conduct shall be the same as before the Courts of the State of Illinois.

History

• Source: Added at 32 Ill. Reg. 346, effective January 7, 2008

14 Ill. Adm. Code 171.85 New Practices and Technologies

The Secretary of State is authorized to accept and file electronically submitted ULPA documents and to store, view and retrieve all ULPA documents and correspondence by means of an electronic storage system.

History

• Source: Added at 32 Ill. Reg. 17971, effective December 1, 2008

Chapter I Secretary of State

Part 171 Uniform Limited Partnership Act (2001)

14 Ill. Adm. Code 171.90 Extension of Filing Deadlines

Filing of Organizational Documents, Annual Reports, and Other Business Entity Materials

a) All organizational documents, annual reports, and other business entity materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes shall be filed with the Business Services Department, Howlett Building, Room 350, Springfield IL 62756 or 69 West Washington, Suite 1240, Chicago IL 60602.

b) Pursuant to the powers vested in him by Section 5(7) of the Secretary of State Act, the Secretary of State hereby extends for the duration of the disaster proclaimed by the Governor in Gubernatorial Proclamation number 2020-038, issued on March 9, 2020, as extended by subsequent proclamations, and for a period of 90 days thereafter, the filing deadlines for materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes and that were due to be filed on or after March 17, 2020. This extension period may be rescinded by the Secretary of State through the adoption of an emergency rule.

c) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 1309 of the Uniform Limited Partnership Act (ULPA) that require the Secretary of State to, within 10 days after any of the documents subject to Section 1309 are delivered to the Secretary for filing, give written notice of his or her disapproval of the documents are suspended for the duration of the disaster proclaimed in Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process these documents as expeditiously as possible.

d) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 1308 of the ULPA that require the Secretary of State to provide expedited services upon request are suspended for the duration of the disaster proclaimed in the Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process the expedited documents within 24 hours or as soon as possible thereafter. For purposes of filing dates, the date the document was submitted for filing will be the document's filing date.

History

• Source: Amended at 45 Ill. Reg. 7157, effective May 28, 2021

Part 175 Illinois Union Label Act

14 Ill. Adm. Code 175.10 Filing with the Secretary of State

All documents required to be filed with the Secretary of State for the Illinois Union Label Act (P.A. 84-517, effective January 1, 1986) shall be filed with the Department of Business Services, Room 300, Centennial Building, Springfield, Illinois 62756, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday, excluding holidays.

History

• Source: Amended at 16 Ill. Reg. 4058, effective March 6, 1992

14 Ill. Adm. Code 175.20 Requirements for Filing

a) The ten dollar ($10.00) registration fee required by P.A. 84-517 shall be payable in cash, by money order, certified check, union check, or personal check. No application filed pursuant to P.A. 84-517 shall be accepted and filed without the payment of the fee.

b) The application form to be used to register a union label shall be the same as that used to register a trademark, (Ill. Rev. Stat. 1983, ch. 140, par. 1 et seq.) and shall include a description of the product goods to which the union label trademark or form of advertisement is affixed or is applicable.

c) The genuine copy of the label, trademark, or form of advertisement shall be a printed or photocopied replica of the union label, trademark, or form of advertisement, not exceeding three (3) inches on any side.

d) The registration statements filed hereunder shall be available for inspection and copying during the normal work hours.

Part 176 Notary Public Records

14 Ill. Adm. Code 176.10 Definitions

For purposes of this Section, all words and terms shall have the same meanings as set forth in 5 ILCS 312/1-104:

"Act" means The Illinois Notary Public Act. [5 ILCS 312]

"Biometric data" or "biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry. Biometric identifiers do not include writing samples, written signatures, photographs, human biological samples used for valid scientific testing or screening, demographic data, tattoo descriptions, or physical descriptions such as height, weight, hair color, or eye color. Biometric identifiers do not include donated organs, tissues, or parts as defined in the Illinois Anatomical Gift Act or blood or serum stored on behalf of recipients or potential recipients of living or cadaveric transplants and obtained or stored by a federally designated organ procurement agency. Biometric identifiers do not include biological materials regulated under the Genetic Information Privacy Act. Biometric identifiers do not include information captured from a patient in a health care setting or information collected, used, or stored for health care treatment, payment or operations under the federal Health Insurance Portability and Accountability Act of 1996. Biometric identifiers do not include an X-ray, roentgen process, computed tomography, MRI, PET scan, mammography, or other image or film of the human anatomy used to diagnose, prognose, or treat an illness or other medical condition or to further validate scientific testing or screening. [740 ILCS 14/10]

"Biometric information" means any information, regardless of how it is captured, converted, stored, or shared, based on an individual’s biometric identifier used to identify an individual. Biometric information does not include information derived from items or procedures excluded under the definition of biometric identifiers. [740 ILCS 14/10]

"Notary public" or "notary" means an individual commissioned to perform notarial acts. [5 ILCS 312/1-104]

"Personal information" or "personally identifiable information" means either of the following:

An individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted or redacted or are encrypted or redacted but the keys to unencrypt or unredact or otherwise read the name or data elements have been acquired without authorization through the breach of security:

Social Security number;

Driver's license number or State identification card number;

Account number or credit or debit card number, or an account number or credit card number in combination with any required security code, access code, or password that would permit access to an individual's financial account;

Medical information;

Health insurance information;

Unique biometric data means data generated from measurements or technical analysis of human body characteristics used by the owner or licensee to authenticate an individual, such as a fingerprint, retina or iris image, or other unique physical representation or digital representation of biometric data. [815 ILCS 530/5]

User name or email address means information provided in combination with a password or security question and answer that would permit access to an online account when either the user name or email address or password or security question and answer are not encrypted or redacted or are encrypted or redacted but the keys to unencrypt or unredact or otherwise read the data elements have been obtained through the breach of security.

"Personal information" does not include publicly available information that is lawfully made available to the general public from federal, State, or local government records. [815 ILCS 530/5]

"Physical location" means real property, non-movable structure, brick and mortar building affixed to a permanent location.

"Secretary" – means the Illinois Secretary of State.

"X.509" means the standard format of a public key certificate derived from the International Telecommunication Union, "Series X: Data Networks, Open System Communications and Security Directory" (https://www.itu.int/rec/T-REC-X.509-201910-I) (2019) (no later editions or amendments included).

History

• Source: Amended at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.11 Record Contents, Request Procedures, and Fees

a) The Secretary maintains Illinois Notary Public appointment records in its computer database. The computer records contain the notary's name, address, city, state, zip code, county, commission number, and the date the commission took effect.

b) All requests for this information shall be in writing, signed before a notary by the person requesting the information. The request shall include the person's address, the purpose of the request, the specific information requested, the name and address of any organization represented by the requestor, and the position of the requestor in the organization. Approved requests shall be formalized in a written agreement.

c) All requests shall be accompanied by the appropriate fee and sent to the following address: Office of the Secretary of State, Index Department, 111 E. Monroe Street, Springfield, Illinois 62756.

d) A list of all current notaries or all notaries in a particular county will be furnished for a fee of $3,600. Weekly update lists will be furnished for $1,000 per year paid in advance. The fee for a list of notaries commissioned during a specific calendar year is $900 and the fee for a list of notaries commissioned during a specific month of a specific year is $75.

e) State, federal, and local law enforcement agencies will receive information at no charge if the information is needed for an official investigation. All other governmental agencies, including county clerks, will receive a list of all current notaries for a fee of $500 if requested for governmental purposes; weekly updates will be furnished for $1,000 per year paid in advance. A list of all notaries in one particular county will be furnished for a fee of $200 and weekly updates will be furnished for $500 per year paid in advance.

f) The fees shall be paid by cashier's check, money order, certified check, or a check drawn on the account of the business or government agency making the request. Once the information is made available to the requestor, then no refunds will be made.

g) Record layouts and field definitions will be supplied by the Secretary with the information.

History

• Source: Amended at 45 Ill. Reg. 6274, effective April 28, 2021

14 Ill. Adm. Code 176.10 Definitions

For purposes of this Section, all words and terms shall have the same meanings as set forth in 5 ILCS 312/1-104:

"Act" means The Illinois Notary Public Act. [5 ILCS 312]

"ARDC" means the Illinois Attorney Registration and Discipline Commission.

"Biometric data" or "biometric identifier" means a retina or iris scan, fingerprint, voiceprint, or scan of hand or face geometry. Biometric identifiers do not include writing samples, written signatures, photographs, human biological samples used for valid scientific testing or screening, demographic data, tattoo descriptions, or physical descriptions such as height, weight, hair color, or eye color. Biometric identifiers do not include donated organs, tissues, or parts as defined in the Illinois Anatomical Gift Act or blood or serum stored on behalf of recipients or potential recipients of living or cadaveric transplants and obtained or stored by a federally designated organ procurement agency. Biometric identifiers do not include biological materials regulated under the Genetic Information Privacy Act. Biometric identifiers do not include information captured from a patient in a health care setting or information collected, used, or stored for health care treatment, payment or operations under the federal Health Insurance Portability and Accountability Act of 1996. Biometric identifiers do not include an X-ray, roentgen process, computed tomography, MRI, PET scan, mammography, or other image or film of the human anatomy used to diagnose, prognose, or treat an illness or other medical condition or to further validate scientific testing or screening. [740 ILCS 14/10]

"Biometric information" means any information, regardless of how it is captured, converted, stored, or shared, based on an individual's biometric identifier used to identify an individual. Biometric information does not include information derived from items or procedures excluded under the definition of biometric identifiers. [740 ILCS 14/10]

"Notary public" or "notary" means an individual commissioned to perform notarial acts. [5 ILCS 312/1-104]

"Personal information" or "personally identifiable information" means either of the following:

An individual's first name or first initial and last name in combination with any one or more of the following data elements, when either the name or the data elements are not encrypted or redacted or are encrypted or redacted but the keys to unencrypt or unredact or otherwise read the name or data elements have been acquired without authorization through the breach of security:

Social Security number;

Driver's license number or State identification card number;

Account number or credit or debit card number, or an account number or credit card number in combination with any required security code, access code, or password that would permit access to an individual's financial account;

Medical information;

Health insurance information;

Unique biometric data means data generated from measurements or technical analysis of human body characteristics used by the owner or licensee to authenticate an individual, such as a fingerprint, retina or iris image, or other unique physical representation or digital representation of biometric data. [815 ILCS 530/5]

User name or email address means information provided in combination with a password or security question and answer that would permit access to an online account when either the user name or email address or password or security question and answer are not encrypted or redacted or are encrypted or redacted but the keys to unencrypt or unredact or otherwise read the data elements have been obtained through the breach of security.

"Personal information" does not include publicly available information that is lawfully made available to the general public from federal, State, or local government records. [815 ILCS 530/5]

"Physical location" means real property, non-movable structure, brick and mortar building affixed to a permanent location.

"Secretary" – means the Illinois Secretary of State.

"X.509" means the standard format of a public key certificate derived from the International Telecommunication Union, "Series X: Data Networks, Open System Communications and Security Directory" (https://www.itu.int/rec/T-REC-X.509-201910-I) (2019) (no later editions or amendments included).

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.11 Record Contents, Request Procedures, and Fees

a) The Secretary maintains Illinois Notary Public appointment records in its computer database. The computer records contain the notary's name, address, city, state, zip code, county, commission number, and the date the commission took effect.

b) All requests for this information shall be in writing, signed before a notary by the person requesting the information. The request shall include the person's address, the purpose of the request, the specific information requested, the name and address of any organization represented by the requestor, and the position of the requestor in the organization. Approved requests shall be formalized in a written agreement.

c) All requests shall be accompanied by the appropriate fee and sent to the following address: Office of the Secretary of State, Index Department, 111 E. Monroe Street, Springfield, Illinois 62756.

d) A list of all current notaries or all notaries in a particular county will be furnished for a fee of $3,600. Weekly update lists will be furnished for $1,000 per year paid in advance. The fee for a list of notaries commissioned during a specific calendar year is $900 and the fee for a list of notaries commissioned during a specific month of a specific year is $75.

e) State, federal, and local law enforcement agencies will receive information at no charge if the information is needed for an official investigation. All other governmental agencies, including county clerks, will receive a list of all current notaries for a fee of $500 if requested for governmental purposes; weekly updates will be furnished for $1,000 per year paid in advance. A list of all notaries in one particular county will be furnished for a fee of $200 and weekly updates will be furnished for $500 per year paid in advance.

f) The fees shall be paid by cashier's check, money order, certified check, or a check drawn on the account of the business or government agency making the request. Once the information is made available to the requestor, then no refunds will be made.

g) Record layouts and field definitions will be supplied by the Secretary with the information.

History

• Source: Amended at 45 Ill. Reg. 6274, effective April 28, 2021

14 Ill. Adm. Code 176.100 Appointment and Reappointment of Notaries Public

a) Every applicant for an initial appointment or reappointment as a notary public must present satisfactory evidence of the applicant’s identity as set forth in the Act at 5 ILCS 312/2-102.

b) Before issuance of an appointment as a notary public or electronic notary public, the applicant for appointment must:

1. execute the oath of office as set forth at 5 ILCS 312/2-104;

2. submit a bond as set forth at 5 ILCS 312/2-105; and

3. complete all application requirements found at 5 ILCS 312/2-102(a) and, if applying for an electronic notary public commission, at 5 ILCS 312/2-102(c).

c) Upon a determination that an applicant meets all requirements of the Act and this Part, the Secretary of State will appoint or reappoint the applicant to the office of notary public or electronic notary public, as applicable, and issue a notary public or electronic notary public commission certificate.

d) Reappointment

1. A current notary public may apply for reappointment 60 days before the expiration of an existing commission. The date of the new commission will be the date immediately after the expiration date of the current commission.

2. To avoid any gaps between notary public or electronic notary public commissions, applications for a notary public should be filed at least 30 days before the expiration of the commission under which the notary public is acting.

e) Any applicant can request the cancellation of an appointment and the cancellation will become effective upon receipt by the Secretary of State of the notice requesting cancellation of the appointment.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.110 Term of Commission

The term of a notary public or electronic notary public commission begins on the date that the notary is commissioned by the Secretary of State and not the date the bond was obtained. The electronic notary public commission, if any, will have the same term of commission as the traditional notary public commission.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.120 Requirements to Qualify as a Resident of the State of Illinois

An applicant must be a resident of the State of Illinois pursuant to 5 ILCS 312/2-101 before applying for a notary public or electronic notary public commission, unless applying for a nonresident application or appointment pursuant to 5 ILCS 312/2-101 and Section 176.130. A notary public or electronic notary public must maintain residency in the State of Illinois during the term of the appointment and must immediately resign the notary public or electronic notary public commission if the notary public’s residency in Illinois ends.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.130 Nonresident Application for Appointment

The form in Illustration A must be used by an applicant for notary public who resides in a state bordering Illinois whose place of work or business is within a county in Illinois, but only if the laws of the applicant's state of residence authorize residents of Illinois to be appointed and commissioned as notaries public in that state. [5 ILCS 312/2-101(a)]

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.200 Definitions

Unless otherwise noted, the following definitions apply to this Subpart only:

"Applicant" means a person or entity applying for certification as a notary public course of study provider and examination provider.

"Certification" means a document issued by the Department that authorizes the entity named in the document to offer a live classroom or webcast course of study and examination required by 5 ILCS 312/2-101.5.

"Consumer information" means the name, address, date of birth, email address and payment information, including credit card and bank account numbers or electronic payment data of students who are enrolled in or have completed a notary public course of study and examination.

"Department" means the Index Department of the Office of the Secretary of State.

"Instructor" means the person charged with providing instruction to notary applicants.

"Live certified proctors" means a person or persons who monitor students in real time in a live classroom setting.

"Multimedia" means a method or methods of technology meant to convey information including, but not limited to animation, graphics, and video displays.

"Provider" means an entity or person certified by the Secretary of State to provide a notary public course of study and examination required by 5 ILCS 312/2-101.5.

"Shareware" means copyrighted software for which the copyright owner sets certain conditions for the software's distribution and use, including requiring payment to the copyright owner after a person who has secured a copy of the software decides to use the software.

"Webcast" means either a live synchronous online or interactive asynchronous course of study and examination as required by 5 ILCS 312/2-101.5.

"Web video conference proctor" means a person or persons who monitor students in real time during a video conference and/or examination.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.205 Course of Study and Examination

a) Beginning January 1, 2024, applicants seeking a commission as either a notary public or an electronic notary public must first successfully complete a course of study and acquire a passing score on the examination, as required by 5 ILCS 312/2-101.5. The applicant will have two years from the date of the examination to apply for a notary public or electronic notary public commission. Once the course of study and examination have been successfully completed and the commission has been issued, the certificate or other proof of successful completion of the course of study and examination will remain valid for the duration of the notary's four-year commission.

b) The Secretary of State may authorize the provision of a course of study for the mandatory training of notaries public and electronic notaries public by qualified third parties subject to this Subpart.

c) To be accepted by the Secretary, the course of study must be taught by a provider or instructor certified by the Secretary.

d) The course of study and examination must consist of the instruction and questions identified in Section 176.225.

e) In accordance with Section 2-101.5(c) of the Act, licensed attorneys in good standing with the ARDC, current Illinois court or federal court judges, or applicants that are employed by a licensed attorney in good standing with the ARDC or an Illinois or federal court who are renewing their Notary Public commission are not required to complete a course of study or pass an examination, if the applicant submits a signed statement using a form designated by the Secretary of State indicating the applicant is a licensed attorney in good standing with the ARDC, current Illinois court or federal judge, or employed by a licensed attorney in good standing with the ARDC or an Illinois or federal court and that applicant has read and understood the version of the Act in effect at the time of application.

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

14 Ill. Adm. Code 176.210 Course of Study and Examination - Provider Certification Required

a) No person, firm, association, partnership, or corporation may operate as a provider or engage in the business of providing a notary public course of study and examination unless the provider holds a certification issued by the Secretary.

b) No provider may remain in operation if its certification to operate as a provider is suspended, revoked, canceled, or not renewed.

c) The Secretary must provide contact information of each provider on its official website. (https://www.ilsos.gov/departments/index/notary/home.html)

d) Every officer, owner, director, partner, and manager for a provider is subject to the requirements of this Subpart C.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.215 Applicants’ and Providers’ Requirements for Notary Public Course of Study and Examination

a) The Secretary will deny, suspend, or revoke a provider certification when:

1. The Secretary determines that the applicant/provider is not of good moral character. In determining good moral character, the Department is not limited to but may consider the following:

A) Whether the applicant/provider has been convicted of a felony or a misdemeanor. The Department will consider:

i) The relationship of any crime of which the applicant/provider has been convicted to the ability to operate a notary public course of study and examination;

ii) The length of time that has elapsed since the applicant’s/provider's last criminal conviction;

iii) Whether the applicant/provider successfully completed any sentence imposed with the convictions;

iv) Whether the applicant/provider has multiple convictions for felony or misdemeanor offenses.

B) Whether the applicant/provider has been indicted, formally charged, or otherwise charged with a felony or a misdemeanor. In this case, the certification will be temporarily either denied or revoked.

i) If the applicant/provider whose certification has been denied or revoked under this Part is adjudicated "guilty" by the court, the denial or revocation previously entered on the person's record in accordance with this Section will stand. This action does not preclude further suspension or revocation of the certification under another Section of this Subpart or the Act.

ii) If the applicant/provider whose certification has been denied or revoked under this Part is adjudicated "not guilty" by the court, the denial or cancellation previously entered on the person's record in accordance with this Section will be rescinded. This action does not preclude further suspension or revocation of the certification under another Section of this Subpart C or the Act.

iii) If the applicant/provider whose certification has been denied or revoked under this Part is granted a disposition of "court supervision" by the court, the denial or revocation previously entered on the person's record in accordance with this Section will be rescinded. This action does not preclude further suspension or revocation of the certification under another Section of this Subpart C or the Act.

2. Any owner or employee of the provider who, while interacting with students:

A) Engaged in an activity that puts the student in danger; or

B) Engaged in reckless behavior; or

C) Failed to maintain a professional relationship with students at all times.

3. The applicant/provider fails to file and maintain with the Department a continuous surety bond in the principal sum of $50,000, underwritten by a company authorized to do business in the State of Illinois, for the protection of the contractual rights of students. However, the aggregate liability of the surety for all breaches of the condition of the bond in no event will exceed the principal sum of $50,000. The surety on any bond may cancel the bond upon giving 30 days’ notice in writing to the Secretary of State and will be relieved of liability for any breach of any conditions of the bond that occurs after the effective date of cancellation. All bonds filed under this provision must be in substantially the same form as Illustration B.

4. The Secretary is not satisfied that the applicant/provider has established adequate procedures for verifying the identity of the student taking the course and ensuring that the student completes the course in its entirety;

5. The applicant fails to submit a copy of its course content, conforming with this Section, to the Department for review and approval, including the questions and answers on the quizzes and final examination;

6. The provider fails to immediately report to the Department any unauthorized access to consumer information, including computer breaches, or fails to comply with the Illinois Personal Information Protection Act [815 ILCS 530];

7. The applicant/provider is an Illinois corporation that is not in good standing with the Illinois Secretary of State, Department of Business Services;

8. The applicant/provider is a foreign corporation that is not authorized to transact business in Illinois, as evidenced by the submission of an Application for Authority to Transact Business in Illinois and acceptance of that application by the Illinois Secretary of State, Department of Business Services;

9. The applicant/provider is a foreign limited liability company that is not authorized to transact business in Illinois, as evidenced by the submission of an Application for Admission to Transact Business and acceptance of that application by the Illinois Secretary of State, Department of Business Services;

10. The owner or any employee of the applicant/provider is a current salaried or contractual employee of the Secretary of State;

11. An applicant/provider, owner, or manager engages in fraudulent activity;

12. An applicant, owner, or employee has been found to have engaged in fraudulent activity within the 5 years before applying for certification;

13. An applicant/provider or owner owes outstanding fees to the Secretary of State in either a personal, official, or professional capacity;

14. An applicant/provider sells or discloses any consumer information or fails to post a statement indicating consumer information will not be sold or disclosed on its website, except as authorized by Section 176.240(e);

15. An applicant/provider requests the Social Security number of students, except as authorized by Section 176.240(e);

16. The provider fails to provide a toll-free customer service hotline that is answered, at a minimum, between the hours of 9:00 am and 5:00 pm Central Time, Monday through Friday;

17. The applicant/provider fails to supply the Department with a detailed description of each position involved in every facet of the notary public course of study and examination, with contact information for each employee. If the course is taught in person, the provider must report any staffing changes to the Department within 5 business days after the change. If the course is taught online, the provider must report any change in the person responsible for creating and managing the online course to the Department within 5 business days;

18. The provider uses voice recognition as a method of verification, unless the provider furnishes a toll-free number for providing the required voice exemplars.

b) The Secretary of State may deny, suspend or revoke a certification:

1. For any violation of the Act;

2. For any violation of this Part;

3. If the provider's certification to provide any type of notary public course of study and examination has been denied, suspended, or revoked by any other state or jurisdiction;

4. For misrepresentation of a notary public's duties and authority under Illinois law;

5. For deviation from the lesson plan for an approved course of instruction;

6. For making representations that the Secretary of State endorses, recommends, or mandates the use of any of the vendor's products, goods, or services;

7. For conviction of any entity, person, or principal closely associated with any provider for any felony or misdemeanor involving fraudulent activity;

8. For engaging in any fraudulent activity or deceptive business practices; or

9. For failure to timely respond to the Secretary of State's request for communication or otherwise cooperate with an investigation.

c) Only one provider certification will be issued to any one individual, group, association, partnership, or corporation, and the Department will deny an application for certification as a course provider if any of the applicants are unqualified, are already certified, or have applied as another provider.

d) Course providers must comply with the following requirements:

1. If the course provider seeks certification for an in-person course of study at the course provider's physical location, the location of the course provider's premises and facilities must be adequate, safe, and sanitary and shall comply with all relevant statutory provisions, rules, regulations and local ordinances concerning fire, health, safety, and sanitation.

2. The equipment, supplies, and instructional materials of the course provider must be satisfactory and adequate in type, quality, and amount, and shall be suitable for use in administering the course of instruction. They must also comply with all relevant statutory provisions and local ordinances concerning fire, health, safety, and sanitation.

e) Before being certified, each applicant must provide the Department with all necessary information to allow the Department to participate in a complete course, without fee to the Department, so that the Department may determine if the course complies with this Part. If the proposed course content meets the requirements of this Subpart, it will be approved by the Department.

f) The requirements of subsection (d) are not intended to limit the ways course providers may offer courses of study or the locations at which course providers may offer courses of study. Live webinars with real-time instruction and courses provided at an employer or business location with an in-person instructor may also be considered for certification by the Secretary of State.

g) When determining whether to approve a submitted course of study, the Department will consider and review the following:

1. The course lesson plan and syllabus or storyboard.

2. A detailed description of how the final examination will be administered. The entity administering the final exam may use either a paper test or an online format. The entity must notify the Department which format they will be using. A notary public course of education provider must offer multiple curriculum tests so that there is not one uniform test in circulation.

3. The process for grading students.

4. How the course educates students regarding the notary public or electronic notary public commission application process, forms, and procedures.

5. A list of course instructors, if applicable.

6. A description of the interaction capabilities between the instructor and the students in an electronic environment or another means of ensuring that students actively participate, if the course of study and examination are to be conducted electronically.

7. Actual time spent by students and instructors online and in class.

8. A video, CD, or DVD of the course, or a copy of or access to any text-based course, or in the case of an interactive asynchronous online course of study and examination, a uniform resource locator (URL) and login credentials to access the course.

h) Upon receipt of a properly executed application for certification, the Department will investigate the qualifications of the applicant to determine whether the application should be granted or denied.

i) Certifications may only be issued by the Department.

j) Providers must follow the course content submitted to and approved by the Department at the time of application for certification.

k) If a provider wishes to substantially change the course content, a copy of the proposed revisions must be sent to the Department for approval. The provider shall also provide the Department with all necessary information to allow the Department to participate in a complete course, as revised, without fee to the Department. After review, the Department will send a letter to the provider either approving or rejecting the proposed changes.

l) An entity whose certification has been denied, suspended, or revoked under this Subpart may request an administrative hearing under Subpart K.

m) A certificate issued to a course of study and examination provider will be valid for one year. The course provider must submit the course of study to the Department for approval annually. Department approval of the course of study will extend from January 1 through December 31. A course provider desiring to be approved must submit an application for course approval or renewal on or before October 1 of each year. The application shall be accompanied by the following information:

1. All information required as part of an application for initial certification as set forth in Sections 176.205, 176.210, 176.215, 176.235, 176.240, and 176.255; and

2. Any supplemental information necessary to bring information on the course provider up to date.

n) A provider may elect not to provide training that includes electronic notarization only if the application of the provider clearly and conspicuously states that the course submitted for approval will not include training with response to electronic notarizations and the provider includes a statement on its website that its training will not include electronic notarizations and will not suffice for an electronic notary public commission application.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.220 Notary Public Course of Study and Examination - Provider Names

a) No provider may adopt, use or conduct any business under a name that is not distinguishable upon the records of the Department from a name used by another provider, as distinguishable is defined in 14 Ill. Adm. Code 150.440.

b) No provider may incorporate under its own or another name unless the name of the proposed corporation is submitted by the Department of Business Services of the Office of the Secretary of State for a final determination of the availability of the name, along with the fee required by Section 15.10 of the Business Corporation Act of 1983 [805 ILCS 5/15.10].

c) No provider’s name may contain, separate and apart from any other word or abbreviation in the name, the word "corporation", "company", "incorporated", or "limited", or an abbreviation of one of these words, unless so licensed by the Secretary of State.

d) No provider may operate under an assumed name unless the provider complies with all provisions of the Assumed Business Name Act [805 ILCS 405].

e) No provider may change its name unless 30 days’ prior written notice is given to the Department stating the change of name. Upon receipt of a notice of name change, the Department will, without an application fee, require the provider to complete an amended application for certification in the form and manner prescribed for original applicants.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.225 Notary Public Course of Study and Examination - Required Instruction and Content

a) Providers must provide 3 hours of notary public instruction in accordance with the course content requirements set forth in subsection (e) in addition to the following requirements:

1. A minimum of 180 minutes of instruction as defined in subsection (b);

2. The course must allow a maximum of 30 days for a student to complete the course;

3. The material presented in the course must be edited for grammar, punctuation, and spelling and be of such quality that it does not detract from its subject matter;

4. Advertisement of goods and services or any material not related to the topic being presented must not appear during instructional time; and

5. An online course must be designed and well-suited for students with minimal keyboard or computer skills.

b) To demonstrate that the course contains a minimum of 180 minutes of instruction, the following calculation shall be used:

1. For written material that is read by the student, count the total number of words in the written section of the course. Divide the word count by 180, the average number of words that a typical student reads per minute. The result equals the time associated with the material for the written sections;

2. For multimedia presentations, including simulators, videos, and animation, calculate the total amount of time it takes for all multimedia presentations to play. The length must not exceed 120 minutes;

3. Assign one minute for each chart or graph; and

4. The total minutes of instruction in the written material, the multimedia presentations, and the charts and graphs altogether must equal or exceed 180 minutes for the course to meet the minimum content time required.

c) Instead of the calculation method in subsection (b), a provider may submit an alternate methodology or otherwise demonstrate that the course contains a minimum of 180 minutes of instruction.

d) Materials. All material appearing on the screen to be read by the student must also be spoken aloud to the student unless this function is manually disabled by the student.

e) Substance required. The educational objectives of a notary public course of study must include, but not be limited to:

1. Promoting respect for and encouraging the observance of the duties and requirements of a notary public under the Act;

2. Identifying potential damages and economic losses that could result from notarial misconduct;

3. Motivating continuing development of notarial competencies through education, including, but not limited to adherence to the Act; and

4. Providing knowledge of the Act, this Part, and other laws related to or affecting notarial work.

f) Providers must monitor the Illinois General Assembly and update their course content to include any new amendments to the Act. This update must be submitted to the Department for review and approval within 60 days after the effective date of the law change.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.230 Notary Public Course of Study and Examination - Student Contracts

a) Before instruction begins and any fees are collected, each student shall be informed of the amount of all fees or charges relative to the notary public course of study, including but not limited to enrollment, tuition, equipment, textbooks, and instruction manuals. The provider shall not require mandatory purchase of the provider’s proprietary software or shareware unless this fee was expressly included in the disclosure of fees made before the student's enrollment in the course.

b) If a provider requires the installation of a free or trial version of its proprietary software, it must be bundled with an uninstallation shortcut that will completely remove that software and any associated registry entries.

c) All contracts or agreements between any provider and any individual or group for the sale, purchase, barter, or exchange of any notary public course of study instruction, must contain the following:

1. A statement that the agreement constitutes the entire contract between the provider and the student and that no verbal assurances or promises not contained in this agreement will bind the provider or the student.

2. A statement indicating that all disputes under this Section must be directed to the Secretary of State.

d) The term "no refund" and a no-refund policy concerning student payments are not permitted in any notary public course of study contract. A provider may use the phrase: "The provider will not refund any fees if the provider is capable and willing to perform its part of the contract."

e) If a provider fails to comply with the provisions of a contract or agreement between the provider and any of its students, the provider must refund all monies paid by the students as the consideration for performance of the contract or agreement by the provider unless the student has violated the provisions of the contract or agreement.

f) Any provider that subcontracts any portion of the course of study or examination must notify the Index Department before entering into the subcontracting relationship.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.235 Course Provider Verification of Student Identity and Course Completion

a) Before being certified, providers must submit procedures to the Secretary of State for verifying the identity of the student taking the course, which may include, but are not limited to, the following:

1. If the course is to be taken in person, an examination of a government-issued photo identification card, including an Illinois driver’s license or Illinois Identification Card;

2. If the course is to be taken online:

A) Web video recording accompanied by an examination of the student’s government-issued photo identification card;

B) Dynamic knowledge-based authentication;

C) Web video proctoring with screen monitoring by live certified proctors; or

D) Any method, or combination of methods, of identity verification submitted by a provider and approved by the Department that reasonably establishes the identity of the student and the student's presence during the online course.

b) If the method of verification is challenge questions, the student must be asked a minimum of two questions per hour, during each hour of the course, at random intervals. The answer to the verification challenge question must be verifiable by the course provider or a third party. Students shall have only 60 seconds to respond. Students who fail to respond to the question or who fail to respond within the specified time period must be returned to the place in the course where the student last successfully passed a verification. A student who, for a second time, fails to respond to a challenge question or who fails to respond within the specified time period will be considered to have failed the course. If a student answers a question incorrectly, another challenge question must be asked. If the student correctly answers the challenge question, the student may proceed with the course. If the student incorrectly answers a third challenge question, the student is considered to have failed a course.

c) Providers must incorporate a course content validation process that verifies student participation, comprehension of course material, and course completion, including the following:

1. Built-in timers to ensure that 180 minutes of instruction have been viewed and completed by the student. Timers must prevent the student from scrolling, skipping, or advancing through the course without reading the material and must not allow the student to take section quizzes or the final examination without viewing or reading the course content. If a student attempts to take a quiz or the final examination without having spent the minimum time required for a single section or the course, the student must be returned to the place in the course where the student last spent the minimum time required.

2. At least one course validation question must be asked following each multimedia clip that exceeds 60 seconds.

3. Students must complete a final examination at the end of the course, which shall consist of 50 questions from a test bank of a minimum of 100 questions. Questions may be multiple-choice, true/false, or a combination of both, but in no event may more than one-half of the questions be true/false. Questions must be randomized and of such difficulty that the answers may not be easily determined without having participated in the entire course.

4. A student must score at least 85% on the final examination. If a student scores less than 85%, the student must be re-tested using different questions from the test bank. The student is not required to repeat the course but shall be allowed to review the course before retaking the examination. The examination may be retaken at any time by agreement between the student and the course provider. If the student fails the comprehensive final examination 3 times, the student has failed the course.

5. A student who fails the examination may choose to take a different course before retaking the examination.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.240 Notary Public Course of Study - Provider Website and Security Requirements

a) Each provider’s website must display the following information on its homepage:

1. the provider’s Secretary of State certification number; and

2. a statement that complaints regarding the provider may be directed to the Secretary of State’s Index Department. Contact information for the Index Department must be included with the statement.

b) A provider offering an online course must offer the course from a single domain. The course may accept students that are redirected to the online course domain, as long as the provider’s certification number appears on the source that redirects the students to the online course domain. The student must be redirected to a webpage that clearly identifies the certified provider offering the course before the student begins the registration process, supplies any information, or pays for the course.

c) A provider offering an online course may choose an existing webinar system or create its own webinar system.

d) Providers are prohibited from selling or disclosing any consumer information provided by the student unless the provider is disclosing the consumer information with a third party solely for the purpose of providing dynamic knowledge-based identity verification. The provider's contract with the student must clearly state whether the provider is disclosing consumer information for the purpose of providing dynamic knowledge-based identity verification. A statement concerning the prohibition on the sale or disclosure of student consumer information must be posted on the provider’s website in a conspicuous location.

e) Providers are prohibited from requesting the Social Security numbers of students, except for a request from a third-party process or service used by a provider to verify the identity of students taking a provider's course, in which case the third-party process or service must not share the Social Security number data with the provider.

f) Providers must take all necessary measures to prevent unauthorized access to consumer information, either in printed or electronic form. Upon discovery of a breach or unauthorized access, the provider must immediately report any unauthorized access to the Department.

g) Provider servers must be located in a secure location, with access restricted to only those employees or persons who have a business need to access the server.

h) Providers may use a third-party payment processing merchant for processing payments only if the provider’s contract clearly indicates to the student, before payment is made, the name of the third-party payment processing merchant to be used and the fee, if any, charged by the payment processor.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.245 Enforcement

a) Duty to Respond to the Secretary of State’s Written Request. Any person or entity providing courses of study or examinations must respond in writing within 10 business days of receiving a written request from the Secretary of State for any information relating to a complaint about a course of study or examination.

b) Inspections. Approved providers must permit the Secretary of State or the Secretary’s designee, at the Secretary’s sole option, to attend any approved course of instruction, whether in person or online, without prior notice at no charge to observe, monitor, audit, and investigate.

c) Complaints. Any person may file a complaint against any provider with the Secretary of State alleging a violation of the Act or this Part. The person must submit a written and dated complaint to:

Secretary of State Index Department

111 E. Monroe Street

Springfield, IL 62756

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.250 Hearings

a) Before denying the certification of an applicant or existing provider, the Department will send written notice to the provider. If a formal hearing is requested in writing under 92 Ill. Adm. Code 1001.Subpart A, the denial shall stand pending the outcome of the hearing. The denial of a certification will contain the specific reasons why the certification has been denied. The notice of denial contains information about the availability and timeline of an appeal and where rules governing the appeal can be found.

b) Before suspending or revoking a provider’s certification, the Secretary of State Department of Administrative Hearings will conduct a hearing using 92 Ill. Adm. Code 1001.Subpart A, in which the Department will present competent evidence to establish violations of any regulations or laws governing providers and seek the appropriate sanctions under Subpart K. Sanctions for violations of the Act or this Part may include, but are not limited to, denial, suspension, or revocation.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.255 Denial, Suspension, and Revocation of a Notary Public Course of Study and Examination Provider Certification

The Department may revoke the certification of a course of study when the Department finds that a course of study or a course provider has failed to comply with the Act or this Part. An affected course provider may appeal the Department’s decision to revoke the certification of the provider’s course of study through an administrative hearing with the Secretary of State Department of Administrative Hearings under Subpart K.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.300 Application for Notary Public and Electronic Notary Public Commissions

a) Applications for a traditional notary public commission. All individuals applying for a traditional notary public commission shall use the application prescribed by the Secretary of State and shall include, at a minimum, the information required by 5 ILCS 312/2-102.

b) Remote notarization. Any notary appointed under subsection (a) shall have the authority to conduct remote notarizations. [5 ILCS 312/2-102(b)]

c) Application for electronic notary public commission. An application for an electronic notary public commission must be filed with the Secretary of State as required by this Subpart D [5 ILCS 312/2-102(c)]. In addition, an applicant for an electronic notary public commission must provide the following:

1. The notary public commission number assigned to the person by the Secretary of State, unless the applicant is applying for the notary public commission and electronic notary public commission at the same time under 5 ILCS 312/2-101(c);

2. The names of all electronic notarization system providers that the applicant intends to use to perform electronic notarial acts;

3. A copy of the electronic signature of the person that is:

A) an exact representation of the handwritten signature of the person already on file or currently being filed with the Secretary of State; and

B) in a format that identifies the electronic notarization system provider that prepared the electronic signature and can be read without additional software and be compared for authentication purposes to the person's handwritten signature on file or being filed with the Secretary;

4. A statement certifying that the applicant:

A) Will comply with the standards set forth by Section 176.835 relating to identity proofing and credential analysis;

B) Will use a third-party provider who has been certified to act as an electronic notarization system provider in the State of Illinois by the Secretary; and

C) Will, upon request by the Secretary, promptly provide any necessary instructions or techniques supplied by a provider that will allow the electronic notary public's digital certificate and electronic seal to be read and authenticated.

5. A disclosure of all disciplinary actions, convictions, or administrative actions taken against the applicant;

6. One of the forms listed below:

A) A certificate or other proof of successful completion of the course of study required under 5 ILCS 312/2-101.5(a), which indicates successful completion of the course within the two years preceding the submission of the application for an electronic notary public commission; or

B) A signed statement in a format designated by the Secretary of State that the applicant:

i) is a licensed attorney in good standing with the ARDC or a current Illinois court or federal court judge or is employed by a licensed attorney in good standing with the ARDC or an Illinois or federal court; and

ii) has read and understood the version of the Act that is in effect at the time of application pursuant to 5 ILCS 312/2-101.5(c).

7. A statement certifying that the person will comply with the applicable provisions of the Act, including Article VI-A.

d) A person may not perform an electronic notarial act, unless:

1. The Secretary has approved the applicant's application for an electronic notary public commission; and

2. The Secretary has approved the registration of the proposed electronic notarization system provider.

e) Incomplete applications. If an application for appointment as a notary public or electronic notary public is incomplete, the Secretary of State will retain the application for at least one year from the date of receipt of the application. If the applicant does not complete the application within one year from the date of receipt of the application, the Secretary of State may deny the application and mail a notice of denial to the applicant.

f) Assignment of Commission Number.

1. The Secretary of State will assign a unique commission number to each original commission certificate. The commission number, which will be used to identify the notary public whose name appears on the commission certificate, must remain assigned to the notary public throughout the period of the appointment and must be included on each duplicate or amended commission certificate issued to the notary public by the Secretary of State.

2. If a notary public applies for a subsequent period of appointment, a new number must be assigned.

3. A notary public that is also commissioned as an electronic notary public will have the same commission number for both commissions.

g) After an application for an electronic notary public commission has been approved, the electronic notary public will be required to notify the Office of the Secretary of State, on a form designated by the Secretary, if the electronic notary public elects to add any other electronic notary system provider.

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

14 Ill. Adm. Code 176.310 Approval of Application, Authority of Secretary of State to Deny Commission, and Effective Date of Commission

a) If an applicant who is applying for an electronic notary public commission satisfies all of the requirements for such a commission pursuant to this Part and 5 ILCS 312/2-102, the Secretary of State will:

1. Approve the application for a commission as an electronic notary;

2. Update the processing system maintained by the Office of the Secretary of State to indicate the commission of the person as an electronic notary; and

3. Notify the applicant of the approved application and commission as an electronic notary.

b) If a person who is applying for an electronic notary public commission does not meet all of the requirements for application set forth in this Part and 5 ILCS 312/2-101, the Secretary of State will not commission the person as an electronic notary public. If the Secretary of State denies a commission as an electronic notary under this subsection, the Secretary of State will notify the person of that refusal.

c) The commission of a person as an electronic notary public becomes effective at the time the processing system maintained by the Secretary of State has been updated pursuant to subsection (a)(2) to indicate such a commission.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.320 Appointment Fee

a) No commission will be issued until the fee required by 5 ILCS 312/2-103 has been paid in full.

b) Authority of the Secretary of State to deny or revoke commission if payment is dishonored or stopped. If any method of payment submitted by an applicant to the Secretary of State pursuant to 5 ILCS 312/2-103 is returned to the Secretary of State or otherwise dishonored upon presentation of payment because the applicant has insufficient money or credit, or because the person stopped payment on the method of payment, the Secretary of State may immediately and without a hearing deny to commission the applicant as a notary public or electronic notary public or immediately revoke the applicant’s commission if the commission has already been granted. An applicant whose commission is denied or revoked under this subsection (b) must resubmit an application for commission as a notary public or electronic notary public. A notary public or electronic notary public whose commission is revoked under this subsection (b) must reapply for a commission.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.330 Oath

a) Notaries public and electronic notaries public must file an oath of office with the Secretary of State, affirming the notary’s or electronic notary's intent to follow the laws and constitutions of the United States of America and the State of Illinois.

b) The legal name on the applicant’s oath of office must exactly match the applicant’s driver’s license or state identification card and the name on the notary public application. Unless proven otherwise, the name shall consist of the applicant’s first personal name (first name), additional name or names, if applicable, and surname (family or last name).

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.340 Bond

a) Applicants for a notary public commission or electronic notary public commission must indicate at the time of application whether the applicant will perform only traditional in-person notarizations or remote notarizations.

b) An applicant for a notary public commission or electronic notary public commission must purchase a bond in the following amounts:

1. Applicants seeking to perform only traditional, in-person notarizations − $5,000;

2. Applicants seeking to perform traditional, in-person notarizations and remote or electronic notarizations − $25,000 in addition to the bond required by subsection (b)(1) for traditional notaries, or a combined bond of $30,000, pursuant to 5 ILCS 312/2-105(b).

c) A copy of the original bond must be filed with the Illinois Secretary of State Index Department.

d) The bond shall contain, on its face, the oath of office for the notary public or electronic notary public as specified in 5 ILCS 312/2-104. The applicant must endorse the oath on the face of the bond, immediately below the oath, by signing the applicant’s name under which the person has applied to be commissioned as a notary public or electronic notary public and exactly as it appears on the notary application form or electronic notary application form filed with the Secretary of State’s Office.

e) In making a claim against a combined bond, as described in subsection (b)(2), a claimant will only be entitled to either a maximum of $5,000 of the bond if the notarization at question was a traditional, in-person, physical notarization or a maximum of $25,000 if the notarization was electronic or remote. In no event may a single claim be eligible for payment of the entirety of the $30,000 bond.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.350 Reappointment

a) A current notary public and a current electronic notary public may apply for reappointment 60 days before an existing commission expires. The date of the new commission will be the date immediately after the expiration date of the current commission.

b) To prevent a gap between commissions, a notary public and electronic notary public should apply for reappointment at least 30 days before the commission under which the notary public is currently acting expires.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.400 Definitions

For purposes of this Subpart, the following definitions apply:

"Applicant" means a person requesting that a remittance agent license be issued in the applicant’s name or the name of a business entity the applicant controls.

"Department" means the Secretary of State Department of Index.

"Financially sound" means solvent and able to pay expenses and debts as due, as evidenced by the surety bond obtained pursuant to Section 176.410(c).

"Fraudulent activity" means any action calculated to deceive, whether it be a single act or combination of circumstances, whether the suppression of the truth or the suggestion of what is false, whether it be by direct falsehood or by innuendo, by speech or by silence, as the action or inaction applies to the remittance agent’s obligations found in 5 ILCS 312/2-107.

"Good business integrity" means soundness or good moral principles and character in business dealings as evidenced by the surety bond or bonds obtained under Section 176.410(c).

"Immediate family" means spouse, offspring, sibling, or parent.

"Licensee" means a licensed remittance agent.

"Remittance Agent" means any person who self-represents to the public as being engaged in or who engages in accepting notary public or electronic notary public applications and fees for submission to the Secretary of State, whether the person renders any other service in connection with the making of any such remittance or is engaged in any other endeavor. The term "remittance agent" also includes any person who self-represents to the public as being engaged in or who engages in accepting money for consulting or advising the public on matters concerning applications for Illinois notarial commissions. The term "remittance agent" does not include any licensed attorney providing advice to clients or the general public.

"Revocation" means the termination by formal action of a person’s license to operate as a remittance agent.

"Secretary" means the Illinois Secretary of State.

"Suspension" means the temporary withdrawal by formal action of the Secretary of a person’s license to operate as a remittance agent for a period of time determined by the Secretary.

"Transaction" means an application for a notary public or electronic notary public commission and fees for remittance to the Department.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.410 Application for Remittance Agent’s License and Renewal

a) If a person wishes to become a remittance agent, an application and bond as described in subsection (c) must be filed with the Office of the Secretary of State in accordance with subsection (e).

b) The application, which must be notarized, shall contain the following information:

1. The previous year’s license number if the person is currently licensed as a remittance agent;

2. The name of the business;

3. The location of the business. A licensee shall not do business at a location not identified in the license and must maintain a physical location in Illinois or name an agent for service of process with a physical location in Illinois;

4. The applicant’s home address, home telephone number, business telephone number, email address, and website, if any;

5. The applicant’s business, occupation, or profession;

6. The total amount of cash, checks, electronic payments, or money orders received by and made payable to the remittance agent for remittance to the State in the highest 15-day period in the preceding year if the person is currently licensed;

7. Whether the applicant, a member of the applicant’s immediate family, or any employee of the applicant is an employee of the Secretary of State; and

8. Whether the applicant has ever been involved in civil or criminal litigation including bankruptcy proceedings, and if so, the type of litigation, the date and suit or charge, the court in which the matter was heard, the style or caption of the case, the disposition of the matter, and if the judgment has been satisfied.

c) A surety bond shall be posted for each location where the applicant intends to do business as a remittance agent. Each bond must be for $5,000 or the amount of cash, checks, electronic payments or money orders received by and made payable to the remittance agent for remittance to the Department during the highest 15-day period in the year preceding the year for which the license is applied, whichever is greater. The bond must be issued by a bonding or insurance company authorized to do business in Illinois. The Department will use a list issued by the Department of Insurance to determine if the bonding or insurance company is authorized to issue the bond.

d) A remittance agent wishing to renew the agent’s license must submit the material required by this Section to the Department between September 1 and December 31 of the year before the new license will become effective.

e) All remittance agent license applications and corresponding materials must be submitted to:

Office of the Secretary of State

Index Department

111 E. Monroe Street

Springfield, IL 62756

f) The Department will make available the application form to any person who requests one. Only the Department’s form will be accepted for a license to operate as a remittance agent.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.420 Denial of Application for Remittance Agent’s License

a) Pursuant to 5 ILCS 312/2-107, the Department will deny an application for a remittance agent’s license unless the applicant complies with that Section. If a person’s application is denied, the person will be sent the application submitted and a notice of the denial by certified mail within 30 days after the date the application was submitted. The notice will contain the reason for the denial and inform the applicant of the opportunity to request an administrative hearing to contest the denial under Subpart K.

b) Renewal of a remittance agent’s license shall be denied if upon investigation it is discovered that the remittance agent is not financially sound and of good business integrity or is otherwise ineligible for a license as provided in 5 ILCS 312/2-107. The Index Department may audit the remittance agent at any time during the term of the license. Any further investigation will be conducted by the Secretary of State Department of Police.

c) The Department will consider written complaints regarding remittance agents. Upon receipt of a complaint, Secretary of State police must investigate the matter. If, upon this investigation, it is discovered that a basis for denial exists under any Section of the Act or this Part, the remittance agent’s current license will be suspended or revoked as provided in Section 176.430.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.430 Suspension and Revocation of Remittance Agent’s License

a) The Department shall suspend a remittance agent’s license under the following circumstances:

1. the licensee fails to keep records detailing transactions with the Secretary of State;

2. the licensee fails to furnish information requested by the Department; or

3. it is discovered that the licensee or a member of the person’s immediate family is an employee of the Secretary of State.

b) The suspension will remain in effect for 60 days, during which an audit shall be conducted to determine compliance with the Act. If the remittance agent has come into compliance, the suspension will be lifted. If the remittance agent has not come into compliance during the 60-day suspension, the remittance agent’s privileges will be revoked.

c) A remittance agent’s license will be revoked under the following circumstances:

1. the licensee attempts to do business or does business as a remittance agent while privileges are suspended;

2. the licensee fails to remit to the Department the fees provided by applicants as required by 5 ILCS 312/2-107, or the check submitted is returned by the bank because of insufficient funds, or the payment submitted electronically is dishonored for any reason, and the licensee fails to submit the proper fees within 10 days after a written request by the Department;

3. the licensee engages in fraudulent activity or forgery while operating as a remittance agent, as determined by the Department after the investigation;

4. the Department determines that the licensee has been adjudicated by a court of law or an administrative hearing officer as guilty of violating any provision of the Act;

5. the licensee has been suspended 2 or more times in one year; or

6. the licensee has been convicted of any felony.

d) The Department will consider written complaints in determining whether a remittance agent’s license shall be suspended or revoked. Upon receipt of a complaint, the Secretary of State Department of Police will investigate the matter to determine if a basis exists under this Section for a suspension or revocation.

e) Revocation. The remittance agent will be notified by certified mail that the license to operate as a remittance agent is being revoked. The notice shall contain the effective date of the revocation, the violation that is the cause of the revocation, and how the applicant can contest the revocation. The remittance agent will be given 10 business days from the date of the notice before the revocation will become effective. A revocation shall be entered for no less than a period of two years. After that date, the former licensee may reapply for reinstatement. To be reinstated following a revocation, the licensee must request an administrative hearing as provided in Subpart K. The remittance agent’s license will not be restored until the Secretary is satisfied that the licensee will comply with the provisions of the Act and is financially sound and of good business integrity.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.440 Processing Transactions

a) All applications for notary public or electronic notary public commissions submitted to the Department by persons acting as remittance agents must be submitted electronically or by regular mail.

b) All transactions must be submitted to the Department within 30 days after receipt by the remittance agent as required by 5 ILCS 312/2-107(c). Transactions sent by regular mail will be considered submitted to the Department on the date of postmark. Depending on the severity of the violation, failure to comply with this Section will be grounds for suspension or revocation.

c) No remittance agent shall employ any individual, or any member of that individual’s immediate family, who is employed by the Office of the Secretary of State.

d) All applications must include the remittance agent’s assigned number in the designated position on the form.

e) The fee submitted to the Department must be done so in a manner that associates the payment with a specific application. Failure of the remittance agent to associate the payment with the proper application will result in the rejection of the transaction.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.450 Recordkeeping Requirements

a) Each person licensed as a remittance agent as defined in 5 ILCS 312/2-107 must maintain for three years a record of each transaction.

b) The records must be maintained in ledger form or be computerized. All records should be available to employees from the Secretary of State or the officers from the Secretary of State Department of Police within 60 minutes, Monday through Friday during business hours, after a request. For purposes of this subsection (b), Secretary of State Police will only make records requests between 11:00 am and 4:00 pm Central Time. The records must contain the following information:

1. The name and address of the remittance agent. If the remittance agent has more than one licensed location, the records must reflect the location where the transaction was received or processed or where the records are kept.

2. The name and address of the applicant submitting the transaction. If a remittance agent does not make the initial contact with the applicant but receives a transaction from another remittance agent, the second remittance agent must record the original applicant’s name and that of the initiating remittance agent.

3. The amount of fee received by the remittance agent for delivery to the Department for each transaction. The funds must be identified as "cash", "check", "electronic payment" or "money order" payable to the Secretary of State, or "check", "electronic payment" or "money order" payable to the remittance agent.

4. The date the fee and transaction were received by the remittance agent.

5. The date the fee and transaction were submitted to the Department and the method of delivery.

6. If the application was approved, the date that the remittance agent license was approved by the Department.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.460 Severability Clause

If any clause or Section of this Part or the application of any provision of this Part to any person or circumstance is rendered unconstitutional, the remainder of this Part or its application to other persons and circumstances shall not be affected. Each clause shall be severable without rendering the rest of the Part invalid. Likewise, each application of the Part shall be severable without rendering future applications invalid.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.500 Use of Official Seal and Electronic Seal

a) A notary public must use the notary public’s official seal, affixed using a rubber stamp, to perform a notarial act. An electronic notary public must use the electronic notary public's electronic seal, affixed using a mechanical stamp, to perform an electronic notarial act.

b) A notary public must place a legible imprint of the notary public's official seal on a notarial certificate for a tangible record at the time of the performance of the notarial act.

c) An electronic notary public must attach or logically associate the electronic notary public's electronic seal with the electronic notarial certificate on an electronic record.

d) A notary public must not place an imprint of the notary public’s official seal, and an electronic notary public must not attach or logically associate the electronic notary public's electronic seal, over any signature in a record to be notarized or over any writing in a notarial certificate.

e) When a notarial certificate is on a separate piece of paper attached to the tangible record to be notarized, or when there are attachments to the tangible record to be notarized, a notary public may use one additional imprint of the notary public’s official seal for identification of the tangible record and notarial certificate attached to the tangible record, if the imprint does not make any part of the record or attachment illegible. The additional seal must be partially stamped together on the notarial certificate, and on the signature page or attachment to the notarized record.

f) A notary public may not use the notary public’s official seal, and an electronic notary public may not use the electronic notary public's electronic seal, for any purpose other than to perform a notarial act.

g) A notary public may not permit any other person to use the notary public’s official seal, and an electronic notary public may not permit any other person to use the electronic notary public's electronic seal, for any purpose.

h) A notary public may not use any other notary public’s official seal or any other object in place of the notary public’s official seal to perform a notarial act.

i) An electronic notary public may not use any other electronic notary public's electronic seal or any other object in place of the electronic notary public's electronic seal to perform a notarial act.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.510 Acquiring the Official Seal and the Electronic Seal

a) A notary public may purchase an official seal, and an electronic notary public may purchase an electronic seal, only after receiving a commission certificate from the Department under Section 176.550(a), and providing a copy of the commission certificate to the notary public's or electronic notary public's chosen seal vendor.

b) The official seal of a notary public, and the electronic seal of an electronic notary public, is the exclusive property of the notary public or electronic notary public and may not be surrendered to an employer upon termination of employment, regardless of whether the employer paid for the official seal or electronic seal, the bond, or the appointment fees.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.520 Description of the Official Seal and Electronic Seal

a) The reasonably legible imprint of an official seal of a notary public must contain:

1. A serrated or milled edge border in a rectangular form not more than one inch in height by two and one-half inches in length surrounding the following information in descending order:

A) The words "Official Seal";

B) The notary's official name, printed;

C) The words "Notary Public, State of Illinois";

D) The words "Commission No." immediately followed by the notary public's commission number; and

E) The words "My Commission Expires", immediately followed by the notary public's commission expiration date, expressed in terms of the month, one- or two-digit day, and complete year (e.g., January 1, 2024). [5 ILCS 312/3-101(a)]

2. The imprint of an official seal of a notary public on a tangible record must be an imprint capable of being photocopied or reproduced.

b) The electronic seal of an electronic notary public on an electronic record must look identical to a traditional notary public seal and be accompanied by the electronic signature of the electronic notary public and language explicitly stating that the electronic notarial act was performed using audio-video communication, if applicable. [5 ILCS 312/3-101(b-5)].

c) A notary may continue to use any seal in effect before July 1, 2023 through the expiration of the notary's current commission.

d) If the notary's official seal appears illegible on the document, a notary public may reapply a second, or subsequent, official seal to the document. Application of a second or subsequent seal must not make any other portion of the document unreadable.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.530 Replacement of Lost, Compromised, Destroyed, or Stolen Official Seal or Electronic Seal

a) When a physical official seal is lost or stolen, the notary public must notify the Department in writing the next business day after discovering the seal was lost or stolen. When an electronic official seal is lost or stolen, the notary public must notify the Department the next business day under 5 ILCS 312/3-101(d)(2).

b) A replacement official seal or electronic seal must contain a distinct difference from the original seal.

c) If the lost or stolen official or electronic seal is found or recovered after a replacement has been obtained, the original seal must be destroyed.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.540 Notary Public and Electronic Notary Public Fees

a) A notary public or electronic notary public may charge the fees prescribed in 5 ILCS 312/3-104.

b) Neither a notary public nor an electronic notary public is required to charge a fee. A notary public or electronic notary public who charges a fee shall not charge more than the maximum fee allowed by 5 ILCS 312/3-104.

c) Before performing any notarial act, the notary public or electronic notary public must inform the requestor of the notary's or electronic notary's fee, if any, that will be charged.

d) A notary public or electronic notary public who advertises notarial services in a language other than English or performs services as described in 5 ILCS 312/3-103 must post a schedule of the fees listed in 5 ILCS 312/3-104 in a conspicuous location at all times, as required by 5 ILCS 312/3-103(b).

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.550 Commission Certificate

a) Upon appointment as a notary public or electronic notary public, the Secretary of State shall send a commission certificate to the person appointed as a notary public or electronic notary public, with which the person appointed may obtain an official seal or electronic seal.

b) Only upon presentation by the notary public or electronic notary public of the Commission Certificate is a vendor authorized to provide the notary with an official seal described in Section 176.520 or an electronic notary with an electronic seal as described in Sections 176.520 and 176.810.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.600 Notarial Certificates

a) Minimum requirements. For a notarial certificate to be sufficient, it must contain the information required under 5 ILCS 312/6-103.

b) Additional Information. A notarial certificate may contain additional or other information as may be required to satisfy any legal requirements, ethical or legal concerns, or the business needs of the parties to the transaction.

c) Permanently and Securely Attached. A notarial certificate must be stamped, stapled, grommeted, or otherwise permanently bound to the tangible document in a tamper-evident manner. The use of tape, paper clips, or binder clips is not permitted.

d) Legible Signature Required. When signing a paper certificate, the notary public shall use a legible, recognizable handwritten signature in blue or black ink that can be attributed to the notary public performing the notarial act by anyone examining or authenticating the signature. If a notary public's preferred signature is not legible and recognizable, the notary public must also legibly print the notary public's name immediately adjacent to the signature. In this chapter, a signature is legible and recognizable if the letters are distinct and easily readable, and the notary public's full name may be clearly discerned by looking at the signature.

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

14 Ill. Adm. Code 176.610 Persons Physically Unable to Sign Documents

a) If a person cannot physically sign a document that is presented to a notary public and directs a person other than the notary to sign the person’s name on the document, both the person who cannot physically sign the document and the person directed to sign the person’s name on the document shall appear before the notary and be identified under 5 ILCS 312/6-102(d), 6-102.5(a), or 6A-103(b), as applicable, at the time the document is signed.

b) A notary public who performs a notarial act for a person who cannot physically sign shall type, print, or stamp the following, or a substantially similar statement, near the signature "Signature affixed by (name of individual) at the direction of (name of person physically unable to sign) in accordance with 14 Ill. Adm. Code 176.610".

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.700 Standards for Remote Notarial Acts Using Audio-Video Communication

a) Pursuant to Section 3-107 of the Act, a notary performing a remote notarization shall maintain an accurate and reliable record of each remote notarial act performed by the notary public.

b) Before performing a remote notarial act using audio-video communication, a remote notary public must confirm the identity of the remotely located principal by:

1. Personal knowledge;

2. The oath of a credible witness who personally knows the remotely located principal and who is personally known to the remote notary public; or

3. Remote presentation by the remotely located principal of a government-issued identification credential that contains a photograph and the signature of the remotely located principal and otherwise conforms to the requirements of 5 ILCS 312/6-102.5(a)(3).

c) If a remote notary public can neither determine that a credential presented by a remotely located principal is a valid identification of the remotely located principal nor match the physical features of the remotely located principal with the credential presented by the remotely located principal, the remote notary public must not take any further action to complete a remote notarial act by using that credential to confirm the identity of the remotely located principal.

d) A remote notary public may perform a remote notarial act using audio-video communication only if the remote notary public and the remotely located principal agree to the performance of the remote notarial act using audio-video communication.

e) Standards for Audio-Video Communication Technology.

1. Communication technology, as defined in 5 ILCS 312/1-104, must provide synchronous audio-video feeds of sufficient video resolution and audio clarity to enable the remote notary public and remotely located principal to see and speak with each other. The process must provide a means for the remote notary public reasonably to confirm that a record presented for a notarial act is the same record in which the remotely located principal made a statement or on which the principal executed a signature.

2. A remote notary public performing a remote notarial act using audio-video communication must verify that the communication technology is sufficient to protect the act and the recording of the act made under Section 176.710 and that any personally identifiable information disclosed during the performance of the remote notarial act is protected from unauthorized access, except as may be required to comply with the Act and Section 176.710(d), including unauthorized access to:

A) the live transmission of the audio-video feeds;

B) the methods used to perform identity verification; and

C) the recorded audio-video communication that is the subject of the remote notarization.

f) If a remotely located principal must exit the workflow before completing the identity verification process, the remotely located principal must restart the identity verification process from the beginning.

g) A remote notary public performing a remote notarization must identify a remotely located principal using the means specified in 5 ILCS 312/6-102.5(a). Nothing in this Part shall prohibit a remote notary public from using enhanced identity verification. (i.e., dynamic knowledge-based assessments).

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.710 Remote Notarial Acts - Recording

a) A notary public in the State of Illinois may perform a remote notarial act for remotely located principals under 5 ILCS 312/6-102.5

b) A remotely located principal may comply with the requirement to appear personally before a remote notary public by appearing remotely before the remote notary public using audio-video technology.

c) A remote notary public has satisfactory evidence of the identity of a remotely located principal if the remote notary public has personal knowledge of the identity of the remotely located principal or if the remote notary public has satisfactory evidence of the identity of the remotely located principal by oath or affirmation of a credible witness.

1. Personal Knowledge. A remote notary public has personal knowledge of the identity of the remotely located principal appearing before the remote notary public if the remotely located principal is personally known to the remote notary public through dealings sufficient to provide reasonable certainty that the remotely located principal has the identity claimed.

2. Credible Witness. To be a credible witness under Section 6-102.5(a)(3) of the Act, the witness shall have personal knowledge of the remotely located principal who has made a statement in or executed a signature on the record that is the subject of the remote notarial act. The remote notary public must have personal knowledge of the credible witness or shall have verified the identity of the credible witness. A credible witness may be a remotely located principal if the remote notary public, credible witness, and remotely located principal whose statement or signature is the subject of the notarial act can communicate by using audio-video technology.

3. Identity Verification. Remote presentation by a remotely located principal of a government-issued identification credential that contains a photograph and the signature of the remotely located principal and otherwise conforms to the requirements of 5 ILCS 312/6-102.5(a)(3).

d) The recording of a remote notarial act performed using audio-video communication, as required by this Part, must be made available upon request to the following persons or entities:

1. To the remotely located principal for whom the remote notarial act was performed;

2. To the Secretary of State;

3. To a law enforcement or federal, state, or local governmental agency in the course of an enforcement action or the performance of any lawful duty;

4. Pursuant to a court order or subpoena;

5. To the remote notary public who performed the remote notarial act;

6. To the employer of the remote notary public to ensure compliance with this Part or the Act; or

7. To any other person who is authorized to obtain the recording by the remotely located principal to the remote notarial act.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.720 Requirement to Restart Performance of Act Under Certain Circumstances

a) A remote notary public who is performing a remote notarial act using audio-video communication must restart the performance of the remote notarial act from the beginning, including and without limitation confirming the identity of the remotely located principal in accordance with Section 176.700, if at any time during the performance of the remote notarial act:

1. The remotely located principal or the remote notary public exits the session;

2. The audio-video communication link is broken; or

3. The remote notary public believes that the process of completing the remote notarial act has been compromised and cannot be completed, for any reason, including poor resolution or quality of the audio or video transmission, or both.

b) As used in this Section, "session" means the performance of one or more remote notarial acts using audio-video communication on a single set of documents as a single event by a single remote notary public with one or more remotely located principals and any applicable witnesses.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.730 Remote Notarial Certificates

a) A form of notarial certificate for a remote notarization complies with Sections 6-103 and 6-105 of the Act if it is in the form provided by applicable law and contains a statement substantially as follows: "This remote notarization involved the use of audio-video technology".

b) A short form of acknowledgment prescribed in 5 ILCS 312/6-105 or other form of notarial certificate required by law complies with 5 ILCS 312/6-103 if it follows substantially one of the forms in this subsection (b):

1. For an acknowledgment in an individual capacity:

State of Illinois

County of ______________

The foregoing instrument was acknowledged before me using audio-video technology on (date)____ by (name(s) of individual(s)).

(Signature of notary public)

Notary Public

(Notary seal)

(My commission expires: _____________)

2. For an acknowledgment in a representative capacity:

State of Illinois

County of ___________

The foregoing instrument was acknowledged before me using audio-video technology on (date)____ by ____(name(s) of individual(s))____as (type of authority, such as officer or trustee) of (name of party on behalf of whom the instrument was executed).

(Signature of notary public)

Notary Public

(Notary seal)

(My commission expires:_ ____________)

3. For a verification on an oath or affirmation:

State of Illinois

County of ____________

Signed and sworn to (or affirmed) before me using audio-video technology on (date)____ by (name(s) of individual(s)) making statement).

(Signature of notary public)

Notary public

(Notary seal)

(My commission expires: _____________)

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.800 Electronic Notary Public Commission Required

a) A person may not perform an electronic notarial act unless the Secretary of State has approved the electronic notary public commission of a person under 5 ILCS 312/2-102 and the traditional notary public commission is in effect.

b) The Secretary of State may suspend or revoke the commission of a notary public who performs or offers to perform an electronic notarial act without an electronic notary public commission that has been approved by the Secretary of State, as required by Section 176.980(b).

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.802 Definitions

Unless otherwise noted, the following definitions apply to this Subpart I:

"Electronic notarization system" or "system" means any combination of technology that enables a notary public to perform a notarial act remotely; that allows the notary public to communicate by sight and sound with the principal or witnesses, if applicable, using audio-video communication; and that includes features to conduct credential analysis and identity proofing.

"Electronic notarization system provider" or "provider" means the third-party vendor that operates, maintains, and sells access to an electronic notarization system. Providers may be manufacturers of the system, authorized representatives of a manufacturer, or other business entities.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.805 Electronic Notarization System Provider Registration, Information Submitted for Registration, and Confidentiality of Certain Information

a) Certification Required to Provide Electronic Notarization Systems. No person or entity may provide electronic notarization systems under 5 ILCS 312/6A-101 unless certified as a provider by the Secretary of State. All certified providers must apply for certification on an annual, calendar-year basis, with applications for recertification due in the Secretary's office not later than September 1 of each year. Nothing in this Part is intended to prohibit a governmental entity from developing an internal electronic notarization system that complies with the requirement in this Part for certification.

b) Who May Provide Electronic Notarization Systems. Without regard to the specific business operations of the provider, all certified system providers under this Section shall be responsible for ensuring that all of the duties and responsibilities of the system provider are carried out in accordance with this Part. System providers may provide these services through their own resources, through a subsidiary, or through contractual relationships with third parties.

c) The Secretary of State shall be solely responsible for certifying providers that apply for certification with the Secretary. Persons or entities desiring to be certified as providers may apply for certification at any time. An application for certification or recertification as a system provider must include the following information:

1. The legal name of the provider;

2. The type of business organization of the provider;

3. The mailing address, physical address, email address, and website address of the provider;

4. The name and phone number of a contact person for the provider;

5. If the applicant is a business entity, proof that the applicant is in good standing with the Illinois Secretary of State, Business Services Department;

6. An attestation that the technology used by the applicant is in compliance with the provisions of this Part and Article VI-A of the Act relating to the performance of electronic notarial acts, with a copy of all manuals and information guides made available to Illinois electronic notaries;

7. A certification that the vendor shall comply with the Illinois Notary Public Act and this Part regarding retention and storage and the disposition of documents, the electronic journal, and audio-video recordings if the provider no longer makes its system available to electronic notaries public for any reason;

8. Copies of publicly available policy and procedure manuals and training materials that are used for training or usage in Illinois;

9. Proof of liability insurance. The provider must maintain general commercial liability or product liability insurance with minimum liability limits of $1 million per occurrence and $3 million aggregate total. The Secretary will accept other commercially acceptable insurance arrangements, in the same minimum amounts, if the Secretary determines that they provide an equivalent level of coverage; and

10. A declaration that the system complies with the laws of the State of Illinois governing electronic notarial acts.

d) An electronic notarization system provider may assert a claim that the information provided to the Secretary of State under subsection (b)(7) by an entity applying for certification with the Secretary of State is the provider's confidential, proprietary information and a trade secret of the system provider and is not a public record nor subject to subsection 7(g) of the Freedom of Information Act [5 ILCS 140].

e) The Secretary of State will certify a system if it meets all of the following requirements:

1. Provides secure access to the system by two-factor verification or another secure means that identifies the electronic notary public accessing the system;

2. Takes all reasonable steps to ensure that an electronic notary public using its system is duly commissioned by the Secretary of State and that the commission is in active status;

3. Provides for uninterrupted, continuous, and simultaneous audio-video communication between an electronic notary public and a principal;

4. Provides audio-video communication with a video resolution and audio quality that ensures that:

A) An electronic notary public and a principal can see, hear, and communicate with each other in real time; and

B) An electronic notary public can match the appearance of a principal with the credential presented by the principal;

5. Provides a secure communication link for audio-video communication that ensures that only the parties to an electronic notarial act and those persons authorized by each party to the electronic notarial act are part of the audio-video communication;

6. For systems providing an electronic journal of electronic notarial acts, ensures it complies with the provisions of this Subpart J and 5 ILCS 312/3-107 governing the requirement that an electronic notary public keep an electronic journal for each electronic notarial act;

7. Provides for the recording of an electronic notarial act performed by audio-video communication that complies with 5 ILCS 312/6A-104 and that is of sufficient quality to ensure verification of the recorded electronic notarial act;

8. Enables an electronic notary public to be satisfied that an electronic document presented for the performance of an electronic notarial act is the same electronic document on which the electronic notarial act was performed;

9. Enables an electronic notary public to affix the wording of a notarial certificate required by 5 ILCS 312/6A-105, as applicable, and the electronic official notary seal of the electronic notary public required by 5 ILCS 312/3-101;

10. Enables a person viewing an electronic document on which an electronic notarial act was performed to view the electronic signature and electronic seal of the electronic notary public who performed the electronic notarial act;

11. Provides a method for determining whether an electronic document on which an electronic notarial act was performed has been altered after the electronic seal of the electronic notary public who performed the electronic notarial act has been affixed to the electronic document and the electronic notarial act was completed;

12. Prevents unauthorized access to:

A) An audio-video communication between an electronic notary public and a principal;

B) The recording of an electronic notarial act required by 5 ILCS 312/6A-104 for an electronic notarial act performed using audio-video communication;

C) Any personally identifiable information used in a credential analysis, identity proofing, or any other part of an audio-video communication, including without limitation:

i) A method of credential analysis and the output of that analysis;

ii) Any credential presented to an electronic notary public;

iii) The questions and answers used to conduct a dynamic knowledge-based authentication assessment; and

iv) The principal's birthdate, Social Security number, and other personally identifiable information;

D) The electronic document on which an electronic notarial act was performed; and

13. Provides a method of generating a paper copy of the electronic journal or journal entry of an electronic notary public and an electronic document on which an electronic notarial act was performed, including, without limitation, the electronic notarial certificate for the electronic document, the electronic signature and electronic seal of the electronic notary public who performed the electronic notarial act and any other document associated with the electronic document.

14. Submits the following plans:

A) A cybersecurity plan outlining security, audit, and other procedures to ensure that the electronic notarization system is secure from cyberattacks, intrusion, and compromise of the user data:

B) A business continuity plan in the case of business interruptions that last longer than two weeks; and

C) A business termination and succession plan in the case of the termination of business by the electronic notarization system provider.

f) The Secretary will notify the applicant to be certified or recertified as a system provider in writing whether the application has been approved or denied. Before denying an application due to minor typographical or clerical errors, the Secretary will advise the applicant of the error and give the applicant 10 business days to correct the error.

g) If an original or amended application to be certified or recertified as a system provider is denied, the applicant may not reapply until 12 months after the date of the denial or the date of the final order of the Secretary upholding the denial if the decision is reviewed in a formal administrative hearing. Before denying an application based on errors, the Secretary of State shall advise the applicant of the error and give the applicant 30 business days to correct the error.

h) In deciding whether to grant or deny an application, the Secretary of State will take into consideration the applicant's past performance in Illinois and other jurisdictions, whether the applicant's license or certification has ever been suspended, revoked, denied, canceled, or withdrawn, and whether another state has denied the applicant's application to operate as a provider in that state.

i) An applicant that has been certified under this Section may at any time submit an amended application seeking certification to provide systems in addition to the systems previously certified for use by the applicant.

j) If there is any change after a provider's certification that affects the ability of an electronic notary public to comply with this Part when performing an electronic notarial act, the provider must immediately notify the Secretary of State of the change. Upon receiving notice of the change, the Secretary of State will determine whether the provider continues to comply with this Part. If the Secretary of State determines that the provider no longer complies with this Part, a provider shall not allow the use of the system to perform an electronic notarial act in this State.

k) Services That Must Be Provided. After certification or recertification by the Secretary, providers shall provide the following services and meet the following requirements:

1. The provider shall only allow the use of systems that have been authorized in Illinois under this Section;

2. The provider shall provide a toll-free customer service/question/complaint hotline, online chat feature, or a dedicated email address that is answered, at a minimum, between 9:00 am and 5:00 pm, Central Time, Monday through Friday;

3. The provider must provide a course of training and written instructions for electronic notaries on operation, maintenance, and safeguards against improper operations for use of the system and, if providing electronic journal capability, instruct the electronic notary on maintaining the required journal of notarial acts performed on the system (see Subpart J). The provider must give the Secretary of State copies of all materials used in the course of this training and available to Illinois electronic notaries;

4. Upon an inquiry from the Secretary of State, providers must verify to the Secretary of State within seven days whether an Illinois electronic notary has been enrolled in the system and provide the Secretary, upon request, with additional reports including but not limited to records of usage in Illinois;

5. The provider must notify the Secretary of State in writing within 10 business days if the provider or the manufacturer becomes unable to provide systems in Illinois or if the provider has been suspended or decertified in any other jurisdiction;

6. The Secretary of State may designate the form, format, and method of delivery (e.g., facsimile, electronic transfer, etc.), for any reports, information, or data required to be filed with the Secretary under this Section, including but not limited to, noncompliance report forms, tampering, or certifications;

7. Upon an allegation that the system provider failed to comply with a material provision of this Part, the Director of Index will notify the system provider, in writing, of the allegations. Within 30 days after receiving the written notice from the Director, the provider must respond to the allegations in writing, and provide an explanation of any corrective action taken. If the provider fails to correct any noncompliance found, the Secretary will deny, suspend, or revoke the certification. This penalty will be in addition to any private causes of action that may exist for an electronic notary that has been aggrieved by the noncompliance of the provider;

8. Upon the request of the Secretary of State, the provider shall, at no cost to the Secretary of State, provide the Secretary with an online demonstration and allow the Secretary of State to ask any relevant questions. The system provider shall also provide to the Secretary a publicly available, detailed description of the system, including complete instructions for operation provided to notaries public.

9. Providers must maintain records related to enrolled electronic notaries for 7 years after the electronic notary disenrolls from the system.

10. Providers shall, upon request of the Secretary of State, submit information regarding the operation of their platform that includes, but is not limited to, the number of current or previous Illinois electronic notaries registered to the platform and the number and type of electronic notarizations performed on the platform by Illinois notaries.

l) Criteria for Certification of Systems. Only systems that have been certified for use in Illinois under this Section may be used by Illinois electronic notaries. Certification of a system will be based on whether the system complies with any nationally recognized standards and this Part.

m) Decertification or Suspension of Providers. The Secretary of State may suspend or decertify a provider from providing electronic notarization systems in Illinois. The Secretary shall provide a written warning, and 15 days to come into compliance, to a provider regarding any violation of this Section that may lead to suspension or decertification. The provider shall respond in writing to the Secretary describing the course of corrective action. If the Director of the Index Department determines that the course of corrective action does not bring the system provider into full compliance with the Act and this Part, or there are recurring instances of the violations, the Secretary may decertify the provider from providing systems in Illinois or suspend the provider from allowing any new enrollments for 3 months. The following are considered actions warranting decertification or suspension:

1. Failure to provide information, as requested, to the Secretary of State in a timely manner;

2. Failure to maintain liability insurance as required;

3. Failure to comply with the duties and obligations contained in this Part;

4. Failure to provide Illinois electronic notaries with correct information regarding the requirements of this Section;

5. Failure to report enrollments and disenrollments to the Secretary within seven days after the enrollment or disenrollment;

6. Failure to inform the Secretary of suspension or decertification from service in another jurisdiction within 30 days;

7. Giving any instruction, codes, procedures, technological information, or advice to a notary that results in or could result in the system being circumvented by a user or third party;

8. Allowing enrollment by a person that is not commissioned as an electronic notary in Illinois;

9. Failure to meet any of the requirements of the Act or this Subpart; and

10. Solicitation of an Illinois electronic notary for any service or product other than the system that has been certified.

11. Has ceased operation as an electronic notarization system provider in the State of Illinois.

n) Notification of Decertification or Decision Not to Recertify. When the Secretary decides not to recertify or to decertify a provider or a provider ceases to operate, the Secretary will notify all affected electronic notaries public in writing. The notifications shall be sent not less than 30 days after the decision or, if the provider requests a formal administrative hearing within that 30-day period to review the decision, notification will not be sent until the entry of a final order of the hearing officer upholding the decision.

o) Applicants Who Are Denied. Applicants whose applications for certification or recertification have been denied and providers that have been suspended or decertified may request an administrative hearing under Subpart K. Decisions not to recertify or to suspend or decertify will not be carried out until at least 30 days after the notice of the decision has been sent to the applicant or provider or, if the applicant or provider requests a hearing within that 30-day period, until the entry of a final order of the hearing officer upholding that decision. The hearings held under this Part shall be conducted in accordance with all the rights, privileges, and procedures set forth in Subpart K. A request for a hearing to contest a decision to deny certification or recertification or to decertify must be made in writing and must be sent to the Office of the Secretary of State, Department of Administrative Hearings, Michael J. Howlett Building, Room 207, Springfield, Illinois 62756, (217) 524-0124.

p) Solicitation by Provider. Any solicitation sent from a provider to a potential user must conspicuously and in bold font include the following statements: "(name of provider) is a privately owned entity and is not owned, operated, or endorsed by the Illinois Secretary of State or any other Illinois government agency" and "(name of provider) is not the sole provider authorized by the Secretary of State". The solicitation or any correspondence from the provider may not be attached to or have the appearance of any official correspondence sent by the Illinois Secretary of State, may not state or otherwise indicate that the provider is the sole or only provider in Illinois. A system provider may not use any personal information (including the name, address, telephone number, or email address) provided by a notary to solicit the notary for any service or product other than the certified electronic notarization system.

q) Publication of Provider Lists. A list of certified electronic notarization system providers, in no particular order, will be published on the Illinois Secretary of State's website (https://www.ilsos.gov/departments/index/notary/home.html) upon certification.

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.810 Information Required in Electronic Seal, Electronic Documents Made Tamper-Evident, and Notation Required If Audio-Video Communication Is Used to Perform Notarial Acts

a) The electronic seal of an electronic notary public must have the information required to be included in an official seal under Section 176.520 and 5 ILCS 312/3-101(a) and must generally conform to the size and other requirements in Section 176.520 and 5 ILCS 312/3-101(a) and (b-5).

b) After the electronic seal and electronic signature are affixed or attached to or logically associated with an electronic notarial certificate of an electronic document and the electronic notarial act is thereby made complete, the electronic seal and electronic signature of the notary public must be capable of independent verification and the electronic document must be rendered tamper-evident.

c) If an electronic notary public performs an electronic notarial act using audio-video communication, the electronic notary public must include adjacent to the electronic seal or in the electronic notarial certificate a notation indicating that the electronic notarial act was performed using audio-video communication. The notation required by this subsection must be the following statement or a substantially similar statement: "Notarial act performed by audio-video communication".

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.815 Access and Use of Electronic Notary Seal and Electronic Signature

a) Neither the employer of an electronic notary public nor any of the employer’s employees or agents shall use or permit the use of an electronic notary seal or signature by anyone other than the authorized electronic notary public to whom it is registered.

b) Access to electronic notary signatures and electronic notary seals must be protected using biometric authentication, password authentication, token authentication, or other form of authentication approved by the Secretary according to the Act and this Part.

c) Report of Theft or Vandalism

1. An electronic notary public must report, in writing to the Secretary, the theft or vandalism of the notary’s electronic signature, electronic notary seal, electronic record or journal, including the backup record, backup journal, and audio-video recordings within the next business day after discovering the theft or vandalism.

2. Failure to report the theft or vandalism is grounds for revocation of an electronic notary public's commission.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.820 Changes to Digital Certificate and Electronic Seal of Electronic Notary

a) An electronic notary public shall at all times maintain an electronic seal and at least one digital certificate that includes the electronic notary’s electronic signature. Both the electronic seal and digital certificate must comply with the Act and this Part.

b) An electronic notary may use more than one digital certificate in accordance with this Part.

c) An electronic notary public shall replace an electronic seal or digital certificate under the following circumstances:

1. The electronic seal or digital certificate has expired;

2. The electronic seal or digital certificate has been revoked or terminated by the device’s issuing or registering authority; or

3. The electronic seal or digital certificate is for any reason no longer valid or capable of authentication.

d) An electronic notary public who replaces an electronic seal or digital certificate must provide the following to the Secretary of State within 10 days after the replacement:

1. The electronic technology or technologies to be used in attaching or logically associating the new electronic seal or digital certificate to an electronic document;

2. The electronic notary's new digital certificate, if applicable;

3. A copy of the electronic notary's new electronic seal, if applicable; and

4. Any necessary instructions or techniques supplied by the vendor that allow the electronic notary’s electronic seal or digital certificate to be read and authenticated.

e) Digital certificates used by an electronic notary shall conform to the X.509 standard to ensure that the document has been rendered tamper-evident.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.825 Standards for Communication Technology

a) Communication technology must provide synchronous audio-video feeds of sufficient video resolution and audio clarity to enable the electronic notary public and the individual to see and speak with each other in real time. The process must provide a means for the electronic notary reasonably to confirm that an electronic record before the electronic notary public is the same record in which the individual made a statement or on which the individual executed a signature.

b) Communication technology must provide reasonable security measures to prevent unauthorized access to:

1. The live transmission of the audio-video feeds;

2. The methods used to perform identity verification;

3. The electronic record that is the subject of the electronic notarization; and

4. Any electronic notary public’s journal or audio-video recordings maintained or stored as a function of the communication technology.

c) If an individual must exit the workflow before completing the identity verification process, the individual must restart the identity verification process from the beginning.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.830 Duties of Electronic Notary Public

An electronic notary public must take reasonable steps to:

a) Ensure the integrity, security, and authenticity of each electronic notarial act performed by the electronic notary public;

b) Maintain a secure backup of the electronic journal kept in accordance with 5 ILCS 312/3-107; and

c) Ensure that any audio-video communication while performing an electronic notarial act, and any journal records and audio-video recordings stored as a function of the communication technology, are secure from unauthorized access or interception.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.835 Standards for Identity Verification

a) If an electronic notary public does not have satisfactory evidence of the identity of a remotely located principal pursuant to 5 ILCS 312/6A-103(b)(1), the electronic notary public must reasonably verify the principal’s identity through a multi-factor authentication procedure as provided in this Section. The procedure must analyze the principal’s identification credential presented remotely against trusted third-person data sources, bind the principal’s identity following a successful dynamic knowledge-based authentication assessment, and permit the electronic notary public to visually compare the identification credential and the principal. Credential analysis and identity proofing must be performed by a reputable third party who has provided evidence to the electronic notary public of the ability to comply with this Section.

b) Credential analysis must use public or private data sources to confirm the validity of the identification credential presented electronically by a principal and will, at a minimum:

1. Use automated software processes to aid the electronic notary public in verifying the identity of each principal;

2. Require the identification credential to pass an authenticity test, consistent with sound commercial practices, that uses appropriate technologies to confirm the integrity of visual, physical, or cryptographic security features and to confirm that the identification credential is not fraudulent or inappropriately modified;

3. Use information held or published by the issuing source or an authoritative source, as available and consistent with sound commercial practices, to confirm the validity of personal details and identification credentials; and

4. Enable the electronic notary public to visually compare for consistency the information and photograph on the identification credential and the principal as viewed by the electronic notary public in real time through communication technology.

c) Identity proofing must be performed using a dynamic knowledge-based authentication assessment. The assessment is successful if it meets the following requirements:

1. The principal must answer a quiz consisting of a minimum of five questions related to the principal’s personal history or identity formulated from public or private data sources;

2. Each question must have a minimum of five possible answer choices;

3. At least 80% of the questions must be answered correctly;

4. All questions must be answered within two minutes;

5. If the principal fails the first attempt, the principal may retake the quiz one time within 24 hours;

6. During a retake of the quiz, a minimum of 40% of the prior questions must be replaced;

7. If the principal fails the second attempt, the principal is not allowed to retry with the same electronic notary public within 24 hours of the second failed attempt; and

8. The electronic notary public must not be able to see or record the questions or answers.

d) An electronic notary public has satisfactory evidence of the identity of the principal if:

1. The electronic notary public has personal knowledge of the identity of the principal; or

2. The requirements of 5 ILCS 312/6A-103(b)(2) are satisfied.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.840 Maintenance of Record of Electronic Notarial Act

Pursuant to 5 ILCS 312/3-107, an electronic notary public shall maintain an accurate and reliable journal record of each electronic notarial act performed by the electronic notary public. The record must be maintained for at least 7 years and must be made available to the Secretary upon request.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.845 Electronic Notarial Act Using Audio-Video Communication - Duty of Electronic Notary and System Provider to Protect Recordings and Personally Identifying Information from Unauthorized Access

An electronic notary public performing an electronic notarial act using audio-video communication, and the provider whose system is used, must ensure that the recording of the electronic notarial act made under 5 ILCS 312/6A-104 and any personally identifiable information disclosed during the performance of the electronic notarial act is protected from unauthorized access.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.850 Use of System Provider to Store Electronic Journals and Recordings

a) An electronic notary public may use a system provider to store the electronic journal of the electronic notary public and the recording made under 5 ILCS 312/6A-104 of an electronic notarial act performed using audio-video communication if the provider has registered with the Secretary of State and the provider's certification is in effect.

b) Except as otherwise provided in this subsection, a provider that stores the electronic journal of an electronic notary public and the recording made under 5 ILCS 312/6A-104 of an electronic notarial act performed using audio-video communication must allow the electronic notary public sole control of the electronic journal and the recording. The provider may allow access to the electronic journal of an electronic notary public or a recording if the electronic notary public has authorized such access or the access to the electronic journal or recording is authorized by the Act or this Part.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.855 Availability of Recordings and Documents to Certain Persons and Entities

The recording made under 5 ILCS 312/6A-104 of an electronic notarial act performed using audio-video communication may be made available:

a) To the principal for whom the electronic notarial act was performed;

b) To the Secretary of State;

c) To a law enforcement or federal, state, or local governmental agency in the course of an enforcement action;

d) Pursuant to a court order or subpoena;

e) To the electronic notary public who performed the electronic notarial act for any purpose listed in subsections (a) through (d), inclusive;

f) To any other person who is authorized by the parties to the electronic notarial act to obtain the recording; or

g) For any authorized purpose and to ensure compliance with the provisions of this Part and Article VI-A of the Act governing electronic notarial acts, the employer of an electronic notary public who performs an electronic notarial act using audio-video communication or the provider whose system was used to perform such an electronic notarial act, or both, may access the recording made under 5 ILCS 312/6A-104 of the electronic notarial act.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.860 Electronic Notarial Acts

a) An electronic notary public may perform an electronic notarial act using audio-video communication only if the electronic notary public and the principal agree to the performance of the electronic notarial act using audio-video communication at the outset of the electronic notarization and before the identity of the principal has been confirmed.

b) Before performing an electronic notarial act using audio-video communication, an electronic notary public must confirm that the electronic document that is the subject of the electronic notarial act is the same document on which the principal made a statement or executed a signature and the identity of the principal. The identity of the principal shall be confirmed by:

1. Personal knowledge;

2. The oath of a credible witness who personally knows the principal and the notary public; or

3. Each of the following:

A) Remote presentation by the principal of a government-issued identification credential that contains a photograph and the signature of the principal;

B) Credential analysis of the government-issued credential and the data on the credential that complies with 5 ILCS 312/6A-103; and

C) A dynamic knowledge-based authentication assessment that complies with 5 ILCS 312/6A-103 or identity proofing under 5 ILCS 312/6A-103.

c) If an electronic notary public cannot determine that a credential presented by a principal is a valid identification of the principal or cannot match the physical features of the principal with the credential presented by the principal, the electronic notary public must not take any further action to complete an electronic notarial act by using that credential.

d) An electronic notary public who is performing an electronic notarial act using audio-video communication must restart from the beginning, including, without limitation, confirming the identity of the principal, if, at any time during the performance of the electronic notarial act:

1. The principal or the electronic notary public exits the session;

2. The audio-video communication link is broken; or

3. The electronic notary public believes that the process of completing the electronic notarization has been compromised and cannot be completed because of the resolution or quality of the audio or video transmission, or both.

e) An electronic notarial act will have the same force and effect as a notarial act performed in the physical presence of a notary public.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.865 Electronic Notarial Certificates

a) A form of notarial certificate for an electronic notarization complies with 5 ILCS 312/6A-105 if it is in the form provided by applicable law and contains a statement substantially as follows: “This electronic notarization involved the use of an electronic system provider".

b) A short form of acknowledgment prescribed in 5 ILCS 312/6A-105 or other form of notarial certificate required by law complies with the Act if it is in substantially the same form as one of the following statements:

1. For an acknowledgment in an individual capacity:

State of Illinois

County of

The foregoing instrument was acknowledged before me using an electronic notarization system provider on (date) by (name(s) of individual(s)).

(Signature of notary public)

Notary Public

(Electronic seal)

(My commission expires:)

2. For an acknowledgment in a representative capacity:

State of Illinois

County of

The foregoing instrument was acknowledged before me using an electronic notarization system provider on (date) by (name(s) of individual(s)) as (type of authority, such as officer or trustee) of (name of party on behalf of whom the instrument was executed).

(Signature of notary public)

Notary Public

(Electronic seal)

(My commission expires:)

3. For a verification on oath or affirmation:

State of Illinois

County of:

Signed and sworn to (or affirmed) before me using an electronic notarization system provider on (date) by (name(s) of individual(s) making statement).

(Signature of notary public)

Notary public

(Electronic seal)

(My commission expires:)

4. For witnessing or attesting a signature:

State of Illinois

County of:

Signed or attested before me on (date) by (name(s) of persons(s))

(Signature of notary public)

(Electronic seal)

(My commission expires:)

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.870 Prohibited Acts

a) An electronic notary public shall not:

1. Engage in any fraudulent activity, deceptive practice, or inequitable act in connection with the Act.

2. Engage in any activity prohibited by 5 ILCS 312/6-104.

3. Fail to record an electronic notarial act performed using audio-video communication or fail to keep such a recording as required by 5 ILCS 312/6A-104.

4. Use an electronic seal or digital certificate that is invalid or fails to comply with this Subpart or Article VI-A of the Act during the performance of an electronic notarial act.

5. Fail to notify the Secretary of State of a change in the electronic seal or digital certificate.

6. Use one’s own electronic seal, alone or together with the electronic signature, except in the performance of an electronic notarial act.

7. Allow unauthorized access to the electronic journal kept by the electronic notary public under 5 ILCS 312/3-107, the electronic notary public's electronic signature or the digital certificate, or to the electronic notarization solution used by the electronic notary public to perform an electronic notarial act.

8. Violate any other provision of this Subpart I or Article VI-A of the Act relating to the performance of an electronic notarial act.

b) The penalties, prohibitions, liabilities, sanctions, and remedies for the improper performance of an electronic notarial act are the same as provided by law for the improper performance of a notarial act that is not an electronic notarial act.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.900 Journal Requirements

a) Every notary public, whether or not also an electronic notary public, must record each notarial act in a journal at the time of notarization to comply with 5 ILCS 312/3-107 and this Subpart J.

b) Each journal of a notary public, whether maintained on a tangible medium or in an electronic format, must contain all of the following information in any order:

1. The name of the notary public as it appears on the commission;

2. The notary public's commission number;

3. The notary public's commission expiration date;

4. The notary public's office address of record with the Secretary of State;

5. A statement that, upon the death or adjudication of incompetency of the notary public, the notary public's personal representative or guardian or any other person knowingly in possession of the journal must deliver or mail it to the Secretary of State;

6. The meaning of any abbreviated word or symbol used in recording a notarial act in the notarial journal; and

7. The signature of the notary public.

c) If a notary public's name, commission expiration date, or address changes before the notary public stops using the notarial journal, the notary public shall add the new information after the old information and the date on which the information changed.

d) An electronic journal kept by a notary public or an electronic notary public under 5 ILCS 312/3-107 must comply with the requirements of subsections (a) and (b) and must also:

1. Prohibit the electronic notary public or any other person from deleting a record included in the electronic journal or altering the content or sequence of such a record after the record is entered into the electronic journal except to redact personally identifiable information as required by Section 176.910(d);

2. Be securely backed up by the electronic notary public and the electronic notarization system provider whose electronic notarization system was used by the electronic notary, if applicable; and

3. Omit all personally identifiable information, as defined in Section 176.10.

e) A notary public shall allow for the inspection of the journal or electronic journal as required by Section 176.950.

f) Notwithstanding any other subsection of this Part to the contrary, a notary employed by an attorney or law firm is not required to keep a journal of notarizations performed during the notary's employment if the attorney or law firm maintains a copy of the documents notarized. No attorney or law firm shall be required to violate attorney-client privilege by allowing or authorizing inspection of any notarizations that are recorded in a notary's journal. Journals of notarizations performed solely within the course of a notary's employment with an attorney or law firm are the property of the employing attorney or firm.

g) No notary public nor electronic notary public is required to keep or maintain a journal or otherwise record a notarial act or electronic notarial act in a journal if that act is performed by or on behalf of a candidate for public office and includes one or more of the following documents:

1. nominating petitions;

2. petitions of candidacy;

3. petitions of nominations;

4. nominating papers; or

5. nomination papers. (See 5 ILCS 312/3-107.)

h) The exemption under subsection (g) applies regardless of whether the notarial act or electronic notarial act is performed on the documents described in subsection (g) before, on, or after the effective date of the amendatory Act of the 103rd General Assembly, and the failure of a notary public or an electronic notary public to keep a journal of or to otherwise record such an act does not affect the validity of the notarial act on that document and is not a violation of the Act. [5 ILCS 312/3-107]

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

14 Ill. Adm. Code 176.910 Journal Entries and Prohibited Entries

a) Required Entries. Each entry shall contain at least the following information:

1. The name of the principal;

2. The name of each credible witness relied upon to verify the identity of the principal;

3. The name of any other person that signed for the principal;

4. The title or a description of the document notarized;

5. The date of the notarization;

6. Whether the notarization was conducted in person, remotely, or electronically;

7. The fee charged, if any; and

8. The physical location of the notary and the principal.

b) Optional Entries. In addition to the entries required under 5 ILCS 312/3-107 of the Act and this Part, a journal may contain the signature of the individual for whom the notarial act is performed and any additional information about a specific transaction that might assist the notary public to recall the transaction.

c) Prohibited Entries. A notary public must not record in the notary’s journal the following:

1. An identification number that was assigned by a governmental agency or by the United States to the principal that is set forth on the identification card or passport presented as identification;

2. Any other number that could be used to identify the principal of the document;

3. A biometric identifier, including a fingerprint, voice print, or retina image of the principal;

4. An individual’s first name or first initial and last name in combination with and linked to any one or more of the following data elements when the data elements are not encrypted or redacted:

A) Social Security number;

B) Driver’s license number or a State identification card number; or

C) Financial account information; and

5. An electronic signature of the person for whom an electronic notarial act was performed or any witnesses. [5 ILCS 312/3-107]

d) Inadvertent or Accidental Entries. A notary public who inadvertently records information prohibited under subsection (c) must redact such information before providing public access to or copies of the journal.

e) Fees. Each notarial fee charged should correspond to the notarial act performed. If a fee is waived or not charged, the notary public shall indicate so in the journal entry using notarizations such as “n/c”, “0” (zero), or " − " (dash). Clerical and administrative fees, if charged, shall be separately itemized in the journal.

f) Address. For journal entries, address means the city and state only.

g) Transitional Provision. A notary public who holds a commission on July 1, 2023, may continue to use the notary public’s journal until the completion of that journal or the expiration of that commission, whichever may occur first.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.920 Form and Content of Journals Maintained on a Tangible Medium

a) A journal maintained on paper or any other tangible medium may be in any form that meets the physical requirements in this Section and the entry requirements in Section 176.910.

b) The cover and pages inside the journal must be bound together by any binding method that is designed to prevent the insertion, removal, or substitution of the cover or a page. This includes glue, staples, grommets, or another binding, but does not include the use of tape, paper clips, or binder clips.

c) Each page must be consecutively numbered from the beginning to the end of the journal. If a journal provides two pages on which to record the required information about the same notarial act, both pages may be numbered with the same number or each page may be numbered with a different number. Page numbers must be preprinted.

d) Each line, or entry if the journal is designed with numbered entry blocks, must be consecutively numbered from the beginning to the end of the page. If a line extends across two pages, the line must be numbered with the same number on both pages. A line or entry number must be preprinted.

e) The journal of a notary public must remain within the exclusive control of the notary public at all times.

f) A notary public who performs multiple notarizations for the same principal within a single transaction may abbreviate the entry of those notarizations in the notary journal after first including all the information required by the Act. The abbreviated entry must indicate the type of transaction and the number of documents notarized as part of that single transaction.

g) A journal maintained in a tangible format must be retained for a minimum of 7 years after the final notarial act chronicled in the journal.

h) The retention requirements for this Part do not apply to notaries in the course of their employment with a governmental entity.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.930 Form and Content of an Electronic Notarial Journal

a) A journal maintained in electronic format may be in any form that complies with this Section and the entry requirements in Section 176.910.

b) A journal maintained in an electronic format must be designed to prevent the insertion, removal, or substitution of an entry.

c) A journal maintained in an electronic format must be securely stored and recoverable in the case of a hardware or software malfunction.

d) Entries from the notarial journal must be available upon request by the Secretary of State in a PDF format.

e) The journal of a notary public shall remain within the exclusive control of the notary public at all times.

f) A notary public who performs multiple notarizations for the same principal within a single transaction may abbreviate the entry of those notarizations in the notary journal after first including all of the information required by the Act. The abbreviated entry must indicate the type of transaction and the number of documents notarized as part of that single transaction.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.940 Custody and Control of the Journal and Notification of a Lost, Compromised, Destroyed, or Stolen Journal

a) The notary public must maintain custody and control of the journal at all times during the term of the notary public's commission. When not in use, the journal must be kept in a secure location and accessible only to the notary public. A secure location includes the notary public's sole possession or a locked location to which only the notary public has access.

b) Notification of a lost, compromised, destroyed, or stolen journal under 5 ILCS 312/3-107 must be made in writing or electronically the next business day after the date the notary public or personal representative or guardian discovers the loss or theft of the journal. The notification must include all of the following:

1. A statement of whether the journal is lost, compromised, destroyed, or stolen;

2. An explanation of how the journal became lost, compromised, destroyed, or stolen;

3. The date the notary public discovered that the journal was lost, compromised, destroyed, or stolen;

4. A statement that the journal has been destroyed or that the notary public does not possess the journal and does not know who possesses it or where it is located; and

5. A statement that, if the notary public subsequently acquires possession of the lost or stolen journal, the notary public shall file a written statement with the Secretary of State within 10 business days after the date the notary public reacquires possession of the lost or stolen journal, including a written explanation of how the journal was recovered.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.950 Inspection of a Journal, Response to Subpoenas and Investigative Requests, and Public Information

a) In the notary's presence, any person may inspect an entry in the official journal of notarial acts during the notary's regular business hours, but only if:

1. The person's identity is personally known to the notary or proven through satisfactory evidence;

2. The person affixes a signature in the journal in a separate, dated entry;

3. The person specifies the month, year, type of document, and the name of the principal for the notarial act or acts sought; and

4. The person is shown only the entry or entries specified.

b) If the notary has a reasonable and explainable belief that a person has a criminal or harmful intent in requesting information from the notary's journal, the notary may deny access to any entry or entries.

c) Subpoenas and investigative requests. A request for inspection or certified copies of a journal made through an investigative request by law enforcement or by the Secretary of State or in a subpoena in the course of criminal or civil litigation, or administrative proceeding shall be complied with in the manner specified in the request or subpoena.

d) If any portion of the audio-video recording of an electronic or remote notarization includes biometric information or includes an image of the identification card used to identify the principal, that portion of the recording is confidential and shall not be released without consent of the individual whose identity is being established, unless ordered by a court of competent jurisdiction or upon request by the Secretary of State.

e) Failure of a notary public to promptly and adequately respond to a request for public information in accordance with this Part may be good cause for suspension or revocation of a notary public or electronic notary public commission or other disciplinary action against the notary.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.960 Electronic Journal Record Retention and Depositories

a) A notary public must retain the electronic journal required and any audio-video recording created under 5 ILCS 312/6A-104 in a computer or other electronic storage device that protects the journal and recording against unauthorized access by password or cryptographic process. The recording must be created in an industry-standard, audio-visual file format and must not include images of any electronic record that was the subject of the electronic or remote notarization.

b) An electronic journal must be retained for at least 7 years after the last electronic or remote notarial act chronicled in the journal. An audio-visual recording must be retained for at least 7 years after the recording is made.

c) A notary public must take reasonable steps to ensure that a backup of the electronic journal and audio-visual recording exists and is secure from unauthorized use.

d) Upon the death or adjudication of incompetency of a current or former notary public, the notary public's personal representative or guardian or any other person knowingly in possession of an electronic journal or audio-visual recording must:

1. Comply with the retention requirements of this Section;

2. Transmit the journal and recording to one or more depositories under subsection (e); or

3. Transmit the journal and recording in an industry-standard readable data storage device to the Illinois Secretary of State, Index Department at 111 E. Monroe St., Springfield, IL 62756.

e) A notary public, guardian, conservator, or agent of a notary public, or a personal representative of a deceased notary public may, by written contract, engage a third person to act as a depository to provide the storage required by this Section. A third person under contract under this Section shall be considered a depository. The contract must:

1. Enable the notary public, guardian, conservator, or agent of the notary public, or the personal representative of the deceased notary public to comply with the retention requirements of this Section even if the contract is terminated; or

2. Provide that the information will be transferred to the notary public, guardian, conservator, or agent of the notary public, or the personal representative of the deceased notary public if the contract is terminated.

f) The retention requirements for this Part do not apply to notaries in the course of their employment with a governmental entity.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.970 Complaints of Alleged Violations

For purposes of this Section, "notary public" includes an electronic notary public and remote notary public.

a) A person may file a complaint in writing with the Secretary of State alleging that a notary public has violated one or more of the provisions of the Act or any provision of this Part. The complaint should include as much information as possible, including:

1. The name of the notary public, and the employer or business name of the notary;

2. If known, the name of the county in which the notary resides;

3. If known and assigned, the notary public commission number assigned to the notary;

4. An explanation of the reason for the complaint;

5. A copy of relevant documents related to the matter;

6. Whether the notarial act was an electronic or remote notarial act performed using audio-video communication; and

7. Additional information that the person considers relevant to the complaint or notarization.

b) The complaint may be filed in person or by mail to the Illinois Secretary of State, Index Department at 111 E. Monroe St., Springfield, IL 62756, or by electronic mail (enotary@ilsos.gov).

c) Upon receipt of the complaint, the Secretary will notify the notary who is the subject of the complaint in writing. The notice shall be sent by regular mail to the address of the notary on file with the Secretary of State. The notice sent to the notary public who is the subject of the complaint will include:

1. A statement of the statutory provision which the notary public is alleged to have violated;

2. An explanation of the disciplinary actions that may be taken against the notary public;

3. Instructions for the notary public to respond to the complaint by regular mail or by email; and

4. A statement that the notary public must respond to the complaint within 10 days after receiving the notice.

d) If, after receiving the response from the notary, the Secretary of State determines that further action is not warranted, the Secretary will notify the notary public of that decision.

e) Either after receiving the response from the notary or if no response is received, the Secretary of State may further investigate the complaint of alleged misconduct against the notary public by considering the totality of the offense, facts, and circumstances of the individual case.

f) When evaluating an allegation of notarial misconduct to determine if action should be taken, the Secretary may consider a variety of factors, including but not limited to, the following:

1. Nature and severity of the act, offense, or crime under consideration;

2. Number and variety of current violations;

3. Evidence of the requisite honesty, credibility, truthfulness, and integrity of the notary public;

4. Actual or potential harm to the general public, group, individual, or customer;

5. History of complaints received by the Secretary of State;

6. Prior disciplinary record or warning from the Secretary of State;

7. Any felony or misdemeanor convictions involving fraudulent activity;

8. Fraudulent, deceptive, or inequitable business acts;

9. The disbarment or professional discipline of a notary that is also an attorney;

10. The revocation of any financial, real estate, or securities licenses; or

11. Failure to pay any Illinois tax.

g) If the Secretary determines that a crime may have been committed, the Secretary will refer the allegations to law enforcement for further investigation or prosecution.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.980 Revocation, Suspension, and Reprimand

For purposes of this Section, "notary public" includes an electronic notary public and remote notary public.

a) Revocation. A notary public's commission may be revoked for any of the foregoing acts or omissions:

1. The notary public demonstrates the notary public lacks the honesty, integrity, competence, or reliability to act as a notary public; or

2. The notary public fails to maintain a residence or place of employment in Illinois.

b) Suspension. A notary public's commission may be suspended for any actions contrary to the Act, other laws of the State of Illinois, and this Part.

c) Other Remedial Actions. The Secretary of State may deliver a written official warning to cease misconduct, misfeasance, or malfeasance to any notary public whose actions are determined to violate this Part, the Act, or other laws of the State of Illinois.

d) Before suspending or revoking a notary public's commission, the Secretary of State must inform the notary public of the basis for the suspension or revocation and that the suspension or revocation takes effect on a particular date unless a request for an administrative hearing is filed with the Secretary of State under 5 ILCS 312/7-108(j) and Section 176.990 before that date.

e) Resignation or expiration of a notary public's commission does not terminate or preclude an inquiry into the notary's conduct by the Secretary of State. Whether the finding would have been grounds for revocation will be made a matter of public record.

f) A notary public or an electronic notary public that notarizes one of the documents listed in this subsection (f) by or on behalf of a candidate for public office and does not enter the notarial act or electronic notarial act into a journal does not violate the Act pursuant to 5 ILCS 312/3-107(f) and shall not be subject to discipline provided in this Section:

1. nominating petitions;

2. petitions of candidacy;

3. petitions for nominations;

4. nominating papers; or

5. nomination papers.

History

• Source: Amended at 49 Ill. Reg. 584, effective January 1, 2025

14 Ill. Adm. Code 176.990 Appeals

Appeals should be addressed to the Secretary of State Department of Administrative Hearings and comply with Subpart K.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1000 Definitions

"Act" means the Illinois Notary Public Act [5 ILCS 312].

"Contested case" means an adjudicatory proceeding conducted by the Department of Administrative Hearings in which the individual legal rights, duties, or privileges of a party are required by law to be determined by the Secretary of State only after an opportunity for a hearing. [5 ILCS 100/1-30]

"Continue a hearing" means to reschedule a hearing to another date certain. A decision to continue a hearing is a continuance.

"Department of Administrative Hearings" means the Department of Administrative Hearings of the Office of the Secretary of State of Illinois.

"Director" means the Director or Acting Director of the Department of Administrative Hearings.

"Formal Hearing" means a hearing authorized to be held by the Department of Administrative Hearings under the Act or this Part.

"Hearing Officer" means any person designated by the Secretary of State to preside at any hearing conducted under this Subpart.

"Order of Default" means an Order entered by the Department of Administrative Hearings which denies all relief because a petitioner fails to appear for a hearing at the time, date, and place specified in the Notice of Hearing or Notice of a continued hearing date without prior notification to the Department of the petitioner's inability to appear.

"Party" means any person named or admitted as a participant in any hearing conducted under this Subpart, including the Secretary and the Department of Administrative Hearings.

"Person" includes any individual, corporation, partnership, association, or firm legally capable of either seeking the action of the Office of the Secretary of State or being the subject of the action.

"Petitioner" is the party who by written request seeks or applies for any relief from the Secretary under the Act or this Part.

"Respondent" means a person against whom a complaint or petition is filed, or who, because of interest in the subject matter of a petition or application or the relief sought in the petition or application, is made a respondent or to whom an order or complaint is directed by the Department of Administrative Hearings.

"Secretary" means the Illinois Secretary of State.

"Withdrawal from a hearing" means to terminate a hearing upon the motion or at the request of the petitioner.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1005 Right to Counsel

a) Attorneys Must be Licensed or 711 Students. Any party may appear and be heard through an attorney at law licensed to practice in the State of Illinois, or any law student licensed under Supreme Court Rule 711, in any hearing in any matter involving the exercise or legal skill of knowledge.

b) Pro Hac Vice. Attorneys admitted to practice in states other than the State of Illinois may appear and be heard in a specific hearing, upon the attorney's verbal representations or written documentation as to the attorney's admittance, by special leave of the Director of Administrative Hearings or a designee, pursuant to an Order pro hac vice, as authorized by Supreme Court Rule 707 and Rule 5.5 of the Illinois Rules of Professional Conduct.

c) Pro Se. A natural person may appear and represent oneself instead of representation by an attorney.

d) Corporations, Limited Liability Companies, and Partnerships. A corporation, association, limited liability company, or partnership must appear by legal counsel licensed to practice in the State of Illinois or appearing pro hac vice.

e) The standard of conduct shall be the same as before all Courts of Illinois.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1010 Appearance of Attorney

An attorney appearing in a representative capacity shall file a written notice of appearance with the Department of Administrative Hearings office where the formal hearing is requested or pending, providing a name, address, email address, website, facsimile number, telephone number, Supreme Court registration number, and identification of the party represented.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1020 Special Appearance

Before filing any other pleading or motion, a special appearance may be made either in person or by an attorney for the limited purpose of objecting to jurisdiction. Every appearance not expressly designated a special appearance will be considered to be a general appearance. If the reasons for objecting to jurisdiction are not apparent from the papers on file in the proceeding, the special appearance shall be supported by an affidavit setting forth the reasons. In ruling upon any objection at any hearing, the hearing officer may consider all matters apparent from the papers on file, affidavits submitted by any party, and any other evidence offered upon disputed issues of fact. No determination of any issue of fact in connection with the objection is a determination of the merits of the case or any aspect thereof. A ruling adverse to the movant does not preclude the making of any motion or defense which might otherwise have been made. If the hearing officer sustains the objection, an appropriate ruling shall be entered on the record. Error in ruling against the objection is not waived by the objector's taking part in further proceedings in this matter.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1030 Substitution of Parties

A hearing officer shall, upon motion, rule on a request for the substitution of parties in cases in which a party has died, resigned, been moved, or otherwise succeeded to the interest of a previously named party.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1040 Commencement of Actions - Notice of Hearing

a) Notice of Hearing. A contested case is begun when the Office of the Secretary, upon either the written request of the petitioner or its own initiative, serves a Notice of Hearing upon the respondent. "Written request" means a petition via facsimile, electronic transmission, or regular mail. The Notice of Hearing must be sent by electronic transmission if the petitioner agrees to receive the Notice of Hearing and Decision or Order via electronic transmission.

b) The Notice of Hearing shall include:

1. The names and addresses of all known parties, including the department initiating the hearing;

2. Whether the hearing is at the request of the petitioner or a department;

3. The time, date, and place of the hearing. The Department of Administrative Hearings will try to accommodate a party's request regarding the location of a hearing, but reserves the discretion to schedule a hearing at a site that is mutually convenient for all parties involved, including witnesses, and subject to the constraints imposed by budgetary and personnel considerations;

4. A concise statement of facts (as distinguished from conclusions of law or a mere recitation in the words of the statute):

A) the alleged act or acts done by each petitioner or, when appropriate, the respondent;

B) either the time, date, and place each such act was done or a concise statement of the matters asserted;

C) the rule, statute, or constitutional provision, if any, alleged to have been violated or otherwise involved in the proceeding; and

D) the relief sought by the petitioning party; and

5. A statement to each party that:

A) each party may be represented by legal counsel and may present evidence, cross-examine witnesses, and otherwise participate in the hearing;

B) failure to appear shall constitute a default, unless a party has, upon due notice to other parties, moved for and obtained a continuance from the hearing officer; and

C) delivery of notice to the designated representative of a party constitutes service upon that party.

c) Filing Fee

1. A petition for a hearing will not be accepted for filing unless it is accompanied by a filing fee of $50. This filing fee must be submitted in the form of a money order or check made payable to the Secretary of State, or credit charge (with a preapproved card).

2. This filing fee will not be refunded to the party requesting a hearing if the hearing proceeds, the party submits multiple petitions for a hearing to different hearing locations simultaneously, the party withdraws from the hearing or an order of default is entered. The party will be required to submit another filing fee before another hearing will be scheduled.

3. When a hearing is continued, the party requesting the hearing will not be required to submit another filing fee.

4. When the party requesting a hearing withdraws or defaults, the party will be required to submit another filing fee before another hearing will be scheduled.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.1050 Motions

a) Form of Motions. All motions must be made in writing and must set forth the relief or order sought and must be filed with the Department of Administrative Hearings at the earliest time to be considered by the hearing officer. Motions may be hand delivered or sent by regular mail, courier, or facsimile transmission. Motions must be sent to the hearing location designated in the notice of hearing and are considered received on the date that they are file-stamped by Department of Administrative Hearings personnel. Motions based on information that does not appear on the record must be supported by an affidavit. Motions may be presented by a party to obtain appropriate relief, such as dismissing the proceedings, adding necessary parties, or extending time to comply with an order.

b) Motions to Correct or Reconsider. The Department will not consider motions to correct a material misstatement of fact or to reconsider a decision made or an Order entered in a formal hearing. The proper avenue for relief is to file a complaint under the Administrative Review Law. [735 ILCS 5/Art. III]

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1060 Form of Documents Filed - Original Documents Required

a) Form of Papers

1. All papers filed in any proceeding must:

A) be clearly written or typewritten;

B) contain a caption showing the title of the proceeding with a case number:

C) be signed or verified by the party filing the papers or that party's authorized representative or attorney; and

D) contain the party's address, telephone number, website, and email address, if available.

2. An original and one copy shall be filed by each party, except as provided in subsection (b).

b) Original Documents Required. If a document submitted under this Part has not been previously submitted to the Department of Administrative Hearings, only the original document will be accepted or admitted into evidence. "Original document" means bearing the original signature of the petitioner or author of the document, as applicable. Documents that are composed or created solely to submit to the Secretary of State at a formal hearing must be submitted as originals.

c) Documents Sent by Facsimile or Electronic Transmission. Documents that must be submitted as an original but are instead sent by facsimile or electronic transmission will be accepted at the time of the hearing. However, the originals of the documents must be submitted at a later date. The hearing officer will grant leave to submit the originals within not more than 14 calendar days after the hearing. The hearing officer will determine the specific number of days within which the petitioner is allowed to submit the original, based on the individual circumstances of each case.

d) Failure to Submit. The petitioner's failure to submit an original document as required in this Section will not in and of itself constitute, under any circumstance, the sole basis for denying relief.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1070 Conduct of Formal Hearings

a) All hearings conducted in any proceeding will be open to the public.

b) Every hearing will be presided over by a hearing officer duly appointed by the Secretary. The hearing officer will have the authority to conduct the hearing, rule on all motions, administer oaths, subpoena witnesses or documents at the request of any party, examine witnesses, and rule upon the admissibility of testimony and evidence. The Secretary may also appoint a representative to appear and participate in the hearing on the Secretary's behalf. Before evidence is taken, the petitioner or respondent may request disqualification of the hearing officer by making a motion for disqualification on the record that states the specific grounds upon which it is alleged that the hearing officer cannot provide a fair and impartial hearing. The hearing officer will rule upon the motion. If the motion is denied, the hearing will proceed, or the petitioner may withdraw from the hearing. If the motion is granted, the case will be transferred to another hearing officer for a hearing on the same day if possible. If it is not possible to schedule a hearing on the same day, the Secretary will assign another hearing officer, who will schedule a new hearing date.

c) Depositions and Interrogatories

1. Upon order of the hearing officer, for good cause shown, and upon reasonable notice to other parties, any party, including the Department, may take, at its own expense, the testimony of any party or person by deposition upon oral examination or written questions for the purpose of discovery or for use as evidence in the action in a contested case (for example, when the witness is not available because of distance, time, cost to the party using the testimony, sickness, infirmity, imprisonment, the witness being out of state, or similar factors). The notice, order, or stipulation to take a deposition must specify whether the deposition is to be a discovery deposition or an evidence deposition. In the absence of specification, a deposition is a discovery deposition only. If both discovery and evidence depositions are desired of the same witness, they must be taken separately, unless the parties stipulate otherwise or the hearing officer orders otherwise upon notice and motion. The deposition must be taken in the manner provided by law for discovery and evidence depositions in civil actions in the Circuit Courts of Illinois.

2. Any party may direct written interrogatories to any other party. Interrogatories must be restricted to the subject matter of the case to avoid undue detail and the imposition of any unnecessary burden or expense on the answering party. Sworn answers or objections to interrogatories directed to the Index Department or the Secretary of State may be made by a designated agent, including the Department's counsel, who shall furnish such information as is available. Written interrogatories must be served on the opposing party not later than 15 business days before the hearing. Objections to questions or refusals to answer will be heard as motions at the hearing before the hearing officer, who will rule on the objection or refusal. Answers shall be sworn. If an answer to an interrogatory can be obtained from documents in the possession or control of the party on whom the interrogatories are served, it is a sufficient answer to specify the documents and make them available to the inquiring party to inspect and copy at the asking party's expense. This subsection (c)(2) does not apply to objections or refusals to answer interrogatories.

d) Rules of Evidence. The technical rules of evidence shall not apply. Any relevant evidence may be admitted if it is the sort of evidence relied upon by reasonably prudent people in the conduct of their affairs. The existence of any common law or statutory exclusionary rule that might make improper the admission of the evidence over objections in civil or criminal actions shall not be a bar to the admissibility of otherwise relevant evidence. The rules of privilege shall be followed to the same extent that they are now or may be recognized in later civil actions. Irrelevant, immaterial, or unduly repetitious evidence may be excluded upon objection. Objections to evidentiary offers may be made and will be noted in the record and ruled upon by the hearing officer. Any party may make an offer of proof following an adverse evidentiary ruling. Subject to these requirements, when a hearing will be expedited and the interests of the parties will not be prejudiced, any part of the evidence may be received in written form. Subject to the evidentiary requirements of this subsection, a party may conduct cross-examination required for a full and fair disclosure of the facts.

e) List of Witnesses and Bill of Particulars. Upon written request made at least 10 business days before the hearing, a party shall furnish to the other parties a list of the names and addresses of prospective witnesses or written answers to a written demand for a bill of particulars.

f) Inspection of Documents and Interview of Parties

1. Any party or its representatives shall have the right, upon the filing of a written motion with proper proof of service, to inspect any relevant document in the possession of or under the control of any other party before the formal hearing. The inspection of documents shall occur at the location the formal hearing is scheduled.

2. Any party may file a written motion seeking to interview parties or persons having knowledge of relevant facts, subject to any statutory or constitutional privileges. Upon order of the hearing officer, for good cause shown, and upon reasonable notice to other parties, any party, including the Department of Administrative Hearings, may interview at its own expense, parties or persons having knowledge of relevant facts. Interviews of persons and inspection of documents shall be at times and places reasonable for the persons and the custodian of the document.

g) Admissions. A party may serve on any other party a written request for the admission by the latter of the truth of any specified relevant fact in the request or for the admission of the genuineness of any relevant documents described in the request. Copies of the documents shall be served with the request unless copies have already been furnished.

h) Right to Call Witnesses, Cross-Examine, Subpoena Documents and Introduce Exhibits. Each party shall have the right to request the subpoena of witnesses, to call and examine witnesses, to introduce exhibits, and to cross-examine witnesses on any matter relevant to the issues even if that matter was not covered in the direct examination. Applications to the hearing officer assigned to the case for subpoenas duces tecum must specify the books, papers and documents desired to be produced.

i) Pre-hearing Conference. At the request of any party or upon the hearing officer's own motion, the hearing officer may call a pre-hearing conference. At the conference, the parties or their representatives shall appear as the hearing officer directs. Matters that may be considered at a pre-hearing conference include, but are not limited to:

1. The simplification of the issues;

2. Amendments to the grounds for action;

3. The possibility of obtaining admissions, stipulations of fact, and documents that will avoid unnecessary proof;

4. The limitation of the number of expert witnesses; and

5. Any other matters that may aid in the disposition of the contested case.

j) Order from Pre-hearing Conference. After a pre-hearing conference, the hearing officer will enter an order reciting any action taken, any agreements made by the parties as to any of the matters considered, and the issues to be heard.

k) Oath. Testimony shall be taken only on oath or affirmation.

l) Stipulations. Parties may agree by stipulation upon any facts involved in the hearing. The facts stipulated shall be considered as evidence in the hearing.

m) Official Notice. The hearing officer may take official notice of past hearings and of any matter of which the Circuit Courts of Illinois may take judicial notice. In addition, official notice may be taken of generally recognized technical or scientific facts with the Department's specialized knowledge. Parties will be notified either before or during the hearing, or by reference in preliminary reports or otherwise, of the material noticed, including staff memoranda and data, and they will be given an opportunity to contest the material so noticed. The Department's and the hearing officer's experience, technical competence, and specialized knowledge may be used in the evaluation of the evidence.

n) Rights of Parties. Each party shall have the right to rebut the evidence against that party, to appear in person, and to be represented by counsel. If a party does not testify on its own behalf, it may be called by the Secretary of State's representative and examined as if under cross-examination.

o) Opening and Closing Statements. Upon the opening of the hearing, the hearing officer will allow the parties to make opening statements. Opening statements may not be made at any other time, except at the discretion of the hearing officer. Upon the close of the hearing, each party may make a closing statement orally, by written brief, or both, at the discretion of the hearing officer, incorporating arguments of fact and law. A written brief may be required when the hearing officer determines that the facts and issues are complicated and the parties must plead their cases in writing for the record.

p) Exhibits. All exhibits must be clearly marked for identification and admitted into evidence by the hearing officer.

q) Cross-examination of Witnesses. In the hearing of any case, any party may call any other party or its agent as an adverse witness and examine that witness as if under cross-examination. The adverse party calling for the examination is not bound by the testimony of the adverse witness, but may rebut the testimony given and impeach the witness by proof of prior inconsistent statements. If the hearing officer determines that a witness is hostile or unwilling, the witness may be examined by the party calling the witness as if under cross-examination. The party calling an occurrence witness may, upon showing that the party called the witness in good faith but is surprised by the testimony, impeach the witness by proof of prior inconsistent statements.

r) Burden of Proof. The general burden of proof is upon the petitioner for any relief in a hearing. The standard of proof is the preponderance of the evidence.

s) Interpreters and the Deaf and Hard of Hearing. The Secretary will provide, upon prior written request, an interpreter for parties who are deaf or hard of hearing and wish to testify. Providing a language interpreter, however, is the responsibility of the petitioner or respondent.

t) Report of Proceedings and Obtaining a Copy of Record

1. The Department of Administrative Hearings will, at its expense, have present at each formal hearing an electronic or digital recording device or a qualified court reporter to make a permanent and complete report of the proceedings, including evidence admitted or tendered and not admitted, testimony, offers of proof, objections, remarks of the hearing officer and of the parties and their representatives, and all rulings of the hearing officer.

2. Upon written request and at the party's own expense, any party may obtain a copy of the report of proceedings from the court reporter or the electronic device from the Department of Administrative Hearings. The party must pay $25 to the Secretary of State, in advance, to cover the cost of making an electronic or digital copy and mailing.

u) Motions to Continue and Withdraw and Leave to Submit Original Documents

1. Motions to Continue by a Petitioner or Respondent and Grounds. Hearings before the Department of Administrative Hearings will be continued only pursuant to a motion that complies with Section 176.1050 and is filed on or before the date of the hearing, made over the telephone before or on the date of the hearing, or made in person on the day of the hearing. The movant shall set forth the grounds for the motion, which are limited to unforeseen, unavoidable, or uncontrollable circumstances, such as an Act of God, the recent discovery of new evidence, the sudden illness or death of the movant, a member of the movant's immediate family, or the movant's legal counsel, or if the movant can demonstrate some other real and compelling need for additional time. A Motion to Continue may be supported by evidence that tends to prove the grounds alleged, including sworn testimony taken at a motion hearing on the day of the hearing. The inability to obtain transportation to the hearing site or a party's failure or inability to obtain the documentation required to fulfill the minimum requirements to be issued relief are not circumstances that justify continuing a hearing.

2. Continued to a Date Certain. A formal hearing will not be continued "generally". A continuance, if granted, will state a date certain on which the hearing shall reconvene. If the petitioner is not prepared to go forward after the first continuance, a request to withdraw must be submitted or an Order of Default shall be entered.

A) Written Motions to Continue filed at least 15 days before the date of the hearing specified in the Notice of Hearing or notice of a continued hearing date will be given priority in rescheduling over motions filed or made less than 15 days before the date of the hearing or made on the date of the hearing. The Department will rule upon Motions to Continue filed at least 15 days before the date of the hearing and, when possible, notify the movant of its ruling before the date of the hearing. If the motion is denied, the movant must appear at and proceed with the hearing or withdraw from the hearing or an Order of Default shall be entered.

B) Motions to Continue made by telephone less than 15 days before the date of the hearing specified in the Notice of Hearing or notice of a continued hearing date must also be filed in writing and received or postmarked no more than 5 days after the date of the hearing to be considered. A Motion to Continue made in writing less than 15 days before the date of the hearing specified in the Notice of Hearing or notice of a continued hearing date must be received and postmarked no more than 5 days after the date of the hearing. The Department of Administrative Hearings cannot assure the movant that it will rule upon these motions before the date of the hearing.

C) It is the responsibility of the movant to inform the Department of Administrative Hearings, in the Motion to Continue or during a telephone conversation, what course of action the movant wishes to take if the motion is denied (either to appear and proceed with the hearing, withdraw, or default). In all cases, it is also the responsibility of a movant who has not been notified of the Department's ruling to contact the Department of Administrative Hearings on or before the day of the hearing to determine whether the hearing officer has ruled on the motion. A movant's failure to appear after a Motion to Continue is denied will result in the entry of an Order of Default.

3. Motions Made by the Secretary or the Index Department. The Department may also make or file a Motion to Continue for unforeseen, unavoidable, or uncontrollable circumstances, such as an Act of God, the recent discovery of new evidence, the sudden illness or death of the hearing officer, the attorney representing the Secretary of State, a witness, or a member of the immediate family of one of these entities, or if the Department can demonstrate some other real and compelling need for additional time.

4. Motions to Withdraw. Except as provided in this subsection (u)(4), a petitioner may withdraw from a hearing for any reason. A Motion to Withdraw made in person or by telephone on or before the day of the hearing must be followed up with a written motion that is received no more than 10 days after the date of the hearing. A Motion to Withdraw made in writing must be received or postmarked not more than 10 days after the date of the hearing. Failure to do so will result in an Order of Default. Once a petitioner is placed under oath, a request to withdraw from a hearing that, in the hearing officer's judgment, is based upon surprise evidence presented or adverse evidence shall not be granted. Upon withdrawal, the requested relief will not be considered and the petition is dismissed. Should the petitioner request another hearing, it must be done in writing and it will be treated as any other request for a hearing.

5. Motions for Leave to Submit Original Document. As provided in this subsection (u), the petitioner may request leave to submit original documents if the petitioner proceeds with the hearing, offering copies of documents when originals are required. The hearing shall be completed and the petitioner shall be granted leave to submit the original documents.

6. Attorney's Appearance on File. A Motion to Continue or Withdraw made by any attorney on behalf of a petitioner or respondent will not be considered unless the attorney has filed a written notice of appearance as provided in Section 176.1010.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

Chapter I Secretary of State

Part 176 Notary Public Records

14 Ill. Adm. Code 176.1080 Orders, Notifications, and Time Limits on Obtaining Relief

a) The Department shall prepare a written order for all final determinations, which shall include the Findings of Fact, Conclusions of Law, Recommendations of the hearing officer, and the Order of the Secretary.

b) The hearing officer shall prepare the Findings of Fact, Conclusions of Law, and Recommendations to the Secretary. The Findings of Fact and Conclusions of Law must be stated separately.

c) The Order of the Secretary shall be the decision of the Office of the Secretary of State upon the application for relief.

d) The Department of Administrative Hearings shall notify all parties or their agents personally, by facsimile, regular mail, or electronic transmission, of the Findings of Fact, Conclusions of Law, Recommendations, and the Order. If it is the Order of the Secretary to grant the petitioner relief, then the Department of Administrative Hearings will also provide instructions on what steps the petitioner must take to obtain the relief. The failure to follow and complete these instructions will result in the denial of relief.

e) An Order of Default will be entered against the petitioner or respondent who fails to appear for a hearing at the scheduled time and has failed to request or been granted a continuance under Section 176.1070(u).

f) Orders resulting from formal hearings are final administrative orders within the meaning of the Administrative Review Law [735 ILCS 5/Art. III].

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1090 Record of Hearings

a) The record of the hearing in a contested case shall include:

1. All pleadings (including all pre-hearing and post-hearing notices and responses thereto, admissions, stipulations of facts, motions, and rulings thereon);

2. All documentary evidence;

3. A statement of matters officially noticed;

4. A transcript of the proceedings;

5. The Findings of Fact, Conclusions of Law, and Recommendations of the hearing officer; and

6. The Order of the Secretary of State, which shall constitute a final administrative decision within the provisions of the Illinois Administrative Review Law [735 ILCS 5/Art. III].

b) The record will be certified by the hearing officer or the Director of Administrative Hearings upon any complaint for administrative review. The Department will prepare an index of the record, with each page of the record numbered in sequence.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.1095 Invalidity

If any portion of this Subpart shall be held by a court of competent jurisdiction to be invalid, that holding shall not affect the remaining portions.

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.ILLUSTRATION A: Nonresident Notary Public Affidavit of Applicant

NONRESIDENT NOTARY PUBLIC

AFFIDAVIT OF APPLICANT

STATE OF

COUNTY OF

I, (name), being first duly sworn, state upon personal knowledge and under penalty of perjury as follows:

1. The address of my residence is:

2. I am employed by:

3. The address of my employer is:

4. The telephone number at my place of employment is:

5. The email address at my place of employment is:

6. The web address at my place of employment is:

Dated this

day of

, 20

Signature of Applicant:

Signed and sworn before me on

day of

, 20

By

(Printed Name of Applicant)

(seal)

Signature of Notary Public

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.ILLUSTRATION B: Notary Public Course of Study and Examination Provider Surety Bond Form

Know All Persons by These Presents, That We, ___________________, hereinafter referred to in this document as Principal and __________________, a corporation organized and existing to do business in the State of Illinois, for the use and benefit of all persons who may be damaged by breach of this bond, as Obligees, in the penal sum of $50,000, lawful money of the United States of America, for the payment of which sum, well and truly to be made, we bind ourselves, our executors, administrators, successors, and assigns, firmly by these presents. The condition of this obligation is such that the principal has applied to the Illinois Secretary of State for certification as a provider of a notary course of study and examination provider.

If the Principal faithfully complies with the Illinois Notary Act and all rules and regulations that have been or may hereafter be in force concerning the certification and shall save and keep harmless the Obligees from all loss or damage that may be sustained as a result of the issuance of the license or permit to the Principal, this obligation shall be void; otherwise, this obligation shall remain in full force and effect. The bond will expire but may be continued by a renewal certificate signed by the Principal and Surety. The Surety may at any time terminate its liability by giving 30 days' written notice to the Index Department, 111 East Monroe, Springfield, Illinois 62756, and the Surety shall not be liable for any default after that 30-day notice period, except for defaults occurring before the notice period.

Signed, Sealed and Dated this _____ day of ___________, 20.

Principal ____________________________

Surety_______________________________

By__________________________________(Attorney-in-fact)

History

• Source: Added at 47 Ill. Reg. 8640, effective June 5, 2023

14 Ill. Adm. Code 176.ILLUSTRATION C Exemption from Notary Public Study Course Requirements

Name: _________________________________________________________

Street Address: _________________________________________________________

City, State, Zip code: _________________________________________________________

I am: (check one)

____ An Illinois licensed attorney in good standing with the Illinois Attorney Registration and Disciplinary Commission. My ARDC registration number is ________________.

____ Currently employed by an Illinois licensed attorney (e.g., law firm located in Illinois, Illinois State's Attorney's Office, Illinois Public Defender's Office, Illinois Attorney General).

Name and address of firm or agency: _____________________________________________

---

---

Name of Illinois licensed attorney who is my direct supervisor: _____________________________________________

____ Currently an Illinois court or federal court judge or employed by an Illinois or federal court.

Name and address of the court: ______________________________________________

---

---

I have read and understand the version of the Act that is in effect at the time of this application and certify that the above information is true and accurate.

---

Signature

---

Date

History

• Source: Added at 49 Ill. Reg. 584, effective January 1, 2025

Part 177 Credit Services Organizations

14 Ill. Adm. Code 177.10 Filing with the Secretary of State

All documents required to be filed with the Secretary of State by the Credit Services Organizations Act (P.A. 85-1384, effective January 1, 1989) shall be filed with the Secretary's Index Department, 111 East Monroe Street, Springfield, Illinois 62756, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday, excluding holidays.

14 Ill. Adm. Code 177.20 Requirements for Filing

a) A registration statement. The statement as shown in Illustration A will be supplied by the Index Department and shall be used by the credit services organization.

b) A one hundred dollar ($100.00) filing fee. The fee shall be paid in cash, by money order, certified check or personal check. No registration statement shall be accepted and filed without the payment of the fee.

c) A $100,000.00 surety bond if a credit services organization charges or receives any money or other valuable consideration prior to full and complete performance of the services the credit services organization agrees to perform (Section 5(1) of P.A. 85-1384). The bond shall contain the same terminology as the bond shown in Illustration B. The bond form will be supplied by the Index Department.

14 Ill. Adm. Code 177.30 Availability of Records

The registration statements and bonds filed hereunder with the Index Department shall be available for inspection and copying during the normal work hours.

14 Ill. Adm. Code 177.ILLUSTRATION A – Credit Services Organization Registration Statement

STATE OF ILLINOIS

CREDIT SERVICES ORGANIZATION

REGISTRATION STATEMENT

($100 Filing Fee)

This registration statement, along with a $100 filing fee and a $100,000 surety bond are to be filed with the Secretary of State, Index Department, 111 East Monroe Street, Springfield, IL 62756.

When a change in the information contained in this statement occurs the credit services organization is required to file an amended statement within 90 days. There is no fee for filing amended statements.

A credit services organization is required to continuously maintain a $100,000 surety bond if that credit services organization charges or receives any money or other valuable consideration prior to full and complete performance of the services the credit services organization has agreed to perform. A bond shall also be maintained for a period of 2 years after the date that the organization ceases operations.

A file-stamped copy of this statement will be returned to the credit services organization who must maintain the copy in their files and allow a buyer to inspect the registration statement.

1. Name and address of the credit services organization.

2. Name and address of the registered agent or individual authorized to accept service of process on behalf of the credit services organization.

3. Name and address of any and all persons who directly or indirectly own or control 10 percent or more of the outstanding shares of stock in the credit services organization. (If additional space is needed, attach a listing)

4. If any, the bond number, name and location of the surety company issuing a $100,000 surety bond as required by the Credit Services Organizations Act.

Bond number:

5. (A) Has there been any litigation or unresolved complaint filed with a governmental authority of this State, any other state or the United States relating to the operation of this Credit Services Organization? No Yes

If answer is yes, you must attach a full and complete disclosure.

(B) If there has been no litigation or unresolved complaint filed, the following statement must be completed and notarized.

I,

,

name

official capacity

of

name of credit services organization

do hereby affirm that there has been no litigation or unresolved complaint filed with a governmental authority of this State, any other State or the United States relating to the operation of this credit services organization.

signature

Subscribed and affirmed to before me on

, 19

.

signature of notary public

(seal)

6. I do hereby affirm that the foregoing statements and any attachments are true and correct.

signature

official capacity

Subscribed and affirmed to before me on

, 19

.

signature of notary public

(seal)

Chapter I Secretary of State

Part 177 Credit Services Organizations

14 Ill. Adm. Code 177.ILLUSTRATION B – Credit Services Organization Surety Bond

STATE OF ILLINOIS

CREDIT SERVICES ORGANIZATION

$100,000 SURETY BOND

File with Secretary of State, Index Department, 111 East Monroe Street,

Springfield, IL 62756

(Required by Public Act 85-1384,

effective January 1, 1989)

Bond Number

Premium $

Term

KNOW ALL PERSONS BY THESE PRESENTS:

That

Name of Principal

as principal, doing business under the name of

,

Name of Business

a credit services organization, and whose address for services is

Street Address

,

City

State

Zip

and

, a corporation

Name of Surety

authorized to transact a general surety business in the State of Illinois, as surety, are held firmly bound unto the People of the State of Illinois in the penal sum of $100,000, for the payment of which, we bind ourselves, our heirs, executors, successors and assigns, jointly and severally, firmly by these presents.

The principal is engaged in the business of selling the services of a credit services organization within the meaning of the "Credit Services Organizations Act" (Public Act 85-1384, approved September 1, 1988, effective January 1, 1989) and is required to furnish a bond conditioned as herein set forth; and this bond is executed and tendered in accordance therewith.

The conditions of this obligation are that if the principal complies with the provisions of the "Credit Services Organizations Act" and does not damage any person by any violation of said Act then this obligation is to be void, otherwise it is to remain in full force and effect.

Any person damaged by any violation of the "Credit Services Organizations Act" may bring an action of law against the principal and surety on this bond in his or her own name to recover such damages.

The liability of surety for any claim arising under this bond shall not exceed the actual damages arising from principal's violation of the "Credit Services Organizations Act" and surety shall not be liable for the punitive damages permitted under Section 11 of the Act.

The aggregate liability of the surety on all claims whatsoever shall not exceed the amount of this bond.

This bond is executed by the surety to comply with the provisions of the "Credit Services Organizations Act" and said bond shall be subject to all of the terms and provisions thereof.

Name of Officer of Business

Name of Surety

Address

Address

This bond is executed under an unrevoked appointment or power of attorney.

I certify (or declare) under penalty of perjury under the laws of the State of Illinois that the foregoing is true and correct.

Date

Signature of Attorney-In-Fact

Printed or Typed Name of Attorney-In-Fact

---

A credit services organization is required to continuously maintain a $100,000 surety bond. A bond shall also be maintained for a period of 2 years after the date that the organization ceases operations.

Part 178 Limited Liability Company Act

14 Ill. Adm. Code 178.10 Definitions

In addition to the definitions contained in Section 1-5 of the Limited Liability Company Act [805 ILCS 180] the following definitions shall apply:

"Abstracts of Limited Liability Companies" shall consist of a hard copy print-out of the information shown on the computer records of the Department of Business Services of the Office of the Secretary of State.

"Delinquent" or "Delinquency" shall mean a status of a limited liability company that is in non-compliance with this Act.

"Department" shall mean the Department of Business Services of the Office of the Secretary of State located in Springfield.

"Director" shall mean the Director of the Department of Business Services.

"Electronic Filing" shall mean the ability to utilize interactive computer applications for the submission, review and filing of documents required or authorized by LLCA.

"Interrogatories" shall mean a written request for information to ascertain whether the limited liability company has complied with the provisions of the Act.

"LLCA" shall mean the Limited Liability Company Act [805 ILCS 180].

"LLC Division" shall mean that unit of the Department which administers the provisions of LLCA.

"Organizer" shall mean a person who has executed the original articles of organization.

"Secretary" shall mean the Secretary of State of Illinois.

History

• Source: Amended at 30 Ill. Reg. 12969, effective July 11, 2006

14 Ill. Adm. Code 178.15 Applicability

The provisions of this Part shall be applicable to all limited liability companies, which are, will or may become subject to the provisions of the Limited Liability Company Act of 1992.

14 Ill. Adm. Code 178.20 Filing Requirements

a) All entities, other than natural persons, serving as a member or manager in a limited liability company must provide evidence of existence upon request of the Secretary of State. Such evidence shall be provided in the formats set forth in subsections (a)(1)-(4) of this Section. All other entities not specifically addressed shall provide proof of existence in the manner prescribed by subsections (a)(1)-(4) that most appropriately applies to their entity format.

1. Corporations, limited liability companies, limited partnerships and limited liability partnerships shall provide either a Certificate of Existence or a Certificate of Good Standing duly authenticated by the proper officer from the state or country of domicile.

2. General partnerships shall provide a statement of information that includes the name of the partnership, the state of formation, the county of formation, the date of formation, the address at which the records of the partnership are kept, and the names and addresses of all partners. The statement shall be sworn to, dated and executed by one of the general partners.

3. Trusts shall provide a statement of information concerning the trust that includes the name of the trust, the date of its creation, the name of all trustees, the location, including state and county, of the trust, and that the trust is currently in full force and effect. The statement shall be dated and executed by a trustee.

4. Estates shall provide a copy of the relevant court order currently dated and executed.

b) Documents transmitted for filing electronically must include the name of the person making the submission. The inclusion shall constitute the affirmation or acknowledgement of the person, under penalties of perjury, that the instrument is his or her act and deed or the act and deed of the limited liability company, as the case may be, and that the facts stated in the submission are true. Compliance with this Section shall satisfy the signature requirements of Section 5-45 of the Limited Liability Company Act, which shall otherwise apply.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

14 Ill. Adm. Code 178.25 Additional Requirements for Forms

a) All forms filed with the Department, except the original articles of organization and application for admission of a foreign limited liability company, shall contain the file number assigned to the limited liability company by the Department.

b) All forms and attachments submitted by a limited liability company shall be typewritten or printed on 8½" by 11" white paper.

14 Ill. Adm. Code 178.30 Filing Location

a) All documents required to be filed with the Secretary of State pursuant to the LLCA shall be filed with the Department.

b) Documents submitted for filing in Springfield, the Department's headquarters, shall be filed at the following address:

Secretary of State's Office

Department of Business Services

Limited Liability Company Division

Room 351, Howlett Building

Springfield, Illinois 62756

c) Documents submitted by mail for filing should be sent to the Department's Springfield office.

History

• Source: Amended at 27 Ill. Reg. 8884, effective May 19, 2003

14 Ill. Adm. Code 178.35 Business Hours

The Department of Business Services business hours are 8:00 a.m. to 4:30 p.m. in Springfield, Monday through Friday, except holidays.

14 Ill. Adm. Code 178.40 Sale of Information

a) Information concerning any limited liability company shall be available to the public from the Department of Business Services upon written request, or by telephone or in person, or, if technology is available, on line through interactive computer.

b) Information in the form of an abstract of record concerning the limited liability companies on file with the Department shall be printed from the computer file of the Department, and shall consist of the limited liability company name, its date of formation, any assumed name, its registered agent, the address of the office at which the records are maintained, the latest date (if any) at which the limited liability company will dissolve, the foreign jurisdiction where formed (if applicable), the date of filing with the Department, the members' and/or managers' names and addresses and the file number with the Department. The fee for each abstract or record shall be $25.

c) Computer connections by non-department users

1. Computer terminal connections to the Secretary's computer may be provided to other State agencies. This service may be made available at no charge so long as the requesting agency commits to pay all costs and so long as the service does not substantially increase costs or network traffic on the Secretary's computer.

2. Computer terminal connection may be allowed to commercial users provided that all costs are borne by the commercial user. The allowance of computer terminal connections shall be contingent upon the best interests of the Office of the Secretary of State, which is based upon the volume of requests received, the computer terminal connections as opposed to other methods, and other factors that may impede the operations of the Office of the Secretary of State. This service will be suspended at anytime, should the connection interfere with the Secretary's internal work schedule and processing.

3. Fees for information supplied by means of computer connections between the Secretary of State's computers and those of any other agency, corporation, or person may be paid on a monthly basis for all information delivered during that month, as determined by the Secretary and the agency or person to be the most economic way of billing. The proper fee shall be determined by negotiation between the agency or commercial user and the Director based upon telephone line charges, rental or purchase fees for terminals, and other appropriate factors, such as statutory fees for certain types of information and the requirements of this Subpart.

4. No user may reproduce any list or abstract from the computer connection. Lists of LLCA information including the names and information concerning all limited liability companies may only be purchased pursuant to the provisions of this Part. Computer connections are to be used only to look up information. No changes on the Department's LLCA files may be made by any computer connection user.

d) Terms and conditions for computer maintained LLCA information

1. The information supplied by the Department to other agencies, commercial users, or other persons shall be in the abstract format only, as specified in subsection (b) of this Section.

2. The fee for the entire file of current and dissolved limited liability companies, and assumed names, shall be $1,500. The monthly update shall cost $400 per update. The update is available through modem access only. If the file is purchased on computer tape, the purchaser shall supply the Department with a computer tape or tapes, compatible with the Secretary's computer equipment, on to which tapes the information shall be transferred.

3. All purchase requests shall be submitted in writing to the Director. Payment shall be made to the Department before delivery of the information to the purchaser. No refunds will be made after the request is approved by the Director. Payment shall be made by check, money order made payable to the "Secretary of State" or credit card approved by the Secretary of State's Department of Accounting Revenue (e.g., Visa, MasterCard).

4. All commercial or other type purchasers shall sign a written agreement setting forth the terms and conditions required by Illinois law, and as may be deemed appropriate after negotiation between the Department and the purchaser.

5. The commercial purchaser shall not resell to any other purchaser the information obtained from the Department in the same form or format in which it is obtained from the Department. Resale of information in the same form or format shall result in cancellation of access to information by the Department. The commercial purchaser may sell the information to the subscribers of its computer or business information services only to the extent that its subscribers request on an individual entity by entity basis.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

14 Ill. Adm. Code 178.45 Right to Counsel

a) Hearing procedures will be governed by Subpart A of 14 Ill. Adm. Code 150.

b) Any party may appear and be heard through an attorney at law licensed to practice in the State of Illinois.

1. Attorneys admitted to practice in states other than the State of Illinois may appear and be heard upon the attorney's verbal representation or written documentation as to the attorney's admittance, pursuant to an order pro hac vice entered by a judge of the circuit court of the county in which the hearing is conducted, as provided in Supreme Court Rule 707.

2. A natural person may appear and be heard on his or her own behalf.

3. A corporation, association, or partnership may appear and present evidence by any bona fide officer, employee, or representative.

c) Only an attorney properly licensed shall represent anyone else in any hearing in any matter involving the exercise of legal skill or knowledge. The standards of conduct shall be the same as before the Courts of the State of Illinois.

d) A hearing officer may be disqualified from presiding over a hearing wherein the hearing officer has an ethical conflict of interest or has an economic interest in the outcome of the proceeding.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

14 Ill. Adm. Code 178.50 Service of Process

a) For the purposes of Section 1-50 of the LLCA, the procedures set forth in this Section shall apply.

b) Any process, notice or demand to be served under this Part shall be made upon the Secretary, the Director, or any employee of the Department designated by the Director to accept such service for him or her, in the following manner:

1. Service shall comply with the provisions of Part 2 of the Civil Practice Law [735 ILCS 5/2], the Federal Rules of Civil Procedure (2B USCA), or any administrative rules of service, as may be appropriate.

2. The affidavit of compliance required by Section 1-50 and 45-55 of the LLCA to be appended to the process, notice or demand to be served, containing the information described in subsection (b) of this Section, shall be signed by the person instituting the action, suit or proceeding or by an attorney of record, and the signature of the affiant, without more, shall constitute the affirmation or acknowledgement, under penalties of perjury, that the affidavit is the act or deed of the affiant and that facts stated therein are true.

c) At the time of any service under this Part, there shall be paid a fee of $100, payable by check or money order to the "Illinois Secretary of State" or credit card. Each process, notice or demand shall be submitted with a separate payment.

d) The Department of Business Services shall maintain original file copies which shall be in paper form or an acceptable archival medium, and originals may be discarded upon verification of archival medium (microfilm or electronic imaging) and upon approval by the State Records Commission (see 5 ILCS 160/16).

History

• Source: Amended at 21 Ill. Reg. 16178, effective December 1, 1997

14 Ill. Adm. Code 178.55 Payment of Fees

All payments of fees and penalties with respect to original articles of organization, applications for original admission to transact business, applications for reinstatement of limited liability companies, and report of penalty-return to good standing shall be by money order, certified check, cashier's check or a check drawn on the account of an Illinois licensed attorney or certified public accountant, payable to the "Secretary of State" or by credit card, a debit card or an electronic funds transfer. All other payments may be made by an entity check, payable to the "Secretary of State." Any check that is returned by the bank to the Secretary of State's Office for any reason will immediately void the transaction for which it was intended and the Secretary of State will treat the filing event as never occurring.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

14 Ill. Adm. Code 178.60 Refunds

A refund of any fee paid to the Department shall be made only in cases of duplicate filings or overpayment of fees, or upon compliance with Section 5-48 of the Limited Liability Company Act.

History

• Source: Amended at 42 Ill. Reg. 9550, effective May 24, 2018

14 Ill. Adm. Code 178.65 New Practices and Technologies

The Secretary of State is authorized to adopt practices and procedures to accomplish receipt, processing, maintenance, retrieval and transmission of, and remote access to, LLCA filing data by means of electronic, voice, optical and/or other technologies, and without limiting the foregoing, to maintain and operate, in addition to or in lieu of a paper-based system, a non-paper-based filing system utilizing any such technologies.

History

• Source: Added at 30 Ill. Reg. 12969, effective July 11, 2006

14 Ill. Adm. Code 178.70 Extension of Filing Deadlines

Filing of Organizational Documents, Annual Reports, and Other Business Entity Materials

a) All organizational documents, annual reports, and other business entity materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes shall be filed with the Business Services Department, Howlett Building, Room 350, Springfield IL 62756 or 69 West Washington, Suite 1240, Chicago IL 60602.

b) Pursuant to the powers vested in him by Section 5(7) of the Secretary of State Act, the Secretary of State hereby extends for the duration of the disaster proclaimed by the Governor in Gubernatorial Proclamation number 2020-038, issued on March 9, 2020, as extended by subsequent proclamations, and for a period of 90 days thereafter, the filing deadlines for materials required to be filed with the Secretary of State pursuant to Chapter 805 of the Illinois Compiled Statutes and that were due to be filed on or after March 17, 2020. This extension period may be rescinded by the Secretary of State through the adoption of an emergency rule. Business organizations are required to pay the statutory amounts to the Secretary of State when materials are filed, including penalties, filing fees, and other charges required to be paid, without regard to the application of the filing extension deadline of this Section.

c) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 55-5 of the Limited Liability Company Act of 1986 (LLCA) that require the Secretary of State to, within 10 days after any of the documents subject to Section 55-5 are delivered to the Secretary for filing, give written notice of his or her disapproval of the documents are suspended for the duration of the disaster proclaimed in Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process these documents as expeditiously as possible.

d) Pursuant to the terms of Executive Order 2020-39, as extended by Executive Order 2020-44, and as may be further extended by subsequent Executive Orders, the provisions of Section 50-50 of the LLCA that require the Secretary of State to provide expedited services upon request are suspended for the duration of the disaster proclaimed in the Gubernatorial Proclamation 2020-44, as extended, and for 30 days thereafter. During this period of suspension, the Secretary shall process the expedited documents within 24 hours or as soon as possible thereafter. For purposes of filing dates, the date the document was submitted for filing will be the document's filing date.

History

• Source: Amended at 45 Ill. Reg. 7162, effective May 28, 2021

14 Ill. Adm. Code 178.100 Availability of Names: Statutory Requirements and Placement of Suffix

A proposed limited liability company name shall comply with the applicable provisions of the LLCA. The term "Limited Liability Company", "L.L.C.", "LLC", or the like, as used in Section 1-10(a) of the LLCA, must be placed at the end of the company name.

History

• Source: Amended at 46 Ill. Reg. 14358, effective July 27, 2022

14 Ill. Adm. Code 178.105 Preliminary Determination of Availability

Requests for searches of the records of the Secretary of State, Department of Business Services, Limited Liability Company Division, for a preliminary determination of the availability of a proposed name will only be accepted through the Springfield office of the Department. Requests may be made over the counter, by letter, or by telephone and will be answered by the same however, no more than three searches may be requested by a single telephone call. A preliminary determination of availability shall be informational only and shall not be deemed a final determination for any purpose.

14 Ill. Adm. Code 178.110 Final Determination of Availability

A final determination whether a proposed name is available as a limited liability company name shall be made only upon payment of the proper fees as listed in Section 5-10 of the Act and the submission of a document required to be filed with the Secretary of State, stamped and filed with the Department of Business Services, Limited Liability Company Division.

14 Ill. Adm. Code 178.115 Response as to Basis of Unavailability

Any final determination or any preliminary determination under this Subpart that indicates a proposed name is unavailable shall specify a reason therefor when a document has been properly submitted or when a request in writing has been made, and has specifically requested that a reason for unavailability be stated. Only one reason for unavailability need be stated and, when appropriate, only one conflicting name need be set forth. Any stated reason for unavailability made with respect to a preliminary determination shall be informational only and shall not be deemed a final determination for any purpose.

14 Ill. Adm. Code 178.120 Reconsideration Procedure

An applicant may request reconsideration of a final determination that a proposed name is unavailable, by making a written request addressed to the Director, Room 328, Howlett Building, Springfield, Illinois 62756. The applicant shall attach to this request a copy of the written final determination rejecting the name, and shall include a statement of the reasons upon which the applicant seeks approval of the name. The applicant may include material in support of the request for reconsideration. This reconsideration procedure shall not apply to any request for preliminary determination of availability. Only after the Director's determination of unavailability shall an applicant be entitled to a hearing.

14 Ill. Adm. Code 178.125 Effect of Final Determination

A final determination under this Subpart that a limited liability company name is available is concerned solely with the administrative convenience of the Department of Business Service, Limited Liability Company Division and does not warrant the name selected or guarantee the unqualified use of the name without regard to the rights of other parties. The Secretary of State does not pass upon the legality of a limited company name by merely permitting organization, qualification, reservation or registration under a name. A final determination of limited liability company name unavailability shall not be based on deceptiveness, confusing similarity or other such considerations derived from unfair competition and trademark law.

14 Ill. Adm. Code 178.130 Standards – Conflicting Names

A limited liability company name shall be distinguishable upon the record of the Secretary of State, Department of Business Services, Limited Liability Company Division, from the limited liability company name or any assumed limited liability company name of any domestic or foreign limited liability company or domestic or foreign corporation name or assumed name in existence and on record or from any name reserved or registered.

History

• Source: Amended at 27 Ill. Reg. 8884, effective May 19, 2003

14 Ill. Adm. Code 178.135 Distinguishable – Defined

A limited liability company name is distinguishable when containing a difference from other names on the record. A difference exists when the limited liability company name distinguishability is recognizable by the Secretary of State or his/her designee.

History

• Source: Amended at 31 Ill. Reg. 8553, effective June 15, 2007

14 Ill. Adm. Code 178.140 Matters Not Considered

Only the proposed name and the names of active limited liability companies or corporations (limited liability companies or corporations that have not been dissolved or revoked) are considered in determining name availability. Among the matters not considered are:

a) the purpose, location or relative size of the business;

b) the intent of the applicant;

c) any consent by a limited liability company or corporation bearing a similar title;

d) the names of other unincorporated entities;

e) the common law or statutory law of unfair competition, unfair trade practices, trade marks, trade names, service marks, service names, copyrights or any other right to the exclusive use of names or symbols;

f) the names of limited liability companies or corporations not on record with the Secretary of State;

g) whether the public may be likely to be deceived or misled by the resemblance of the proposed name to the name of other limited liability companies or corporations;

h) whether an existing limited liability company or corporation may possibly be injured by a resemblance of the proposed name;

i) any criteria of sound, including, but not limited to, phonetics derived from deliberate misspelling or otherwise.

History

• Source: Amended at 31 Ill. Reg. 8553, effective June 15, 2007

14 Ill. Adm. Code 178.145 Differences

Limited liability company names are deemed not to be distinguishable when a comparison of the names reveals no difference except for:

a) one or more of the following: limited liability company, LLC, L.L.C., corporation, company, incorporated, limited, or an abbreviation thereof, regardless of where in the name such may appear;

b) the inclusion or omission of punctuation, articles of speech, conjunctions, contractions (or symbols thereof), or a letter or letters;

c) an abbreviation versus a spelling out of a word, a different tense of a word, or the use of the singular as opposed to the plural of a word.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

14 Ill. Adm. Code 178.150 Surnames

A surname shall be considered a "word". Where a limited liability company name consists of a surname without a given name or initials, it is treated in the same manner as other words for application of this Subpart. A person may use his or her own name in a limited liability company name, but the limited liability company name must still be distinguishable from other limited liability company names.

14 Ill. Adm. Code 178.155 Alphabet Names

Where a name or portion of a name consists of initials only or letters of the alphabet, the combination of initials or letters of the alphabet will be treated as a "word" in the same manner as other words for application of this Subpart.

14 Ill. Adm. Code 178.160 Government Affiliation

No name may falsely imply governmental affiliation.

14 Ill. Adm. Code 178.165 Restricted and Professional Words

a) Words which are subject to restrictions on their use in a limited liability company name include, but are not limited to, the following and any variation thereof: Insurance, Surety, Underwriters, Bank, Bankers, Banking, or any licensed professional services.

b) However, "Bank", "Banker", or "Banking" may be used in a limited liability company name if, at the time of filing of the articles of organization, application for admission by a foreign limited liability company, or an amendment to either of these documents to change the limited liability company name, the limited liability company shall give the Department a letter signed by the Director of Financial and Professional Regulation-Division of Banking or a designee granting permission to use these words, pursuant to the standard set forth in Section 46 of the Illinois Banking Act [205 ILCS 5/46].

1. The limited liability company using any of these aforementioned words must not be engaged in the banking business, but may be a bank holding company.

2. The use of these words shall be allowed if the limited liability company is not conducting financial business and the otherwise prohibited word is a person's proper name, e.g. "Robert Banks".

c) The Department will prohibit the organization of limited liability companies which seek to use names or have purposes which violate the Act. This prohibition does not apply to names or purposes specifically authorized by these rules.

History

• Source: Amended at 29 Ill. Reg. 19699, effective November 28, 2005

14 Ill. Adm. Code 178.170 Acceptable Characters of Print

The limited liability company name must consist of letters of the English alphabet, Arabic or Roman numerals, and/or symbols capable of being readily reproduced by the Office of the Secretary of State [805 ILCS 5/4.05].

a) Letters of the English alphabet include upper case or capital letters only; no distinction as to type face or font is recognized.

b) Arabic numerals include: 0, 1, 2, 3, 4, 5, 6, 7, 8, 9

c) Roman numerals characters include: I, V, X, L, C, D, M

d) Symbols recognized by the Secretary of State include: @ # $ % & * ( ) _ + = : " ; / ? , .

History

• Source: Amended at 20 Ill. Reg. 7050, effective May 8, 1996

14 Ill. Adm. Code 178.175 Invalidity

If any provision of this Part shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect validity of the remaining provisions thereof.

14 Ill. Adm. Code 178.180 Assumed Names

a) A limited liability company may adopt, change, renew or cancel its assumed name by filing an application with the Department and paying the fee as prescribed in Section 5-10 of the LLCA. The application shall contain the following required information: the name of the limited liability company, the file number, and the assumed name to be adopted, changed, renewed or cancelled.

b) The application to adopt, change, or cancel an assumed name shall be on a separate form from the application to renew an assumed name.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

Chapter I Secretary of State

Part 178 Limited Liability Company Act

14 Ill. Adm. Code 178.185 Foreign Llc with Prohibited Name

a) A foreign LLC that has a name prohibited by this Part may be admitted to transact business in this State, if the foreign LLC:

1. Elects to adopt an assumed name or names, in accordance with Section 178.180 of this Part, that complies with provisions of Section 1-10(a)(1) of the LLCA; and

2. Agrees in its application for admission to transact business in this State only under such assumed name or names; and

3. Maintains the foreign assumed name on the records of the Office of the Secretary of State or the company becomes subject to revocation of its admission.

b) Failure to comply with subsections (a)(1) through (3) subjects the foreign LLC to revocation of its admission or its authority to transact business in this State.

History

• Source: Amended at 46 Ill. Reg. 14358, effective July 27, 2022

14 Ill. Adm. Code 178.190 Improper Names

The limited liability company name or assumed limited liability company name shall not contain any word or words that create a connotation that is offensive to good taste and decency. By way of example only, prohibited words and phrases include, but are not limited to, profanity, those that are likely to be considered slurs based on race, ethnicity, sexual orientation or gender, or those that otherwise defame a person or group of persons. The provisions of this Section shall apply regardless of whether the name or assumed name of the limited liability company is stated in English or some other language.

History

• Source: Amended at 32 Ill. Reg. 12046, effective July 16, 2008

Chapter I Secretary of State

Part 180 Uniform Commercial Code

14 Ill. Adm. Code 180.10 Definitions

"Amendment" means a UCC record that amends the information contained in a financing statement. Amendments include assignments, continuations and terminations.

"Assignment" means an amendment that assigns all or a part of a secured party's power to authorize an amendment to a financing statement.

"Continuation statement" shall have the meaning prescribed by Section 9-102(27) of the UCC.

"Correction statement" means a UCC record that indicates that a financing statement is inaccurate or wrongfully filed.

"Department" means the Department of Business Services of the Office of the Secretary of State.

"Director" means the Director of the Department.

"File number" shall have the meaning prescribed by Section 9-519(b) of the UCC [810 ILCS 5/9-519(b)].

"Filing office" and "filing officer" means Secretary of State (see Section 9-501 of the UCC [810 ILCS 5/9-501]).

"Filing officer statement" means a statement entered into the filing office's

information system to correct an error by the filing office.

"Financing statement" shall have the meaning prescribed by Section 9-102(39) of the UCC [810 ILCS 5/9-102(39)].

"Individual" means a human being or a decedent, in the case of a debtor that is the decedent's estate.

"Initial financing statement" means a UCC record that does not identify itself as an amendment or identify an initial financing statement to which it relates, as required by Section 9-512, 9-514 or 9-518 of the UCC [810 ILCS 5/9-512, 9-514 or 9-518].

"Online services" means the interactive computer applications for UCC document filing and search functions, including direct computer access, available on the Illinois Secretary of State web site.

"Organization" means a legal person who is not an individual.

"Remitter" means a person who tenders a UCC record to the filing officer for filing, whether the person is a filer or an agent of a filer responsible for tendering the record for filing. "Remitter" does not include a person responsible merely for the delivery of the record to the filing office, such as the postal service or a courier service, but does include a service provider who acts as a filer's representative in the filing process.

"Secretary" means the Secretary of State of Illinois.

"Secured party of record" shall have the meaning prescribed in Section 9-511 of the UCC [810 ILCS 5/9-511].

"Termination statement" shall have the meaning prescribed by Section 9-102(79) of the UCC [810 ILCS 5/9-102(79)].

"UCC" means the Uniform Commercial Code-Secured Transactions as adopted in this State at 810 ILCS 5/Art. 9.

"UCC Division" means that unit of the Department that records, maintains, supplies copies, and otherwise administers the UCC.

"UCC record" means an initial financing statement, an amendment, an assignment, a continuation, a termination, or a correction statement, and shall not be deemed to refer exclusively to paper-based writings.

History

• Source: Amended at 30 Ill. Reg. 12977, effective July 11, 2006

14 Ill. Adm. Code 180.11 Tender of Ucc Records for Filing/Search Request Delivery

a) UCC records may be tendered for filing at the UCC Division as follows:

1. Personal delivery, at the UCC Division's street address. The file time for a UCC record delivered by this method is when delivery of the UCC record is accepted by the filing office (even though the UCC record may not yet have been accepted for filing and subsequently may be rejected). The date and time of receipt are stamped on the document or otherwise permanently associated with the record maintained for a UCC document in the UCC information management system.

2. Courier delivery, at the UCC Division's street address. The file time for a UCC record delivered by this method is, notwithstanding the time of delivery, the next close of business following the time of delivery (even though the UCC record may not yet have been accepted for filing and may be subsequently rejected). The date and time of receipt are stamped on the document or otherwise permanently associated with the record maintained for a UCC document in the UCC information management system. A UCC record delivered after regular business hours or on a day the filing office is not open for business, if not examined for processing sooner, will have a filing time of the close of business on the next day the filing office is open for business.

3. Postal service delivery, to the filing office's mailing address. The file time for a UCC record delivered by this method is the next close of business following the time of delivery (even though the UCC record may not yet have been accepted for filing and may be subsequently rejected). The date and time of receipt are stamped on the document or otherwise permanently associated with the record maintained for a UCC document in the UCC information management system. A UCC record delivered after regular business hours or on a day the filing office is not open for business will have a filing time of the close of business on the next day the filing office is open for business.

4. The Secretary of State offers online information and electronic filing and search services through the website of the Secretary of State at www.cyberdriveillinois.com. The file time for a UCC document delivered by this method is the time that the Secretary of State's system analyzes the relevant transmission and determines that all the required elements of the transmission have been received in a required format and are machine-readable.

5. The UCC Division filing office hours.

A) The UCC Division business hours for personal delivery, courier delivery and postal service delivery are 8:00 a.m. to 4:30 p.m., Monday through Friday, except holidays, in Springfield only.

B) Electronic filing and search services are available 24 hours per day, 365 days per year, except for scheduled maintenance and unscheduled interruptions of service.

6. The office address is Howlett Building, Room 350 West, 501 South

Second Street, Springfield IL 62756. All incorporated materials and forms referenced in this Part are available to the public for inspection and copying at this address.

b) UCC search requests may be delivered to the filing office by any of the means by which UCC records may be delivered to the filing office. A search request for a debtor named on an initial financing statement may not be made on the initial financing statement form, even if the form has a space for that request. Search requests must be made on the UCC-11 form approved by the International Association of Commercial Administrators, as incorporated by reference in Section 180.12 of this Part.

History

• Source: Amended at 31 Ill. Reg. 8559, effective June 15, 2007

14 Ill. Adm. Code 180.12 Forms

The forms prescribed by Section 9-521 of the UCC [810 ILCS 5/9-521] shall be accepted by the filing office. Forms approved by the UCC Division shall be accepted. Copies of the approved forms are available on the Secretary of State's website at www.cyberdriveillinois.com.

a) In order to insure the legibility after records are scanned into the imaging system of the UCC Division, the information on each record submitted shall be typewritten or computer generated typeface. The names and addresses of the debtor and the secured party shall be in all capital or mixed case letters with a font size of at least 10 point Helvetica/Swiss style font.

b) The remitter shall submit two copies of each record, along with a self-addressed stamped envelope. The UCC Division shall retain one copy for its records and return one copy to the remitter as an acknowledgement. If only one copy is submitted, it will be stamped "No Acknowledgement Received" and the UCC Division will retain that copy for its records. There will be no acknowledgement copy returned to the remitter.

c) All UCC records must contain the full legal name and address of the debtor and indicate whether the debtor is an individual or an organization. As used in this Section, address is deemed to include street address, route number or P.O. Box, city, state and zip code. The disclosure on the records of the social security number or tax identification number of the debtor is non-required information and, due to the sensitive nature of the information, it will be redacted from the record.

d) When submitting a UCC-3 Amendment to delete more than a single debtor name, a separate UCC-3 Amendment form must, pursuant to Section 9-512 of the UCC, be completed for each debtor name to be deleted. A separate fee must also be tendered for each UCC-3 Amendment form submitted.

e) When submitting a UCC-3 Amendment pursuant to Section 9-512 of the UCC, only one UCC-3 Amendment type per form will be permitted. A separate fee must also be tendered for each UCC-3 Amendment form submitted.

History

• Source: Amended at 38 Ill. Reg. 15638, effective July 1, 2014

14 Ill. Adm. Code 180.13 Filing Fees/Methods of Payment/Overpayment and Underpayment Policies and Extension of Filing Deadlines

a) Filing Fees.

1. The fee for filing and indexing a UCC record communicated in a paper-based format or electronically is $20.

2. A fee of $20 shall be paid for an initial financing statement that indicates that it is filed in connection with a public-finance transaction and a fee of $20 shall be paid for an initial financing statement that indicates that it is filed in connection with a manufactured-home transaction.

3. UCC search fee. The fee for a UCC search request communicated on paper or in a paper-based format is $10 per name searched.

4. UCC search – copies. The fee for UCC search copies is $1 per page.

b) Methods of Payment. Filing fees and fees for public records services may be paid by the following methods:

1. Cash. Payment in cash shall be accepted, if paid in person at the filing office.

2. Checks. Personal checks, cashier's checks and money orders made payable to the filing office shall be accepted for payment if they are drawn on a bank acceptable to the filing office or if the drawer is acceptable to the filing office. Checks made payable to the filing office are acceptable to the filing office if drawn on a bank insured by the Federal Deposit Insurance Corporation (FDIC), the Federal Savings and Loan Insurance Corporation (FSLIC), or the National Credit Union Association (NCUA).

3. Electronic funds transfer. The filing office may accept payment via electronic funds transfer under National Automated Clearing House Association (NACHA) rules from remitters who have entered into appropriate NACHA-approved arrangements for the EFT and who authorize the relevant transfer pursuant to the arrangements and rules. NACHA rules are available at NACHA, 13665 Dulles Technology Drive, Suite 300, Herndon VA 20171. The NACHA rules were effective as of January 1, 2001 and do not include any later amendments or editions.

4. Credit cards. The UCC Division shall accept payment by credit cards issued by approved issuers. Remitters shall provide the filing officer with the card number, the expiration date of the card, the name of the card issuer, the name of the person or entity to whom the card was issued, the daytime telephone number of the remitter and the billing address for the card. Payment will not be deemed tendered until the issuer or its agent has confirmed payment. A current list of approved credit card issuers is available from the filing office.

5. Debit cards. The UCC Division shall accept payment by debit cards issued by approved issuers (e.g., Visa, MasterCard). Remitters shall provide the filing officer with the card number, the expiration date of the card, the name of the card issuer, the name of the person or entity to whom the card was issued, the daytime telephone number of the remitter and the billing address for the card. Payment will not be deemed tendered until the issuer or its agent has confirmed payment. A current list of approved debit card issuers is available from the filing office.

c) Overpayment and Underpayment Policies.

1. Overpayment. The filing officer shall refund an overpayment only upon the written request of the remitter. Requests for refund shall contain the debtor's name and address, the file number and date of filing the record for which overpayment was made. If the record for which a refund is requested is a UCC-3, the request must also include the file number of the original filing.

2. Underpayment. Upon receipt of a record with an insufficient fee, the filing officer shall return the record to the remitter as provided in Section 180.15. The tendered payment shall be included with the record.

3. Non-sufficient funds. Upon notification from Accounting/Revenue that non-sufficient funds or an unacceptable form of payment was receipted for a UCC filing, that filing will be reversed and removed from the Secretary of State information management system as though it were never received and was refused for acceptance under the provisions of 810 ILCS 5/9-516(b)(2).

d) Filing of Uniform Commercial Code (UCC) Documents, Federal Tax Liens, and Other UCC-related Materials.

1. All UCC documents, federal tax liens, and other UCC-related materials required to be filed with the Secretary of State pursuant to Chapter 810 of the Illinois Compiled Statutes shall be filed with the Business Services Department, Howlett Building, Room 350, Springfield IL 62756.

2. Pursuant to the powers vested in him by Section 5(7) of the Secretary of State Act, the Secretary of State hereby extends for the duration of the disaster proclaimed by the Governor in Gubernatorial Proclamation number 2020-038, issued on March 9, 2020, as extended by subsequent disaster proclamations, and for a period of 90 days thereafter, the filing deadlines for materials required to be filed with the Secretary of State pursuant to Chapter 810 of the Illinois Compiled Statutes and that were due to be filed on or after March 17, 2020. This extension period may be rescinded by the Secretary of State through the adoption of an emergency rule. Any fees for late filings of materials shall be waived for materials subject to this Section.

History

• Source: Amended at 44 Ill. Reg. 13748, effective August 4, 2020

14 Ill. Adm. Code 180.14 Public Record Services

Public record services are provided on a non-discriminatory basis to any member of the public on the terms described in this Part. The following are made available for obtaining copies of UCC and Federal Tax Lien records and copies of data from the UCC information management system.

a) Individually identified records. Copies of individually identified UCC and Federal Tax Lien filings are available upon request on a submitted UCC-11 information request form.

1. Fees for UCC-11 information request for debtor name searched are $10.

2. Fees for Federal Tax Lien taxpayer name to be searched are $5.

3. Fees for copies of images.

A) Copies of UCC images are $1 per copy page requested.

B) Copies of Federal Tax Lien images are $.50 per page requested.

b) Bulk Data File Transfer Protocol (FTP). Data file transfers are available upon written request, along with payment in advance, to the Director of the Department of Business Services.

1. Full Extract. A full extract of the master file of all historical data of UCC and Federal Tax Lien data from the management system is available for a one-time fee of $2,500 payable in advance.

2. Update Extracts. A weekly update of the UCC and Federal Tax Lien data from management system is available for a fee of $200 per week, payable in advance.

c) CD Subscription. A written request to receive UCC and Federal Tax Lien images on CD-Rom may be submitted, along with advance payment, to the UCC Division. The CDs will be mailed to each subscriber twice each month. The first mailing will occur within four business days after the 15th of each month. The second CD mailing will occur within four business days after the last business day of each month.

1. Fees for CD subscriptions are $250 each month, payable in advance.

2. Mailings may be requested to be shipped overnight at the expense of the subscriber. Express mail labels and packages must be submitted to the filing office prior to each mailing.

d) Direct Access On-line Services. Data may be accessed through a direct link into the government database by use of an assigned Remote Access Identification Number (RAQF ID). A contract for Direct Access must be obtained from the Illinois Secretary of State Office of General Counsel.

1. Fees are determined pursuant to contract (see 44 Ill. Adm. Code 2000).

2. Fees must be paid prior to receiving Direct Access On-line Services and are non-refundable once the Department has accepted the contract. Acceptance shall be evidenced once the contract has been signed by the Director of the Department of Business Services.

e) New Practices and Technologies. The filing officer is authorized to adopt practices and procedures to accomplish receipt, processing, maintenance, retrieval and transmission of, and remote access to, Article 9 Part 5 of the UCC filing data by means of electronic, voice, optical and/or other technologies, and without limiting the foregoing, to maintain and operate, in addition to or in lieu of a paper-based system, a non-paper-based filing system utilizing any such technologies. In developing and utilizing technologies and practices, the filing officer shall, to the greatest extent feasible, take into account compatibility and consistency with, and, whenever possible, uniformity with, technologies, practices, policies and regulations adopted in connection with filing systems in other states.

History

• Source: Amended at 32 Ill. Reg. 12057, effective July 16, 2008

Chapter I Secretary of State

Part 180 Uniform Commercial Code

14 Ill. Adm. Code 180.15 Acceptance and Refusal of Records

a) Role of Secretary. The duties and responsibilities of the Secretary with respect to the administration of the UCC are ministerial. In accepting for filing or refusing to file a UCC record, the Secretary does none of the following:

1. Determine the legal sufficiency or insufficiency of a record.

2. Determine that a security interest in collateral exists or does not exist.

3. Determine that information in the record is correct or incorrect, in whole or in part.

4. Create a presumption that information in the record is correct or incorrect, in whole or in part.

b) Grounds for refusal. In addition to the grounds listed in Section 9-516 of the UCC [810 ILCS 5/9-516], allowing the filing officer to refuse a UCC record, the filing officer shall refuse a UCC record if the record contains more than one debtor, secured party or assignee name or address and some names or addresses are missing or illegible, or no address is given in the address field. As used in this Section, address is deemed to include street address, city, state and postal code.

1. Deadline for filing a continuation statement. The first day on which a continuation statement may be filed is the date corresponding to the date upon which the financing statement would lapse, six months preceding the month in which the financing statement would lapse. If there is no such corresponding date, the first day on which a continuation may be filed is the last day of the sixth month preceding the month in which the financing statement would lapse.

2. Last day permitted. The last day on which a continuation statement may be filed is the last business day of maturity before the lapse date of the UCC. If the last business day on which the UCC matures falls on a holiday or weekend, the filing office must receive the continuation on the last business day prior to the lapse date.

c) Procedure upon refusal. Except as provided in Section 180.13 of this Part, if the filing officer finds grounds to refuse a UCC record, the filing officer shall return the record to the remitter and shall return the filing fee.

d) Notification of defects. Nothing in this Section prevents a filing officer from communicating to a filer or a remitter that the filing officer noticed apparent potential defects in a UCC record, whether or not it was filed or refused for filing. However, the filing office is under no obligation to do so and may not, in fact, have the resources to do so, or to identify such defects. The responsibility for the legal effectiveness of filing rests with filers and remitters and the filing office bears no responsibility for legal effectiveness.

e) Refusal errors. If a secured party or a remitter demonstrates to the satisfaction of the filing officer that a UCC record that was refused for filing should not have been, the filing officer will file the UCC record with a filing date and time assigned when the filing occurs. The filing officer will also file a filing officer statement that states the effective date and time of filing, which shall be the date and time the UCC record was originally tendered for filing.

f) Transmitting utility rejections. If a UCC Financing Statement submitted as a Transmitting Utility is rejected because it does not meet the definitions of a Transmitting Utility under the provisions of 810 ILCS 5/9-102(80), it may be resubmitted with proper verification that a Transmitting Utility exists.

1. Rejected UCCs submitted as a Transmitting Utility will be reviewed by General Counsel and the Director of the Department of Business Services to determine that a valid reason exists for the rejection.

2. Upon receipt of the resubmitted UCC Financing Statement with proper verification that a Transmitting Utility exists, the submitted documents will be accepted and given the same received stamped date as the original date of filing.

History

• Source: Amended at 38 Ill. Reg. 15638, effective July 1, 2014

14 Ill. Adm. Code 180.16 Ucc Information Management System

Policy statement. The UCC Division uses an information management system to store, index, and retrieve information relating to financing statements. The information management system includes an index of the names of debtors named on financing statements that have not lapsed. This Section describes the UCC information management system.

a) Primary data elements. The primary data elements used in the UCC information management system are the following:

1. Identification numbers.

A) Each initial financing statement is identified by its file number as described in Section 180.10. Identification of the initial financing statement is stamped on written UCC records or otherwise permanently associated with the record maintained for UCC records in the UCC information management system. A record is created in the information management system for each initial financing statement and all information comprising that record is maintained in the system. The record is identified by the same information assigned to the initial financing statement.

B) A UCC record other than an initial financing statement is identified by a unique file number assigned by the filing officer. In the information management system, records of all UCC records other than initial financing statements are linked to the record of their related initial financing statement.

2. Type of record. The type of UCC record from which data is transferred is identified in the information management system from information supplied by the remitter.

3. Filing date and filing time. The filing date and filing time of UCC records are stored in the information management system. Calculation of the lapse date of an initial financing statement is based upon the filing date.

4. Identification of parties. The names and addresses of debtors and secured parties are transferred from UCC records to the UCC information management system using one or more data entry or transmittal techniques.

5. Status of financing statement. In the information management system, each financing statement has a status of active or inactive.

6. Page count. The total number of pages in a UCC record is maintained in the information management system.

7. Lapse indicator. An indicator is maintained by which the information management system identifies whether a financing statement will lapse and, if it does, when it will lapse.

b) Names of debtors who are individuals. For the purpose of this subsection, "individual" means a human being, or a decedent in the case of a debtor that is the decedent's estate. This subsection applies to the name of a debtor or a secured party on a UCC record who is an individual.

1. Individual name fields. The names of individuals are stored in files that include only the names of individuals, and not the names of organizations. The filing officer assumes no responsibility for the accurate designation of the components of a name, but will accurately enter the data in accordance with the filer's designations.

2. Titles and prefixes before names. Titles and prefixes, such as "doctor", "reverend", "Mr.", and "Ms.", should not be entered in the UCC information management system. However, when a UCC record is submitted with designated name fields, the data will be entered in the UCC information management system exactly as it appears.

3. Titles and suffixes after names. Title or indications of status such as "M.D." and "esquire" shall not be entered in the UCC information management system. Suffixes are not part of an individual's name and should not be provided by filers in UCC records. Suffixes that indicate which individual is being named, such as "senior", "junior", "I", "II", and "III", are entered into the information management system exactly as received.

4. Truncation – individual names. Personal name fields in the UCC database are fixed in length. Although filers should continue to provide full names on their UCC records, a name that exceeds the fixed length is entered as presented to the filing officer, up to the maximum length of the data entry field. The maximum length of the data entry name field is 64 characters.

c) Names of debtors that are organizations. This subsection applies to the name of an organization that is a debtor or a secured party on a UCC record.

1. Single field. The names of organizations are stored in files that include only the names of organizations and not the names of individuals. A single field is used to store an organization name.

2. Truncation – organization names. The organization name field in the UCC database is fixed in length. The maximum length is 200 characters. Although filers should continue to provide full names on their UCC record or records, a name that exceeds the fixed length is entered as presented to the filing officer, up to the maximum length of the data entry field.

d) Estates. Although they are not human beings, estates are treated as if the decedent were the debtor under Section 180.16(b).

e) Trusts. If the trust is named in its organic records, its full legal name, as set forth in those records is used. Those trusts are treated as organizations. If the trust is not so named, the name of the settlor is used. If a settlor is indicated to be an organization, the name is treated as an organization name. If the settlor is an individual, the name is treated as an individual name. A UCC record that uses a settlor's name should include other information provided by the filer to distinguish the debtor trust from other trusts having the same settlor and all financing statements filed against trusts or trustees acting with respect to property held in trust should indicate the nature of the debtor. If this is done in, or as part of, the name of the debtor, it will be entered as if it were a part of the name.

f) Initial financing statement. Upon the filing of an initial financing statement the status of the parties and the status of the financing statement shall be as follows:

1. Status of secured party. Each secured party named on an initial financing statement shall be a secured party of record, except that if the UCC record names an assignee, the secured party/assignor shall not be a secured party of record and the secured party/assignee shall be a secured party of record.

2. Status of debtor. The status of a debtor named on the record shall be active and shall continue as active until one year after the financing statement lapses.

3. Status of financing statement. The status of the financing statement shall be active. A lapse date shall be calculated, five years from the file date, unless the initial financing statement indicates that it is filed with respect to a public-financing transaction or a manufactured-home transaction, in which case the lapse date shall be 30 years from the file date, or, if the initial financing statement indicates that it is filed against a transmitting utility, there shall be no lapse date. A financing statement remains active until one year after it lapses, or, if it is indicated to be filed against a transmitting utility, until one year after it is terminated with respect to all secured parties of record.

g) Amendment. Upon the filing of an amendment, the status of the parties and the status of the financing statement shall be as follows:

1. Status of secured party and debtor. An amendment shall affect the status of its debtors and secured parties as follows:

A) Collateral amendment or address change. An amendment that amends only the collateral description or one or more addresses has no effect upon the status of any debtor or secured party. If a statement of amendment is authorized by less than all of the secured parties (or, in the case of an amendment that adds collateral, less than all of the debtors), the statement affects only the interests of each authorizing secured party (or debtor).

B) Debtor name change. An amendment that changes a debtor's name has no effect on the status of any debtor or secured party, except that the related initial financing statement and all UCC records that include an identification of the initial financing statement shall be cross-indexed in the UCC information management system, so that a search under either the debtor's old name or the debtor's new name will reveal the initial financing statement and the related UCC records. The statement of amendment affects only the rights of its authorizing secured parties.

C) Secured party name change. An amendment that changes the name of a secured party has no effect on the status of any debtor or any secured party, but the new name is added to the index as if it were a new secured party of record.

D) Addition of a debtor. An amendment that adds a new debtor name has no effect upon the status of any party to the financing statement, except the new debtor name shall be added as a new debtor on the financing statement. The addition shall affect only the rights of the secured parties authorizing the statement of amendment.

E) Addition of a secured party. An amendment that adds a new secured party shall not affect the status of any party to the financing statement, except that the new secured party name shall be added as a new secured party on the financing statement.

F) Deletion of a debtor. An amendment that deletes a debtor has no effect on the status of any party to the financing statement, even if the amendment purports to delete all debtors.

G) Deletion of a secured party. An amendment that deletes a secured party of record has no effect on the status of any party to the financing statement, even if the amendment purports to delete all secured parties of record.

2. Status of financing statement. An amendment shall have no effect upon the status of the financing statement, except that a continuation may extend the period of effectiveness of a financing statement.

h) Assignment of powers of secured party of record.

1. Status of the parties. An assignment shall have no effect on the status of the parties to the financing statement, except that each assignee named in the assignment shall become a secured party of record.

2. Status of financing statement. An assignment shall have no effect upon the status of the financing statement.

i) Continuation. Status of parties upon filing a continuation.

1. Continuation of lapse date. Upon the timely filing of one or more continuations by any secured parties of record, the lapse date of the financing statement shall be postponed for five years.

2. Status of parties. The filing of a continuation shall have no effect upon the status of any party to the financing statement.

3. Status of financing statement. Upon the filing of a continuation statement, the status of the financing statement remains active.

j) Termination. Status of parties upon filing a termination.

1. Status of parties. The filing of a termination shall have no effect upon the status of any party to the financing statement.

2. Status of financing statement. A termination shall have no effect upon the status of the financing statement. The financing statement shall remain active in the information management system until one year after it lapses, unless the termination relates to a financing statement that indicates it is filed against a transmitting utility, in which case the financing statement will become inactive one year after it is terminated with respect to all secured parties of record.

k) Correction statement.

1. Status of parties. The filing of a correction statement shall have no effect upon the status of any party to the financing statement.

2. Status of financing statement. A correction statement shall have no effect upon the status of the financing statement.

l) Procedure upon lapse. If there is no timely filing of a continuation with respect to a financing statement, the financing statement lapses on its lapse date, but no action is then taken by the filing office. On the first anniversary of the lapse date, the information management system renders, or is caused to render, the financing statement inactive and the financing statement will no longer be made available to searchers, unless inactive statements are requested by the searcher and the financing statement is still retrievable by the information management system.

History

• Source: Amended at 30 Ill. Reg. 12977, effective July 11, 2006

14 Ill. Adm. Code 180.17 Filing and Data Entry Procedures

a) Errors of the filing office. The filing officer may correct the errors of filing office personnel in the UCC information management system at any time. If the correction occurs after the filing officer has issued a certification date, the filing officer shall file a filing officer correction statement in the UCC information management system identifying the record to which it relates and the date of the correction and explaining the nature of the corrective action taken. The record shall be preserved as long as the record of the initial financing statement is preserved in the UCC information management system.

1. In the case of a data entry error that caused the record in the UCC information management system to be different from the originally submitted document, the record indexed in the management system will be corrected to correspond with the originally submitted record.

2. In the case of an error on the part of the filer that is noticed after a certification date has been issued, the filing office is under no obligation to make the corrections. It is the responsibility of the filer to correct any errors pursuant to Sections 9-511, 9-512 and 9-518 of the UCC [810 ILCS 5/9-511, 9-512 and 9-518].

b) Data entry of names – designated fields. A filing should designate whether a name is a name of an individual or an organization. If the name is that of an individual, the first, middle and last names and any suffix shall be given.

1. Organization names. Organization names are entered into the UCC information management system exactly as set forth in the UCC record, even if it appears that multiple names are set forth in the record, or if it appears that the name of an individual has been included in the field designated for an organization name.

2. Individual names. On a form that designates separate fields for the individual's surname, first personal name, and additional names/initials, the filing officer enters the names into the respective fields in the UCC information management system exactly as set forth on the form.

3. Designated fields encouraged. The filing office encourages the use of forms that designate separate fields for individual and organization names and separate fields for first, middle, and last names and any suffix. Such forms diminish the possibility of filing office error and help assure that filers' expectations are met. However, filers should be aware that the inclusion of names in an incorrect field or failure to transmit names accurately to the filing office may cause filings to be ineffective.

c) Notice of bankruptcy. The filing officer shall take no action upon receipt of a notification, formal or informal, of a bankruptcy proceeding involving a debtor named in the UCC information management system.

History

• Source: Amended at 38 Ill. Reg. 15638, effective July 1, 2014

14 Ill. Adm. Code 180.18 Search Requests and Reports

General requirements. The filing officer maintains for public inspection a searchable index for all records of UCC documents. The index shall provide for the retrieval of a record by the name of the debtor and by the file number of the initial financing statement of each filed UCC record relating to the initial financing statement.

a) Search requests. Search requests shall contain the following information:

1. Name searched. A search request should set forth the name of the debtor to be searched and must specify whether the debtor is an individual or an organization. A search request will be processed using the name in the exact form it is submitted. Each search request shall be limited to one debtor name.

2. Requesting party. The name and address of the person to whom the search report is to be sent.

3. Fee. The appropriate fee shall be enclosed, payable by a method described in Section 180.13 of this Part.

4. Search request with filing. If a filer requests a search at the time a UCC record is filed, a UCC-11 form designating the exact debtor name from the initial financing statement shall be submitted. The requesting party shall be the name and address to whom the search report should be sent, and the search request shall be deemed to request a search that would retrieve all financing statements filed on or prior to the date the UCC record is filed. The filer shall submit the search request on a UCC-11 form.

b) Rules applied to search requests. Search results are produced by the application of standardized search logic to the name presented to the filing officer. Human judgment does not play a role in determining the results of the search. The following rules apply to searches:

1. There is no limit to the number of matches that may be returned in response to the search criteria.

2. No distinction is made between upper and lower case letters.

3. Punctuation marks and accents are disregarded.

4. Words and abbreviations at the end of a name that indicate the existence or nature of an organization as set forth in the "Ending Noise Words" list as promulgated and adopted by the International Association of Commercial Administrators are disregarded. Such words include, but are not limited to, the following:

Agency

Incorporated

PLCC

Trustee

LC

Prof Assn

Assc

Limited

Prof Corp

Assn

Limited Liability Company

Professional Association

Assoc

Associates

Limited Liability Partnership

Professional Corporation

Association

Attorneys at Law

Limited Partnership

Professional Limited Liability Company

Bank

Business Trust

LLC

Charter

LLLP

Chartered

LLP

Real Estate Investment Trust

Co

LP

Company

Ltd.

Registered Limited Liability Partnership

Corp

Ltd. Partnership

Corporation

MDPA

Credit Union

MDPC

CU

Medical Doctors Professional Association

REIT

FCU

RLLP

Federal Credit Union

SA

Medical Doctors Professional Corporation

Savings Association

Federal Savings Bank

Sole Proprietorship

FSB

NA

Gen Part

National Association

SP

General Partnership

SPA

National Bank

Trust

GP

PA

Trustee

Inc

Partners

5. The word "the" if used anyplace in the search criteria is disregarded.

6. All spaces are disregarded.

7. For first and middle names of individuals, initials are treated as the logical equivalent of all names that begin with such initials, and first name and no middle name or initial is equated with all middle names and initials. For example, a search request for "John A. Smith" would cause the search to retrieve all filings against all individual debtors with "John" or the initial "J" as the first name, "Smith" as the last name, and with the initial "A" or any name beginning with "A" in the middle name field. If the search were for "John Smith" (first and last names with no designation in the middle name field), the search would retrieve all filings against individual debtors with "John" or the initial "J" as the first name, "Smith" as the last name and with any name or initial or no name or initial in the middle name field.

8. After using the preceding rules to modify the name to be searched, the search will reveal only names of debtors that are contained in unlapsed financing statements and exactly match the name requested, as modified.

9. The word "AND" is converted to "&" and the "&" symbol is left the same. The results searching "AND" and "&" will be identical.

c) Optional information. A UCC search request may contain any of the following information:

1. The request may limit the records requested by limiting them by the address of the debtor, the city of the debtor, the date of filing (or a range of filing dates) on the financing statements. A report created by the filing officer in response to such a request shall contain the statement "A limited search may not reveal all filings against the debtor searched and the searcher bears the risk of relying on such a search".

2. The request may ask for copies of UCC records identified on the primary search response.

3. Instructions on the mode of delivery desired, if other than by ordinary mail, which will be honored if the requested mode is available to the filing office.

4. UCC or Federal Tax Lien Search Requests. All information requests submitted on a UCC-11 Information Request Form will be assumed to be a UCC information search unless otherwise identified as a Federal Tax Lien search. Only one type of search may be requested per form. A separate fee and form are required for each search requested.

d) Search responses. Reports created in response to a search request shall include the following:

1. Filing officer. Identification of the filing officer and the certification of the filing officer required by law.

2. Report date. The date the report was generated.

3. Name searched. Identification of the name searched.

4. Certification date. The certification date and time for which the search is effective.

5. Identification of initial financing statements. Identification of each unlapsed initial financing statement filed on or prior to the certification date and time corresponding to the search criteria, by name of debtor, by identification number, and by file date and file time.

6. History of financing statement. For each initial financing statement on the report, a listing of all related UCC records filed by the filing officer on or prior to the certification date.

7. Copies. Copies of all UCC records revealed by the search and requested by the searcher.

8. Extensive search requests. The filing officer will need additional time to process any information or search request that is in excess of 100 pages in length due to system limitations for printing lengthy search requests as described under the provisions of 810 ILCS 5/9-524(1) and (2).

History

• Source: Amended at 36 Ill. Reg. 3931, effective February 27, 2012

14 Ill. Adm. Code 180.19 Xml Documents

a) IACA standard adopted. The XML Format as adopted by the International

Association of Commercial Administrators shall be adopted in Illinois for

electronic transmission of UCC records. An E-filing account must be created before submitting an XML filing. The electronic filing shall pass verification to the DTD (Document Type Definition). Failure to pass this verification shall result in rejection of the record pursuant to Section 9-516 of the UCC [810 ILCS 5/9-516].

b) Implementation guide. The filing office shall publish an implementation

guide that prescribes the use of the XML Format. The guide shall be available to the public upon request.

c) Direct on-line data entry procedures. Upon application and approval of an E-filing account, the remitter shall receive direct on-line data entry procedures to file UCC records on-line. Persons interested in filing records in this manner shall contact the UCC Division at the address listed in Section 180.11 of this Part.

History

• Source: Added at 31 Ill. Reg. 8559, effective June 15, 2007

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.100 Act

The "Act" means the Franchise Disclosure Act of 1987 [815 ILCS 705], hereinafter cited as Section 1 through Section 44 of the Act.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.101 Disclosure Statement (Repealed)

History

• Source: Repealed at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.102 Marketing Plan or System

a) Marketing Plan or System within the meaning of Section 3(1)(a) of the Act means advice given to the purchaser on how to sell the franchisor's product or service.

b) Whether such a plan or system is prescribed or suggested in substantial part by the franchisor within the meaning of Section 3(1)(a) of the Act depends on the extent to which the following assistance is provided by the franchisor: site selection, the grant of an exclusive territory, assistance on constructing or remodeling or decorating business premises, advice on fixtures or equipment or signs, advice on dress, training programs, advice on business hours, limitations on products or services to be sold, advertising assistance, suggested prices or credit practices, customer relations advice, and warranty advice.

c) A marketing plan or system may be prescribed or suggested in substantial part regardless of whether the franchisee is an independent contractor and not the agent of the franchisor and notwithstanding provisions of a franchise or other agreement purporting to grant the franchisee complete freedom in operating its business.

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.103 Substantially Associated

A franchisee's business is substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor or its affiliate within the meaning of Section 3(1)(b) of the Act, if the franchise or other agreement, the nature of the franchise business or other circumstances permit or require the franchisee to identify its business to its customers primarily under such trademark, service mark, trade name, logotype, advertising or other commercial symbol (hereinafter referred to collectively as "franchisor's mark") or to otherwise use the franchisor's mark in a manner likely to convey to the public that it is an outlet of the franchisor. Mere absence in the franchise agreement of permission to use the franchisor's name or mark will not alone negate "substantial association". A contractual prohibition on use of the franchisor's name or mark must be policed and enforced to insure that the name or mark is not being substantially used without the franchisor's knowledge.

14 Ill. Adm. Code 200.104 Franchise Fee

A "franchise fee" within the meaning of Section 3(14) of the Act may be present regardless of the designation given to or the form of the fee, whether payable in lump sum or installments, definite or indefinite in amount, or partly or wholly contingent on future sales, profits, purchases for the franchise business, or the sale or transfer of the franchisee's business. A transfer fee will not be considered a franchise fee if it represents reasonable expenses incurred in connection with the transfer.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.105 Absence of Fee Exclusion

a) Any payment(s) in excess of $500 that is required to be paid by a franchisee to the franchisor or an affiliate of the franchisor constitutes a franchise fee unless specifically excluded by Section 3(14) of the Act.

b) However, rental payments which reflect payments for the economic value of property, as opposed to payments wholly or partly for the right to enter into a business or to sell, resell or distribute goods, services or franchises, shall not be considered indirect franchise fees.

c) A payment made to a franchisor or affiliate for equipment, materials, real estate services, or other items shall not constitute a franchise fee if the purchase of the items is not required by the franchisor or franchisee is permitted to purchase the items from sources other than the franchisor or its affiliates and the item is available from such other sources.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.106 Bona Fide Wholesale and Retail Price

a) The Bona Fide Wholesale and Retail Price exceptions to franchise fee described in Section 3(14)(c) and (f) of the Act apply if the price charged constitutes a fair payment for goods purchased at a comparable level of distribution. No part of the price may be for the right to enter into the franchise business.

b) Only goods sold to the franchisee for resale qualify for the bona fide wholesale price exception. The price charged for a trademarked product does not exceed its bona fide wholesale price merely because that price exceeds the wholesale price of non-trademarked products of comparable quality and specifications. If the trademarked product commands a premium price by virtue of the trademark it carries, such premium does not constitute the payment of a franchise fee.

c) The bona fide wholesale and retail price exceptions apply only to purchases of goods. Services, rental payments, and leases of real or personal property are not within the category of "goods" regardless of whether the payment for such items constitutes a fair payment. Payments for services are presumed to be in part for the right granted to the franchisee to engage in the franchise business. Training programs are services and not goods regardless of whether offered, distributed or communicated by word of mouth, through instructions or lectures, in writing or printed form or by record or tape recording. If services are provided, an indirect franchise fee will be presumed regardless of whether the agreement sets forth an itemized fee for such services.

History

• Source: Amended at 19 Ill. Reg. 16950, effective January 1, 1996

14 Ill. Adm. Code 200.107 Established Market

Whether a product has an established market within the meaning of Section 3(14) of the Act is determined by the following factors in Illinois or in another area with market characteristics similar to Illinois:

a) The number of wholesale and retail outlets of the seller or of competitors in a similar line of business;

b) The quantity and price of like or similar products presently sold;

c) The ability of the purchaser to resell at the suggested retail price of the manufacturer and/or wholesaler or at a reasonable markup over purchaser's cost;

d) The number of years this and similar products have been sold.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.108 Indirect Franchise Fee

An indirect franchise fee within the meaning of Section 3(14) of the Act is present despite the bona fide wholesale or retail price exceptions if the buyer is required to purchase a quantity of goods so unreasonably large that such goods may not be resold within a reasonable time. What constitutes a reasonable time is determined by the price, markup, consumer demand, location of product suppliers and seasonal demand variations.

14 Ill. Adm. Code 200.109 Consideration

Consideration within the meaning of Section 5(2) of the Act includes, without limitation, fully refundable deposits and post-dated checks.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.110 Material

A statement or omission of fact is "material" within the meaning of the Act if there is a substantial likelihood that a reasonable prospective franchisee would consider it significant in making a decision to purchase or not purchase the franchise.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.111 Franchise Broker (repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.112 Administrator

"Administrator" as used in this Part means the Illinois Attorney General, 500 South Second Street, Springfield, Illinois 62706, (217)782-1090. Conferences may be arranged by appointment. Persons with questions concerning the Act are encouraged to telephone the Franchise Bureau.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.113 Correspondent

The term "Correspondent" means the person authorized in the application for registration to receive notices and communications.

14 Ill. Adm. Code 200.114 Negotiated Change

As stated in Section 11 of the Act, an amendment is not required when changes in the franchise agreement are made pursuant to negotiations between the franchisor and franchisee. However, if the same change is consistently made in additional consecutive franchise sales and it is a material change, it is considered to be a permanent change in the franchise agreement and an Amendment reflecting the change must be filed within the applicable time period.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.115 Tradeshows

A franchisor shall not attempt to solicit franchise sales at a trade show held in Illinois, from Illinois residents or persons desiring an Illinois franchise site, unless the franchisor is registered with the Administrator or is otherwise exempt from registration. Accepting the name, address and phone number of prospective franchisees for contact after registration does not constitute an offer or offer to sell.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.116 Franchise Broker

A person shall be deemed to be a franchise broker engaged in the business of representing a franchisor in offering for sale or selling a franchise within the meaning of Section 3(21) of the Act, unless otherwise exempt, if such person provides a prospective franchisee with information about specific franchises other than the franchisor's name, address and phone number. The expectation or acceptance of a fee contingent upon a franchise sale shall be considered as evidence of franchise broker status unless such fee results from an isolated transaction as defined in Section 200.202.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.117 Cooperative

"Cooperative" means a for-profit organization owned and operated, or a nonprofit organization operated, by the wholesale or retail members it serves. A cooperative that operates as, or subsequently purchases, a franchise system must register that system under the Franchise Disclosure Act if the system franchisees are not members of the cooperative with control relatively equal to the other cooperative members.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.118 Ufoc Disclosure Requirements

References in this Part to a Uniform Franchise Offering Circular (UFOC), disclosure statement, offering circular, or prospectus means a document prepared in compliance with the UFOC Guidelines as adopted by the North American Securities Administrators Association (NASAA) and set forth in Section 200.Appendix A, Illustration L.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.119 Notification

Notification in Section 10 of the Act means the listed documents required to be filed by the franchisor under Section 200.600 and UFOC General Instruction 110.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.120 Time Periods Ending on Saturday, Sunday or Holiday

Whenever the Act establishes a filing deadline, whether based upon calendar "days" or "business days" and the date due falls upon a Saturday, Sunday or Holiday when the Office of the Administrator is closed to the public, the party affected is excused from compliance until the next business day when the office is open to the public.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.200 Interpretive Opinions and No Action Letters

a) Except as provided in subsections (b) and (c) below, the Attorney General will issue an interpretive opinion upon submission of the following:

1. An explanatory cover letter;

2. A $50.00 fee as required by Section 40(d) of the Act;

3. A copy of the agreement;

4. Promotional materials where relevant;

5. Photographs of locations where relevant;

6. A list of states where the applicant is registered;

7. A list of the names and addresses of all company operated and licensed outlets;

8. Copies of all interpretive opinions from other administrative franchise agencies relating to the same issue;

9. A certification of all facts.

b) The Administrator will decline to issue an interpretive opinion if litigation is ongoing or reasonably anticipated.

c) No action letters will be issued where, despite the absence or pendancy of litigation, a close issue is involved which in the Administrator's opinion is best left to judicial resolution. The Administrator will consider whether the interest of the franchisee is protected, whether the issue has been previously undecided and whether the franchisor has requested a no action letter. A no action letter does not reach the merits of the issue but merely contains a statement that the Attorney General will not prosecute.

d) All interpretive opinions and no action letters are open to public inspection at the Administrator's office. Copies of specific opinions and no action letters may be ordered at a cost of $1.00 each.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.201 Order of Exemption

a) Pursuant to Section 9 of the Act, the Administrator may by Order grant exemptions from the registration and disclosure requirements of the Act. The Administrator will consider whether to issue such an Order upon submission of the following:

1. A cover letter describing the basis for the exemption by reference to this Section and to Section 9 of the Act, a list of administrative agencies (other franchise regulatory states and the Federal Trade Commission) that have issued or denied exemptions or opinions with copies of the exemptions or opinions, and a statement of the number of franchises the franchisor intends to sell in Illinois in the ensuing twelve months;

2. A list showing all Illinois franchise sales since the most recent UFOC submitted with the exemption application;

3. A UFOC (Appendix A, Illustration L); and

4. A certification page (Appendix A, Illustration G).

b) Exemption requests will be granted only when in the public interest. An exemption is considered in the public interest:

1. If the franchisor intends to sell only one or two franchises in Illinois in the ensuing twelve months;

2. If the litigation and bankruptcy disclosure is not materially adverse to the interests of prospective franchisees;

3. If the franchisor agrees to timely provide the franchisee with a UFOC disclosure statement; and

4. If the franchisor obtains a letter from the prospective franchisee's attorney, after issuance of the exemption but within the time period described in Section 5(2) of the Act, stating that he has explained the Act to his client, and the client does not object to issuance of the exemption, and forwards the letter to the Administrator. Prior to procurement of this letter, but after issuance of the order of exemption, the franchisor may solicit franchisees but may not have a contract signed or require a prospective franchisee or subfranchisor to pay consideration.

c) Application for exemption from Sections 5 and 10 of the Act may be made with regard to the offer and sale of a single unit franchise in which the actual minimum initial investment is in excess of $1,000,000. The Administrator will consider whether to issue such an Order upon submission of the following:

1. The information required by subsection (a) of this Section;

2. A list showing all Illinois franchise sales since the most recent UFOC submitted with the exemption application; and

3. Application documents required by Section 200.600(a)(1) through (7).

d) Every registered franchise and any franchisor exempt under this Section must provide the prospective franchisee with a UFOC disclosure document unless specifically excused from this requirement by the Administrator.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.202 Exemptions by Rule

a) The offer and sale of a franchise to a bank, savings institution, trust company, interstate carrier or insurance company is exempt from Sections 5 and 10 of the Act.

b) Isolated Transaction

1. If a referral source provides the name of a prospective franchisee to a franchisor and receives a referral or broker fee, but the person making the referral has no involvement in presenting the advantages of that particular franchise system, handles no franchisee payments owed to the franchisor, and has made no referral to that franchisor during the preceding 12 months, then such an isolated transaction does not require registration as a franchise broker and does not require the franchisor to provide disclosures concerning the person making the referral in the franchisor's UFOC.

2. If a franchisor obtains a prospective franchisee from an unregistered broker, the franchisor must verify the representations made to the prospect by the broker and that all required disclosure has been provided. No referral fee or commission shall be paid to the broker until such broker is properly registered with the Administrator or is found to be exempt from registration.

c) An officer, director or employee of an affiliate or related company of the franchisor is exempt from the Broker Application and Registration requirements of Section 13 of the Act, provided that the franchisor files a Sales Agent Disclosure Form with the Administrator for any such person. See Appendix A, Illustration C.

d) Franchise Trade Show Promoters and persons who organize or manage events, shows or facilities in which franchises are advertised, offered or otherwise promoted are hereby exempt from the requirements of Section 13 of the Act if:

1. the person does not receive a fee or other consideration from the exhibitors participating in such event or show other than exhibitor fees; and

2. any rent, exhibitor fees or other consideration paid for use of the exhibit space is not contingent or based upon the sale of franchises by the exhibitors or show promoters; and

3. the person is in compliance with 16 CFR 436, as amended through May 1, 1999, or is in compliance with an exemption issued by the Federal Trade Commission (contact FTC Consumer Response Center, 600 Pennsylvania Ave. N.W., Washington D.C. 20580).

e) Large Franchisor Exemption

The offer and sale of a franchise meeting the following requirements is exempt from Sections 5(1) and 10 of the Act:

1. Net Worth. The franchisor and, when applicable, a parent corporation or other business entity owning at least 80 percent of the franchisor must meet one of the following net worth requirements according to the financial statements for the most recent fiscal year just ended:

A) The franchisor has a net worth on a consolidated basis of not less than $5,000,000, according to its audited financial statement; or

B) The franchisor has a net worth of not less than $1,000,000, and its parent has a net worth of not less than $5,000,000, according to the audited financial statements of the franchisor and its parent, respectively; or

C) The franchisor has a net worth not less than $1,000,000, according to its unaudited financial statement, and the parent has a net worth on a consolidated basis of not less than $5,000,000 according to its audited financial statement, and the parent absolutely and unconditionally guarantees to assume the duties and obligations of the franchisor under the franchise agreement should the franchisor become unable to perform its duties and obligations.

2. Experience. The franchisor or its parent corporation or other business entity owning at least 80 percent of the franchisor or the franchisor's predecessor (as defined by UFOC Guidelines), or any combination thereof, has, throughout the five year period immediately preceding the offer and sale of the franchise, at least 25 franchisees conducting business in its franchise system. Up to three years of the required experience can be fulfilled by demonstrating that the franchisor has conducted business that is substantially the same as the subject of the franchise.

3. Disclosure. The franchisor agrees to timely provide a Federal Trade Commission prospectus or UFOC offering circular to each prospective franchisee.

4. Loss of Exemption. This exemption shall immediately terminate if:

A) Franchisor's net worth requirement is no longer met; or

B) Franchisor has fewer than 25 active franchisees; or

C) The franchisor was dependent upon another corporation or business entity to qualify for this exemption and such qualifying support has been withdrawn or is otherwise no longer available.

5. Required Documentation. Franchisor must submit the following documents to the Administrator to secure this exemption:

A) A cover letter stating: how the net worth requirement has been met; specific information demonstrating that the experience requirement has been met; that the franchisor agrees to timely provide a UFOC or FTC disclosure document to each prospective franchisee; that the Illinois Franchise Disclosure Act applies to all Illinois franchise transactions; and that this exemption will immediately terminate for the reasons stated above;

B) Franchisor's current UFOC or FTC disclosure document;

C) A Uniform Consent to Service of process and the appropriate acknowledgment (Section 200.Appendix A, Illustrations D and E or F);

D) A Certification Page (Appendix A, Illustration G) verifying that the documents submitted are true and correct.

6. The franchisor must renew its exemption annually.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.300 Deceptive Practices

Use of advertising not in compliance with this Subpart is deemed a false, fraudulent, misleading or deceptive practice.

14 Ill. Adm. Code 200.301 Statements of Profitability

No advertising in connection with the offer or sale of franchises shall contain the statement that the purchase of a franchise is a safe investment, is free from risk of loss or failure, or assures earnings or profit. The text of the advertisement may employ words such as "success", "profits", or "profit potential" so long as such terms are reasonably qualified.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.302 Opinions of Counsel

No advertising shall contain or refer to any opinion of counsel unless the franchisor has obtained the prior written consent to such use of counsel's name and opinion and unless the name and address of such counsel is included in the advertising.

14 Ill. Adm. Code 200.303 Inconsistencies with Disclosure Statement

It is a fraudulent practice for a franchisor to make any oral or written representation which is materially inconsistent with the information contained in the registered Disclosure Statement.

14 Ill. Adm. Code 200.304 Dollar Statements on Sales or Income

Any advertisement which suggests a range or specific level of sales, income, gross or net profits, or other types of earnings claims must be consistent with the guidelines contained in Item 19 of the UFOC. (See Section 200.Appendix A, Illustration L.)

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.305 Filing Requirements (Repealed)

History

• Source: Repealed at 23 Ill. Reg. 11561, effective September 7, 1999

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.306 Internet Franchise Offers

Any communication made through the Internet, the World Wide Web, or any other similar proprietary or common carrier electronic delivery system, of an offer to sell a franchise ("Internet Offer") is exempt from the registration provisions of the Illinois Franchise Disclosure Act if the franchisor limits contact with prospective Illinois franchisees to keeping a prospect list and notifying such prospects that, until the franchisor registers the franchise in Illinois, no further discussion about the franchise opportunity can take place.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.400 Preamble

The regulations contained in this Subpart shall govern administrative hearings under the Act. The purpose of this Subpart is to provide for the orderly determination of rights, duties and privileges of parties under procedures assuring such parties due process of law.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.401 Party

"Party" means the Administrator and all persons whose rights are to be determined at the hearing. Several persons may be joined as parties when they are alleged to have engaged in the same transaction constituting a violation.

14 Ill. Adm. Code 200.402 Hearing Officer

"Hearing Officer" means an independent person designated by the Administrator to preside at the hearing. Such person must meet the following standards and qualifications:

a) be of high integrity and good personal repute;

b) be unbiased, impartial and without any material conflict of interest;

c) be a member in good standing of the Bar of Illinois;

d) be familiar with the rules of evidence applied in civil cases in the circuit courts of Illinois and with the Act and the Rules promulgated thereunder; and

e) not be a regular employee of the Illinois Attorney General.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.403 Office

"Office", unless otherwise indicated, refers to the Office of the Attorney General, 500 South Second Street, Springfield, Illinois 62706.

14 Ill. Adm. Code 200.404 Hearing Requests

a) A party may request a hearing within 15 days of the date of an order issued under Section 23 of the Act.

b) If such a request is received by the Administrator, the matter will be set down for hearing within 10 days after such receipt, unless the requesting party consents to a later date.

c) Unless a hearing is so requested, the order will remain in effect until it is modified or vacated by the Administrator.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.405 Notice of Hearing

a) A notice of hearing shall be delivered to all parties to the proceeding by certified or registered U.S. Mail with return receipt requested, not less than 5 days prior to the initial date of such hearing, or any proper extension thereof.

b) The notice shall include:

1. the names and last known addresses of all parties;

2. the time, date and place of hearing;

3. the name of the Hearing Officer;

4. a short and concise statement of facts (as distinguished from conclusions of law or a mere recitation of the words of the Act) alleging the act or acts done by each respondent; the date and place each such act was done; the Sections of the Act or of this Part alleged to have been violated or otherwise involved in the proceeding; and the decision or action requested by the Administrator;

5. a concise statement to each party that:

A) the party may be represented by legal counsel; may present evidence; may cross-examine witnesses and otherwise participate;

B) failure to so appear shall constitute default unless any party has upon due notice moved for and obtained a continuance.

14 Ill. Adm. Code 200.406 Requirements Relating to Continuances

Certain costs are incurred by the Administrator when a scheduled hearing is continued to another time. Therefore, the requirements for a continuance are as follows:

a) All requests for a continuance shall be in writing and must be received by the Administrator at least three days prior to the assigned hearing date;

b) A party requesting a continuance shall serve a copy of the request on all parties;

c) Continuances will be granted by the Administrator upon a showing of:

1. Illness of the parties or attorneys,

2. Death in the immediate family of the parties or attorneys,

3. Unalterable court appearances by the attorneys, or

4. Undue hardship or inconvenience to either the parties or the hearing officer.

14 Ill. Adm. Code 200.407 Rules of Evidence in Hearings

a) Irrelevant, immaterial or unduly repetitious evidence shall be excluded. The rules of evidence and privilege as applied in civil cases in the Circuit Courts of this State shall be followed. However, evidence not admissible under such rules of evidence may be admitted (except where precluded by statute) if it is of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs. Objection to evidentiary offers may be made and shall be noted in the record. Subject to these requirements, when a hearing will be expedited and the interests of the parties will not be prejudiced, any part of the evidence may be received in written form.

b) Subject to the evidentiary requirements of subsection (a) of this Section, a party may conduct cross-examinations required for a full and fair disclosure of the facts.

c) Notice may be taken of matters of which the Circuit Courts of this State may take judicial notice. Parties shall be notified either before or during the hearing, or by reference in preliminary reports or otherwise, of the material noticed, including any staff memoranda or data, and they shall be afforded an opportunity to contest the material so noticed.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.408 Record of Proceedings

a) At each hearing, a licensed court reporter may be called by the Administrator, or a sound recording may be made, to create a permanent and complete record of the proceedings.

b) Upon request, and at the party's own expense, any party may have a copy of the record.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.409 Record of Hearing

The record of hearing shall include:

a) Offers of proof, objections, and rulings thereon;

b) All pleadings (including all pre-hearing and post-hearing notices and responses thereto, admissions, stipulations of facts, motions and rulings thereon);

c) A statement of matters officially noted;

d) Evidence received including testimony;

e) All memoranda or data submitted to the Hearing Officer;

f) Any opinion, report, or recommendation of the Hearing Officer to the Administrator or the Administrator's representative;

g) The findings of fact and law and final order entered by the Administrator.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.410 Duties of Hearing Officer

a) The Hearing Officer shall have authority to conduct the hearing, to entertain and rule upon motions, to administer oaths, to examine witnesses, and to rule upon the admissibility of evidence.

b) The Hearing Officer shall rule on procedure, make findings of fact and law, and issue a recommendation to the Administrator within one (1) month of the close of the hearing.

14 Ill. Adm. Code 200.411 Final Administrative Decision

a) A final administrative decision shall be issued by the Administrator in writing within one month of receipt of the Hearing Officer's recommendation. The Hearing Officer's recommendation, rulings and findings of fact and law are to be taken into account but are not binding on the Administrator. However the final administrative decision must be based exclusively on evidence in the record. The Administrator may refuse to accept the factual recommendations of the Hearing Officer only when all the evidence, viewed most favorably to the party for whom the Hearing Officer held, so overwhelmingly favors the other party, that no contrary holding based on that evidence could withstand Administrative Review under the Administrative Review Act because the findings of fact of the Hearing Officer are against the manifest weight of the evidence. A copy of the final administrative decision shall be sent by certified or registered mail to each party or each party's representatives.

b) The final administrative decision shall include findings of fact and conclusions of law, separately stated. Findings of fact, if set forth in statutory language, shall be accompanied by a concise and explicit statement of the underlying facts supporting the findings.

c) The final order of the Administrator shall constitute a final administrative decision within the provisions of the Administrative Review Act [735 ILCS 5/Art. III].

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.500 Assurance of Financial Ability to Fulfill Obligations

a) If, after examination of the financial statements of the franchisor and the duties and obligations of the franchisor contained in the franchise or other agreement to furnish goods and/or services to assist its franchisees in establishing and opening their business, the Administrator determines that adequate financial resources are not available to the franchisor for the performance of said obligations or that the franchisor will depend primarily on the initial franchise fees paid by franchisees as such financial resources (the franchisor has no other apparent source of income or assets), the Administrator will require the franchisor at the franchisor's option to assure financial capability by one of the following means: an escrow of funds, guaranty of performance, the posting of a surety bond, the issuance of a Certificate of Deposit, or the deferral of the initial franchise fees until the franchisor has met its obligations to the franchisee and the franchisee has commenced doing business.

b) When determining whether adequate financial resources are available, the Administrator shall give consideration to the applicant's recent financial statements. The following criteria shall be considered in making the determination: the auditor's opinion letter or review report, notes to the financial statements, the current ratio, the quick ratio, the amount of working capital, the proportion of tangible and intangible assets, the amount and maturities of debts, the debt/equity ratio, the amount of equity, the earnings history, the proportion of receivables compared to other assets, and the quality of receivables (e.g., financial statements reflect receivables that will not be collected, including bad debts, a debt discharged in bankruptcy, or the failure to allow for aged receivables).

c) Registration under the provisions of this Section shall be limited to the sale of the number of franchises authorized by the Administrator. The Administrator will make that decision based upon the franchisor's demonstrated willingness to fulfill its obligations to a specific number of franchises.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.501 Escrow, Guaranty, Surety Bond (Repealed)

(Repealed at 12 Ill. Reg. 9424, effective May 18, 1988)

14 Ill. Adm. Code 200.502 Escrow of Funds

When a franchisor chooses the escrow of franchise fees to comply with financial assurance requirements, the escrow account shall comply with the following requirements:

a) Checks shall be made payable to the escrowee by the franchisee;

b) The account shall be established in a federally insured bank, and the funds shall be kept and maintained in an account separate and apart from the franchisor's business and personal accounts;

c) The escrowed funds shall not be subject to any liens or charges by the escrowee or judgments, garnishments, or creditor's claims against the franchisor as hereinafter provided. This escrow is for the benefit of each franchisee in the amount paid by each franchisee;

d) At the request of the Administrator, statements indicating the status of the escrow shall be furnished by the bank or trust company to the Administrator;

e) An escrow agreement in the form set forth in Appendix C, Illustration A hereto, shall be entered into between the bank and the franchisor, which shall state that its purpose is to protect the franchisee and shall authorize the Administrator to inspect the records of the bank as escrowee relating thereto, and shall state that, upon order of the Administrator or a court of competent jurisdiction, the escrowee shall release and pay over the funds, or a portion thereof, to the franchisor or franchisee; and

f) The escrow shall remain in effect as to the respective franchisee/franchisor relationships until the initial obligations of the franchisor to assist the franchisee to establish and open the franchisee's business are fulfilled.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.503 Release of Escrowed Funds

a) A franchisor shall petition for release of escrowed funds by use of the form attached as Appendix C, Illustration B. Upon receipt of such petition, the Administrator will send notice of it to the franchisee advising the franchisee that any objection that the franchisee may have to the petition must be filed in writing and received by the Administrator within 30 days after the date the notice is sent. The Administrator shall issue a "no exception notice" authorizing the escrowee to release to the franchisor the escrowed funds applicable to a specified franchisee upon a showing that the franchisor has fulfilled its initial obligations under the franchise or other agreements to establish such franchise and that the franchisee has commenced doing business pursuant to the franchise agreement. The "no exception notice" shall state that the Administrator has no objection to the release of the funds to the franchisor.

b) A franchisee shall petition for release by use of the form attached as Appendix C, Illustration C. Upon receipt of such petition, the Administrator will send notice of it to the franchisor advising it that any objection it may have to the petition must be filed in writing and received by the Administrator within 30 days after the date the notice is sent. The Administrator shall issue a "no exception notice" authorizing the escrowee to release to the franchisee the escrowed funds applicable to each franchisee upon a showing that the franchisor has failed to fulfill its initial obligations under the franchise or other agreement to the franchise and that the franchisee has not commenced doing business. The "no exception notice" shall state that the Administrator has no objection to the release of funds to the franchisee.

c) An order of the Administrator releasing funds held in escrow to the franchisor or franchisee shall not be considered a finding of any fact and shall not constitute evidence of any such finding of fact in any judicial or arbitration proceeding.

d) If the Administrator receives a timely objection to the release of the escrowed funds, the Administrator shall not order the funds released from escrow until such time as the objection is resolved by either settlement, court order, or decision of arbitrator.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.504 Guarantee of Performance

a) If the franchisor can make arrangements with any other individual, partnership or corporation whose financial statements demonstrate an ability to perform the franchisor's obligations as contained in the franchise or other agreement, the Administrator will accept a guaranty of performance in the form set forth in Appendix D, Illustration A from such other individual, partnership or corporation;

b) The guarantor shall submit, in addition to the guaranty of performance, the resolution of its governing body authorizing the guaranty, the certificate of its Secretary as to such resolution, and a consent to service of process and acknowledgment for the guarantor in the form set forth in Appendix D, Illustrations B and C and Appendix A, Illustrations D, E and F hereto. The franchisor's disclosure statement shall include those financial statements of the guarantor which, absent a guaranty, the U.F.O.C. or F.T.C. prospectus requires of the franchisor.

14 Ill. Adm. Code 200.505 Performance or Surety Bond

A franchisor who posts a surety bond shall do so in the form of Appendix E hereto in an amount equal to the product of the initial franchisee fee and the number of franchises the franchisor is authorized to sell in Illinois in the ensuing registration year. The bond is to be issued by a corporate surety authorized to transact business in Illinois. The bond shall be conditioned upon the performance by the franchisor of its obligations under the franchise and other agreements to furnish goods and/or services necessary to establish and open the business of its franchisees and upon the franchisor's compliance with the Act and this Part.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.506 Certificate of Deposit

a) A franchisor who posts a Certificate of Deposit must post one Certificate of Deposit for each franchise that is authorized for sale by the Administrator. Each Certificate of Deposit shall be in an amount equal to the initial franchise fee.

b) Each Certificate of Deposit is to be deposited with a federally insured savings institution and issued in the name of the Administrator for the benefit of the franchisee. The Certificate and accrued interest thereon shall be renewed for such periods necessary to maintain it until such time that the Administrator determines that it may be released either to the franchisor or to franchisees upon notice to both parties.

History

• Source: Added at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.507 Release of Certificate of Deposit

a) A franchisor petition for release of the Certificate of Deposit by use of the form attached as Appendix F, Illustration A. Upon receipt of such petition, the Administrator will send notice of it to the franchisee advising the franchisee that any objection that the franchisee may have to the petition must be filed in writing and received by the Administrator within 30 days after the date the notice is sent. The Administrator shall issue a "no exception notice" authorizing the bank to release to the franchisor the Certificate of Deposit applicable to a specified franchisee upon a showing that the franchisor has fulfilled its initial obligations under the franchise or other agreements to establish such franchise and that the franchise has commenced doing business pursuant to the franchise agreement. The "no exception notice" shall state that the Administrator has no objection to the release of the Certificate of Deposit to the franchisor.

b) A franchisee shall petition for release of the Certificate of Deposit by use of the form attached as Appendix F, Illustration B. Upon receipt of such petition, the Administrator will send notice of it to the franchisor advising it that any objection it may have to the petition must be filed in writing and received by the Administrator within 30 days after the date the notice is sent. The Administrator shall issue a "no exception notice" authorizing the bank to release to a franchisee the Certificate of Deposit applicable to the franchise agreement upon a showing that the franchisor has failed to fulfill its initial obligations under the franchise or other agreements to the franchisee and the franchisee has not commenced doing business. The "no exception notice" shall state that the Administrator has no objection to the release of the Certificate of Deposit to the franchisee.

c) An order of the Administrator releasing the Certificate of Deposit to the franchisor or franchisee shall not be considered a finding of fact and shall not constitute evidence of any such finding of fact in any judicial or arbitration proceeding.

d) If the Administrator receives a timely objection to the release of the Certificate of Deposit, the Administrator shall not order the Certificate of Deposit released until such time as the objection is resolved by either settlement, court order, or decision of arbitrator.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.508 Deferral of Franchise Fee

A franchisor who defers the payment of initial franchise fees pursuant to Section 200.500 of this part shall defer the payment of all initial franchise fees owed to the franchisor, or its affiliate, by the franchisee until such time as all initial obligations owed to the franchisee under the franchise agreement or other agreements have been fulfilled by the franchisor and the franchisee has commenced doing business pursuant to the franchise agreement.

History

• Source: Added at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.600 Original Registration

a) Documents to File

The following materials must be submitted to the Administrator to obtain registration:

1. Uniform Franchise Registration Application Page, Appendix A, Illustration A;

2. Supplemental Information Page, Appendix A, Illustration B;

3. Sales Agent Disclosure Form for each sales agent employed by or affiliated with the applicant, Appendix A, Illustration C;

4. Uniform Consent to Service of Process naming the Illinois Attorney General as agent to receive service, with corporate, individual or partnership acknowledgment, Appendix A, Illustration D, E, F, G and H;

5. Certification Page, Appendix A, Illustration G;

6. Auditor's consent letter granting consent to use each audited report in the registration, Appendix A, Illustration H;

7. Uniform Franchise Offering Circular in duplicate current within 120 days and in compliance with UFOC Guidelines. Updated information pertaining to Items 20 or 21 may be submitted as an exhibit without changing the information already in these items; and

8. A $500 nonrefundable fee payable to the State of Illinois.

b) Signing of Notification: The Notification shall be signed by an authorized officer of the applicant; however, it may be signed by another person holding a power of attorney for such purposes from the applicant. If signed on behalf of the applicant pursuant to such power of attorney, the application shall include as an additional exhibit a copy of the power of attorney or a copy of the corporate resolution authorizing the attorney to act.

c) Phase In Of Audit Requirement: Franchisors who have never had audited financial statements and are filing their first application with the Administrator may request a phase in of the audit requirement. All unaudited statements must be prepared by an independent CPA in accordance with GAAP. Initial registration will be granted using the unaudited statements which cover the time periods set forth in UFOC Item 21. The franchisor must notify its CPA to count the opening inventory at the beginning of the franchisor's fiscal year which commences after the registration has been filed. At the end of that fiscal year, the balance sheet must be audited. The remainder of the financial statements for that fiscal year may be unaudited but must independently be prepared in accordance with GAAP. Financial statements for the following fiscal year must be fully audited.

d) The franchisor submitting original registration documents shall be provided either a courtesy notice that registration has been completed or an order of denial indicating the deficiencies that must be cured.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.601 Extension of Registration Period (Repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.602 Notification of Registration (repealed)

History

• Source: Repealed at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.603 Annual Report

a) To maintain the effectiveness of registration, a franchisor must file the Annual Report required by Section 10 of the Act no later than one business day prior to the anniversary date of the registration. The filing of the Annual Report shall include:

1. A non-refundable filing fee of $100;

2. Two complete unbound copies of the franchisor's Uniform Franchise Offering Circular updated as of 120 days after the franchisor's anniversary date. The phase in of the Audit Requirement continues. If the required audited financial documents are not current within 120 days after the anniversary date, interim financials in a format consistent with GAAP, including a balance sheet and corresponding income statement for the period between the close of the franchisor's most recent fiscal year and the date of the balance sheet must be submitted. All material changes in the disclosure statement must be clearly marked on one copy of the UFOC. The updated UFOC shall replace the UFOC previously submitted to the Administrator;

3. Sales Agent Disclosure Form for each salesperson employed by the applicant, Appendix A, Illustration C;

4. Certification Page, Appendix A, Illustration G;

5. Auditor's consent letter granting consent to use each audited report in the registration, Appendix A, Illustration H;

b) If the franchise is registered pursuant to conditions required under Section 15 of the Act or Section 200.500 and the franchisor has sold that number of franchises previously authorized by the Administrator, additional sales must be authorized by the Administrator in accordance with the terms of Section 15 of the Act or Section 200.500;

c) All other documents listed in Section 200.600 need not be submitted with the Annual Report if the information contained in them is current. If the information contained in those documents is no longer current, updated documents must be filed with the Annual Report;

d) If the franchisor fails to timely submit an Annual Report, the Administrator shall enter an order pursuant to Section 22 of the Act declaring that the franchisor's registration is terminated effective as of the anniversary date of its registration date. Annual Reports received after the Annual Report filing date are invalid. A franchisor whose registration is terminated due to its failure to file an Annual Report must file as an original registrant and comply with Section 200.603(a)(3) if it desires to offer or sell franchises in this State;

e) The Administrator may consider a franchisor's incomplete filing of its Annual Report as partial compliance with Section 200.603(a) and provide the franchisor up to 14 additional days to complete its Annual Report if:

1. The franchisor has filed the required fee and an Annual Report that is in substantial compliance with Section 200.603 no later than one business day prior to the anniversary date of its registration;

2. A letter of explanation is provided as to why material portions of the Annual Report have not been provided and verifying that the missing information will be provided within a maximum period of 14 days after the Annual Report due date; and

3. The franchisor agrees not to make offers or conclude the sale of franchises during the period when the Annual Report is incomplete; and

f) The franchisor shall be provided a courtesy notice that its Annual Report has been received.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.604 Amendment

a) Within 90 days after the occurrence of any material change to the UFOC the following materials must be submitted to the Administrator to amend the disclosure statement:

1. Two complete copies of the UFOC pages containing the changes. One copy of the changed pages must have all changes clearly marked;

2. An Application page, Appendix A, Illustration A;

3. A Certification page, Appendix A, Illustration G;

4. A nonrefundable filing fee:

A) $25.00 for an immaterial amendment;

B) $100.00 for a material amendment.

b) A UFOC may be amended by addendum.

c) The franchisor shall be provided a courtesy notice that its amendment(s) has been received.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.605 Final Circular Submission

A registrant may be required to submit one extra, complete unbound copy of the Disclosure Statement, including all revisions and exhibits.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.606 Multiple Filings

The Administrator will register multiple franchises in one filing provided:

a) The franchises will be offered concurrently; and

b) The franchises are of a similar type; and

c) The contractual obligations are similar; and

d) The information can be presented in a nonconfusing manner.

14 Ill. Adm. Code 200.607 Public Examination and Photocopying of Disclosure Statements

Any disclosure document registered under the Act may be examined at the office of the Administrator or ordered by mail for $50.00 payable to the State of Illinois from the Illinois Attorney General, Franchise Division, 500 South Second Street, Springfield, Illinois 62706.

History

• Source: Amended at 19 Ill. Reg. 16950, effective January 1, 1996

14 Ill. Adm. Code 200.608 Jurisdiction and Venue

As described in Section 4 of the Act, a franchise agreement shall not require a franchisee to litigate any cause of action, with the exception of arbitration proceedings, arising under the franchise agreement or the Act outside of this State, nor shall a franchise agreement provide for a choice of law provision for any state other than Illinois.

History

• Source: Added at 19 Ill. Reg. 16950, effective January 1, 1996

14 Ill. Adm. Code 200.609 Waiver

No franchisor shall attempt to circumvent compliance with the Act by requiring a franchisee to execute any document evidencing waiver of any right granted by the Act as described in Section 41 of the Act. This prohibition against waiver includes, but is not limited to, statements involving unregistered earnings claims, timely disclosure, warranty, material misrepresentations or limitation of liability.

History

• Source: Added at 19 Ill. Reg. 16950, effective January 1, 1996

14 Ill. Adm. Code 200.610 Denial of Initial Registration

a) A franchisor, whose initial registration has been denied without a full review of the UFOC by the Administrator because incomplete financial statements not in compliance with UFOC Guidelines were submitted, shall have 90 days to correct such deficiencies. The Administrator shall have 21 days to review the corrected financial data submitted and the previously submitted circular.

b) If the Administrator finds material deficiencies upon a complete review of the initial registration materials, or a review subsequent to the franchisor's submission of the required financial data, pursuant to subsection (a), the franchisor shall be notified that the franchisor has 90 days within which to correct such deficiencies. The Administrator shall have 21 days to review the curative information.

c) If the franchisor cures the deficiencies noticed by the Administrator within the times specified in this Part, the Administrator shall rescind the order of denial and register the franchise. A franchisor that fails to comply with statutory requirements and UFOC Guidelines during the above described 90 day periods must reapply by submitting a new registration fee and documents pursuant to the Act and Section 200.600.

History

• Source: Added at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.700 Definitions (repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.701 Number of Applications

An application to register the offer of a franchise between a subfranchisor and a subfranchisee shall be made by a separate application. If there is more than one subfranchisor (e.g., two subfranchisors offering the franchise in the same state), the franchise to be offered by or through each subfranchisor shall be filed for registration by a separate application.

History

• Source: Amended at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.702 Responsibility for Filing the Application

a) When both the franchisor and the subfranchisor have performance obligations to the subfranchisee, whether such obligations are set forth in the franchise agreement or other written document or arise as a matter of practice, it is the responsibility of both the franchisor and the subfranchisor to register the offer of the subfranchise. The application for registration regarding the subfranchise shall contain a signature page from both the franchisor and the subfranchisor, each certifying as to the accuracy of the information he supplied, as well as a properly executed consent to service of process from each. Both the franchisor's and subfranchisor's financial statements are to be included in the disclosure statement.

b) If the franchise agreement is solely between a subfranchisor and a subfranchisee and the franchisor has no material performance obligations under the franchise or any other agreement, then the responsibility for registering the offer of the subfranchise is that of the subfranchisor. The franchisor need only verify the information in the application that is relevant to the franchisor.

c) If the franchise agreement is solely between the franchisor and the subfranchisee, the subfranchisor is not a signatory to any such agreement, the franchisor has the primary performance obligations to the subfranchisee, then the responsibility for registering the offer of the subfranchise is that of the franchisor. The subfranchisor need only verify the information in the application relevant to the subfranchisor. This subsection will not apply if the area franchise agreement requires the subfranchisor to service subfranchisees, despite the lack of direct privity between the subfranchisor and the subfranchisee.

History

• Source: Amended at 19 Ill. Reg. 16950, effective January 1, 1996

14 Ill. Adm. Code 200.703 Time for Filing the Application (repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.800 Failure to Diligently Prosecute Application (repealed)

History

• Source: Repealed at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.900 Documents to File

Each franchise broker shall file with the Administrator the documents listed below in duplicate and pay an annual $100 registration fee.

a) Franchise Broker application page, Appendix B, Illustration A;

b) Certification page, Appendix A, Illustration G;

c) Salesperson Disclosure Form for each person who will be offering or selling franchises, Appendix A, Illustration C;

d) Corporate, Partnership or Individual Acknowledgment, Appendix A, Illustrations E and F;

e) Uniform Consent to Service of Process naming the Illinois Attorney General as agent to receive service, Appendix A, Illustration D;

f) Broker Authorization Form, Appendix B, Illustration B. This form must be filed with the Administrator for each franchisor the broker purports to represent, before making such representations to any prospective franchisee. The franchisor must amend its UFOC to disclose each broker relationship before the respective broker(s) represents the Franchisor, except under the "isolated transaction" exemption;

g) A broker who is authorized to accept cash, checks or other payments from prospective franchisees on behalf of a franchisor shall comply with the provisions of this subsection (g) requiring an unaudited balance sheet and income statement externally prepared by an independent CPA in accordance with GAAP current within 120 days certifying the net worth of the franchise broker to be not less than $50,000.

1. In lieu of an unaudited balance sheet and income statement, the broker may post a surety bond in the amount of $50,000 (Appendix B, Illustration C); or

2. In lieu of the franchise broker's unaudited balance sheet the franchise broker may submit an audited balance sheet and income statement of a person, corporation or partnership having a net worth of $50,000, a Guaranty of Performance from such other entity (Appendix B, Illustration D), a Corporate Resolution (Appendix D, Illustration B), a Secretary's Certificate (Appendix D, Illustration C), a Consent to Service of Process from the guarantor (Appendix A, Illustration D), and an Acknowledgment from the guarantor (Appendix A, Illustration E or F); and

h) $100 registration fee.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.901 Notice of Broker Registration

The franchise broker shall be notified by letter of the registration date of the broker.

14 Ill. Adm. Code 200.1000 Documents to File (Repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.1001 Notice of Broker Registration (Repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION A Uniform Franchise Registration Notification Page

File No.

(Insert prior number, if any)

Fee:

(Enclosed at time of initial filing)

Date of Filing:

Notification of Filing For (Check only one category):

Registration of an offer or sale of franchises

Annual Report

Amendment

1. Name of Franchisor

Name under which the Franchisor is doing or intends to do business.

2. Franchisor's principal business address.

Name and address of Franchisor's agent in the State of Illinois authorized to receive process.

Illinois Attorney General, 500 South Second Street, Springfield, Illinois 62706

3. Name, address and telephone number of subfranchisors, if any, for this State.

4. Name, address and telephone number of person to whom communications regarding this application should be directed.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION B Supplemental Information

1. List the following:

A. The states in which this proposed registration is effective.

B. The states in which this proposed registration is or will be shortly on file.

C. The states, if any, which have refused, by order or otherwise, to register this franchise.

D. The states, if any, which have revoked or suspended the right to offer this franchise.

E. The states, if any, in which the proposed registration of this franchise has been withdrawn.

2. With respect to all franchises sought to be registered set forth, in budget form, the total projected financing required by the franchisor to fulfill the franchisor's obligations to provide real estate, improvements, equipment, inventory, training and all other items included in the offering. Show separately the sources of all of the required funds including any proposed loans or contributions to capital.

History

• Source: Amended at 19 Ill. Reg. 16950, effective January 1, 1996

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION C Sales Agent Disclosure Form

1. List the persons who will offer or sell franchises in this State. For each person state:

A. Name;

B. Business address and telephone number;

C. Home address and telephone number;

D. Present employer;

E. Present title;

F. Social security number;

G. Birthdate; and

H. Employment during the past 5 years. For each such employment state the name of the employer, position held and beginning and ending dates.

2. State whether any person identified in 1. above:

A. Has any administrative, civil or criminal action pending alleging a violation of franchise or securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or any comparable allegations?

YES NO

B. Has during the 10 year period immediately before the Offering Circular date:

(1) been convicted of a felony or pleaded nolo contendere to a felony charge or been held liable in a civil action by final judgment if the felony or civil action involved a violation of franchise or securities law, fraud, embezzlement, fraudulent conversion, restraint of trade, unfair or deceptive practices, misappropriation of property or comparable violation of law?

YES NO

(2) entered into or been named in any consent judgment, decree, order or assurance under federal or state franchise, securities antitrust, monopoly, trade practice, or trade regulation law?

YES NO

(3) been subject to any order of any national securities association or national securities exchange (as defined in the Securities and Exchange Act of 1934, 15 U.S.C. 78a) suspending or expelling the person from membership in the association or exchange.

YES NO

C. With respect to each question above answered "YES" state:

(1) the name of each person or entity involved;

(2) the court, agency, association or exchange involved;

(3) a summary of the allegations;

(4) if applicable, the date of the conviction, judgment, decree, order or assurance; and

(5) the penalty imposed, damages assessed and nature thereof, terms and conditions of the judgment, decree, order or assurance.

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION D Uniform Consent to Service of Process

(name)

,

(a corporation organized under the laws of the State of )

(a partnership) (an individual)

, irrevocably appoints the

(regulatory authority)

and the successors in office, its attorney in the State of

(state)

for service of notice,

process or pleading in any action or proceeding against it arising out of or in connection with

the sale of franchises, or a violation of the franchise laws of

(state)

; and consents that

an action or proceeding against it may be commenced in a court of competent jurisdiction and

proper venue within

(state)

by service of process upon this officer with the same

effect as if the undersigned was organized or created under the laws of

(state)

and had lawfully been served with process in

(state)

.

A copy of any notice, process or pleading served pursuant to this consent shall be mailed to:

(name and address)

Date:

,

By:

Title

(SEAL)

By:

Title

(Notarial Seal)

Notary Public

My Commission Expires:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION E Corporate Acknowledgment

STATE OF

)

SS

)

COUNTY OF

)

On this

day of

,

, before me

the undersigned officer, personally appeared

and

, known personally to me to be the

President

and

Secretary, respectively, of the above named corporation, and that

they, as such officers, being authorized so to do, executed the foregoing instrument for the purpose therein contained, by signing the name of the corporation by themselves as such officer.

IN WITNESS WHEREOF I have hereunto set my hand and official seal.

(Notarial Seal)

Notary Public

My commission Expires:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION F Individual or Partnership Acknowledgment

STATE OF

)

SS

)

COUNTY OF

)

On this

day of

,

, before me

the undersigned officer, personally appeared

to me personally known and known to be the same person(s) whose name(s) is (are) signed to the foregoing instrument, and acknowledged the execution thereof for the uses and purposes therein set forth.

IN WITNESS WHEREOF I have hereunto set my hand and official seal.

(Notarial Seal)

Notary Public

My commission expires:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION G Certification Page

I certify under penalty of law that I have read this notification and the exhibits attached hereto and incorporated herein by reference, and know the contents thereof and that the statements therein are true and correct.

Executed at

,

Illinois

,

.

(SEAL)

(Signature(s) of Franchisor, Subfranchisor or Broker)

By

Title

STATE OF

)

SS

)

COUNTY OF

)

Personally appeared before me this

day of,

the above-named

(and)

to me known to be the

person(s) who executed the foregoing notification (as

and

respectively, of the above-named applicant) and (each) being

first duly sworn, stated upon oath that said notification, and all exhibits submitted herewith, are true and correct.

(Notarial Seal)

Notary

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION H Consent of Accountant

A "Manually Signed Consent of Accountant" should contain the following language:

John Doe and Company, Inc. hereby consents to the use in the Franchise Disclosure Document filed by John Smith, Inc. of our report dated April 4, 1978, relating to the financial statements of John Smith, Inc. for the period ending December 31, 1977.

NOTE: This letter must be manually signed by the accountant.

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION I UFOC Cross Reference Sheet (Repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION J FTC Cross Reference Sheet (Repealed)

History

• Source: Repealed at 12 Ill. Reg. 9424, effective May 18, 1988

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION K Acknowledgment of Receipt (Suggested Format) (Repealed)

History

• Source: Repealed at 19 Ill. Reg. 16950, effective January 1, 1996

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION L Requirements for Preparation of a Uniform Franchise Offering Circular

THE UNIFORM FRANCHISE OFFERING CIRCULAR GUIDELINES

GENERAL INSTRUCTIONS

90. Introduction: The Uniform Franchise Offering Circular (UFOC) Guidelines consist of the Requirements, Instructions and Sample Answers (Appendix A, Illustration L). The UFOC Guidelines were prepared and adopted by the North American Securities Administrators Association ("NASAA") and its predecessor, the Midwest Securities Commission Association June 10, 1993. The members of NASAA cannot create statutes since that is the constitutional province of state legislators, but NASAA intends for the UFOC Guidelines to facilitate compliance with disclosure requirements under state franchise investment laws. Where possible, NASAA has developed uniform disclosure requirements, but differences in state laws bearing on the franchise relationship may necessitate changes. In addition, state administrators will continue to review the application for deficient disclosure and additional disclosure necessitated by special problems or risks in the proposed offering.

91. Follow these General Instructions and the Requirement and Instruction for each Item in franchise registration applications and disclosure in the Uniform Franchise Offering Circular.

92. Original Registration Application – Documents to File:

(a) Uniform Franchise Registration Application Page (also known as "Facing Page") (Appendix A, Illustration A);

(b) Supplemental Information Pages(s) (Appendix A, Illustration B);

(c) Certification Page (Appendix A, Illustration G);

(d) Uniform Consent to Service of Process (Appendix A, Illustration D);

(e) Sales Agent Disclosure Form (Appendix A, Illustration C);

(f) If the applicant is a corporation or partnership, an authorizing resolution if the application is verified by a person other than applicant's officer or general partner (Appendix A, Illustrations E, F, M and N);

(g) Uniform Franchise Offering Circular (Appendix A, Illustration L);

(h) Application Fee (Section 40 of the Act);

(i) Auditor's consent (or a photocopy of the consent) to the use of the latest audited financial statements in the offering circular (Appendix A, Illustration H).

120. Renewal Application: When state law requires renewal, mark "renewal" on the application page. Submit all documents required for an initial application with additions to the previously filed documents underlined. Changes must be clearly marked so that the change is noticed easily. File a renewal application before the prior registration has expired (see Section 10 of Act). If the prior registration has expired, mark "Registration of an Offer or Sale of Franchises" on the facing page and pay the fee charged for initial registrations. Redlining and bracketing changes from the last filing will speed a re-registration. Do not mark the amendment boxes on the application page on the first renewal filing even if documents are revised. In Illinois you can make as many changes in a renewal filing as are necessary without paying an amendment fee.

121. "Disclose" means to state all material facts in an accurate and unambiguous manner. Disclose clearly, concisely and in a narrative form that is understandable by a person unfamiliar with the franchise business. For clear and concise disclosure avoid legal antiques1 and repetitive phrases2. When possible, use active, not passive voice3. Limit the length and complexity of disclosure through careful organization of information in the disclosure. Avoid technical language and unnecessary detail. Make the format and chronological order consistent within each Item.

NOTES:

1 Avoid these legal antiques. Preferred substitutes are in parentheses: aforesaid; arising from (from); as between; as an inducement for; as part of the consideration; as set forth in (in); as the case may be, at a later point in time; binding upon and inure; commence (begin); condition precedent (before); condition subsequent (after); consist of (are); engaged in business of offering (offers); for and in consideration of the grant of the franchise; for a period of (for); foregoing; forthwith; from time to time; hereby; herein; hereinafter; hereto; heretofore; if necessary; in the event (if); including but not limited to (including); in any manner whatsoever; including without limitation (including); in conjunction with; in connection with; in no event of (if); in whole or in part; it will be specifically understood that; manner in which; not later than (within, by); not less than (at least); notwithstanding; offers to an individual, corporation or partnership (offer); on behalf of (for); precendent (before); prescribed (required); prior to (before); provided however (but, unless); provided that (if, unless); purporting to; relating to (under); subsequent (after); such (this); so as to (to); so long as (while); thereafter, therefrom; thereof; thereunder; without limiting the foregoing; whatsoever; with respect to.

2 Avoid repetitive phrases. Preferred substitutes are in parentheses: agrees, acknowledges and recognizes; any and all; are and remain; based upon, related to, or growing out of (because); certified as true and correct (certified); consultation, assistance and guidance (guidance); each and every; equipment, furniture, supplies and inventory set forth on the equipment list attached as Exhibit ___ (items on Exhibit ____); necessary and appropriate; sample, test and review (test); twenty-three (23) (write as 23).

3 The preferred phrase in the parentheses: As the franchisor prescribes (you must); being offered (offers); consists of (is); engaged in the business of offering (offer); giving rise to; if it becomes necessary for (if); inure to the benefit of (benefits); if granted the right to (can); is given an opportunity to (can); is required to (must); shall be no less than (a minimum of); shall continue in effect (continues); with the exception of (except).

160. Since prospective franchisees must have sufficient disclosure to understand economic commitments and to develop a business plan, Items 5, 6, 7 and 8 must disclose the minimum and maximum franchisee cost. The franchisor should provide reasonably available information to allow franchisees to forecast future charges listed in these Items and to be paid to person who are independent of the franchisor. Future payments to the franchisor should be specific as is required by individual Items.

161. The disclosure for each UFOC Item should be separately titled and in the required order. Do not repeat the UFOC question in the offering circular. Respond to each question fully. If the disclosure is not applicable, respond in the negative but if an answer is required "if applicable," respond only if the requested information applies. Do not qualify a response with a reference to another document unless permitted by the instructions to that Item.

162. For each Item in the UFOC, type the Requirement's Item title and number. Sub-items may be designated by descriptive headings, but do not use sub-item letters and numbers.

163. Separate documents (for example, a confidential operations manual) must not make representations or impose terms that contradict or are materially different from the disclosure in the offering circular.

164. Use 8½ by 11 inch paper for the entire application.

165. When the applicant is a master franchisor seeking to sell subfranchises, references in these requirements and instructions to "franchisee" include the subfranchisor unless the language context requires a different meaning.

166. The offer of subfranchises is an offer separate from the offer of franchises and usually requires a separate registration or exemption. A single application may register the sale of single unit and multi-unit franchises if the offering circular is not confusing.

167. When the applicant is a subfranchisor, disclose the same information concerning the subfranchisor that is required about the franchisor, to the extent applicable.

168. In offerings by a subfranchisor, "franchisor" means both the franchisor and subfranchisor.

169. When state requirements conflict with these Guidelines, the state requirements control. The State Administrator may modify or waive these Guidelines or may require additional documentation or information.

170. Grossly deficient applications may be rejected summarily by the Administrator as incomplete for filing. It is not the function of an Administrator to prepare, in effect, an applicant's application. The additional examiner time reviewing the grossly deficient product delays the processing of diligently prepared and pursued applications.

171. The Guidelines that continue after these Instructions use the following format:

(a) The title of the Item follows the Item number. It is capitalized and centered on the page.

(b) The "Item" is a restatement of the Uniform Franchise Offering Circular (UFOC) Item Requirement. It is capitalized and follows the title of the Item.

(c) The "Instruction" appears beneath the Item. It explains portions of the Item requirements.

(d) The "Sample Answer" at the end of each Item provides sample disclosures. Double horizontal lines divide the Sample Answer from the Instructions.

COVER PAGE: The State cover page of the offering circular must state:

1. The title in boldface type: FRANCHISE OFFERING CIRCULAR

2. The franchisor's name, type of business organization, principal business address and telephone number.

3. A sample of the primary business trademark, logotype, trade name, or commercial label or symbol under which the franchisee will conduct its business. (Place in upper left-hand corner of the cover page.)

4. A brief description of the franchised business.

5. The total amounts in Items 5 and 7 of the offering circular: Franchisee's Initial Franchise Fee or Other Payment and Franchisee's Initial Investment.

6. The following statements:

Information comparing franchisors is available. Call the State administrators listed in Exhibit ______ or your public library for sources of information.

Registration of this franchise by a state does not mean that the state recommends it or has verified the information in this offering circular. If you learn that anything in the offering is untrue, contact the Federal Trade Commission and Illinois Attorney General.

7. Effective Date: (Leave blank until notified of effectiveness by State regulatory authority.)

Cover Page Instructions:

i. Present information in the required order. Except for risk factors or when instructed by the examiner, do not capitalize or underline.

ii. The estimated cash investment should agree with the Item 7 total. This total should represent the franchisee's entire initial investment minus only exclusions allowed by Item 7. Do not state what the total includes.

iii. Limit the cover page disclosure to one page unless risk factors require additional space. Disclosure on the cover page should be brief. Limit the description of the business to the product or service offered by the franchisor. Unless required by a State regulator, do not disclose financing arrangements or the franchisee's right to use the trademark. Exclude non-required information unless necessary as a risk factor or required by a State regulator.

iv. If applicable, disclose the following risk factors using the following language on the cover:

a. THE FRANCHISE AGREEMENT PERMITS THE FRANCHISEE (TO

SUE) (TO ARBITRATE WITH)

(franchisor)

ONLY IN

(state)

. OUT OF STATE (ARBITRATION) (LITIGATION)

MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST MORE (TO

SUE) (TO ARBITRATE WITH)

(franchisor).

IN

(state)

THAN IN YOUR HOME STATE.

b. THE FRANCHISE AGREEMENT STATES THAT (state) LAW GOVERNS THE AGREEMENT, AND THIS LAW MAY NOT PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT TO COMPARE THESE LAWS.

c. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.

v. In addition to the above language, disclose other risk factors required by a State regulator.

vi. Use capital letters for risk factor disclosure.

vii. In multistate offerings in which the franchisor uses a single offering circular, refer to an exhibit to the offering circular for a list of State or Provincial authority.

Sample Cover Page

(Logo) Franchise Offering Circular

Belmont Mufflers, Inc.

A Minnesota Corporation

First Street

Jackson, Minnesota 55000

(612) 266-3430

The franchisee will repair and install motor vehicle exhaust systems.

The initial franchise fee is $10,000. The estimated initial investment required ranges from $132,700 to $160,200. This sum does not include rent for the business location.

Risk Factors:

THE FRANCHISE AGREEMENT REQUIRES THAT ALL DISAGREEMENTS BE SETTLED BY ARBITRATION IN MINNESOTA. OUT OF STATE ARBITRATION MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT MAY ALSO COST YOU MORE TO ARBITRATE WITH US IN MINNESOTA THAN IN YOUR HOME STATE.

Information about comparisons of franchisors is available. Call the state administrators listed in Exhibit _____________ or your public library for sources of information.

Registration of this franchise with the state does not mean that the state recommends it or has verified the information in this offering circular. If you learn that anything in this offering circular is untrue, contact the Federal Trade Commission and Illinois Attorney General.

Effective date:

TABLE OF CONTENTS: INCLUDE A TABLE OF CONTENTS BASED ON THE REQUIREMENTS OF THIS OFFERING CIRCULAR.

Table of Contents Instructions:

Refer to UFOC Items and state the page where each UFOC Item disclosure begins. List exhibits by letter. Use the following format:

SAMPLE TABLE OF CONTENTS:

TABLE OF CONTENTS

ITEM

PAGE

1

The Franchisor, its Predecessors and Affiliates...................................

2

Business Experience............................................................................

3

Litigation..............................................................................................

4

Bankruptcy...........................................................................................

5

Initial Franchise Fee............................................................................

6

Other Fees............................................................................................

7

Initial Investment.................................................................................

8

Restrictions on Sources of Products and Services...............................

9

Franchisee's Obligations......................................................................

10

Financing.............................................................................................

11

Franchisor's Obligations......................................................................

12

Territory...............................................................................................

13

Trademarks..........................................................................................

14

Patents, Copyrights and Proprietary

Information..........................................................................................

15

Obligation to Participate in the Actual

Operation of the Franchise Business...................................................

16

Restrictions on What the

Franchise May Sell..............................................................................

17

Renewal, Termination, Transfer

and Dispute Resolution........................................................................

18

Public Figures......................................................................................

19

Earnings Claims...................................................................................

20

List of Outlets......................................................................................

21

Financial Statements............................................................................

22

Contracts..............................................................................................

23

Receipt.................................................................................................

Exhibits

A.

Franchise Agreement...........................................................................

B.

Equipment Lease.................................................................................

C.

Lease for Premises...............................................................................

D.

Loan Agreement..................................................................................

Item 1

THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES

Item 1 Instructions:

i. Use the word "we," initials or one or two words to refer to the franchisor. Use different initials or a different one or two words to refer to other persons contracting with the franchisee under the franchise agreement. Except in the 23 Item titles, use these initials or the word(s) to describe these persons or entities throughout the offering circular.

ii. Define the franchisee as "you" and use this description throughout the offering circular. If the franchisee could be a corporation, partnership or other entity, disclose whether "you" includes the franchisee's owners.

iii. "Predecessor" in Item 1 means a person from whom the franchisor acquired directly or indirectly the major portion of the franchisor's assets.

iv. The disclosure regarding predecessors need only cover the 10 year period immediately before the close of the franchisor's most recent fiscal year.

v. Affiliate in Item 1 means a person (other than a natural person) controlled by, controlling or under common control with the franchisor, which is offering franchises in any line of business or is providing products or services to the franchisees of the franchisor.

DISCLOSE IN SUMMARY FORM:

A. THE NAME OF THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES.

B. THE NAME UNDER WHICH THE FRANCHISOR DOES OR INTENDS TO DO BUSINESS.

Item 1B Instruction:

If the franchisor does business under a name different from the name disclosed in Item 1A, state that other name. If not, state that the franchisor does not do business under another name.

C. THE PRINCIPAL BUSINESS ADDRESS OF THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES, AND THE FRANCHISOR'S AGENT FOR SERVICE OF PROCESS.

Item 1C Instructions:

i. Principal business address means "home office" in the United States, not in the state for which the offering circular was prepared. If appropriate, also disclose the location of an international "home office." The business address cannot be a post office box.

ii. In a multi-state offering in which the agent for service of process is required, the franchisor may use an exhibit or the acknowledgement of receipt to disclose this agent.

D. THE BUSINESS FORM OF THE FRANCHISOR

Item 1D Instruction:

Disclose the state of incorporation or business organization and the type of business organization.

E. THE FRANCHISOR'S BUSINESS AND THE FRANCHISES TO BE OFFERED IN THIS STATE.

Item 1E Instructions:

Disclose the following:

i. That the franchisor sells or grants franchises;

ii. Whether the franchisor operates businesses of the type being franchised;

iii. The franchisor's other business activities;

iv. The business to be conducted by the franchisees;

v. The general market for the product or service to be offered by the franchisee. (For example, is the market developed or developing? Will the goods be sold primarily to a certain group? Are sales seasonal?);

vi. In general terms any regulations specific to the industry in which the franchise business operates. It is not necessary to include laws or regulations that apply to businesses generally;

vii. A general description of the competition.

F. THE PRIOR BUSINESS EXPERIENCE OF THE FRANCHISOR. ITS PREDECESSORS AND AFFILIATES INCLUDE:

(1) THE LENGTH OF TIME THE FRANCHISOR HAS CONDUCTED A BUSINESS OF THE TYPE TO BE OPERATED BY THE FRANCHISEE.

(2) THE LENGTH OF TIME EACH PREDECESSOR AND AFFILIATE HAS CONDUCTED A BUSINESS OF THE TYPE TO BE OPERATED BY THE FRANCHISEE.

(3) THE LENGTH OF TIME THE FRANCHISOR HAS OFFERED FRANCHISES FOR THE SAME TYPE OF BUSINESS AS THAT TO BE OPERATED BY THE FRANCHISEE.

(4) THE LENGTH OF TIME EACH PREDECESSOR AND AFFILIATE OFFERED FRANCHISES FOR THE SAME TYPE OF BUSINESS AS THAT TO BE OPERATED BY THE FRANCHISEE.

(5) WHETHER THE FRANCHISOR HAS OFFERED FRANCHISES IN OTHER LINES OF BUSINESS, INCLUDING:

(A) A DESCRIPTION OF EACH OTHER LINE OF BUSINESS;

(B) THE NUMBER OF FRANCHISES SOLD IN EACH OTHER LINE OF BUSINESS; AND

(C) THE LENGTH OF TIME THE FRANCHISOR HAS OFFERED EACH OTHER FRANCHISE.

(6) WHETHER EACH PREDECESSOR AND AFFILIATE OFFERED FRANCHISES IN OTHER LINES OF BUSINESS, INCLUDING:

(A) A DESCRIPTION OF EACH OTHER LINE OF BUSINESS;

(B) THE NUMBER OF FRANCHISES SOLD IN EACH OTHER LINE OF BUSINESS; AND

(C) THE LENGTH OF TIME EACH PREDECESSOR AND AFFILIATE OFFERED EACH OTHER FRANCHISE.

Item 1F Instruction:

Limit disclosure about predecessors to the time before the franchisor acquired the predecessor's assets. Thus, under the 10 year limitation, if a franchisor acquired the assets of a predecessor 8 years ago, the disclosure about the predecessor should cover only the 2 year period before the acquisition.

Sample Answer 1

To simplify the language in this offering circular "Belmont" means Belmont Mufflers Inc., the franchisor. "You" means the person who buys the franchise. Belmont is a Minnesota corporation that was incorporated on September 3, 1963. Belmont does business as Belmont Muffler Shops. Our principal business address is 111 First Street, Jackson, Minnesota 55555.

Belmont's agent for service of process is disclosed in Exhibit _____ .

Belmont currently operates 12 Belmont Muffler Shops and sells pipe bending machines and mufflers to various muffler shops.

Belmont franchises the right to sell and install mufflers for the public. You must honor our guarantee to replace mufflers or exhaust pipes that wear out if the vehicle ownership has not changed. Belmont's franchisees often operate their muffler shop franchise with their service stations or tire center. Your competitors include department store service departments, service stations and other national chains of muffler shops. Exhibit _____ is attached to this offering circular and contains a summary of the special regulations for muffler installation in your state.

During the past 5 years Belmont has operated 7 muffler shops that are similar to the franchised shops being offered. All these shops are located in urban areas, have approximately xxxxx square feet of floor space and are located on busy streets. An additional 3 muffler shops were opened in 1990. From 1968 to 1973, Belmont offered franchises for "Repair-All Transmission Shops." "Repair-All" franchises repaired and replaced motor vehicle transmissions under a marketing plan similar to the franchise in this offering circular. Belmont sold 40 of these franchises primarily in the states of Minnesota, Michigan, Wisconsin and Illinois. In 1973, Belmont sold this transmission repair company to CTF Inc.

Item 2

BUSINESS EXPERIENCE

LIST BY NAME AND POSITION THE DIRECTORS, TRUSTEES AND/OR GENERAL PARTNERS, THE PRINCIPAL OFFICERS AND OTHER EXECUTIVES OR SUBFRANCHISORS WHO WILL HAVE MANAGEMENT RESPONSIBILITY RELATING TO THE FRANCHISES OFFERED BY THIS OFFERING CIRCULAR. LIST ALL FRANCHISE BROKERS. STATE EACH PERSON'S PRINCIPAL OCCUPATIONS AND EMPLOYERS DURING THE PAST FIVE YEARS.

Item 2 Instructions:

i. Principal officers include the chief executive and chief operating officer, the president, financial, franchise marketing, training and franchise operations officers.

ii. First disclose the position and the name of the person holding it. Underline this information; then skip one line.

iii. Disclose the beginning date and departure date for each job held in the five year period whether or not this date is within the past five years. Disclose the location of the job.

iv. Do not disclose home addresses, home telephones, social security numbers or birth dates in this Item.

v. Disclose the required information concerning the franchise broker's directors, principal officers and executives with management responsibility to market or service the franchises.

vi. In a multi-state offering in which the franchisor uses a single offering circular and franchise brokers and executives with direct management responsibility to the franchisees differs from state to state, use an exhibit to refer to these personnel.

Sample Answer 2

President: Jane J. Doe

From June 1978, until April, 1986, Ms. Doe was Vice President of Atlas Inc., a Houston, Texas based manufacturer of automobile wheels. In April 1986, she joined Belmont as a Director and Vice President. She was promoted to President in June 1987.

Item 3

LITIGATION

DISCLOSE WHETHER THE FRANCHISOR, ITS PREDECESSOR, A PERSON IDENTIFIED IN ITEM 2 OR AN AFFILIATE OFFERING FRANCHISES UNDER THE FRANCHISOR'S PRINCIPAL TRADEMARK:

A. HAS AN ADMINISTRATIVE, CRIMINAL OR MATERIAL CIVIL ACTION PENDING AGAINST THAT PERSON ALLEGING A VIOLATION OF A FRANCHISE, ANTITRUST OR SECURITIES LAW, FRAUD, UNFAIR OR DECEPTIVE PRACTICES, OR COMPARABLE ALLEGATIONS. IN ADDITION, INCLUDE ACTIONS OTHER THAN ORDINARY ROUTINE LITIGATION INCIDENTAL TO THE BUSINESS WHICH ARE SIGNIFICANT IN THE CONTEXT OF THE FRANCHISE SYSTEM OR ITS BUSINESS OPERATIONS. IF SO, DISCLOSE THE NAMES OF THE PARTIES, THE FORUM, NATURE, AND CURRENT STATUS OF THE PENDING ACTION. FRANCHISOR MAY INCLUDE A SUMMARY OPINION OF COUNSEL CONCERNING THE ACTION IF A CONSENT TO USE OF THE SUMMARY OPINION IS INCLUDED AS PART OF THIS OFFERING CIRCULAR.

B. HAS DURING THE 10 YEAR PERIOD IMMEDIATELY BEFORE THE DATE OF THE OFFERING CIRCULAR BEEN CONVICTED OR A FELONY OR PLEADED NOLO CONTENDERE TO A FELONY CHARGE; OR BEEN HELD LIABLE IN A CIVIL ACTION BY FINAL JUDGMENT OR BEEN THE SUBJECT OF A MATERIAL ACTION INVOLVING VIOLATION OF A FRANCHISE, ANTITRUST OR SECURITIES LAW, FRAUD, UNFAIR OR DECEPTIVE PRACTICES, OR COMPARABLE ALLEGATIONS. IF SO, DISCLOSE THE NAMES OF THE PARTIES, THE FORUM AND DATE OF CONVICTION OR DATE JUDGMENT WAS ENTERED, PENALTY OR DAMAGES ASSESSED AN/OR TERMS OF SETTLEMENTS.

C. IS SUBJECT TO A CURRENTLY EFFECTIVE INJUNCTIVE OR RESTRICTIVE ORDER OR DECREE RELATING TO THE FRANCHISE OR UNDER A FEDERAL, STATE OR CANADIAN FRANCHISE, SECURITIES, ANTITRUST, TRADE REGULATION OR TRADE PRACTICE LAW RESULTING FROM A CONCLUDED OR PENDING ACTION OR PROCEEDING BROUGHT BY A PUBLIC AGENCY. IF SO, DISCLOSE THE NAME OF THE PERSON, THE PUBLIC AGENCY AND COURT, A SUMMARY OF THE ALLEGATIONS OR FACTS FOUND BY THE AGENCY OR COURT AND THE DATE, NATURE, TERMS AND CONDITIONS OF THE ORDER OR DECREE.

Item 3 Instructions:

i. Definitions:

a. For purposes of these instructions to Item 3, "franchisor" includes the franchisor, its predecessors, persons identified in Item 2 and affiliates offering franchises under the franchisor's principal trademarks.

b. Action: Action includes complaints, cross claims, counterclaims, and third party complaints in a judicial proceeding, and their equivalents in an administrative action or arbitration proceeding. The franchisor may disclose its counterclaims. Omit actions that were dismissed by final judgment without liability of or entry of an adverse order against the franchisor.

c. Included in the definition of material is an action or an aggregate of actions if a reasonable prospective franchisee would consider it important in making a decision about the franchised business.

d. In this Item, settlement of an action does not diminish its materiality if the franchisor agrees to pay material consideration or agrees to be bound by obligations which are materially adverse to its interests.

e. "Ordinary routine litigation" means actions which ordinarily result from the business and which do not depart from the normal kinds of actions in the business.

f. "Held liable" includes a finding by final judgment in a judicial, binding arbitration or administrative proceeding that the franchisor, as a result of claims or counterclaims, must pay money or other consideration, must reduce an indebtedness by the amount of an award, cannot enforce its rights, or must take action adverse to its interests.

g. "Currently Effective": An injunctive or restrictive order or decree is "currently effective" unless it has been vacated or rescinded by a court or by the issuing public agency. An order that has expired by its own terms is not "currently effective." If the named party(s) have fully complied with an order (for example, through registration of its franchise offer), the order is not "currently effective." A party has not fully complied with an order to act or to refrain from an act (for example, to comply with the franchise law or to refrain from violating the franchise law) until the order expires by its own terms.

ii. Civil Litigation or Injunctive or Restrictive Order:

a. Use Sample Answer 3-1 for a negative response to Item 3 if the franchisor has never been named in litigation or if the only litigation naming the franchisor is outside the scope of Item 3.

b. Disclose in the same order as the instructions below appear.

c. Title each action and state its case number or citation in parentheses. Underline the title of the action.

d. For each action state the action's initial filing date and the opposing party's name and relationship with the franchisor. Relationships include competitor, supplier, lessor, franchisee, former franchisee, or class of franchisees.

e. Summarize the legal and factual nature of each claim in the action.

f. Summarize the relief sought or obtained. Summarize conclusions of law or fact.

g. State that other than these (list number of actions) no litigation is required to be disclosed in this offering circular.

iii. Criminal Convictions or Pleas:

a. Disclose in the same order as the following instructions appear.

b. Title each action and state its citation in parentheses. Underline the title of the action.

c. Name the person convicted or who pleaded.

d. State the crime or violation and the date of conviction.

e. Disclose the sentence or penalty imposed.

f. State that other than these (list the number of actions) actions, no litigation is required to be disclosed in this offering circular.

Sample Answer 3-1

No litigation is required to be disclosed in this offering circular.

Sample Answer 3-2

Doe v. Belmont Muffler Service, Inc. (cite) On March 1, 1985, our franchisee, Donald Doe, sought to enjoin us from terminating him for nonpayment of royalty fees. Doe alleged ________. On April 3, 1986, Doe withdrew the case when we repurchased his franchise for $90,000 and agreed not to enforce non-compete clauses against him.

Indiana v. Belmont Muffler Service, Inc. (cite) On April 1, 1985, the Attorney General of Indiana sought to enjoin us from offering unregistered franchises and from using false income representations. The Attorney General alleged that the earnings claims were false because.... The court found that we had offered franchises, that the offers were not registered and that we had made the alleged false representations in our earnings claims. The court enjoined us from repeating those acts.

Other than these 2 actions, no litigation is required to be disclosed in this offering circular.

Item 4

BANKRUPTCY

STATE WHETHER THE FRANCHISOR, ITS AFFILIATE, ITS PREDECESSOR, OFFICERS OR GENERAL PARTNER DURING THE 10 YEAR PERIOD IMMEDIATELY BEFORE THE DATE OF THE OFFERING CIRCULAR (A) FILED AS DEBTOR (OR HAD FILED AGAINST IT) A PETITION TO START AN ACTION UNDER THE U.S. BANKRUPTCY CODE; (B) OBTAINED A DISCHARGE OF ITS DEBTS UNDER THE BANKRUPTCY CODE; OR (C) WAS A PRINCIPAL OFFICER OF A COMPANY OR A GENERAL PARTNER IN A PARTNERSHIP THAT EITHER FILED AS A DEBTOR (OR HAD FILED AGAINST IT) A PETITION TO START AN ACTION UNDER THE U.S. BANKRUPTCY CODE OR THAT OBTAINED A DISCHARGE OF ITS DEBTS UNDER THE BANKRUPTCY CODE DURING OR WITHIN 1 YEAR AFTER THE OFFICER OR GENERAL PARTNER OF THE FRANCHISOR HELD THIS POSITION IN THE COMPANY OR PARTNERSHIP. IF SO, DISCLOSE THE NAME OF THE PERSON OR COMPANY THAT WAS THE DEBTOR UNDER THE BANKRUPTCY CODE, THE DATE OF THE ACTION AND THE MATERIAL FACTS.

Item 4 Instructions:

i. First, name the party that filed (or had filed against it) the petition in bankruptcy and the party's relationship to the franchisor. If the debtor in a bankruptcy proceeding was or is affiliated with the franchisor, state the relationship. If the debtor in a bankruptcy proceeding is unaffiliated with the franchisor, state the name, address and principal business of the bankrupt company.

ii. Disclose that the entity filed bankruptcy or reorganization under the bankruptcy law and the date of the original filing.

iii. Identify the bankruptcy court, and the case name and number. Put this information in parentheses.

iv. State the date on which the debtor obtained a discharge in bankruptcy (including discharges under Chapter 7 and confirmation of any plans of reorganization under Chapters 11 and 13 of the U.S. Bankruptcy Code).

v. Disclose other material facts.

vi. Cases, actions and other proceedings under the laws of foreign nations relating to bankruptcy proceedings should be included in answers, where responses are required, as if those cases, actions and proceedings took place under the U.S. Bankruptcy Code.

vii. If information is disclosed in this Item, at the end of the disclosure add Sample Answer 4-1 with the qualification "other than these actions."

viii. Use Sample Answer 4-1 if no person listed in Items 1 or 2 has been involved as a debtor in bankruptcy proceedings or any person listed in Items 1 or 2 has been involved as debtor in bankruptcy proceedings but the bankruptcy proceedings (under the U.S. Bankruptcy Code or its predecessor, the National Bankruptcy Act of 1898) were discharged more than 10 years ago. "Person" includes natural persons and legal entities listed in Items 1 and 2. Person does not include anyone acting solely as the franchisor's agent for service of process.

Sample Answer 4-1

No person previously identified in Items 1 or 2 of this offering circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this Item.

Sample Answer 4-2

On March 2, 1984, Belmont filed a petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code. We were allowed to continue to operate under bankruptcy court supervision. On October 2, 1985, the bankruptcy court approved our plan of reorganization and discharged the proceedings. (US Bankruptcy Court for the District of Case B 84-301.)

Belmont's present president, Roger Rowe, was president of Acme Muffler Service, Inc., a Houston, Texas based manufacturer of exhaust systems, from July 1, 1978, through June 14, 1983. On June 6, 1983, an involuntary petition under the U.S. Bankruptcy Code was filed against Acme by its creditors. On July 14, 1983, the court entered an order of relief. Acme sold its assets and was dissolved.

Other than these 2 actions, no person previously identified in Items 1 or 2 of this offering circular has been involved as a debtor in proceedings under the U.S. Bankruptcy Code required to be disclosed in this Item.

Item 5

INITIAL FRANCHISE FEE

DISCLOSE THE INITIAL FRANCHISE FEE AND STATE THE CONDITIONS WHEN THIS FEE IS REFUNDABLE.

Item 5 Instructions:

i. "Initial fee" includes all fees and payments for services or goods received from the franchisor before the franchisee's business opens. "Initial fee" includes all fees and payments whether payable in lump sum or installments.

ii. If the initial fee is not uniform, disclose the formula or the range of initial fees paid in the fiscal year before the application date and the factors that determined the amount.

iii. Disclose installment payment terms in this Item or in Item 10.

Sample Answer 5-1

All franchisees pay a $10,000 lump sum franchise fee when they sign the franchise agreement. Belmont will refund the entire amount if we do not approve your application within 45 days. Belmont will refund $9,000 of this fee if you do not satisfactorily complete your 2-week training. There are no refunds under other circumstances.

Sample Answer 5-2

You must pay a franchise license fee of $________ per thousand licensed drivers who reside within your exclusive area when the franchise agreement is signed. The number of licensed drivers is determined by the latest abstract of the state agency which issues driver's licenses. The minimum fee is $20,000. When you send your application, you must pay a non-refundable $500 application fee. You must pay an additional $10,000 when you receive your equipment. The balance of your fee is payable in 12 equal monthly installments of $______. The first installment payment is due 1 year after your shop opens. Belmont charges 10% annual interest on the unpaid balance. Interest compounds daily and accrues from the date that you receive your equipment. All buyers pay this uniform fee and receive the same financing terms on the fee. If your application is not accepted, Belmont retains the $500 for investigative costs, but you are not liable for the $19,500 remainder. Belmont does not give refunds under other circumstances.

Item 6

OTHER FEES

DISCLOSE OTHER RECURRING OR ISOLATED FEES OR PAYMENTS THAT THE FRANCHISEE MUST PAY TO THE FRANCHISOR OR ITS AFFILIATES OR THAT THE FRANCHISOR OR ITS AFFILIATES IMPOSE OR COLLECT IN WHOLE OR IN PART ON BEHALF OF A THIRD PARTY. INCLUDE THE FORMULA USED TO COMPUTE THESE OTHER FEES AND PAYMENTS. IF ANY FEE IS REFUNDABLE, STATE THE CONDITIONS WHEN EACH FEE OR PAYMENT IS REFUNDABLE.

Item 6 Instructions:

i. First disclose fees in tabular form. Use footnotes or a "remarks" column to elaborate on the information in the table or to disclose caveats. If elaborations are lengthy, use footnotes instead of a remarks column.

ii. Disclose the amount of each fee. A dollar amount or a percentage of gross sales is acceptable if the term gross sales is defined. If dollar amounts may increase, disclose the formula which determines the increase or the maximum amount of the increase.

iii. Disclose the due date for recurring payments.

iv. If all fees are payable to only the franchisor, disclose this in a footnote.

v. If all fees are imposed and collected by the franchisor, disclose this in a footnote.

vi. If all fees are non-refundable, state this in a footnote.

vii. Disclose the voting power of franchisor owned outlets on any fees imposed by cooperatives. If franchisor outlets have controlling voting power, disclose a range for the fee. Disclose this information in a footnote or a "remarks" column.

viii. The franchisor need not repeat information contained in Items 8 & 9, but the table should direct the franchisees to those Items.

ix. Examples of fees are royalty, lease negotiation, construction, remodeling, additional training, advertising, group advertising, additional assistance, audit, accounting/inventory, and transfer and renewal fee.

Sample Answer 6-1

Name of Fee

Amount

Due Date

Remarks

Royalty1

4% of total gross sales

Payable monthly on the 10th day of the next month

Gross sales includes all revenue from the franchise location. Gross sales does not include sales tax or use tax.

Advertising1

2% of total gross sales

Same as Royalty fee

Cooperative Advertising 1

Maximum − 2% of gross sales

Established by franchisees

Franchisees may form an advertising cooperative and establish local advertising fees. Company owned stores have no vote in these cooperatives.

Additional Training1

$1,000 per person

2 weeks prior to beginning of training

Belmont trains 2 persons free − See Item 11

Additional Assistance1

$500 per day

30 days after billing

Belmont provides opening assistance free − See Item 11

Transfer1

$1,000

Prior to consummation of transfer

Payable when you sell your franchise. No charge if franchise transferred to a corporation which you control.

Audit1

Cost of audit plus 10% interest on underpayment2

30 days after billing

Payable only if audit shows an understatement of at least 2% of gross sales for any month

Renewal Fee1

$1,000

30 days before renewal

Notes:

1 All fees are imposed by and are payable to Belmont. All fees are non-refundable.

2 Interest begins from the date of the underpayment.

Item 7

INITIAL INVESTMENT

DISCLOSE THE FOLLOWING EXPENDITURES STATING TO WHOM THE PAYMENTS ARE MADE, WHEN PAYMENTS ARE DUE, WHETHER EACH PAYMENT IS REFUNDABLE, THE CONDITIONS WHEN EACH PAYMENT IS REFUNDABLE, AND, IF PART OF THE FRANCHISEE'S INITIAL INVESTMENT IN THE FRANCHISE MAY BE FINANCED, AN ESTIMATE OF THE LOAN REPAYMENTS, INCLUDING INTEREST:

A. REAL PROPERTY, WHETHER PURCHASED OR LEASED. IF NEITHER ESTIMABLE NOR DESCRIBABLE BY A LOW-HIGH RANGE, DESCRIBE REQUIREMENTS, SUCH AS PROPERTY TYPE, LOCATION AND BUILDING SIZE.

B. EQUIPMENT, FIXTURES, OTHER FIXED ASSETS, CONSTRUCTION, REMODELING, LEASEHOLD IMPROVEMENTS AND DECORATING COSTS, WHETHER PURCHASED OR LEASED.

C. INVENTORY REQUIRED TO BEGIN OPERATION.

D. SECURITY DEPOSITS, UTILITY DEPOSITS, BUSINESS LICENSES, OTHER PREPAID EXPENSES.

E. ADDITIONAL FUNDS REQUIRED BY THE FRANCHISEE BEFORE OPERATIONS BEGIN AND DURING THE INITIAL PHASE OF THE FRANCHISE.

F. OTHER PAYMENTS THAT THE FRANCHISEE MUST MAKE TO BEGIN OPERATIONS.

Item 7 Instructions:

i. Begin disclosure by listing expenditures in tabular form. List preopening expenses first. Use footnotes to comment on expected expenditures.

ii. Disclose payments required by the franchise agreement and all costs necessary to begin operation of the franchise and operate the franchise during the initial phase of the business. A reasonable time for the initial phase of the business is at least 3 months or a reasonable period for the industry. Include an entry titled "additional funds" and disclose the length of the initial phase in the entry.

iii. If a specific expenditure amount is not ascertainable, use a low-high range based on the franchisor's current experience. If real property costs cannot be estimated in a low-high range, disclose the approximate size of the property and building involved. Describe the probable location of the building (for example, strip shopping center, mall, downtown, rural or highway).

iv. The franchisor may include additional expenditure tables to show expenditure variations caused by differences in site location, premise size, etc. Describe in general terms the factors, basis and experience that the franchisor considered or relied upon in formulating the amount required for additional funds.

v. If the franchisor or an affiliate finances part of the initial investment, state the expenditures that it will finance. State the required down payment, annual percentage rate of interest, rate factors, and the estimated loan repayments. Make the discussion brief, and refer to Item 10.

vi. Total the initial investment. This total should be the same as the total investment on the offering circular cover.

Sample Answer 7

YOUR ESTIMATED INITIAL INVESTMENT

AMOUNT

METHOD OF PAYMENT

WHEN DUE

TO WHOM PAYMENT IS TO BE MADE

INITIAL

FRANCHISE FEE

$20,000

(Note 1)

Lump Sum

At Signing of Franchise Agreement

Belmont, Inc.

TRAVEL AND LIVING EXPENSES WHILE TRAINING

$2,500 to $5,000

As Incurred

During Training

Airlines, Hotels & Restaurants

REAL ESTATE AND IMPROVEMENTS

(Note 2)

(Note 2)

(Note 2)

(Note 2)

EQUIPMENT

$40,000

(Note 3)

Lump Sum

Prior to Opening

Belmont or vendors

SIGNS

$2,200

Lump Sum

Prior to Opening

Abbey Sign Company

MISCELLANEOUS OPENING COSTS

$8,000

(Note 4)

As Incurred

As Incurred

Suppliers, Utilities, etc.

OPENING INVENTORY

$8,000

(Note 5)

Lump Sum

Prior to Opening

Belmont or vendors

ADVERTISING FEE − 3 MONTHS

$500

Monthly

Belmont

ADDITIONAL FUNDS − 3 MONTHS

$50,000 to $75,000

(Note 6)

As Incurred

As Incurred

Employees, Suppliers, Utilities

TOTAL

$132,700 to $160,200

(Note 7)

(Does not include real estate costs)

Notes:

1 See Item 5 for the conditions when this fee is partly refundable. Belmont does not finance any fee.

2 If you do not own adequate shop space, you must lease the land and building for the Belmont Muffler Shop. Typical locations are light industrial and commercial areas. The typical Belmont Muffler Shop has 5,000 – 8,000 square feet. Former three or four bay gasoline service stations have been converted with relative ease into Belmont Muffler Shops. Rent is estimated to be between $12,000 – $20,000 per year depending on factors such as size, condition and location of the leased premises.

3 This payment is fully refundable before equipment installation. After installation, Belmont deducts $3,000 installation costs from your refund.

4 Includes security deposits, utility costs, incorporation fee.

5 This payment is fully refundable before Belmont delivers your inventory. After delivery Belmont deducts a 10% restocking fee from your refund.

6 This estimates your start up expenses. These expenses include payroll costs. These figures are estimates and Belmont cannot guarantee that you will not have additional expenses starting the business. Your costs will depend on factors such as: how much you follow Belmont's methods and procedures; your management skill, experience and business acumen; local economic conditions; the local market for our product; the prevailing wage rate; competition; and the sales level reached during the initial period.

7 Belmont relied on its 30 years of experience in the muffler business to compile these estimates. You should review these figures carefully with a business advisor before making any decision to purchase the franchise.

8 Belmont does not offer direct or indirect financing to franchisees for any items.

Item 8

RESTRICTIONS ON SOURCES

OF PRODUCTS AND SERVICES

DISCLOSE FRANCHISEE OBLIGATIONS TO PURCHASE OR LEASE FROM THE FRANCHISOR, ITS DESIGNEE OR FROM SUPPLIERS APPROVED BY THE FRANCHISOR OR UNDER THE FRANCHISOR'S SPECIFICATIONS. FOR EACH OBLIGATION DISCLOSE:

A. THE GOODS, SERVICES, SUPPLIES, FIXTURES, EQUIPMENT, INVENTORY, COMPUTER HARDWARE AND SOFTWARE OR REAL ESTATE RELATING TO ESTABLISHING OR OPERATING THE FRANCHISED BUSINESS.

B. THE MANNER IN WHICH THE FRANCHISOR ISSUES AND MODIFIES SPECIFICATIONS OR GRANTS AND REVOKES APPROVAL TO SUPPLIERS.

C. WHETHER, AND FOR WHAT CATEGORIES OF GOODS AND SERVICES, THE FRANCHISOR OR ITS AFFILIATES ARE APPROVED SUPPLIERS OR THE ONLY APPROVED SUPPLIERS.

D. WHETHER, AND, IF SO, THE PRECISE BASIS BY WHICH, THE FRANCHISOR OR ITS AFFILIATES WILL OR MAY DERIVE REVENUE OR OTHER MATERIAL CONSIDERATION AS A RESULT OF REQUIRED PURCHASES OR LEASES.

E. THE ESTIMATED PROPORTION OF THESE REQUIRED PURCHASES AND LEASES TO ALL PURCHASES AND LEASES BY THE FRANCHISEE OF GOODS AND SERVICES IN ESTABLISHING AND OPERATING THE FRANCHISED BUSINESS.

F. THE EXISTENCE OF PURCHASING OR DISTRIBUTION COOPERATIVES.

Item 8 Instructions:

i. An obligation includes those imposed by written agreement or by the franchisor's practice. The franchisor may include the reason for the requirement.

ii. Do not include goods or services provided as part of the franchise and without a separate charge (for example, a fee for initial training when the cost is included in the franchise fee). These fees should be described in Item 5. Do not include fees disclosed in response to Item 6.

iii. For "precise basis," disclose the franchisor's total revenues and the franchisor's revenues from all required purchases and leases of products and services. Also, disclose the percentage of the franchisor's total revenues represented by the franchisor's revenues from required purchases or leases. If the franchisor's affiliates also sell or lease products or services to franchisees, disclose affiliate revenues from those sales or leases. These amounts should be taken from the franchisor's statement of operations (or profit and loss statement) from the most recent annual audited financial statement attached to the offering circular. If the franchisor's annual audited financial statement is not required to be attached to the offering circular or if the franchisor's affiliate sells or leases required products or services to franchisees, disclose the sources of information used in computing revenues.

iv. State how the franchisor formulates and modifies specifications and standards imposed on franchisees.

v. Disclose whether specifications and standards are issued to franchisees, subfranchisors, or approved suppliers.

vi. Describe how suppliers are evaluated, approved or disapproved. Disclose whether the franchisor's criteria for supplier approval are available to franchisees. State the fees and procedure to secure approval and how approvals are revoked. State the time period when the franchisee will receive notification of approval or disapproval.

vii. If the designated supplier will make payments to the franchisor because of transactions with franchisees, disclose the basis for the payment. Specify a percentage or a flat amount. Purchases of similar goods or services by the franchisor at a lower price than that available to franchisees is a payment.

viii. Disclose whether the franchisor negotiates purchase arrangements with suppliers (including price terms) for the benefit of franchisees.

ix. Disclose whether the franchisor provides material benefits (for example, renewal or granting additional franchises) to a franchisee based on a franchisee's use of designated or approved sources.

x. Use Sample Answer 8-1 if the response to Item 8 is negative.

Sample Answer 8-1

Belmont has no required specifications, designated suppliers, or approved suppliers for goods, services or real estate relating to your franchise business. Belmont will not derive revenue from your purchases or leases.

Sample Answer 8-2

You must purchase your pipe bending machine, hoist, cutting torch and suppliers under specifications in the operations manual. These specifications include standards for delivery, performance, design and appearance. You may purchase this equipment from Belmont. In the year ending December 31, 1992, Belmont's revenues from the sale of this equipment to franchisees was $500,000, or 5% of Belmont's total revenues of $10,000,000. The cost of equipment purchased in accordance with specifications represents 10% of your total purchases in connection with establishment of your store.

Belmont's affiliate, Muffler Supply Co., is an approved supplier of mufflers to franchisees. In the year ending December 31, 1992, the affiliate's revenues from the sale of mufflers to franchisees was $2,000,000. The purchase of mufflers from approved sources will represent 15 to 20% of your overall purchases in operating the store. Belmont has approved other suppliers of mufflers and exhaust pipe. If you would like to purchase these items from another supplier, you may request our "Supplier Approval Criteria and Request Form." Based on the information and samples you supply to us and your payment of a $500 fee, we will test the items supplied and review the proposed supplier's financial records, business reputation, delivery performance, credit rating and other information. Our review typically is completed in 30 days.

One of the approved suppliers of mufflers and exhaust pipes, Scottie's Pipes, Inc., pays Belmont a rebate of 1% of all franchisee purchases, which is deposited in the Belmont Advertising Fund. Another approved supplier, Michael's Clean-Air, Inc., pays Belmont 2% of all franchisee purchases of catalytic converters. This amount is used in Belmont's training center for classes in catalytic converter repair and replacement.

Item 9

FRANCHISEE'S OBLIGATIONS

DISCLOSE THE PRINCIPAL OBLIGATIONS OF THE FRANCHISEE UNDER THE FRANCHISE AND OTHER AGREEMENTS AFTER THE SIGNING OF THESE AGREEMENTS.

Item 9 Instructions:

i. Disclose obligations in tabular form. Refer to the section of the agreement that contains the obligation and any Item of the offering circular that further describes the obligation.

ii. The table should contain a response to each category listed below. If the response to any category is that no obligation is imposed, the table should state that. Do not change the names of the categories. Fit all obligations within the listed categories. If other material obligations fall outside the scope of all of the prescribed categories, add additional categories as needed. The categories of franchisee obligations are:

a. Site selection and acquisition/lease

b. Pre-opening purchases/leases

c. Site development and other pre-opening requirements

d. Initial and ongoing training

e. Opening

f. Fees

g. Compliance with standards and policies/Operating Manual

h. Trademarks and proprietary information

i. Restrictions on products/services offered

j. Warranty and customer service requirements

k. Territorial development and sales quotas

l. Ongoing product/service purchases

m. Maintenance, appearance and remodeling requirements

n. Insurance

o. Advertising

p. Indemnification

q. Owner's participation/management/staffing

r. Records and reports

s. Inspections and audits

t. Transfer

u. Renewal

v. Post-termination obligations

w. Non-competition covenants

x. Dispute resolution

y. Other (describe)

iii. Before the table, state the following:

THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS OFFERING CIRCULAR.

Sample Answer 9

Obligation

Section In Agreement

Item in Offering Circular

a.

Site Selection and acquisition/lease

Section 2A of Franchise Agreement

Items 6 and 11

b.

Pre-opening purchases/leases

Section 3B of Franchise Agreement

Item 8

c.

Site development and other pre-opening requirements

Sections 3A and 3B of Franchise Agreement

Items 6, 7 and 11

d.

Initial and ongoing training

Section 5 of Franchise Agreement

Item 11

e.

Opening

Section 4 of Franchise Agreement

Item 11

f.

Fees

Section 6 of Franchise Agreement

Items 5 and 6

g.

Compliance with standards and policies/Operating Manual

Section 8A of Franchise Agreement

Item 11

h.

Trademarks and proprietary information

Sections 7 and 11 of Franchise Agreement

Items 13 and 14

i.

Restrictions on products/services offered

Section 12 of Franchise Agreement

Item 16

j.

Warranty and customer service requirements

Section 8B of Franchise Agreement

Item 11

k.

Territorial development and sales quotas

None

l.

Ongoing product/service purchases

Section 9 of Franchise Agreement

Item 8

m.

Maintenance, appearance and remodeling requirements

Sections 8C and 10 of Franchise Agreement

Item 11

n.

Insurance

Section 13A of Franchise Agreement

Items 6 and 8

o.

Advertising

Section 15 of Franchise Agreement

Items 6 and 11

p.

Indemnification

Section 13B of Franchise Agreement

Item 6

q.

Owner's participation/management/ staffing

Sections 4, 5 and 14 of Franchise Agreement

Items 11 and 15

r.

Records/reports

Section 17A of Franchise Agreement

Item 6

s.

Inspections/audits

Section 17B of Franchise Agreement

Items 6 and 11

t.

Transfer

Section 18 of Franchise Agreement

Item 17

u.

Renewal

Section 20 of Franchise Agreement

Item 17

v.

Post-termination

Section 22 of Franchise Agreement

Item 17

w.

Non-competition covenants

Sections 11, 18 and 22C of Franchise Agreement

Item 17

x.

Dispute resolution

Section 24 of Franchise Agreement

Item 17

Item 10

FINANCING

DISCLOSE THE TERMS AND CONDITIONS OF EACH FINANCING ARRANGEMENT THAT THE FRANCHISOR, ITS AGENT OR AFFILIATE OFFERS DIRECTLY OR INDIRECTLY TO THE FRANCHISEE.

Item 10 Instructions:

i. "Financing" includes leases and installment contracts.

ii. Payments due within 90 days on open account financing need not be disclosed under this Item.

iii. A written arrangement between a franchisor or its affiliate and a lender for the lender to offer financing to the franchisee or an arrangement in which a franchisor or its affiliate receives a benefit from a lender for franchisee financing is an "indirect offer of financing" and must be disclosed under this Item. The franchisor's guarantee of a note, lease or obligation of the franchisee is an "indirect offer of financing" and must be disclosed under this Item.

iv. If financing of the initial fee is disclosed in the Item 7 disclosure, a cross reference to Item 7 is sufficient if all the disclosure which Item 10 requires is provided in Item 7.

v. If an affiliate offers financing, identify the affiliate and its relationship to the franchisor.

vi. The franchisor may summarize the terms of each financing arrangement in tabular form, using footnotes to entries in the chart to provide additional information required by these instructions that does not fit in the chart.

vii. If a financing arrangement is for the establishment of the franchised business, disclose what the financing covers, including:

a. Initial franchise fee;

b. Site acquisition;

c. Construction or remodeling;

d. Equipment or fixtures; and

e. Opening inventory or supplies.

viii. If the franchisor generally offers financing for the operation of the franchised business, disclose what the financing arrangement covers, including:

a. Inventory or supplies;

b. Replacement equipment or fixtures; and

c. Other continuing expenses.

ix. Disclose the terms of each financing arrangement, including:

a. The identity of the lender(s) providing the financing and its relationship to the franchisor (for example, affiliate);

b. The amount of financing offered or, if the amount depends on an actual cost that may vary, the percentage of the cost that will be financed;

c. The annual percentage rate of interest ("APR") charged, computed as provided by Sections 106-107 of the Consumer Protection Credit Act, 15 USC Secs. 106-107. If the APR may differ depending on when the financing is issued, disclose the APR on a specified recent date;

d. The number of payments or the period of repayment;

e. Nature of security interest required by the lender;

f. Whether a person other than the franchise (for example spouse, shareholder of the franchisee) must personally guarantee the debt;

g. Whether the debt can be prepaid and the nature of any prepayment penalty;

h. The franchisee's potential liabilities upon default, including any accelerated obligation to pay the entire amount due, court costs and attorney's fees for collection, and termination of the franchise, or other cross default clauses whether directly, as a result of non-payment, or indirectly, as a result of loss of necessary facilities; and

i. Other material financing terms.

x. Include specimen copies of the financing documents as an exhibit to Item 22. Cite the section and name of the document containing the financing terms. Put this information in parentheses at the end of the description of the term.

xi. Use Sample Answer 10-1 if the franchisor does not offer financing.

A. A WAIVER OF DEFENSES OR SIMILAR PROVISIONS IN A DOCUMENT.

Item 10A Instructions:

i. Disclose the terms of waivers of legal rights by the franchise under the terms of the financing arrangement (for example confession of judgment).

ii. Describe provisions of the loan agreement that bar the franchisee from asserting a defense against the lender, the lender's assignee or the franchisor.

iii. If the loan agreement does not contain the provisions in i. or ii., disclose that fact.

iv. Cite the section and name of the document containing these terms. Put this information in parentheses at the end of the description of the term.

B. THE FRANCHISOR'S PRACTICE OR ITS INTENT TO SELL, ASSIGN, OR DISCOUNT TO A THIRD PARTY ALL OR PART OF THE FINANCING ARRANGEMENT.

Item 10B Instructions:

i. Practice includes past or present practice and future intent to sell or assign franchisee financing arrangements.

ii. Disclose the assignment terms including whether the franchisor will remain primarily obligated to provide the financed goods or services.

iii. If the franchisor may sell or assign its rights under the financing agreement, disclose that the franchise may lose all its defenses against the lender as a result of the sale or assignment.

iv. Cite the section and name of the document containing these terms. Put this information in parentheses at the end of the description of the term.

v. If no disclosure is required by Instruction 10B, disclose that fact.

C. PAYMENTS TO THE FRANCHISOR OR AN AFFILIATE(S) FOR THE PLACEMENT OF FINANCING WITH THE LENDER.

Item 10C Instructions:

i. Describe the payments.

ii. If no disclosure is required by Instruction 10C i. for a financing arrangement, disclose that fact.

iii. Identify the source of the payment and the relationship of the source to the franchisor or its affiliates.

iv. Disclose the amount or the method of determining the payment.

v. Cite the section and name of the document containing these arrangements. Put this information in parentheses at the end of the description of the term.

Sample Answer 10-1

Belmont does not offer direct or indirect financing. Belmont does not guarantee your note, lease or obligation.

Sample Answer 10-2

SAMPLE ANSWER 10-2 SUMMARY OF FINANCING OFFERED

ITEM

LIABILITY

LOSS OF LEGAL

FINANCED

AMOUNT

DOWN

TERM

APR

MONTHLY

PREPAY

SECURITY

UPON

RIGHT ON

(Source)

FINANCED

PAYMENT

(YRS)

%

PAYMENT

PENALTY

REQUIRED

DEFAULT

DEFAULT

INITIAL FEE

$

LOSS OF

WAIVE NOTICE

(NOTE 1)

$10,000

10

18

NONE

PERSONAL

FRANCHISE

CONFESS

(BELMONT)

GUARANTEE

UNPAID LOAN

JUDGEMENT

LAND/

NONE

CONSTRUCT

LEASED

LOSS OF FRAN-

SPACE

CHISE-BACK

(NOTE 2)

$2,000

7 to 10

N/A

$

NONE

PERSONAL

RENT-2 MOS.

NONE

(BELMONT)

(secur.

GUARANTEE

FRANCHISE

dep.)

RIGHTS-

ATTY'S FEES

EQUIPMENT

LEASE (NOTE 3)

$5,000

NONE

5

15

$

NONE

EQUIPMENT

COST OF

LOSE ALL

(USA CREDIT

PERSONAL

REMOVAL

DEFENSES

CORP.)

GUARANTEE

EQUIPMENT

PURCHASE

$3,750

$1,250

2 to 7

15

$

$500

EQUIPMENT

LOSS OF

NONE

(NOTE 4)

(25%)

PERSONAL

FRANCHISE

(BELMONT)

GUARANTEE

ATTY'S FEES

OPENING

NONE

INVENT.

OTHER

NONE

FINANCING

Notes:

1 If you meet Belmont's credit standards, Belmont will finance the $10,000 initial franchisee fee over a 10-year period at an APR of 18%, using the standard form note in Exhibit A. The only security Belmont requires is a personal guarantee of the note by you and your spouse or by all the shareholders of your corporation. (Loan Agreement Section ______) The note can be prepaid without penalty at any time during its 10-year term. (Loan Agreement Section ______) If you do not pay on time, Belmont can call the loan and demand immediate payment of the full outstanding balance and obtain court costs and attorney's fees if a collection action is necessary. (Loan Agreement Section ______) Belmont also has the right to terminate your franchise if you do not make your payments on time more than three times during the note term. (Loan Agreement Section ______) You waive your rights to notice of a collection action and to assert any defenses to collection against Belmont. (Loan Agreement Section ______) Belmont discounts these notes to a third party who may be immune under the law to any defenses to payment you may have against Belmont. (Loan Agreement Section ______)

2 In most cases Belmont will sublease the franchised premises to you but will guarantee your lease with a third party if you have acceptable credit and that is the only way to obtain an exceptional location. (Lease Section ______) The precise terms of Belmont's standard lease in Exhibit B will vary depending on the size and location of the premises, but the chart reflects a typical range of payments for Belmont's standard 6-day franchise outlet, including payment of one month's rent as a security deposit. (Lease Section ______) The only other security Belmont requires is a personal guarantee of the lease by you and your spouse or by all the shareholders of your corporation. (Lease Section ) The lease can be prepaid without penalty at any time during its term. (Lease Section ) If you do not make a rent payment on time, Belmont has the right to collect the unpaid rent plus an additional two months rent, as liquidated damages. (Lease Section ) Belmont can also obtain court costs and attorney's fees if a collection action is necessary. (Lease Section) If you are late with your rent more than three times during the lease term, Belmont has the right to terminate the lease, take over the premises, and terminate your franchise. If Belmont guarantees your lease, Belmont will require you to sign the guarantee agreement in Exhibit F. (Lease Section) This gives Belmont the same legal rights as the sublease but requires you to give Belmont the right to approve your lease and pay the rent for you if you fail to pay on time. (Lease Section)

3 If you want to lease the pipe bending machine and other equipment you need, Belmont has arranged an equipment lease (see Exhibit C) from USA Credit Corporation of Las Vegas, Nevada. If you choose this option, you will pay $100 a month for 60 months (5 years) at an APR of 15% based on a cash price of $5,000, with no money down. (Equipment Lease Section ______) At the end of the lease term, you may purchase the equipment with a one-time payment of $2,500. (Equipment Lease Section ______) USA Credit requires a personal guarantee from you and your spouse or from all the shareholders of your corporation and retains a security interest in the equipment. (Equipment Lease Section ______) The equipment lease can be prepaid at any time, but the interest you might otherwise save will be reduced by application of the Rule of 78's for computing finance charges. (Equipment Lease Section ______) If you do not make a payment on time, USA Credit can demand payment of all past due payments, remove the equipment, and charge you $1,000 as liquidated damages. (Equipment Lease Section ______) USA Credit can also recover its costs of collection, including court costs and attorney's fees. (Equipment Lease Section ______) While Belmont does not know USA Credit's policies, USA Credit may discount the lease to a third party who may be immune under the law to claims or defenses you may have against USA Credit, the equipment manufacturer or Belmont. Belmont receives a referral fee of $500 from USA Credit for every franchisee who leases equipment from it.

4 If you prefer, Belmont will sell you the pipe bending machine and other necessary equipment on time. (Equipment Purchase Agreement Section ______) Belmont requires a 25% down payment of $1,250. (Equipment Purchase Agreement Section ______) Belmont will finance the remainder over a 2-7 year period at your option at an APR of 15%. (Equipment Purchase Agreement Section ______) Payments range from $228.11 a month over 7 years to $821.58 a month over 2 years. (Equipment Purchase Agreement Section ______) Belmont's standard equipment financing note in Exhibit D must be personally guaranteed by you and your spouse or by all the shareholders of your corporation, and Belmont will retain a security interest in the equipment. (Equipment Purchase Agreement Section ______) You may purchase the equipment at any time during the lease period by paying the remainder of the principal plus a $500 prepayment penalty. (Equipment Purchase Agreement Section ______) If you do not make a payment on time, Belmont can demand all overdue payments, repossess the equipment, and terminate your franchise. Belmont can also recover its costs of collection, including court costs and attorney's fees. (Equipment Purchase Agreement Section ______)

Except as disclosed in Note 1, Belmont does not offer financing that requires you to waive notice, confess judgment or waive a defense against Belmont or the vendor, although you may lose your defenses against Belmont and others in a collection action on a note that is sold or discounted, as disclosed in Notes 2 and 3.

Except as disclosed in Note 3, Belmont does not arrange financing from other sources.

Except as disclosed in Notes 1 and 3, commercial paper from franchisees has not been and is not sold or assigned to anyone, and Belmont has no plans to do so.

Except as disclosed in Note 3, Belmont does not receive direct or indirect payments for placing financing.

Except as disclosed in Note 2, Belmont does not guarantee your obligations to third parties.

Item 11

FRANCHISOR'S OBLIGATIONS

DISCLOSE THE FOLLOWING:

A. THE OBLIGATIONS THAT THE FRANCHISOR WILL PERFORM BEFORE THE FRANCHISE BUSINESS OPENS. CITE BY SECTION THE PROVISIONS OF THE AGREEMENT REQUIRING PERFORMANCE.

Item 11A Instructions:

i. Begin the disclosure by stating: "Except as listed below, (the franchisor) need not provide any assistance to you."

ii. Pre-opening obligations include assistance to:

a. Locate a site for the franchised business and negotiate the purchase or lease of this site. State whether the franchisor generally owns the premises and leases it to the franchisee;

b. Conform the premises to local ordinances and building codes and obtain the required permits (i.e., health, sanitation, building, driveway, utility and sign permits);

c. Construct, remodel or decorate the premises for the franchised business;

d. Purchase or lease equipment, signs, fixtures, opening inventory and supplies. Disclose whether the franchisor provides these items directly or merely the names of approved suppliers. Disclose whether the franchisor provides written specifications for these items. Disclose whether the franchisor delivers or installs these items. (The franchisor may cross reference Item 8 for details); and

e. Hire and train employees.

iii. After describing the obligation, cite the section number of the agreement imposing the obligation. Put the citation in parentheses. Use this format throughout this Item.

B. THE OBLIGATIONS TO BE MET BY THE FRANCHISOR DURING THE OPERATION OF THE FRANCHISE BUSINESS.

Item 11B Instructions:

i. Include assistance in:

a. Products or services to be offered by the franchisee to its customers;

b. Hiring and training of employees;

c. Improvements and developments in the franchised business;

d. Pricing;

e. Administrative, bookkeeping, accounting and inventory control procedures; and

f. Operating problems encountered by the franchisee.

ii. For the franchisor's advertising program for the product or service offered by the franchisee:

a. Disclose the media in which the advertising may be disseminated (for example, print, radio, or television).

b. Disclose whether the coverage of the media is local, regional, or national in scope.

c. Disclose the source of the advertising (for example, in-house advertising department, a national or regional advertising agency).

d. Disclose the conditions when the franchisor permits franchisees to use their own advertising material.

e. If there is an advertising council composed of franchisees that advises the franchisor on advertising policies, disclose:

(1) How members of the council are selected.

(2) Whether the council serves in an advisory capacity only or has operational or decision-making power.

(3) Whether the franchisor has the power to form, change, or dissolve the advertising council.

f. If the franchisee must participate in a local or regional advertising cooperative, disclose:

(1) How the area or membership of the cooperative is defined.

(2) How the franchisee's contribution to the cooperative is calculated (may reference Item 6).

(3) Who is responsible for administration of the cooperative (for example, franchisor, franchisees, advertising agency).

(4) Whether cooperatives must operate from written governing documents and whether the documents are available for review by the franchisee.

(5) Whether cooperatives must prepare annual or periodic financial statements and whether the statements are available for review by the franchisee.

(6) Whether the franchisor has the power to require cooperatives to be formed, changed, dissolved or merged.

g. If applicable, for each advertising fund not described in above subsection (f), disclose:

(1) Who contributes to each fund (for example, franchisees, franchisor, franchisor-owned units, outside vendors or suppliers).

(2) Whether the franchisor-owned units must contribute to the fund and, if so, whether it is on the same bases as franchisees.

(3) How much the franchisee must contribute to the advertising fund(s) (may reference Item 6) and whether other franchisees are required to contribute at a different rate (it is not necessary to disclose the specific rates).

(4) Who administers the fund(s). Whether the fund is audited and when, and whether financial statements of the fund are available for review by the franchisee.

(5) Use of the fund(s) in the most recently concluded fiscal year, the percentages spent on production, media placement, administrative expenses, and other (with a description of what constitutes "other"). Totals should equal 100%.

(6) Whether the franchisor or an affiliate receives payment for providing goods or services to an advertising fund.

h. State whether the franchisor must spend any amount on advertising in the area or territory where the franchisee is located.

i. If all advertising fees are not spent in the fiscal year in which they accrue, explain how the franchisor uses the remaining amounts. Indicate whether franchisees will receive a periodic accounting of how advertising fees are spent.

j. Disclose the percentage of advertising funds, if any, used for advertising that is principally a solicitation for the sale of franchises.

k. Cross reference Items 6, 8 and 9.

iii. If the franchisor requires that franchisees buy or use electronic cash register or computer systems, provide a general description of the systems in non-technical language:

a. Identify each hardware component and software program by brand, type and principal functions.

(1) If the hardware component or software program is the proprietary property of the franchisor, an affiliate or a third party, state whether the franchisor, an affiliate or a third party has the contractual right or obligation to provide ongoing maintenance, repairs, upgrades or updates. Disclose the current annual cost of any optional or required maintenance and support contracts, upgrades and updates.

(2) If the hardware component or software program is the proprietary property of a third party, and no compatible equivalent component or program has been approved by the franchisor for use with the system to perform the same functions, identify the third party by name, business address and telephone number, and state the length of time the component or program has been in continuous use by the franchisor and its franchisees.

(3) If the hardware component or software program is not proprietary, identify compatible equivalent components or programs that perform the same functions and indicate whether they have been approved by the franchisor.

b. State whether the franchisee has any contractual obligation to upgrade or update any hardware component or software program during the term of the franchise, and if so, whether there are any contractual limitations on the frequency and cost of the obligation.

c. For each electronic cash register system or software program, describe how it will be used in the franchisee's business, and the type of business information or data that will be collected and generated. State whether the franchisor will have independent access to the information and data, and if so, whether there are any contractual limitations on the franchisor's right to access the information and data.

iv. After describing the obligation, cite the section number of the agreement imposing the obligation. Put the citation in parentheses.

v. Disclose if the franchisor is not obligated to provide or to assist the franchisee to obtain the above items or services.

vi. Do not repeat, but do cross reference disclosure made in Item 6.

vii. Disclose the table of contents of the operating manual(s) provided to the franchisee as of the franchisor's last fiscal year end or a more recent date. State the number of pages devoted to each subject and the total number of pages in the manual as of this date. Alternatively, this disclosure may be omitted if the prospective franchisee views the manual before purchase of the franchise.

C. THE METHODS USED BY THE FRANCHISOR TO SELECT THE LOCATION OF THE FRANCHISEE'S BUSINESS.

Item 11C Instructions:

i. Disclose whether the franchisor selects the site or approves an area within which the franchisee selects a site. Disclose how and whether the franchisor must approve a franchisee selected site.

ii. Disclose the factors which the franchisor considers in selecting or approving sites (for example, general location and neighborhood, traffic patterns, parking, size, physical characteristics of existing buildings and lease terms).

iii. Disclose the time limit for the franchisor to locate or to approve or disapprove the site. Disclose the consequences if the franchisor and franchisee cannot agree on a site.

iv. Disclosure made in response to Item 11A need not be repeated or cross referenced in the response to Item 11C.

D. THE TYPICAL LENGTH OF TIME BETWEEN THE SIGNING OF THE FRANCHISE AGREEMENT OR THE FIRST PAYMENT OF CONSIDERATION FOR THE FRANCHISE AND THE OPENING OF THE FRANCHISEE'S BUSINESS.

Item 11D Instructions:

i. Disclosure may be a range of times if the range is specific.

ii. Describe the factors which may affect the time period such as ability to obtain a lease, financing or building permits, zoning and local ordinances, weather conditions, shortages, or delayed installation of equipment, fixtures and signs.

E. THE TRAINING PROGRAM OF THE FRANCHISOR AS OF THE FRANCHISOR'S LAST FISCAL YEAR END OR A MORE RECENT DATE INCLUDING:

(1) The location, duration and general outline of the training program;

(2) How often the training program will be conducted;

(3) The experience that the instructors have with the franchisor;

(4) Charges to be made to the franchisee and who must pay travel and living expenses of the enrollees in the training program;

(5) If the training program is not mandatory, the percentage of new franchisees that enrolled in the training program during the preceding 12 months; and

(6) Whether any additional training programs and/or refresher courses are required.

F. DESCRIBE THE NATURE AND EXTENT OF TRAINING UNDER THE FRANCHISOR'S TRAINING PROGRAM.

Item 11F Instructions:

i. Use a table to state the subjects taught and the number of hours of classroom and "on the job training" devoted to each subject in the franchisor's training program. Use footnotes to explain.

ii. For each subject disclose the training location and how often training classes are held.

iii. Describe the location or facility where the training is held (for example, company, home, office, company owned store).

iv. State how long after the signing of the agreement or before the opening date of the business the franchisee must complete the required training.

v. Describe the nature of instruction material. Disclose the minimum experience of the instructors. Disclose only experience that is relevant to the subject taught and the franchisor's operations.

vi. State who may and who is required to attend the training. State whether the franchisee or other persons must complete the program to the franchisor's satisfaction.

vii. Charges for training or training materials should be disclosed in Item 5 if the obligation to pay arises before the franchise location opens.

viii. Disclose who pays the travel and living expenses of the persons receiving the training.

Sample Answer 11

Except as disclosed below, Belmont need not provide any assistance to you.

Before you open your business, Belmont will:

(1) Designate your exclusive territory (Franchise Agreement - paragraph 2).

(2) Assist you in selecting a business site. Your site must be at least square fee in area, have parking spaces, and an average of cars per hour driving by. We must approve or disapprove your site within 20 days after we receive notice of the location.

(3) Within 30 days of your signing the Franchise Agreement, assist you to find and negotiate the lease or purchase of a location for your muffler shop (Franchise Agreement – paragraph____). Your store location will be purchased or leased by you from independent third parties.

(4) Within 60 days of your signing the Franchise Agreement, provide written specifications for store construction or remodeling and for all required and replacement equipment, inventory and supplies (Franchise Agreement – paragraph____). See Item 8 of this offering circular.

(5) Within 60 days of your signing the Franchise Agreement, provide blueprints for your store construction or remodeling and obtain health, sanitation, building, utility and sign permits for your premises. You pay for the construction or remodeling (Franchise Agreement – paragraph____).

(6) Within 60 days of your signing the Franchise Agreement, train you and one other person as follows:

Subject

Time Begun

Instructional Material

Hours of Class Room Training

Hours of on the Job Training

Instructor

Belmont does not charge for this training or service, but you must pay the travel and living expenses for you and your employees. All training occurs at Belmont's Jackson, Minnesota headquarters.

During the operation of the franchised business, Belmont will:

(1) Develop new products and methods and provide you with information about developments (Franchise Agreement – paragraph____).

(2) Loan you a copy of our operations manual which contains mandatory and suggested specifications, standards and procedures. This manual is confidential and remains our property. Belmont will modify this manual, but the modification will not alter your status and rights under the Franchise Agreement (Franchise Agreement – paragraph____). The table of contents is as follows:

Each week for the first 90 days after you open your shop, Belmont will telephone to discuss your operational problems.

Belmont will hold annual conferences to discuss sales techniques, personnel training, bookkeeping, accounting, inventory control, performance standards, advertising program and merchandising procedures. There is no conference fee, but you must pay all your travel and living expenses. These elective conferences are held at our Jackson, Minnesota headquarters or at a location chosen by a majority vote of all franchisees.

Belmont provides advertising materials and services to you through a national advertising fund (the "National Fund"). Materials provided by the National Fund to all franchisees include video and audio tapes, mats, posters, banners and miscellaneous point-of-sale items. You will receive one sample of each at no charge. If you want additional copies you must pay duplication costs.

You may develop advertising materials for your own use, at your own cost. Belmont must approve the advertising materials in advance and in writing.

Belmont occasionally provides for placement of advertising on behalf of the entire Belmont system, including franchisees. However, most placement is done on a local basis, typically by local advertising agencies hired by individual franchisees or advertising cooperatives. Belmont reserves the right to use advertising fees from the Belmont system to place advertising in national media (including broadcast, print or other media) in the future. In the past Belmont has used an outside advertising agency to create and place advertising. Neither Belmont nor its affiliate receives payment from the National Fund. Advertising funds are used to promote the product sold by the franchisee and are not used to sell additional franchises.

The National Fund is a nonprofit corporation which collects advertising fees from all franchisees. Each franchisor owned store of Belmont contributes to the National Fund on the same basis as franchisees. All payments to the National Fund must be spent on advertising, promotion and marketing of goods and services provided by Belmont Muffler Shops. You must contribute the amounts described in Item 6, under the heading "Advertising Fees and Expenses."

The National Fund is administered by Belmont's accounting and marketing personnel under the direction of the Advertising Council. An annual audited financial statement of the National Fund is available to any franchisee upon request. During the last fiscal year of the National Fund (ending on December 31, 1990), the National Fund spent 39% of its income on the production of advertisements and other promotional materials, 36% for media placement, 18% for general and administrative expenses, and 7% for other expenses (the purchase of glassware given to customers of Belmont shops as part of a promotional campaign).

The Advertising Council acts as the board of directors of the National Fund. The Advertising Council has 8 members: the President, Treasurer, Vice President-Marketing, and Vice President-Operations of Belmont; and 4 franchisee representatives who are elected by the governing board of the Belmont Franchisee Association.

Once your shop opens, you must participate in the local advertising cooperative established in the Area of Dominant Influence (ADI) where your store is located. The amount of your contribution to the local advertising cooperative is described in Item 6 under the heading "Advertising Fees and Expenses."

Each local advertising cooperative must adopt written governing documents. A copy of the governing documents of the cooperative (if one has been established) for your ADI is available upon request. Each cooperative may determine its own voting procedures; however, each company-owned Belmont Shop will be entitled to one vote in any local advertising cooperative. The members and their elected officers are responsible for administration of the cooperative. Advertising cooperatives must prepare quarterly and annual financial statements. The annual financial statement must be prepared by an independent CPA and be made available to all franchisees in that advertising cooperative.

You select your business site within your exclusive area subject to our approval. Belmont assists in site selection by telling you the number of new car registrations, population density, traffic patterns and proximity of the proposed site to other Belmont Muffler Shops.

Franchisees typically open their shops 4 to 7 months after they sign a franchise agreement. The factors that affect this time are the ability to obtain a lease, financing or building permits, zoning and local ordinances, weather conditions, shortages, and delayed installation of equipment fixtures and signs.

Item 12

TERRITORY

DESCRIBE ANY EXCLUSIVE TERRITORY GRANTED THE FRANCHISEE. CONCERNING THE FRANCHISEE'S LOCATION (WITH OR WITHOUT EXCLUSIVE TERRITORY), DISCLOSE WHETHER:

A. THE FRANCHISOR HAS ESTABLISHED OR MAY ESTABLISH ANOTHER FRANCHISEE WHO MAY ALSO USE THE FRANCHISOR'S TRADEMARK.

B. THE FRANCHISOR HAS ESTABLISHED OR MAY ESTABLISH A COMPANY-OWNED OUTLET OR OTHER CHANNELS OF DISTRIBUTION USING THE FRANCHISOR'S TRADEMARK.

Item 12 Instructions:

i. As used in Item 12, trademark includes name, trademarks, logos and other commercial symbols.

ii. If appropriate, describe the minimum area granted to the franchisee. The franchisor may use an area encompassed within a specific radius, a distance sufficient to encompass a specified population or another specific designation.

iii. State whether the franchise is granted for a specific location or a location to be approved by the franchisor.

iv. If appropriate, state the conditions under which the franchisor will approve the relocation of the franchised business or the establishment of additional franchised outlets.

v. Describe restrictions on the franchisor regarding operating company-owned stores or on granting franchised outlets for a similar or competitive business within the defined area.

vi. Describe restrictions on franchisees from soliciting or accepting orders outside of their defined territories.

vii. Describe restrictions on the franchisor from soliciting or accepting order inside the franchisee's defined territory. State compensation that the franchisor must pay for soliciting or accepting orders inside the franchisee's defined territories.

viii. Describe franchisees options, rights of first refusal or similar rights to acquire additional franchises within the territory or contiguous territories.

ix. If the franchisor does not grant territorial rights, use Sample Answer 12-1.

C. THE FRANCHISOR OR ITS AFFILIATE HAS ESTABLISHED OR MAY ESTABLISH OTHER FRANCHISES OR COMPANY-OWNED OUTLETS OR ANOTHER CHANNEL OF DISTRIBUTION SELLING OR LEASING SIMILAR PRODUCTS OR SERVICES UNDER A DIFFERENT TRADEMARK.

Item 12C Instructions:

i. "Similar products and services" includes competing, interchangeable or substitute products but not products or services which are not part of the same product or service market.

ii. If the franchisor or an affiliate operates, franchises or has present plans to operate or franchise a business under a different trademark and that business sells goods or services similar to those to be offered by the franchisee, describe:

a. The similar goods and services;

b. The trade names and trademarks;

c. Whether outlets will be franchisor owned or operated;

d. Whether the franchisor or its franchisees who use the different trademark will solicit or accept orders within the franchisee's territory;

e. A timetable for the plan;

f. How the franchisor will resolve conflicts between the franchisor and the franchisees and between the franchisees of each system regarding territory, customers or franchisor support; and

g. If appropriate, disclose the principal business address of the franchisor's similar operating business. If it is the same as the franchisor's principal business address disclosed in Item 1, disclose whether the franchisor maintains (or plans to maintain) physically separate offices and training facilities for the similar competing business.

D. CONTINUATION OF THE FRANCHISEE'S TERRITORIAL EXCLUSIVITY DEPENDS ON ACHIEVEMENT OF A CERTAIN SALES VOLUME, MARKET PENETRATION OR OTHER CONTINGENCY AND UNDER WHAT CIRCUMSTANCES THE FRANCHISEE'S TERRITORY MAY BE ALTERED.

Item 12D Instructions:

i. Disclose conditions for the franchisee's keeping its territoral rights (for example, sales quotas or the opening of additional business outlets). Specify the quotas or conditions and the franchisor's rights if the franchisee fails to meet the requirements.

ii. Disclose other circumstances that permit the franchisor to modify the franchisee's territoral rights (for example, a population increase in the territory giving the franchisor the right to grant an additional franchise within the area). Disclose the effect on the franchisee's rights.

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Sample Answer 12-1

You will not receive an exclusive territory. Belmont may establish other franchised or company owned outlets that may compete with your location.

Sample Answer 12-2

You will receive an exclusive territory with a minimum population of 50,000 people. You will operate from one location and must receive Belmont's permission before relocating. Belmont will not operate stores or grant franchises for a similar or competitive business within your area. Except when advertising cooperatively with appropriate franchisees, neither Belmont nor you can advertise or solicit orders within another franchisee's territory. You and Belmont can accept orders from outside your territory without special payment.

You do not receive the right to acquire additional franchises within your area.

There is no minimum sales quota. You maintain rights to your area even though the population increases.

Item 13

TRADEMARKS

DISCLOSE THE PRINCIPAL TRADEMARKS TO BE LICENSED TO THE FRANCHISEE INCLUDING:

Item 13 Instructions:

i. As used in Item 13, "principal trademarks" means the primary trademarks, service marks, names, logos and symbols to be used by the franchisee to identify the franchised business. It does not include every trademark owned by a franchisor.

ii. The franchisor may limit Item 13 disclosure to information that is relevant to the state where the franchised business will be located. The franchisor may include all states to eliminate the need for multiple disclosure in Item 13 but must amend its offering circular to reflect any material change in the list.

A. WHETHER THE PRINCIPAL TRADEMARKS ARE REGISTERED WITH THE UNITED STATES PATENT AND TRADEMARK OFFICE. FOR EACH REGISTRATION STATE THE REGISTRATION DATE AND NUMBER AND WHETHER THE REGISTRATION IS ON THE PRINCIPAL OR SUPPLEMENTAL REGISTER.

Item 13A Instructions:

i. Identify each principal trademark which the franchisee may use. The franchisor may reproduce these trademarks in this Item.

ii. State the date and identification number of each trademark registration or registration application listed. State whether the franchisor has filed all required affidavits. State whether any registration has been renewed.

iii. State whether the principal trademarks are registered on the principal or supplemental register of the U.S. Patent and Trademark Office, and if not, whether an "intent to use" application or an application based on actual use has been filed with the U.S. Patent and Trademark Office. If the principal trademark to be used by the franchisee is not registered on the Principal Register of the U.S. Patent and Trademark Office, state:

By not having a principal federal registration for (name or description of symbol), (name of franchisor) does not have certain presumptive legal rights granted by a registration.

B. DISCLOSE CURRENTLY EFFECTIVE MATERIAL DETERMINATIONS OF THE PATENT AND TRADEMARK OFFICE, TRADEMARK TRAIL AND APPEAL BOARD, THE TRADEMARK ADMINISTRATOR OF THIS STATE OR ANY COURT; PENDING INFRINGEMENT, OPPOSITION OR CANCELLATION; AND PENDING MATERIAL LITIGATION INVOLVING THE PRINCIPAL TRADEMARKS.

Item 13B Instructions:

i. Litigation or an action is material if it could significantly affect the ownership or use of a trademark listed under Item 13. Describe how the determination affects the ownership, use or licensing. Describe any decided infringement, cancellation or opposition proceedings. Include fringement, opposition or cancellation proceedings in which the franchisor unsuccessfully sought to prevent registration of a trademark in order to protect a trademark licensed by the franchisor.

ii. For pending material federal or state litigation regarding the franchisor's use or ownership rights in a trademark disclose:

a. The forum and case number;

b. The nature of claims made opposing the franchisor's use or by the franchisor opposing another person's use; and

c. Any effective court or administrative agency ruling concerning the matter.

iii. Do not repeat disclosure made in response to Item 13A.

iv. The franchisor need not disclose historical challenges to registrations of trademarks listed in Item 13 that were resolved in the franchisor's favor.

v. The franchisor may include an attorney's opinion relative to the merits of litigation or of an action if the attorney issuing the opinion consents to its use. The text of the disclosure may include a summary of the opinion if the full opinion is attached and the attorney issuing the opinion consents to the use of the summary.

C. DISCLOSE AGREEMENTS CURRENTLY IN EFFECT WHICH SIGNIFICANTLY LIMIT THE RIGHTS OF THE FRANCHISOR TO USE OR LICENSE THE USE OF TRADEMARKS LISTED IN ITEM 13 IN A MANNER MATERIAL TO THE FRANCHISE.

Item 13C Instructions:

For each agreement disclose:

i. The manner and extent of the limitation or grant;

ii. The agreement's duration;

iii. The parties to the agreement;

iv. The circumstances under which the agreement may be cancelled or modified; and

v. All other material terms.

D. WHETHER THE FRANCHISOR MUST PROTECT THE FRANCHISEE'S RIGHT TO USE THE PRINCIPAL TRADEMARKS LISTED IN ITEM 13, AND MUST PROTECT THE FRANCHISEE AGAINST CLAIMS OF INFRINGEMENT OR UNFAIR COMPETITION ARISING OUT OF THE FRANCHISEE'S USE OF THEM.

Item 13D Instructions:

i. Disclose the franchisee's obligation to notify the franchisor of the use of, or claims of rights to, a trademark identical to, or confusingly similar to, a trademark licensed to the franchisee.

ii. State whether the franchise agreement requires the franchisor to take affirmative action when notified of these uses or claims. Identify who has the right to control administrative proceedings or litigation.

iii. State whether the franchise agreement requires the franchisor to participate in the franchisee's defense and/or indemnify the franchisee for expenses or damages if the franchisee is a party to an administrative or judicial proceeding involving a trademark licensed by the franchisor to the franchisee, or if the proceeding is resolved unfavorably to the franchisee.

iv. Disclose the franchisee's rights under the franchise if the franchisor requires the franchisee to modify or discontinue the use of a trademark as a result of a proceeding or settlement.

E. WHETHER THE FRANCHISOR ACTUALLY KNOWS OF EITHER SUPERIOR PRIOR RIGHTS OR INFRINGING USES THAT COULD MATERIALLY AFFECT THE FRANCHISEE'S USE OF THE PRINCIPAL TRADEMARKS IN THIS STATE OR THE STATE IN WHICH THE FRANCHISED BUSINESS IS TO BE LOCATED.

Item 13E Instructions:

For each use of a principal trademark that the franchisor believes constitutes an infringement that could materially affect the franchisee's use of a trademark, state:

i. The location(s) where the infringement is occurring;

ii. To the extent known, the length of time of the infringement; and

iii. Action taken by the franchisor.

If the franchisor knows of a use of a trademark by another in a geographic area relevant to the franchisee which is or is likely to be based on a claim of superior prior rights to the franchisor's, state the nature of the use by the other person and the place or area where it is occurring.

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Sample Answer 13

Belmont grants you the right to operate a shop under the name Belmont Muffler Shop. You may also use our other current or future trademarks to operate your shop. By trademark Belmont means trade names, trademarks, service marks and logos used to identify your shop. Belmont registered the below trademark on the United State Patent and Trademark Office principal register:

You must follow our rules when you use these marks. You cannot use a name or mark as part of a corporate name or with modifying words, designs or symbols except for those which Belmont licenses to you. You may not use Belmont's registered name in connection with the sale of an unauthorized product or service or in a manner not authorized in writing by Belmont.

On June 4, 1973, the United States Patent and Trademark Office rejected Belmont's application to register the mark "Super Mufflers" because the mark was found to be confusingly similar to a registered mark. Belmont's inability to register this mark on a federal level permits others to establish rights to use the mark. This use will not be in areas where our franchisees are operating, or advertising under the mark, or in the natural zone of expansion for Belmont's shops. In addition, these users must act in good faith and without actual knowledge of Belmont's prior use of the mark. However, if others establish rights to use Belmont's mark, Belmont may not be able to expand into these areas using the mark.

No agreements limit Belmont's right to use or license the use of Belmont's trademarks.

You must notify Belmont immediately when you learn about an infringement of, or challenge to, your use of our trademark. Belmont will take the action we think appropriate. While Belmont is not required to defend you against a claim against your use of our trademark, Belmont will reimburse you for your liability and reasonable costs in connection with defending Belmont's trademark. To receive reimbursement you must have notified Belmont immediately when you learned about the infringement or challenge.

You must modify or discontinue the use of a trademark if Belmont modifies or discontinues it. If this happens, Belmont will reimburse you for your tangible costs of compliance (for example, changing signs). You must not directly or indirectly contest our right to our trademarks, trade secrets or business techniques that are part of our business.

Belmont does not know of any infringing uses that could materially affect your use of Belmont's trademark.

or

John E. Jones, 4231 Main Street, Reno, Nevada is currently doing business as Belmont Muffler Shoppe at 4231 Main Street, Reno, Nevada. We believe that this is an infringing use of our federally registered trademark "Belmont Muffler Shop," and we have filed an action to enjoin Mr. Jones and to recover damages. If the court holds that Mr. Jones' use is not infringing, Belmont may not be able to use Belmont's trademark in Mr. Jones' immediate area. (Belmont Muffler Shop v. Belmont Muffler Shoppe-cite)

Item 14

PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION

IF THE FRANCHISOR OWNS RIGHTS IN PATENTS OR COPYRIGHTS THAT ARE MATERIAL TO THE FRANCHISE, DESCRIBE THESE PATENTS AND COPYRIGHTS AND THEIR RELATIONSHIP TO THE FRANCHISE. INCLUDE THEIR DURATION AND WHETHER THE FRANCHISOR CAN AND INTENDS TO RENEW THE COPYRIGHTS. TO THE EXTENT RELEVANT, DISCLOSE THE INFORMATION REQUIRED BY ITEM 13 CONCERNING THESE PATENTS AND COPYRIGHTS. IF THE FRANCHISOR CLAIMS PROPRIETARY RIGHTS IN CONFIDENTIAL INFORMATION OR TRADE SECRETS, DISCLOSE THEIR GENERAL SUBJECT MATTER AND THE TERMS AND CONDITIONS FOR USE BY THE FRANCHISEE.

Item 14 Instructions:

i. State the patent number, issue date and title for each patent. State the serial number, filing date and title of each patent application. Describe the type of patent or patent application (for example mechanical, process, or design). State the registration number and date of each copyright.

ii. Describe the relationship of the patent, patent application or copyright to the franchised business.

iii. Describe any current determination of the Patent and Trademark Office, Copyright Office (Library of Congress) or court regarding the patent or copyright. Include the forum, case number and effect on the franchised business.

iv. State the forum, case number, claims asserted, issues involved and effective determinations for any proceedings pending in the Patent and Trademark Office or the Court of Appeals for the Federal Circuit.

v. If counsel consents, the franchisor may include a counsel's opinion or a summary of the opinion about patent or copyright issues discussed in this Item.

vi. If an agreement limits the use of the patent, patent application or copyright, state the parties to and duration of the agreement, the extent to which the franchisee may be affected by the agreement, and other material terms of the agreement.

vii. Disclose the franchisor's obligation to protect the patent, patent application or copyright. State:

a. Whether franchisee must notify the franchisor of claims or infringements or if the action is discretionary.

b. Whether the franchisor must take affirmative action when notified of infringement or if the action is discretionary.

c. Who has the right to control litigation.

d. Whether the franchisor must participate in the defense of a franchisee or indemnify the franchisee for expenses or damages in a proceeding involving a patent, patent application or copyright licensed to the franchisee.

e. Requirements that the franchisee modify or discontinue use of the subject matter covered by the patent or copyright.

f. Franchisee's rights if the franchisor requires the franchisee to modify or discontinue the use of the subject matter covered by the patent or copyright.

viii. If the franchisor actually knows of an infringement that could materially affect the franchisee, state:

a. The nature of the infringement.

b. The location(s) where the infringement is occurring.

c. The length of time of the infringement.

d. Action taken or anticipated by the franchisor.

ix. State whether the franchisor intends to renew the copyright when the registration expires.

x. Discuss in general terms other proprietary information communicated to the franchisee (for example, whether there is a formula or recipe considered to be a trade secret).

xi. Use Sample Answer 14-1 if no patents or copyrights are material to the franchise.

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Sample Answer 14-1

No patents or copyrights are material to the franchise.

Sample Answer 14-2

You do not receive the right to use an item covered by a patent or copyright, but you can use the proprietary information in Belmont's Operations Manual. The Operations Manual is described in Item 11. Although Belmont has not filed an application for a copyright registration for the Operations Manual, it claims a copyright and the information is proprietary. Item 11 describes limitations on the use of this manual by you and your employees.

You must also promptly tell us when you learn about unauthorized use of this proprietary information. Belmont is not obligated to take any action but will respond to this information as we think appropriate. Belmont will indemnify you for losses brought by a third party concerning your use of this information.

Sample Answer 14-3

U.S. Patent 3999442 was issued on December 14, 1980. It describes a process for exhaust system installation. The process describes the steps in making a straight length of exhaust pipe, bending this pipe, coating the inside and outside of this pipe with our Pipe Protector and installing the exhaust pipe on a motor vehicle. You will use equipment utilizing this process.

On December 15, 1970, Belmont obtained a copyright registration for its Operations Manual under Registration A41139. Amendments to the manual were registered on January 7, 1983 (Reg. A521,371) and June 6, 1974 (Reg. A 541,333). Belmont intends to renew these copyrights. Item 11 of this Offering Circular describes the Operations Manual and the manner in which you are permitted to use it.

Belmont's right to use or license these patents and copyrighted items is not materially limited by any agreement or known infringing use.

You must tell us immediately if you learn about an infringement or challenge to our use of these patents or copyrights. Belmont will take the action that Belmont thinks appropriate. You must also agree not to contest Belmont's interest in these or our other trade secrets.

If Belmont decides to add, modify or discontinue the use of an item or process covered by a patent or copyright, you must also do so. Belmont's sole obligation is to reimburse you for the tangible cost of complying with is obligation.

Although Belmont is not obligated to defend your use of these items or processes, Belmont will reimburse you for damages and reasonable costs incurred in litigation about them.

Item 15

OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS

DISCLOSE THE FRANCHISEE'S OBLIGATION TO PARTICIPATE PERSONALLY IN THE DIRECT OPERATION OF THE FRANCHISE BUSINESS AND WHETHER THE FRANCHISOR RECOMMENDS PARTICIPATION.

Item 15 Instructions:

i. Include obligations arising from written agreement (including personal guaranty, confidentiality agreement or noncompetition agreement) or from the franchisor's practice.

ii. If personal "on premises" supervision is not required:

a. If the franchisee is an individual, state whether the franchisor recommends "on premises" supervision by the franchisee;

b. State limitations on whom the franchisee can hire as an on premises supervisor;

c. Whether this "on premises" supervisor must successfully complete the franchisor's training program; and

d. If the franchisee is a business entity, state the amount of equity interest that the "on premises" supervisor must have in the franchise.

iii. Disclose the restrictions which the franchisee must place on its manager (for example, maintain trade secrets, non-competition).

iv. The franchisor may reference Items 14 and 17 in its answer.

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Sample Answer 15-1

If you are an individual, you must directly supervise the franchised business on its premises. If you are a corporation, the direct, on-site supervision must be done by a person who owns at least ⅓ of the corporate equity.

Sample Answer 15-2

Belmont does not require that you personally supervise the franchised business. The business must be directly supervised "on premises" by a manager who has successfully completed Belmont's training program. The on premises manager cannot have an interest or business relationship with any of Belmont's business competitors. The manager need not have an ownership interest in a corporate or partnership franchisee. The manager must sign a written agreement to maintain confidentiality of the trade secrets described in Item 14 and to conform with the covenants not to compete described in Item 17.

Each individual who owns a 5% or greater interest in the franchisee entity must sign an agreement (Exhibit ) assuming and agreeing to discharge all obligations of the "franchisee" under the Franchise Agreement.

Item 16

RESTRICTIONS ON

WHAT THE FRANCHISEE MAY SELL

DISCLOSE RESTRICTIONS OR CONDITIONS IMPOSED BY THE FRANCHISOR ON THE GOODS OR SERVICES THAT THE FRANCHISEE MAY SELL OR THAT LIMIT THE CUSTOMERS TO WHOM THE FRANCHISEE MAY SELL GOODS OR SERVICES.

Item 16 Instructions:

i. Describe the franchisee's obligation to sell only goods and services approved by the franchisor.

ii. Disclose any franchisee obligation to sell all goods and services authorized by the franchisor. Disclose whether the franchisor has the right to change the types of authorized goods and service and whether there are limits on the franchisor's right to make changes.

iii. If the franchisee is restricted regarding customers, disclose the restrictions.

iv. The applicant may cross reference disclosures made in Items 8, 9, and 12.

v. Use Sample Answer 16-1 for a negative response.

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Sample Answer 16-1

Belmont does not restrict the type of goods or services that you may offer.

Sample Answer 16-2

Belmont requires you to offer and sell only those goods and services that Belmont has approved (see Item 9).

You must offer all goods and services that Belmont designates as required for all franchisees. These required services are muffler inspection, repair and replacement. Parts, supplies, and equipment used in your Belmont Muffler business must be approved by Belmont (see Item 8).

Belmont has the right to add additional authorized services that the franchisee is required to offer. There are no limits on Belmont's right to do so except that the investment required of a franchisee (for equipment, supplies and initial inventory) will not exceed $5,000 per year.

Belmont also designates some services as optional for qualified franchisees. Current optional services are brake inspection, repair and replacement, tire rotation, wheel balancing, and alignment and rustproofing. To offer optional goods or services, you must be in substantial compliance with all material obligations under your Franchise Agreement. In addition, Belmont may require you to comply with other requirements (such as training, marketing, insurance) before Belmont will allow you to offer certain optional services.

As long as you meet your annual agreed sales quotas (see Item 12), Belmont will not restrict you from soliciting any customers, no matter who they are or where they are located. If you do not meet your annual sales quota, Belmont may deny you the right to receive any further fleet business referrals from Belmont and may either keep the fleet business referrals for itself or give them to another franchisee. Failure to meet your annual sales quota is a default under your Franchise Agreement and grounds for termination of your franchise (see Item 17).

Item 17

RENEWAL, TERMINATION, TRANSFER

AND DISPUTE RESOLUTION

SUMMARIZE THE PROVISIONS OF THE FRANCHISE AND OTHER AGREEMENTS DEALING WITH TERMINATION, RENEWAL, TRANSFER, DISPUTE RESOLUTION AND OTHER IMPORTANT ASPECTS OF THE FRANCHISE RELATIONSHIP.

Item 17 Instructions:

i. Begin Item 17 disclosure with the following statement:

This table lists certain important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this offering circular.

ii. Respond in tabular form. Refer to the section of the agreement which covers each subject.

iii. Use a separate table for any other significant franchise-related agreement. If a provision in any other agreement affects the provisions of the franchise or franchise-related agreements disclosed in this Item (for example, the term of the franchise will be equal to the term of the lease), disclose that provision in the applicable category in the table.

iv. The table should contain a "summary" column to summarize briefly the disclosed provision. The summary is intended to provide a concise overview of the provision in no more than a few words or a sentence. Do not specify in detail all matters covered by a provision.

v. The table should respond to each category listed below. Do not change the names of the categories. List all contractual provisions relevant to each category in the table. If the response to any category is that the agreement does not contain the relevant provision, the table should so state. If the agreement is silent concerning a category but the franchisor unilaterally offers to provide certain benefits or protections to franchisees as a matter of policy, a footnote should describe this policy and state whether the policy is subject to change. The categories are:

a. Length of the term of the franchise

b. Renewal or extension of the term

c. Requirements for franchisee to renew or extend

d. Termination by franchisee

e. Termination by franchisor without cause

f. Termination by franchisor with "cause"

g. "Cause" defined – curable defaults

h. "Cause" defined – defaults which cannot be cured

i. Franchisee's obligations on termination/non-renewal

j. Assignment of contract by franchisor

k. "Transfer" by franchisee – denied

l. Fanchisor approval of transfer by franchisee

m. Conditions for franchisor approval of transfer

n. Franchisor's right of first refusal to acquire franchisee's business

o. Franchisor's option to purchase franchisee's business

p. Death or disability of franchisee

q. Non-competition covenants during the term of the franchise

r. Non-competition covenants after the franchise is terminated or expires

s. Modification of the agreement

t. Integration/merger clause

u. Dispute resolution by arbitration or mediation

v. Choice of forum

w. Choice of law

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Sample Answer 17

This table lists important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this offering circular.

Note:

(1) Franchisor is not obligated by the Agreement to do so, but, if the franchise is terminated, franchisor's policy is to buy back inventory at fair market value. This policy is subject to change at any time.

These states have statutes which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise: ARKANSAS (Stat. Section 70-807), CALIFORNIA (Bus. & Prof. Code Sections 20000-20043), CONNECTICUT (Gen. Stat. Section 42-133e et seq.), DELAWARE (Code, Tit.), HAWAII (Rev. Stat. Section 482E-1), ILLINOIS [815 Compiled Stat. 705/19 and 20], INDIANA (Stat. Section 23-2-2.7), IOWA (Code Sections 523H.1-523H.17), MICHIGAN (Stat. Section 19.854(27)), MINNESOTA (Stat. Section 80C.14), MISSISSIPPI (Code Section 75-24-51), MISSOURI (Stat. Section 407.400), NEBRASKA (Rev. Stat. Section 87-401), NEW JERSEY (Stat. Section 56:10-1), SOUTH DAKOTA (Codified Laws Section 37-5A-51), VIRGINIA (Code 13.1-557-574-13.1-564), WASHINGTON (Code Section 19.100.180), WISCONSIN (Stat. Section 135.03). These and other states may have court decisions which may supersede the Franchise Agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.

Item 18

PUBLIC FIGURES

DISCLOSE THE FOLLOWING:

A. COMPENSATION OR OTHER BENEFIT GIVEN OR PROMISED TO A PUBLIC FIGURE ARISING FROM:

(1) The use of the public figure in the franchise name or symbol or

(2) The endorsement or recommendation of the franchise to prospective franchisees.

B. THE EXTENT TO WHICH THE PUBLIC FIGURE IS INVOLVED IN THE ACTUAL MANAGEMENT OR CONTROL OF THE FRANCHISOR.

C. THE TOTAL INVESTMENT OF THE PUBLIC FIGURE IN THE FRANCHISOR.

Item 18 Instructions:

i. A "public figure" is a person whose name or physical appearance is generally known to the public in the geographic area where the franchise will be located.

ii. Disclose the compensation paid or promised for the endorsement or use of the name of the public figure.

iii. Describe the public figure's position and duties in the franchisor's business structure.

iv. State the amount of the public figure's investment. Describe the extent of the amount contributed in services performed or to be performed. State the type of investment (for example, common stock, promissory note).

v. Use Sample Answer 18-1 for a negative response.

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Sample Answer 18-1

Belmont does not use any public figure to promote its franchise.

Sample Answer 18-2

Belmont has paid Ralph Doister $50,000 for the use of his name in promoting the sale of our franchise. The right expires December 31, 1992. Belmont has produced newspaper ads, a brochure and a video which feature Mr. Doister. Mr. Doister does not manage or own an interest in Belmont.

Item 19

EARNINGS CLAIMS

A. AN EARNINGS CLAIM MADE IN CONNECTION WITH AN OFFER OF A FRANCHISE MUST BE INCLUDED IN FULL IN THE OFFERING CIRCULAR AND MUST HAVE A REASONABLE BASIS AT THE TIME IT IS MADE. IF NO EARNINGS CLAIM IS MADE, ITEM 19 OF THE OFFERING CIRCULAR MUST CONTAIN THE NEGATIVE DISCLOSURE PRESCRIBED IN THE INSTRUCTION.

Item 19 Instructions:

i. Definition: "Earnings claim" means information given to a prospective franchisee by, on behalf of or at the direction of the franchisor or its agent, from which a specific level or range of actual or potential sales, costs, income or profit from franchised or non-franchised units may be easily ascertained.

A chart, table or mathematical calculation presented to demonstrate possible results based upon a combination of variables (such as multiples of price and quantity to reflect gross sales) is an earnings claim subject to this item.

An earnings claim limited solely to the actual operating results of a specific unit being offered for sale need not comply with this item if it is given only to potential purchasers of that unit and is accompanied by the name and last known address of each owner of the unit during the prior three years.

ii. Supplemental earnings claim: If a franchisor has made an earnings claim in accordance with this Item 19, the franchisor may deliver to a prospective franchisee a supplemental earnings claim directed to a particular location or circumstance, apart from the offering circular. The supplemental earnings claim must be in writing, explain the departure from the earnings claim in the offering circular, be prepared in accordance with this Item 19, and be left with the prospective franchisee.

iii. Scope of requirement: An earnings claim is not required in connection with the offer of franchises; if made, however, its presentation must conform with this Item 19. If an earnings claim is not made, then negative disclosure 19 (below) must be used.

iv. Claims regarding future performance: A statement or prediction of future performance that is prepared as a forecast or projection in accordance with the statement on standards for accountants' services on prospective financial information (or its successor) issued by the American Institute of Certified Public Accountants, Inc., is presumed to have a reasonable basis.

v. Burden of proof: The burden is upon the franchisor to show that it had a reasonable basis for its earnings claim.

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[NEGATIVE DISCLOSURE 19]

REPRESENTATIONS REGARDING EARNINGS CAPABILITY

Belmont does not furnish or authorize its salespersons to furnish any oral or written information concerning the actual or potential sales, costs, income or profits of [a Belmont muffler shop]. Actual results vary from unit to unit and Belmont cannot estimate the results of any particular franchise.

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B. AN EARNINGS CLAIM SHALL INCLUDE A DESCRIPTION OF ITS FACTUAL BASIS AND THE MATERIAL ASSUMPTIONS UNDERLYING ITS PREPARATION AND PRESENTATION.

Item 19B Instructions:

i. Factual Basis: The factual basis of an earnings claim includes significant matters upon which a franchisee's future results are expected to depend. This includes, for example, economic or market conditions which are basic to a franchisee's operation and encompass matters affecting, among other things, franchisee's sales, the cost of goods or services sold and operating expenses.

In the absence of an adequate operating experience of its own, a franchisor may base an earnings claim upon the results of operations of a substantially similar business of a person affiliated with the franchisor or franchisees of that person; provided that disclosure is made of any material differences in the economic or market conditions known to, or reasonably ascertainable by, the franchisor.

ii. Basic Disclosures: The earnings claim must state:

a. Material assumptions, other than matters of common knowledge, underlying the claim (see Definition iii under Item 3 for the definition of "material");

b. A concise summary of the basis for the claim including a statement of whether the claim is based upon actual experience of franchised units and, if so, the percentage of franchised outlets in operation for the period covered by the earnings claim that have actually attained or surpassed the stated results;

c. A conspicuous admonition that a new franchisee's individual financial results are likely to differ from the result stated in the earnings claim; and

d. A statement that substantiation of the data used in preparing the earnings claim will be made available to the prospective franchisee on reasonable request.

Item 20

LIST OF OUTLETS

A. THE NUMBER OF FRANCHISES OF A TYPE SUBSTANTIALLY SIMILAR TO THOSE OFFERED AND THE NUMBER OF FRANCHISOR OWNED OR OPERATED OUTLETS AS OF THE CLOSE OF EACH OF THE FRANCHISOR'S LAST 3 FISCAL YEARS. SEGREGATE FRANCHISES THAT ARE OPERATIONAL FROM FRANCHISES NOT YET OPERATIONAL. SEGREGATE DISCLOSURE BY STATE. TOTAL EACH CATEGORY.

B. THE NAMES OF ALL FRANCHISEES AND THE ADDRESSES AND TELEPHONE NUMBERS OF ALL OF THEIR OUTLETS. THE FRANCHISOR MAY LIMIT ITS DISCLOSURE TO ALL FRANCHISEE OUTLETS IN THE STATE, BUT IF THESE FRANCHISEE OUTLETS TOTAL FEWER THAN 100, DISCLOSE FRANCHISEE OUTLETS FROM ALL CONTIGUOUS STATES AND THEN THE NEXT CLOSEST STATE(S) UNTIL AT LEAST 100 FRANCHISEE OUTLETS ARE LISTED.

C. THE ESTIMATED NUMBER OF FRANCHISES TO BE SOLD DURING THE 1 YEAR PERIOD AFTER THE CLOSE OF THE FRANCHISOR'S MOST RECENT FISCAL YEAR.

D. THE NUMBER OF FRANCHISEE OUTLETS IN THE FOLLOWING CATEGORIES THAT, FOR THE 3-YEAR PERIOD IMMEDIATELY BEFORE THE CLOSE OF FRANCHISOR'S MOST RECENT FISCAL YEAR, HAVE:

(1) Transferred controlling ownership;

(2) Been cancelled or terminated by the franchisor;

(3) Not been renewed by the franchisor;

(4) Been reacquired by the franchisor; or

(5) Been reasonably known by the franchisor to have otherwise ceased to do business in the system.

E. THE NAME AND LAST KNOWN HOME ADDRESS AND TELEPHONE NUMBER OF EVERY FRANCHISEE WHO HAS HAD AN OUTLET TERMINATED, CANCELLED, NOT RENEWED, OR OTHERWISE VOLUNTARILY OR INVOLUNTARILY CEASED TO DO BUSINESS UNDER THE FRANCHISE AGREEMENT DURING THE MOST RECENTLY COMPLETED FISCAL YEAR OR WHO HAS NOT COMMUNICATED WITH THE FRANCHISOR WITHIN 10 WEEKS OF THE APPLICATION DATE.

Item 20 Instructions:

i. Do not include a transfer when beneficial ownership of the franchise does not change.

ii. List an outlet that is reacquired by the franchisor in that column whether or not it also fits another category.

iii. Other than the franchisee names, addresses, and telephone numbers, disclose Item 20 information in tabular form. Use footnotes or a "remarks" column to elaborate on information in the table or to disclose caveats. Disclose the number of franchised and franchisor owned outlets sold, opened and closed. Disclose the total number of franchised and franchisor owned outlets open at the end of each year. Disclose information for each of the last 3 fiscal years.

iv. If an outlet has been operated by more than one franchisee, disclose each transfer in the transfer column.

v. Disclose information about franchisor owned outlets that are substantially similar to the franchised outlets. In this Item "franchisor owned" outlets include outlets owned by the franchisor and by its affiliates. Use a separate table with a format similar to the format for franchised outlets. The same table may be used if the franchisor owned outlets are separated from franchised outlets.

vi. For franchisees operating within the system disclose franchisee business addresses and telephone numbers. List outlets owned by the persons listed in Item 2 and their immediate families or by business entities owned by them as franchisor owned outlets. These outlets can be identified in the table by an asterisk.

vii. Separate information by state. List all states for which franchisor has information responsive to this Item.

viii. When the requirement states "most recent fiscal year," the franchisor may use a more recent date if it discloses that date and uses that date for all disclosures in this Item.

ix. When the requirement states "most recent fiscal year," the state may require a more recent date.

---

---

Sample Answer 20

FRANCHISED

STORE STATUS SUMMARY

FOR YEARS 1992/1991/1990

FRANCHISED STORE STATUS SUMMARY FOR YEARS 1992/1991/1990

State

Transfers

Canceled or

Not

Reacquired

Left

Total

Franchises

Terminated

Renewed

by

the System

from left

operating at

Franchisor

Other

columns (2)

year end

Alaska

2/0/0

Arizona

2/1/0

2/1/0

8/6/2

Arkansas

6/4/2

California

1/1/0

1/1/0

4/0/0

Colorado

3/3/3

Conneticut

5/3/1

Delaware

1/0/0

1/0/0

6/4/0

Florida

2/0/0

Georgia

2/0/0

Idaho

2/0/0

Totals

2/1/0

1/0/0

0/0/0

0/0/0

1/1/0

4/2/0

40/20/8

Notes:

(1) All numbers are as of December 31 for each year.

(2) The numbers in the "Total" column may exceed the number of stores affected because several events may have affected the same store. For example, the same store may have had multiple owners.

Note: Belmont no longer operates company owned stores.

PROJECTED OPENINGS

AS OF DECEMBER 31, 1992

Note:

(1) As of December 31, 1992

Item 21

FINANCIAL STATEMENTS

PREPARE FINANCIAL STATEMENTS IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. THESE FINANCIAL STATEMENTS MUST BE AUDITED BY AN INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT. UNAUDITED STATEMENTS MAY BE USED FOR INTERIM PERIODS. INCLUDE THE FOLLOWING FINANCIAL STATEMENTS:

A. THE FRANCHISOR'S BALANCE SHEETS FOR THE LAST TWO FISCAL YEAR ENDS BEFORE THE APPLICATION DATE. IN ADDITION, INCLUDE STATEMENTS OF OPERATIONS, OF STOCKHOLDERS EQUITY AND OF CASH FLOWS FOR EACH OF THE FRANCHISOR'S LAST THREE FISCAL YEARS. IF THE MOST RECENT BALANCE SHEET AND STATEMENT OF OPERATIONS ARE AS OF A DATE MORE THAN 90 DAYS BEFORE THE APPLICATION DATE, THEN ALSO SUBMIT AN UNAUDITED BALANCE SHEET AND STATEMENT OF OPERATIONS AS OF A DATE WITHIN 90 DAYS OF THE APPLICATION DATE.

B. AFFILIATED COMPANY STATEMENTS. INSTEAD OF THE DISCLOSURE REQUIRED BY ITEM 21A, THE FRANCHISOR MAY INCLUDE FINANCIAL STATEMENTS OF ITS AFFILIATED COMPANY IF THE AFFILIATED COMPANY'S FINANCIAL STATEMENTS SATISFY ITEM 21A AND THE AFFILIATED COMPANY ABSOLUTELY AND UNCONDITIONALLY GUARANTEES TO ASSUME THE DUTIES AND OBLIGATIONS OF THE FRANCHISOR UNDER THE FRANCHISE AGREEMENT.

C. CONSOLIDATED AND SEPARATE STATEMENTS:

(1) When a franchisor owns a direct or beneficial, controlling financial interest in another corporation, its financial statements should reflect the financial condition of the franchisor and its subsidiaries.

(2) If the applicant is a subfranchisor include separate financial statements for the franchisor and subfranchisor related entity.

(3) Prepare consolidated and separate financial statements in accordance with generally accepted accounting principles.

Item 21 Instructions:

i. States may require financial statements additional to those listed in this Item.

ii. A company controlling 80% or more of a franchisor may be required to include its financial statements.

iii. Present required financials in a format of columns which compare at least 2 fiscal years.

iv. In Item 21A, the required financial statements for a franchisor with a calendar fiscal year end and a July 15, 1989 application filing date are:

a. Unaudited balance sheet as of either April 30, May 31 or June 30, 1989 with an unaudited income statement for the period from January 1, 1989 to the date of the balance sheet;

b. Balance sheets, statements of operations, of stockholders equity and of cash flow. The balance sheets should be audited and as of December 31, 1987 and 1988. The remaining statements should be audited and should be for periods ending December 31, 1986, 1987 and 1988; and

c. If the franchisor has never had an audit, it need not supply the financial statement required by (b) if it supplies either an audit as of its last fiscal year end or the statements required by (a) in an audited form.

v. In the Item 21B response, the affiliate's guarantee need cover only the franchisor's obligations to the franchisee. The guarantee need not extend to third parties. A sample guarantee is on page in Exhibit .

vi. In the Item 21B response the filing state may permit a surety bond instead of the parent company's guarantee.

vii. Disclose the existence of a guarantee.

Item 22

CONTRACTS

ATTACH A COPY OF ALL AGREEMENTS PROPOSED FOR USE OR IN USE IN THIS STATE REGARDING THE OFFERING OF A FRANCHISE, INCLUDING THE FRANCHISE AGREEMENT, LEASES, OPTIONS AND PURCHASE AGREEMENTS.

Item 22 Instructions:

i. Copies of agreements attached to the offering circular under Item 22 are part of the offering circular. Each offering circular delivered to a prospective franchisee must include copies of all agreements to be offered.

ii. The franchisor may cross reference Item 10 for financing agreements.

Item 23

RECEIPT

THE LAST PAGE OF THE OFFERING CIRCULAR IS A DETACHABLE DOCUMENT ACKNOWLEDGING RECEIPT OF THE OFFERING CIRCULAR BY THE PROSPECTIVE FRANCHISEE. IT MUST CONTAIN THE FOLLOWING STATEMENT IN BOLDFACE TYPE:

THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE FRANCHISE AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY.

IF OFFERS YOU A FRANCHISE, MUST PROVIDE THIS OFFERING CIRCULAR TO YOU BY THE EARLIEST OF:

(1) The first personal meeting to discuss our franchise; or

(2) Ten business days before the signing of a binding agreement; or

(3) Ten business days before a payment to .

YOU MUST ALSO RECEIVE A FRANCHISE AGREEMENT CONTAINING ALL MATERIAL TERMS AT LEAST FIVE BUSINESS DAYS BEFORE YOU SIGN A FRANCHISE AGREEMENT.

IF DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR IF IT CONTAINS A FALSE OR MISLEADING STATEMENT, OR A MATERIAL OMISSION, A VIOLATION OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND THE ILLINOIS ATTORNEY GENERAL OFFICE, 500 SOUTH SECOND STREET, SPRINGFIELD, ILLINOIS 62706. (Any additional state disclosure time or required statutory language.)

Item 23 Instructions:

i. Place the name of the franchisor in the blank.

ii. Make two copies of the Receipt: one for retention by the franchisee and one by the franchisor.

iii. Disclose the name, principal business address and telephone number of the subfranchisor or franchise broker offering the franchise in this State.

iv. List the title of all attached exhibits.

v. Effective Date: (Leave blank until notified of effectiveness by State regulatory authority.).

vi. The name and address of the franchisor's registered agent authorized to receive service of process if not disclosed in Item 1.

---

---

Sample Answer 23

RECEIPT

THIS OFFERING CIRCULAR SUMMARIZES PROVISIONS OF THE FRANCHISE AGREEMENT AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS OFFERING CIRCULAR AND ALL AGREEMENTS CAREFULLY.

IF BELMONT OFFERS YOU A FRANCHISE, BELMONT MUST PROVIDE THIS OFFERING CIRCULAR TO YOU BY THE EARLIEST OF:

(1) THE FIRST PERSONAL MEETING TO DISCUSS OUR FRANCHISE; OR

(2) TEN BUSINESS DAYS BEFORE SIGNING OF A BINDING AGREEMENT; OR

(3) TEN BUSINESS DAYS BEFORE ANY PAYMENT TO BELMONT.

YOU MUST ALSO RECEIVE A FRANCHISE AGREEMENT CONTAINING ALL MATERIAL TERMS AT LEAST FIVE BUSINESS DAYS BEFORE YOU SIGN ANY FRANCHISE AGREEMENT.

IF BELMONT DOES NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR IF IT CONTAINS A FALSE OR MISLEADING STATEMENT, OR A MATERIAL OMISSION, A VIOLATION OF FEDERAL AND STATE LAW MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE FEDERAL TRADE COMMISSION, WASHINGTON, D.C. 20580 AND (STATE AGENCY).

Belmont authorizes Legal Process Corp at 448 West Washington Avenue, City, State to receive service of process for Belmont. I have received a Uniform Franchise Offering Circular dated ________. This offering circular included the following Exhibits:

A. License Agreement

B. Equipment Lease

C. Lease for Premises

D. Loan Agreement

---

Date Franchisee

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION M Joint Venture Agreement & Acknowledgment

STATE OF

)

)

SS

COUNTY OF

)

On this day of , , before me the undersigned officer, personally appeared and to me known personally to be the authorized representative(s) of , a joint venture undertaking, whose name(s) is signed to the foregoing instrument, and that he (they), as such representative(s), being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the joint venture by himself (themselves) as such authorized representative(s).

IN WITNESS WHEREOF I have hereunto set my hand and official seal.

(Notarial Seal)

Notary Public

My Commission expires:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX A Franchise Registration Forms

Section 200.ILLUSTRATION N Limited Partnership Acknowledgement

STATE OF

)

)

SS

COUNTY OF

)

On this day of , ____________________ , before me the undersigned officer, personally appeared and to me known personally to be the authorized representative(s) of , a limited partnership, whose name(s) is signed to the foregoing instrument, and that he (they), as such representative(s), being authorized to do so, executed the foregoing instrument for the purposes therein contained, by signing the name of the limited partnership by himself (themselves) as such authorized representative(s).

IN WITNESS WHEREOF I have hereunto set my hand and official seal.

(Notarial Seal)

Notary Public

My Commission expires:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX B Franchise Broker Registration Forms

Section 200.ILLUSTRATION A Franchise Broker Registration Application Page

File No.

(Insert file number of previous filings of applicant, if any)

FEE:

(To be enclosed by applicant at time application is initially filed)

Date of Application:

1. Name of Franchise Broker.

Name under which the Franchise Broker is doing or intends to do business.

2. Franchise Broker's principal business address.

Name and address of Franchise Broker's agent in the State of Illinois authorized to receive process.

Illinois Attorney General, 500 South Second Street, Springfield, Illinois 62706

3. Name, address and telephone number of person to whom communications regarding this application should be directed.

History

• Source: Expedited correction at 20 Ill. Reg. 4458, effective January 1, 1996

14 Ill. Adm. Code 200.APPENDIX B Franchise Broker Registration Forms

Section 200.ILLUSTRATION B Broker Authorization

To Whom It May Concern:

______________________ ("Broker") is hereby authorized to act as Franchise Broker and sell franchises on behalf of our company.

(Check one of the Following)

A.

Broker shall not accept payment from any Illinois franchisee in its own name, but shall only accept checks payable to our company and shall forward said checks and applications to us within ________ days after receipt of same.

B.

Broker shall accept payment from franchisees in its own name.

C.

Broker is not authorized to accept cash, checks or other payments from prospective franchisees on behalf of our company.

(Franchisor)

By:

Title:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX B Franchise Broker Registration Forms

Section 200.ILLUSTRATION C Franchise Broker Surety Bond

We, (broker name) , a corporation, with principal offices at (broker address) , as principal, and (name of Surety) , with principal offices at (Surety address) , a Surety Company incorporated under the laws of the State of (identify state) and authorized to conduct business in the State of Illinois as Surety, are bound to the Illinois Attorney General, Obligee in the sum of 11561 to be paid to the Obligee or its legal representatives, successors, or assigns, for which payment we bind ourselves and our legal representatives and successors, jointly and severally.

WHEREAS, the above-named principal has made application to the Illinois Attorney General for registration as a franchise broker under the Illinois Franchise Disclosure Act [815 ILCS 705] and is required pursuant to the Rules and Regulations promulgated under the Illinois Franchise Disclosure Act to post bond in the amount of 11561.

WHEREAS, the Obligee intends to assign this bond to the respective purchaser(s) of the aforementioned franchise upon sale of the aforementioned franchise(s) to said purchaser(s).

THEREFORE, the condition of this obligation is that the principal:

1. Comply with the Illinois Franchise Disclosure Act and Regulations promulgated thereunder; and

2. Pay all damages suffered by any person by reason of the Broker's violation of said Illinois Franchise Disclosure Act or any Rules or Regulations promulgated thereunder or any acts, rules, regulations, or orders amendatory thereof, and/or supplementary thereto, or hereafter enacted, or by reason of any misrepresentation, deceit, fraud or omission to state a material fact necessary in order to make any statement made, in the light of the circumstances under which such statement was made, not misleading.

This bond and obligation hereunder shall be deemed to run continuously and shall remain in full force and effect for four full years after the date of execution shown below.

In the event that any action or proceeding is initiated with respect to this bond, the parties agree that the venue thereof shall be the County in which the offer or sale of the franchise occurred.

IN WITNESS WHEREOF, Principal and Surety have executed this instrument at this _______ day of _____________________, ________.

Principal

Surety

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX B Franchise Broker Registration Forms

Section 200.ILLUSTRATION D Broker Guaranty of Performance

For value received (name of guarantor), located at _____(address) _____, absolutely and unconditionally guarantees the performance by broker, __(name of broker), of all obligations under the Illinois Franchise Disclosure Act and Rules, incurred in the sale of franchises in the State of _______________ and any underlying contractual responsibilities resulting from the sale of franchises occurring after this date with franchisees under the jurisdiction of the Illinois Franchise Disclosure Act, as the same have been or may hereafter be amended, modified, renewed or extended from time to time. This guaranty shall continue in force until all such obligations of broker shall have been satisfied or until such liability of broker to such franchisees has been completely discharged, whichever first occurs. Guarantor shall not be discharged from liability hereunder as long as any such claim by a franchisee against broker remains outstanding. Notice of acceptance is waived. Notice of default on the part of broker is not waived. This guaranty shall be binding upon guarantor, its successors and assigns.

In witness whereof, guarantor has, by a duly authorized officer, executed this guarantee at, this ______ day of _________________, ______.

ATTEST

Guarantor

By:

Title:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX C Escrow Forms

Section 200.ILLUSTRATION A Escrow Agreement

Agreement, made this

day of

,

, by

(name of franchisor)

, a

(type of business entity)

organized

under the laws of the State of

(hereinafter referred to as "Franchisor"), and

hereinafter referred to as "BANK", as Escrowee for the

franchisees of Franchisor;

WHEREAS, Franchisor is desirous of establishing franchises in the State of Illinois; and

WHEREAS, it is in the discretion of the Illinois Attorney General as administrator of the Illinois Franchise Disclosure Act, to require an escrow of the franchise fees; and

WHEREAS, in order to conform to the procedures for arranging an escrow account, Franchisor desires to enter into an escrow agreement with BANK, pursuant to which initial franchise fees are to be held in escrow until Franchisor has met its initial obligations to its franchisees.

NOW THEREFORE, with the foregoing recitals hereinafter incorporated by reference and made a part hereof, it is agreed as follows:

1. Franchisor shall deposit with BANK initial franchise fees received from franchisees that are required to be escrowed under the order of the Administrator, but BANK shall not be responsible for insuring that any part or all moneys received by Franchisor from each or any one franchisee are deposited with BANK.

2. Franchisor will supply BANK with the name and address of each franchisee, together with the amount of the deposit which represents moneys paid by each franchisee and BANK will maintain records containing the same information.

3. All moneys received by BANK from Franchisor shall be held by BANK as escrowee for the exclusive purpose herein described and will be placed in a single segregated account designated substantially as follows:

(Name of Bank)

, AS ESCROWEE FOR FRANCHISES OF

(Name of

Franchisor)

(hereinafter referred to as "Escrow Account.")

4. BANK shall accept such funds as Franchisor shall deliver to BANK, as escrowee, and BANK shall acknowledge the receipt of funds from Franchisor; however, BANK shall not be responsible for the accuracy of the information provided to it by Franchisor.

5. Any funds deposited hereunder in the Escrow Account shall be invested and kept invested by BANK, at the option of the Franchisor, in instruments of its choosing, until they are to be disbursed as provided in paragraph 6 hereof. All interest received and any increment thereon shall be added to the funds so deposited in the Escrow Account and shall be distributed as provided in paragraph 6.

6. BANK shall pay out funds, plus interest, if any, from the Escrow Account upon the occurrence of one of the following conditions:

(a) Upon receipt of a letter from an officer of Franchisor directing BANK to pay out such funds to Franchisor, accompanied by a written notice from the Administrator stating that he takes no exception (hereinafter referred to as "No Exception Notice") to the release, BANK shall pay part or all of the moneys held in escrow for the benefit of a specified franchisee, plus interest, if any, to Franchisor.

(b) Upon written notice from the Administrator BANK shall return part or all of the deposited franchise fee and other funds, plus interest, if any, to a specified franchisee.

(c) BANK shall pay funds into court or disburse or deliver them in accordance with any final order of any court of competent jurisdiction.

BANK shall not be personally liable for any act taken or omitted by it in good faith and in the exercise of its own best judgment. BANK shall also be fully protected in relying upon any written notice, demand, certificate or document which it in good faith believes to be genuine.

7. BANK is authorized, in its sole discretion, to disregard any and all notices or instructions given by any of the undersigned or by any other person, firm or corporation, except only such notices or instructions by the Administrator as are hereinafter provided for and orders of process of any court entered or issued with or without jurisdiction. If any property subject hereto is at any time attached, garnished, or levied upon under any court order or in case the payment, assignment, transfer, conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in case of any court order affecting such property or any part thereof, then and in any of such events BANK is authorized, in its sole discretion, to rely upon and comply with any such order, writ, judgment or decree which it is advised by legal counsel of its own choosing is binding upon it; if it complies with any such order, writ, judgment or decree, it shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance even though such order, writ, judgment or decree may be subsequently reversed, modified, annulled, set aside or vacated.

8. Written consent of BANK to act in the capacity of escrowee shall be manifested upon the duly authorized execution of this Agreement. The Administrator may, at any time, inspect the records of BANK, insofar as they relate to this Escrow Agreement. At the Administrator's discretion, statements indicating status of the escrow shall be furnished by BANK to the Administrator. An executed duplicate original of this Agreement shall be filed with the Administrator at Illinois Attorney General, Franchise Division, 500 South Second Street, Springfield, Illinois 62706.

9. BANK shall be paid by Franchisor for any expenses incurred by it and reasonable compensation for its services hereunder. Funds held by BANK pursuant to this Agreement shall not be subject to any liens or charges by BANK.

10. If BANK believes it to be reasonably necessary to consult with counsel concerning any of its duties in connection with this Agreement, or in the event BANK retains counsel upon becoming involved in litigation on account of any deposit or of this Agreement, Franchisor shall reimburse BANK for and indemnify and hold BANK harmless against any and all costs, attorney's fees, charges, disbursements and expenses in connection with such consultation or litigation.

11. Franchisor unconditionally guarantees that, in the event BANK misapplies, dissipates, converts or is otherwise responsible for a deficiency in the funds deposited in the Escrow Account through the exercise of less than a fiduciary standard of care, Franchisor shall reimburse each and every franchisee to the extent of such deficiency if such amounts deposited are required to be returned to such franchisee under paragraph 6(a) through (c) hereof.

12. Franchisor shall give each franchisee a copy of this Agreement prior to collecting any moneys from such franchisee.

13. BANK's duties as escrowee shall terminate upon final distribution of all moneys received under this Agreement.

IN WITNESS WHEREOF, this Agreement has been duly executed, the parties intending to be legally bound hereby.

ATTEST:

BANK

By:

Its Secretary

Its:

FRANCHISOR

By:

Its:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX C Escrow Forms

Section 200.ILLUSTRATION B Franchisor's Petition for Release of Escrowed Funds

)

)

SS

)

IN THE MATTER OF:

FRANCHISOR:

FRANCHISEE:

BEFORE THE ATTORNEY GENERAL OF ILLINOIS

AS ADMINISTRATOR OF THE FRANCHISE DISCLOSURE ACT

The undersigned franchisor hereby requests the Administrator to authorize release from

escrow the sum of

, plus accrued interest representing the franchise fee paid by

on the

day of

,

.

The undersigned franchisor hereby represents that it has fulfilled the initial obligations owed to the franchisee under the franchise and other agreements and that the franchisee has commenced doing business.

Franchisor

By:

Escrowee Bank

Name and Title

Address of Bank

Printed Name of Franchisee

Phone Number of Bank

Address of Franchisee

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX C Escrow Forms

Section 200.ILLUSTRATION C Franchisee's Petition For Release of Escrowed Funds

)

)

SS

)

IN THE MATTER OF:

FRANCHISOR:

FRANCHISEE:

BEFORE THE ATTORNEY GENERAL OF ILLINOIS

AS ADMINISTRATOR FOR THE FRANCHISE DISCLOSURE ACT

The undersigned franchisee hereby requests the Administrator to authorize release from

escrow the sum of $

, plus accrued interest representing the franchise fee paid

by me on the

day of

,

.

The undersigned franchisee hereby represents that the franchisor has not fulfilled the initial obligations owed to me under the franchise and other agreements and that I have not commenced doing business.

Franchisee Signature

Printed Name of Franchisee

Address of Franchisee

Subscribed and sworn to before me this

day of

,

.

Notary Public

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX D Guaranty Forms

Section 200.ILLUSTRATION A Guaranty of Performance

For value received, (name of guarantor), located at (address), absolutely and unconditionally guarantees the performance by franchisor, (name of franchisor), of all obligations under the Illinois Franchise Disclosure Act and Rules, and of all of the obligations of franchisor to furnish goods and/or services necessary to establish and open the business of franchisees to whom franchises are granted by franchisor pursuant to the registration of such franchises in the State of ______________ and the terms and conditions of its franchise and other agreements entered into after this date with franchisees under the jurisdiction of the Illinois Franchise Disclosure Act, as the same have been or may hereafter be amended, modified, renewed or extended from time to time. This guaranty shall continue in force until all such obligations of franchisor shall have been satisfied or until such liability of franchisor to such franchisees has been completely discharged, whichever first occurs. Guarantor shall not be discharged from liability hereunder as long as any such claim by a franchisee against franchisor remains outstanding. Notice of acceptance is waived. Notice of default on the part of franchisor is not waived. This guaranty shall be binding upon guarantor, its successors and assigns.

In witness whereof, guarantor has, by a duly authorized officer, executed this guarantee at______________, this _________ day of ______________, ______.

ATTEST:

Guarantor

By:

Title:

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX D Guaranty Forms

Section 200.ILLUSTRATION B Corporate Resolution

RESOLVED, that it is desirable and in the best interest of this Corporation that the franchisor be authorized to offer and sell franchises in the State of Illinois; that the President, any Vice-President, the Secretary, or any Assistant Secretary are hereby authorized to execute on behalf of this Corporation any Guaranty of Performance of all of the duties and obligations of franchisor under the Illinois Franchise Disclosure Act and Rules, and obligations to furnish goods and/or services necessary to establish and open the business of franchisees to whom franchises are granted by franchisor pursuant to the registration of such franchises in the State of Illinois, and the terms and conditions of its franchise and other agreements entered into with franchises under the jurisdiction of the Illinois Franchise Disclosure Act, as the same have been or may hereafter be amended, modified, renewed, or extended from time to time; and that the execution of previous such Guarantees of Performance of franchisor by any of the aforesaid officers is hereby ratified and approved.

14 Ill. Adm. Code 200.APPENDIX D Guaranty Forms

Section 200.ILLUSTRATION C Secretary's Certificate

The undersigned hereby certifies that the undersigned is the __________ Secretary of (name of guarantor)_ , a corporation organized and existing under the laws of the State of ______________, that the foregoing is a true and correct copy of the resolution duly adopted at a meeting of the Board of Directors of said corporation held on the ______ day of ____________, ______, at which meeting a quorum was at all times present and acting; that the passage of said resolution was in all respects legal; and that said resolution is in full force and effect.

Dated this _______ day of _____________ , ________.

Secretary

(Corporate Seal)

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX E Surety Bond

We, (name of franchisor), a corporation with principal offices at (address of franchisor)_ as principal, and (name of surety company), a surety company with principal offices located at (address of Surety) incorporated under the laws of the State of _______________ and authorized to conduct business in the State of Illinois, as Surety, are indebted to the Administrator, Illinois Attorney General, 500 South Second Street, Springfield, Illinois 62706, Obligee in the sum of ______________ to be paid to the Obligee or its legal representatives, successors, or assigns, for which payment we bind ourselves and our legal representatives and successors, jointly and severally.

WHEREAS, the above-named principal has made application to the Administrator for registration of the offer of its franchises under the Illinois Franchise Disclosure Act and is required pursuant to said law to provide the Administrator with a Surety Bond.

WHEREAS, the Principal proposes to offer in Illinois ____________ franchise(s) within one year from the effective date of the proposed registration under the Illinois Franchise Disclosure Act; and

WHEREAS, the Obligee intends to assign this bond to the respective purchaser(s) of the aforementioned franchise(s) upon sale of the aforementioned franchise(s) to said purchaser(s).

The conditions of this bond are that if the Principal, its agent or employees shall:

1. Comply with the Illinois Franchise Disclosure Act and all rules and orders promulgated thereunder; and

2. Pay all damages suffered by any person by reason of the violation of the Illinois Franchise Disclosure Act or any rules or orders promulgated thereunder or any acts, rules or orders amendatory thereof and/or supplementary thereto, or hereafter enacted, or by reason of any misrepresentation, deceit, fraud or omission to state a material fact necessary in order to make any statement made in the light of the circumstances under which such statement was made, not misleading, including, but not limited to, the failure to disclose, as required by Illinois Franchise Disclosure Act and the rules and regulations promulgated thereunder, the true financial condition of franchisor; and

3. Fully completes its obligations under the Franchise Agreement and all related Agreements to provide real estate, improvements, equipment, inventory, training and other items included in the franchise offering, then this obligation shall be void; otherwise this obligation will remain in full force and effect. This bond and obligation hereunder shall be deemed to run continuously and shall remain in full force and effect for four full year after the date of execution of this document.

In the event that any action or proceeding is initiated with respect to this bond, the parties agree that the venue thereof shall be the state or province in which the offer or sale of the franchise occurred.

IN WITNESS WHEREOF, Principal and Surety have executed this instrument at this________ day of _______________, _______ .

Principal

Surety

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

Chapter II Attorney General

Part 200 Franchise Disclosure Act

14 Ill. Adm. Code 200.APPENDIX F Certificate of Deposit Forms

Section 200.ILLUSTRATION A Franchisor's Petition for Release of Certificate of Deposit

)

)

SS

)

IN THE MATTER OF:

FRANCHISOR:

FRANCHISEE:

BEFORE THE ATTORNEY GENERAL OF ILLINOIS

AS ADMINISTRATOR FOR THE FRANCHISE DISCLOSURE ACT

The undersigned franchisor hereby requests the Administrator to authorize release of the Certificate of Deposit in the name of the Administrator in the sum of $16950, plus accrued interest representing the franchise fee paid by ___on the _______ day of, ______.

The undersigned franchisor hereby represents that it has fulfilled the initial obligations owed to the franchisee under the franchise and other agreements and that the franchisee has commenced doing business.

In furtherance of this request, the undersigned franchisor submits the franchisee's statement indicating the franchisee has no objection to this request. By this statement the franchisee has not waived any rights which he may have against the undersigned franchisor.

Franchisor

By:

Name and Title

Subscribe and sworn to before me

this

day of

,

.

Printed Name of Franchisee

Notary Public

Address of Franchisee

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

14 Ill. Adm. Code 200.APPENDIX F Certificate of Deposit Forms

Section 200.ILLUSTRATION B Franchisee's Petition for Release of Certificate of Deposit

)

)

SS

)

IN THE MATTER OF:

FRANCHISOR:

FRANCHISEE:

BEFORE THE ATTORNEY GENERAL OF ILLINOIS

AS ADMINISTRATOR FOR THE FRANCHISE DISCLOSURE ACT

The undersigned franchisee hereby requests the Administrator to authorize the release of the Certificate of Deposit issued in the name of the Administrator in the sum of ___________, plus accrued interest representing the franchisee fee paid by me on the ___________ day of _________, ____.

The undersigned franchisee hereby represents that the franchisor has not fulfilled the initial obligations owed to me under the franchise and other agreements and that I have not has commenced doing business.

In furtherance of this request, the undersigned franchisor submits the franchisee's statement indicating that it has no objection to this request.

Signature

Printed Name of Franchise

Address of Franchisee

Subscribe and sworn to before me

this

day of

,

.

Notary Public

History

• Source: Amended at 23 Ill. Reg. 11561, effective September 7, 1999

Part 250 Tobacco Products Manufacturers' Escrow Enforcement Act of 2003

14 Ill. Adm. Code 250.10 General

This Part provides for enforcement of the Tobacco Product Manufacturers' Escrow Act [30 ILCS 168], in accordance with the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003 [30 ILCS 167] (see P.A. 93-446). The former Act, passed as a result of the Master Settlement Agreement (MSA) entered into between 46 states, including Illinois, and the major tobacco companies, requires tobacco product manufacturers not participating in the MSA to set up qualified escrow accounts and to deposit funds into those accounts based on the number of manufacturers' cigarettes sold in each state. The latter Act provides for enforcement of the escrow obligations.

History

• Source: Amended at 28 Ill. Reg. 7904, effective May 28, 2004

14 Ill. Adm. Code 250.20 Definitions

"AGO" means the Office of the Illinois Attorney General.

"Brand family" has the same meaning ascribed in Section 10 of the Escrow Enforcement Act.

"Cigarette" has the same meaning ascribed in Section 10 of the Escrow Act, which includes roll-your-own tobacco.

"Department" means the Illinois Department of Revenue.

"Director" means Director of Revenue.

"Distributor" has the same meaning ascribed in Section 1 of the Cigarette Tax Act [35 ILCS 130] and Section 1 of the Cigarette Use Tax Act [35 ILCS 135]. Additionally, "distributor" means a distributor, as defined by Section 10-5 of the Tobacco Products Tax Act of 1995 [35 ILCS 143], of roll-your-own tobacco.

"Escrow Act" means the Tobacco Product Manufacturers' Escrow Act [30 ILCS 168].

"Escrow Enforcement Act" means the Tobacco Products Manufacturers' Escrow Enforcement Act of 2003 [30 ILCS 167].

"Filed" means received by the AGO in readable form, however transmitted, or postmarked for delivery by the U.S. mail.

"Liability year" means the calendar year in which a tobacco product manufacturer's cigarettes are sold in Illinois, and to which the requirements of the Escrow Act apply.

"Master Settlement Agreement" or "MSA" has the meaning ascribed in Section 10 of the Escrow Act.

"NPM" means a tobacco product manufacturer that is not a participating manufacturer.

"Participating manufacturer" has the same meaning ascribed in Section 15(a)(1) of the Escrow Act.

"Qualified Escrow Fund" has the same meaning ascribed in Section 10 of the Escrow Act.

"Roll-Your-Own" or "RYO" has the same meaning set out in Section 10 of the Escrow Act (definition of "cigarette").

"Stamps or imprints" means revenue tax stamps or imprints as provided for in Section 3 of the Cigarette Tax Act or stamps or imprints evidencing the payment of cigarette use tax as provided for in Section 3 of the Cigarette Use Tax Act, as appropriate.

"Tobacco product manufacturer" or "TPM" has the same meaning ascribed in Section 10 of the Escrow Act.

"Units sold" has the same meaning ascribed in Section 10 of the Escrow Act and includes "roll-your-own" tobacco for which tobacco products tax is owed and does not bear an excise tax stamp of the State.

History

• Source: Amended at 41 Ill. Reg. 2068, effective February 2, 2017

14 Ill. Adm. Code 250.30 Distributor Filings

a) Each distributor shall report quarterly to the AGO on paper or electronic forms provided by the AGO such information as is necessary for the AGO to ascertain the quantity of each NPM's cigarettes sold in Illinois by the distributor during the preceding quarter. Paper forms shall be sent to: Office of the Illinois Attorney General, 500 South Second Street, Springfield, Illinois 62701. Paper forms may alternatively be faxed to (217) 524-4701. Electronic forms shall be e-mailed to tobacco.tobacco@ilag.gov. The quarterly information to be reported shall include:

1. The number of each NPM's cigarettes distributed by the distributor within Illinois, by brand.

2. The equivalent stick count of each NPM's RYO tobacco distributed by the distributor within Illinois, by brand.

3. The NPM name and address for each brand.

4. The name and address of the person or entity from whom the distributor purchased or obtained the brand.

5. The name and address of the first importer of foreign NPM brands or the first purchaser of non-resident NPM brands.

b) The information required by subsection (a) shall be filed prior to the 20th day after the end of each calendar quarter. The filing for:

1. January, February, and March is due on or before April 20.

2. April, May, and June is due on or before July 20.

3. July, August, and September is due on or before October 20.

4. October, November, and December is due on or before January 20 of the following year.

c) Distributors not selling any NPM brands for the relevant time period shall timely file a form as described in subsection (a) marked "none".

d) Distributors shall maintain and make available to the Attorney General all records, invoices, and documentation relating to or reflecting purchases and sales of NPM cigarettes, which records, invoices and documentation provide a basis for the filings under subsection (a), for a period of not less than five years after the date of sale.

e) Distributors shall provide an electronic mail address to the AGO for the purpose of receiving electronic mail updates and notifications, if the distributor has created an electronic mail account.

f) Distributors shall provide any additional information requested by the AGO including, but not limited to, samples of packaging, labeling of each brand family, names of customers and quantities of each brand sold to them and a statement signed by an officer of the manufacturer, under penalty of perjury, certifying whether the manufacturer is, or is not, a participating tobacco manufacturer under the MSA.

g) Distributors not complying with this Section 250.30, or filing false or inaccurate information with the AGO, may be deemed to be in violation of the Escrow Enforcement Act and dealt with in accordance with Section 250.110.

History

• Source: Amended at 49 Ill. Reg. 9984, effective July 15, 2025

14 Ill. Adm. Code 250.40 Prohibition of Distribution of Non-Compliant TPM Cigarettes

a) A distributor shall not affix or cause to be affixed stamps or imprints to individual packages of cigarettes delivered or caused to be delivered by the distributor in Illinois, and may not otherwise deliver or cause to be delivered in Illinois RYO tobacco, if the tobacco product manufacturer of those cigarettes or RYO tobacco does not appear on either the directory of participating manufacturers or the directory of compliant NPMs.

b) A distributor that affixes or causes to be affixed stamps or imprints to individual packages of cigarettes for delivery in Illinois, or that otherwise delivers or causes to be delivered RYO tobacco in Illinois, which cigarettes or RYO tobacco are manufactured by a tobacco product manufacturer whose name on the date of stamping or imprinting (of cigarettes), or on the date of delivery (of RYO tobacco), does not appear on either the directory of participating manufacturers or the directory of compliant NPMs, may be deemed to be in violation of the Escrow Enforcement Act and may be dealt with in accordance with Section 250.110.

History

• Source: Amended at 28 Ill. Reg. 7904, effective May 28, 2004

Chapter II Attorney General

Part 250 Tobacco Products Manufacturers' Escrow Enforcement Act of 2003

14 Ill. Adm. Code 250.50 Appointment of Agent for Service of Process

a) Any non-resident or foreign NPM that has not registered to do business in this State shall appoint an agent located within the State of Illinois to receive service of process on behalf of that non-resident or foreign NPM. On forms provided by the AGO, the NPM shall submit the name, address, phone number, company name (if applicable) and hours of availability of the agent, as well as proof of appointment, to the AGO.

b) If the NPM terminates the authority of the agent, the NPM shall notify the AGO of the termination at least 30 calendar days prior to the termination, and provide proof at least 5 calendar days prior to the termination of the appointment of a new agent. If the agent terminates an agency appointment, the NPM shall notify the AGO of the termination no later than 5 calendar days after the termination, and shall include proof of the appointment of a new agent.

c) Any foreign or non-resident NPM that fails to appoint an agent as required by this Section and in Section 20 of the Escrow Enforcement Act shall be deemed to appoint the Illinois Secretary of State as the agent on whom process may be served on its behalf. However, such appointment will not satisfy the condition precedent for having its brand families listed in the directory of compliant NPMs.

History

• Source: Amended at 31 Ill. Reg. 12718, effective August 24, 2007

14 Ill. Adm. Code 250.60 Certification Requirements for Tobacco Product Manufacturers

a) No later than April 30 of each year, on paper or electronic forms provided by the AGO, every tobacco product manufacturer whose cigarettes or RYO tobacco were sold in Illinois during the preceding calendar year shall execute and deliver to the AGO a certification acknowledging under penalty of perjury that:

1. as of the date of the certification, the tobacco product manufacturer is a participating manufacturer or an NPM;

2. if it is a participating manufacturer, it has generally performed its financial obligations under the MSA;

3. if it is an NPM, it is in full compliance with the Escrow Act and the Escrow Enforcement Act.

b) The certification of a participating manufacturer shall include:

1. a list of its brand families, which list shall be updated 30 days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the AGO;

2. that the brand family is deemed to be its cigarettes for purposes of calculating payments under the MSA in the volume and shares determined pursuant to the MSA.

c) The certification of an NPM shall include:

1. a complete list of all of its brand families, which list shall be updated 30 days prior to any addition to or modification of its brand families by executing a supplemental certification to the AGO, and the number of units sold for each brand family in Illinois during the preceding calendar year;

2. that the brand family is deemed to be its cigarettes for purposes of Section 15 of the Escrow Act;

3. a complete list of all of its brand families that have been sold in Illinois during the current calendar year;

4. a complete list of all of its brand families that were sold in Illinois during the preceding year that are no longer being sold in Illinois as of the date of the certification;

5. the name and address of any other manufacturer in the preceding calendar year of a brand family for which certification is sought;

6. that it is registered to do business in Illinois or has appointed a registered agent for service of process and provided notice thereof as required by Section 20 of the Escrow Enforcement Act;

7. that it has established, continues to maintain, and has fully funded a qualified escrow account pursuant to Section 15 of the Escrow Act;

8. that it has executed a qualified escrow agreement that has been reviewed and approved by the AGO;

9. the name, address and telephone number of the financial institution where the NPM has established its escrow account;

10. the account number of the escrow account, and the sub-account number for Illinois;

11. the amount the NPM deposited into the escrow account for cigarettes sold in Illinois during the preceding calendar year, including the dates and amounts of each deposit, and evidence thereof;

12. the dates and amounts of any withdrawal or transfer from any escrow account established, maintained, or funded by the NPM;

13. that it is otherwise in full compliance with the Escrow Act and the Escrow Enforcement Act as well as any regulations, including all quarterly installment payments.

d) All records, invoices and documentation relied upon for certification shall be maintained by a TPM for at least 5 years.

e) Participating manufacturers and NPMs shall provide any additional information requested by the AGO including, but not limited to, samples of packaging, labeling of each brand family, contracts to manufacture a brand family and proof of first importer status under the MSA.

History

• Source: Added at 28 Ill. Reg. 7904, effective May 28, 2004

Chapter II Attorney General

Part 250 Tobacco Products Manufacturers' Escrow Enforcement Act of 2003

14 Ill. Adm. Code 250.70 Npms Required to Make Quarterly Installment Payments

a) Whenever the AGO determines that compliance with the Escrow Act will be promoted by requiring certification and escrow deposits more frequently than on an annual basis, the AGO may require an NPM, on a case-by-case basis, to certify its compliance with the Escrow Act and make its required escrow deposits in quarterly installments during the Liability Year. The notice of the AGO's determination requiring the payment of quarterly installments shall be a final administrative decision reviewable under the Administrative Review Law [735 ILCS 5/Art. III]. Factors which may be considered in making this determination include, but are not limited to, the following:

1. the initial addition of an NPM to the directory of compliant NPMs;

2. a history of the NPM not complying with the Escrow Act;

3. a history of the NPM under-funding its qualified escrow account;

4. a history of the NPM failing to timely pay, or failing to pay entirely, judgments or penalties due under the Escrow Act to a qualified escrow account or to the AGO;

5. credible evidence supporting a concern by the AGO that the NPM may not be financially able to meet its fiscal obligations under the Escrow Act when they become due on April 30 of the following calendar year;

6. a volume of more than 2,000,000 cigarettes sold during a calendar quarter.

b) The notice of the AGO's determination requiring the payment of quarterly installments shall include:

1. the basis for the determination;

2. the date the first quarterly payment is due, such date being a minimum of 30 days after the date of notice;

3. that the NPM may request judicial review of the AGO's determination in the manner set forth in Section 250.100;

4. the requirement that quarterly installment payments shall be made for four quarters where the basis for quarterly installment payments is the initial addition of an NPM to the directory of compliant NPMs; and

5. a copy of the State of Illinois Affidavit of Nonparticipating Manufacturer Regarding Quarterly Escrow Payment.

c) Each NPM required to make quarterly installment payments shall:

1. make its required escrow deposit based upon Illinois sales for the previous quarter;

2. provide proof of deposit for each quarterly installment;

3. file quarterly with the AGO the State of Illinois Affidavit of Nonparticipating Manufacturer Regarding Quarterly Escrow Payment; and

4. file a State of Illinois Affidavit of Nonparticipating Manufacturer Regarding Escrow Reconciliation Payment, make a final reconciliation payment and provide proof of deposit on or before April 15 of the year following the liability year.

d) The information required by subsection (c) shall be filed on or before the last day of the month following the end of the quarter. The filing for:

1. January, February, and March is due on or before April 30.

2. April, May and June is due on or before July 31.

3. July, August and September is due on or before October 31.

4. October, November and December is due on or before January 31 of the following year.

e) The AGO shall notify the NPM of the date it can cease making quarterly installment payments.

f) NPMs not complying with this Section, or filing false or inaccurate information with the AGO, may be deemed to be in violation of the Escrow Enforcement Act and will be dealt with in accordance with Section 250.110. In addition, NPMs not complying with this Section shall be subject to a penalty not to exceed 5% of the amount improperly withheld from escrow per each day of the violation, and in a total amount not to exceed 100% of the original amount improperly withheld from escrow.

History

• Source: Amended at 31 Ill. Reg. 12718, effective August 24, 2007

14 Ill. Adm. Code 250.80 Establishment of Directory of Participating Manufacturers and Directory of Compliant NPMs

a) The AGO shall develop, maintain, and publish a directory of participating manufacturers who have generally performed their financial obligations under the MSA, and a separate directory of compliant NPMs who have established a qualified escrow account and who are otherwise in compliance with Section 15(a)(2) of the Escrow Act and Section 15(a)(2) and (3) of the Escrow Enforcement Act.

b) The directories shall be published on the AGO's website (www.illinoisattorneygeneral.gov) and shall be revised as necessary as new information is received by the AGO.

1. If the AGO intends to remove or not list a TPM from the directory, the AGO shall send a notice of intent to deny the TPM or its agent for service of process. The notice of intent to deny shall include:

A) the factual and legal deficiencies upon which the AGO's intended action rests;

B) the actions that the TPM must undertake to cure the factual or legal deficiencies upon which the intended action is based; and

C) a notification that the TPM shall have 10 calendar days to cure deficiencies and submit documentation or other information of its attempt to cure to the AGO.

2. The AGO may extend the time period for a TPM to cure its deficiencies.

c) If the TPM's deficiencies have been cured, a notice of approval shall be sent to the TPM or its agent for service of process. If the TPM's deficiencies have not been cured, a notice of removal or refusal to list shall be sent to the TPM or its agent for service of process. The notice of approval, removal or refusal to list shall be sent by certified or registered U.S. Mail or by other commercial mail delivery service 10 days prior to the change. The notice of approval, removal or refusal to list shall be a final administrative decision. Any TPM may request judicial review of the final administrative decision in the manner set forth in Section 250.100.

d) If the AGO decides to add or remove a TPM or brand family from the directory, notice shall be provided to distributors. The notice to distributors shall be provided by U.S. Mail, other commercial mail delivery service, electronic mail or facsimile 10 calendar days prior to the change. In addition, notice of the directory change may be published on the AGO's website (www.illinoisattorneygeneral.gov) 10 calendar days prior to the change.

e) The AGO shall not place an NPM on the directory of compliant NPMs unless all outstanding final judgments (including interest thereon) for violations of the Escrow Act and the Escrow Enforcement Act have been fully satisfied for that brand family and NPM, and:

1. the NPM has had sales in one or more Liability Years prior to the date of the directory's publication and it is in full compliance with its escrow obligations under the Escrow Act and the Escrow Enforcement Act and Section 250.70 as to such sales, including the payment of any applicable penalties; or

2. the NPM is a successor to a tobacco product manufacturer that has had sales in one or more Liability Years prior to the date of the directory's publication, and it has deposited funds into a qualified escrow account to fully fund all prior Liability Year obligations for all of its predecessor's brands and paid all the penalties due for all such brands for all prior Liability Years, if the NPM's predecessor has not already done so; or

3. the NPM has had no sales in any prior Liability Years but has established a qualifying escrow account (as evidenced by an approved Escrow Agreement) and is otherwise compliant with the Escrow Act and the Escrow Enforcement Act.

f) Under Section 15(a)(2) of the Escrow Act, each NPM for a particular brand family is jointly and severally liable with every other NPM for that particular brand family for all Liability Year escrow obligations and penalties.

g) In determining compliance for purposes of placing a TPM on the directory of participating manufacturers and the directory of compliant NPMs, the AGO may consider the following factors:

1. the requirements for placement on the directory as set forth in this Part and in the Acts;

2. distributor filings;

3. the TPM's certifications, affidavits, and supporting documents;

4. the lack of completeness of the TPM's certifications, affidavits, and supporting documents;

5. the NPM's escrow agreement;

6. the failure of a TPM who is a PM to generally perform its financial obligations under the MSA, or of the TPM, predecessor of the TPM, or previous TPM of the brand families to make its full MSA payments unless as otherwise provided in MSA Section XI(d);

7. the failure of the NPM, predecessor of the NPM, or previous NPM of the brand families to timely pay or fully fund its qualified escrow account or to timely or entirely pay judgments or penalties due to a qualified escrow account or to the AGO under the Escrow Act or other states' tobacco statutes;

8. whether the TPM is, in fact, the manufacturer of the brands with respect to which the TPM seeks to be listed as compliant;

9. whether acting on its own or through a distributor, wholesaler, retailer, or similar intermediary or intermediaries or another TPM, the TPM's having engaged in business as a distributor (as defined in the Tobacco Products Tax Act of 1995 [35 ILCS 143]) without first having obtained a license to do so from the Department;

10. the TPM's failure to cure the deficiencies identified in a notice of intent to deny under this Part within 10 calendar days after receiving the notice;

11. the TPM's failure to provide additional information as requested by the AGO;

12. information from any other source (e.g., U.S. Department of the Treasury, Department of Revenue, distributors) that pertains to the verification of the accuracy of the information provided by the TPM;

13. whether the TPM is controlled, managed, or operated by a person with a current or prior interest in any other TPM that is not or has not been compliant with the Escrow Act or that is the subject of an injunction for failure to comply with the Escrow Act; and

14. any other facts or circumstances that are relevant to the certification of the TPM.

History

• Source: Amended at 41 Ill. Reg. 2068, effective February 2, 2017

14 Ill. Adm. Code 250.90 Release of Escrow Account Money

a) Funds deposited by a tobacco product manufacturer pursuant to Section 15 of the Escrow Act shall be released from escrow only:

1. to pay a judgment or settlement on any released claim brought against the tobacco product manufacturer by the State or any releasing party located or residing in the State;

2. to the extent a tobacco product manufacturer establishes that the amount it was required to place into escrow was greater than the MSA payments, as determined by Section IX(i) of that Agreement, in which case the excess shall revert back to the tobacco product manufacturer;

3. to the extent the funds were not released under subsection (a)(1) or (2) above in which case the remaining funds shall revert back to the tobacco product manufacturer 25 years after the date on which they were placed into escrow.

b) The release of escrow account funds under subsection (a)(1) above may be effectuated only pursuant to a Court order or a valid, fully executed Settlement Agreement. The order or agreement shall be forwarded to the escrow agent, who shall promptly release the funds to the AGO or the releasing party (as the case may be) in the order in which they were placed into escrow, and only in the amount specified in the order or agreement.

c) The release of escrow account funds under subsection (a)(2) above may be effectuated only upon the presentation to the AGO of sufficient documentary evidence demonstrating that the tobacco product manufacturer did in fact place funds into the escrow account, that it is current on all escrow obligations and penalties for any period for any brand family (including those of any predecessor above TPM), and that it was required to place into escrow amounts greater than it would have paid had it been a participating manufacturer under the MSA. Upon the presentation of such evidence, the AGO and the TPM will by letter direct the escrow agent to promptly release funds from the escrow account to the tobacco product manufacturer in the order in which they were placed into escrow, in the amount specified by the letter of direction.

d) The release of escrow account funds under subsection (a)(3) above may be effectuated only upon the presentation to the AGO of sufficient documentary evidence demonstrating that the tobacco product manufacturer did in fact place funds into the escrow account, that it is current on all escrow obligations and penalties for any period for any brand family (including those of any predecessor TPM), and that the funds for which it is seeking a release were placed in the account more than 25 years earlier and they are not needed to pay any judgment or settlement to the State or a releasing party. Upon the presentation of such evidence, the AGO and the TPM will by letter direct the escrow agent to promptly release funds from the escrow account to the tobacco product manufacturer in the order in which they were placed into escrow, in the amount specified by the letter of direction.

History

• Source: Added at 28 Ill. Reg. 7904, effective May 28, 2004

Chapter II Attorney General

Part 250 Tobacco Products Manufacturers' Escrow Enforcement Act of 2003

14 Ill. Adm. Code 250.100 Review of Ago Determinations

All AGO's determinations of removal or refusal to list and AGO's determinations regarding quarterly installments shall be final administrative decisions. Any TPM dissatisfied with the AGO's determination of removal or refusal to list, or with the AGO's determination regarding quarterly installments, may obtain judicial review, which shall be governed by the provisions of the Administrative Review Law [735 ILCS 5/Art. III].

History

• Source: Amended at 31 Ill. Reg. 12718, effective August 24, 2007

14 Ill. Adm. Code 250.110 Violations

a) The AGO may investigate conduct that appears to be in violation of the Escrow Act, the Escrow Enforcement Act, or this Part, and may request the assistance of the Department in accordance with its investigatory powers under the Cigarette Tax Act [35 ILCS 130], the Cigarette Use Tax Act [35 ILCS 135], or the Tobacco Products Tax Act of 1995 [35 ILCS 143].

b) If the AGO determines that a violation has occurred, it shall give written notice to the distributor or the TPM that has committed the violation and shall provide written notice of the violation to the Director. The notice shall include copies of any documents evidencing the violation and a recommendation for revocation or suspension of license pursuant to Section 6 of the Cigarette Tax Act, Section 6 of the Cigarette Use Tax Act, or Section 10-25 of the Tobacco Products Tax Act of 1995, as appropriate.

c) The AGO may initiate litigation in Circuit Court to enforce the provisions of the Escrow Act, the Escrow Enforcement Act, and this Part, or to seek an injunction to restrain a threatened or actual violation of the Acts or rules. In any such action, the AGO shall be entitled to recover the costs of the investigation, the costs of the litigation, and reasonable attorney fees.

History

• Source: Amended at 31 Ill. Reg. 12718, effective August 24, 2007

Chapter III Illinois Commerce Commission

Part 300 Restricted Call Registry

14 Ill. Adm. Code 300.10 Procedures Governed

The Restricted Call Registry Act [815 ILCS 402] concerns telephone solicitations. This Part establishes procedures for a Restricted Call Registry, methods to obtain the Registry, subscriber enrollment, public notification, complaints procedures, violations and relief.

14 Ill. Adm. Code 300.20 Definitions

The following terms as used in this Part shall have the definitions shown:

"Act" means the Restricted Call Registry Act [815 ILCS 402].

"Commission" means the Illinois Commerce Commission.

"Established business relationship" means the existence of an oral or written transaction, agreement, contract, or other legal state of affairs involving a person or entity and an existing customer under which both parties have a course of conduct or established pattern of activity for commercial or mercantile purposes and for the benefit or profit of both parties. A pattern of activity does not necessarily mean multiple previous contacts. The established business relationship must exist between the existing customer and the person or entity directly, and does not extend to any related business entity or other business organization of the person or entity or related to the person or entity or the person or entity's agent including but not limited to a parent corporation, subsidiary partnership, company or other corporation or affiliate. (Section 5 of the Act [815 ILCS 402/5])

"Existing customer" means an individual who has either entered into a transaction, agreement, contract, or other legal state of affairs between a person or entity and a residential subscriber under which the payment or exchange of consideration for any goods or services has taken place within the preceding 18 months or has been arranged to take place at a future time or opened or maintained a debit account, credit card account, or other credit or discount program offered by or in conjunction with the person or entity and has not requested the person or entity to close such account or terminate such program. (Section 5 of the Act)

"Local exchange telecommunications company" means a local exchange telecommunications carrier certificated by the Illinois Commerce Commission to provide intra-exchange and/or inter-exchange service within the same market service area pursuant to Sections 13-209 and 13-210 of the Public Utilities Act [220 ILCS 5/13-209 and 13-210].

"Registry" means the Restricted Call Registry established under the Act. (Section 5 of the Act)

"Residential subscriber" means a person or spouse who has subscribed to either residential telephone service from a local exchange company or public mobile services, as defined by Section 13-214 of the Public Utilities Act [220 ILCS 5/13-214], a guardian of the person or the person's spouse, or an individual who has power of attorney from or an authorized agent of the person or the person's spouse. (Section 5 of the Act)

"Telephone solicitation" means any voice communication over a telephone line from a live operator, through the use of an autodialer or autodialer system, as defined in Section 5 of the Automatic Telephone Dialers Act [815 ILCS 305/5], or by other means for the purpose of encouraging the purchase or rental of, or investment in, property, goods, or services, or for the purposes of soliciting charitable contributions, but does not include communications:

to any residential subscriber with that subscriber's prior express invitation or permission when a voluntary 2-way communication between a person or entity and a residential subscriber has occurred with or without an exchange of consideration. A telephone solicitation is presumed not to be made at the express request of a subscriber if one of the following occurs, as applicable:

The telephone solicitation is made 30 business days after the last date on which the subscriber contacted a business with the purpose of inquiring about the potential purchase of goods or services.

The telephone solicitation is made 30 business days after the last date on which the subscriber consented to be contacted.

The telephone solicitation is made 30 business days after a product or service becomes available where the subscriber has made a request to the business for that product or service that is not then available, and requests a call when the product or service becomes available;

by or on behalf of any person or entity with whom a residential subscriber has an established business relationship which has not been terminated in writing by either party and which is related to the nature of the established business relationship;

by or on behalf of any person or entity with whom a residential subscriber is an existing customer, unless the customer has stated to the person or entity or the person's or entity's agent that he or she no longer wishes to receive the telemarketing sales calls of the person or entity, or unless the nature of the call is unrelated to the established business relationship with the existing customer;

by or on behalf of an organization that is exempt from federal income taxation under section 501(c) of the Internal Revenue Code (26 USC 501(c)), but only if the person making the telephone solicitation immediately discloses all of the following information upon making contact with the consumer:

the caller's true first and last name; and

the name, address, and telephone number of the organization;

by or on behalf of an individual licensed under the Real Estate License Act of 2000 [225 ILCS 454] or as an insurance producer under the Illinois Insurance Code [215 ILCS 5] who either:

is setting or attempting to set a face to face appointment for actions relating to that individual's real estate or insurance business; or

is encouraging or attempting to encourage the purchase or rental of, or investment in, property, goods, or services, which cannot be completed, and for which payment or authorization of payment is not required, until after a written or electronic agreement is signed by the residential subscriber; or

until July 1, 2005, by or on behalf of any entity over which the Federal Communications Commission or the Illinois Commerce Commission has regulatory authority to the extent that, subject to that authority, the entity is required to maintain a license, permit, or certificate to sell or provide telecommunications service, as defined in Section 13-203 of the Public Utilities Act [220 ILCS 5/13-203], while the entity is engaged in telephone solicitation for inter-exchange telecommunications service, as defined in Section 13-205 of the Public Utilities Act [220 ILCS 5/13-205], or local exchange telecommunications service, as defined in Section 13-204 of the Public Utilities Act [220 ILCS 5/13-204] or to the extent, subject to the regulatory authority of the Federal Communications Commission, the entity is defined by Title 47, section 522(5) of the United States Code (47 USC 522(5)), or providers of information services as defined by Title 47, section 153(20) of the United States Code (47 USC 153(20)). (Section 5 of the Act)

14 Ill. Adm. Code 300.30 Federal Rules

The federal rules for the restriction of telemarketing calls are found at 47 CFR 64.1200 for the Federal Communications Commission and at 16 CFR 310 for the Federal Trade Commission.

14 Ill. Adm. Code 300.100 Establishment and Maintenance of the Registry

a) The Commission shall establish and provide for the operation of a Restricted Call Registry. The national "do-not-call" registry established and maintained by the Federal Trade Commission, pursuant to 16 CFR 310.4(b)(1)(iii)(B) shall serve as the Illinois Restricted Call Registry.

b) The Registry shall contain a list of the telephone numbers of residential subscribers who do not wish to receive telephone solicitation calls. (Section 20 of the Act [815 ILCS 402/20])

14 Ill. Adm. Code 300.110 Use of the Registry

a) Information pertaining to residential subscribers in the Registry is confidential and shall be afforded reasonable privacy protection except as necessary for compliance to avoid making or causing to be made any telephone solicitation calls to any residential subscriber more than 45 days after the person or entity obtains the Registry or any update of the Registry on which the residential subscriber’s telephone number or numbers first appear and in a proceeding under Subpart E. The information is not a public record under the Freedom of Information Act [5 ILCS 140]. (Sections 10 and 20 of the Act [815 ILCS 402/10 and 20]

b) A person or entity that obtains the Registry shall not use the Registry for any purpose other than to comply with the Act. These unlawful purposes include, but are not limited to, causing a subscriber to participate in and be included in the Registry without the subscriber’s knowledge or consent, selling or leasing the Registry to a person other than a telephone solicitor, selling or leasing by a telephone solicitor of the Registry, and a telephone solicitor, either directly or indirectly, persuading a subscriber with whom it has an established business relationship to place his or her telephone number in the Registry, if the solicitation has the effect of preventing competitors from contacting that solicitor’s customers. (Section 20 of the Act)

c) No person or entity that sells, leases, exchanges, or rents telephone solicitation lists, except for directory assistance and telephone directories sold by telephone companies or their affiliates, shall include in those lists those telephone numbers that appear in the current Registry. (Section 20 of the Act)

14 Ill. Adm. Code 300.120 Obligations of Telephone Solicitors

a) Prohibited calls. Beginning October 1, 2003, it is a violation of the Act for any person or entity to make or cause to be made any telephone solicitation calls to any residential subscriber more than 45 days after the person or entity obtains the Registry or any update of the Registry on which the residential subscriber's telephone number or numbers first appear on the Registry. (Section 10 of the Act)

b) Any person or entity conducting telephone solicitation calls within the State of Illinois shall purchase the Restricted Call Registry and updates no less frequently than every 3 months exclusively from the Federal Trade Commission. Failure to do so prior to conducting telephone solicitation calls is a violation subject to the penalties provided for in Subpart E. (Section 20 of the Act)

14 Ill. Adm. Code 300.130 Enrollment of Residential Subscribers

Residential subscribers may enroll in the Registry using the methods prescribed by the Federal Trade Commission.

14 Ill. Adm. Code 300.200 Public Notification

a) The Commission shall include, on its Internet web site, information to customers regarding their right to be included in the Registry and the various methods by which they may enroll. (Section 30 of the Act [815 ILCS 402/30])

b) At least once per year, local exchange telecommunications companies shall notify their customers about the availability from the Commission of, and instructions for requesting information pertaining to, the Registry. Local exchange telecommunications companies shall provide this notice, using language developed by the Commission’s Consumer Services Division, through a message on the customer’s bill, or a notice in the information section of all telephone directories distributed to customers and shall include on their website a link to the Commission’s web page for the Registry.

14 Ill. Adm. Code 300.300 Complaint Procedures

The Commission and the Federal Trade Commission shall receive complaints from residential subscribers regarding telephone solicitation calls.

14 Ill. Adm. Code 300.400 Relief

a) The Commission may initiate administrative proceedings in accordance with this Part relating to a knowing and willful violation of Section 10 of the Act. (Section 35(a) of the Act [815 ILCS 402/35(a)])

b) Any enforcement proceedings for violation of the Act shall be conducted pursuant to 83 Ill. Adm. Code 200.

c) If it is determined after a hearing that a person has knowingly and willfully violated one or more provisions of Section 35 of the Act, the Commission may assess a fine not to exceed $1,000 for the first violation and not to exceed $2,500 for a second or subsequent violation. Each individual violation of Section 10 of the Act shall be a separate and distinct offense under this Section. In imposing a penalty under Section 35 of the Act, the Commission shall, at a minimum, consider the following factors:

1. Whether the offense was knowing or willful;

2. Whether the entity committing the offense has a prior history of non-compliance with the Act;

3. The offender’s relative ability to pay a penalty;

4. Whether the offender has or has not cooperated with the Commission in pursuing the investigation; and

5. Such other special, mitigating or aggravating circumstances as the Commission may find to exist.

d) No action or proceeding may be brought under this Section:

1. More than one year after the person bringing the action knew or should have known of the occurrence of the alleged violation; or

2. More than one year after the termination of any proceeding or action arising out of the same violation or violations by the State of Illinois, whichever is later. (Section 35 of the Act)

14 Ill. Adm. Code 300.410 Exemptions

a) A person or entity may not be held liable for violating the Act if:

1. The person or entity has obtained copies of the Registry and each updated Registry from the Federal Trade Commission and has established and implemented written policies and procedures related to the requirements of the Act;

2. The person or entity has trained its personnel in the requirements of the Act;

3. The person or entity maintains records demonstrating compliance with Section 40(a)(1) and (a)(2) of the Act and the requirements of the Act; and

4. Any subsequent telephone solicitation is the result of unintentional error.

b) A person or entity that has entered into a contract with another person or entity to make telephone solicitations on its behalf is not liable for a violation of the Act by the person or entity making telephone solicitations under the contract if the person or entity on whose behalf the telephone solicitations were made has provided written notification to the person or entity making telephone solicitations under the contract that it is necessary to comply with the provisions of the Act when making telephone solicitations. (Section 40 of the Act [815 ILCS 402/40])

Chapter II Attorney General

Part 400 Solicitation for Charity Act

14 Ill. Adm. Code 400.10 General

The Charitable Trusts Bureau of the Attorney General's Office (hereafter Bureau) will maintain a file of all charitable organizations, professional fund raisers, professional fundraising consultants and professional solicitors registered under the Illinois Solicitation for Charity Act at its Chicago office.

History

• Source: Amended at 24 Ill. Reg. 14684, effective September 21, 2000

14 Ill. Adm. Code 400.20 Definitions

The words used in this Part are used with the same meaning assigned to them by statute unless clarified below.

"Charitable purposes" means any charitable, benevolent, philanthropic, patriotic, or eleemosynary purpose and includes the conduct described in Section 480.20(e) of Charitable Trust Act (14 Ill. Adm. Code 480).

"Contributions" means the gross amount of money raised and not merely the portion which after expenses is devoted to the charity.

History

• Source: Amended at 2 Ill. Reg. 37, p. 185, effective September 30, 1978

14 Ill. Adm. Code 400.30 Registration

a) Charitable Organization

1. Any charitable organization that solicits in Illinois must first register with the Attorney General unless it is exempt under the provisions of Section 3(b) of the Act.

2. To register, a charitable organization must file a completed registration statement in the forms prescribed by the Attorney General entitled "CO-1" (Charitable Organization Registration Statement) and "CO-2" (Charitable Organization Financial Information Form) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, all appropriate attachments, and all required statutory fees. All registrations must be accompanied by a copy of the instrument under which the property is administered (for example, trust documents, articles of incorporation, constitution, by-laws). If the organization employs a professional fund raiser, a copy of its contract with the professional fund raiser must accompany the registration statement.

3. If the organization has been in operation prior to registering, it must file, in addition to its registration statement, financial statements for each of the past three years and executed copies of annual reports and returns filed with the Internal Revenue Service for each of the past three years, must pay all filing fees and all late fees as provided by Sections 2 and 4 of the Act, and is subject to accounting for all past years of operation prior to registration.

4. When a registration is canceled, to return to compliance, a re-registration must be made. Re-registration requires the submission of all of the above registration documents as applicable, including the re-registration penalty fees as provided by Section 2 of the Act.

5. Registration by an organization under Section 2 of the Act may upon request also satisfy the organization's registration requirements under the Charitable Trust Act [760 ILCS 55/5].

6. The Attorney General may by pre-approval accept registration forms used by other states that contain the information required in the form prescribed by the Attorney General entitled "CO-1" (Charitable Organization Registration Statement) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

b) Professional Fund Raiser

1. No professional fund raiser may be employed by a charitable organization in Illinois without prior registration with the Attorney General.

2. To register, a professional fund raiser must file a completed registration statement in the forms prescribed by the Attorney General entitled "PFR-01" (Professional Fund Raiser Registration Statement) and "PFR-06" (Professional Fund Raiser List of Charities and Contracts) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, all required statutory fees, copies of all Illinois charitable fundraising contracts and a professional fund raiser's bond when a bond is required, as described in subsection (b)(3).

3. If the applicant is a professional fund raiser that will control or possess charitable funds, a bond in the amount of $10,000, expiring upon the next June 30, issued with the professional fund raiser as a principal and a corporate surety licensed to do business in Illinois as surety, must accompany the registration. The bond must be in the form prescribed by the Attorney General entitled "CS-6" (Professional Fund-Raiser's Bond) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

c) Professional Solicitor

1. No professional solicitor may solicit in Illinois without prior registration with the Attorney General. No person may register as a professional solicitor unless the person is employed by a registered professional fund raiser.

2. To register, a professional solicitor must file a completed registration statement in the form prescribed by the Attorney General entitled "PS-01" (Professional Solicitor Registration Statement) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

d) Professional Fundraising Consultant

1. No person or entity may act as a professional fundraising consultant without prior registration with the Attorney General.

2. To register, a professional fundraising consultant must file a completed registration statement in the form prescribed by the Attorney General entitled "PFC-01" (Professional Fundraising Consultant Registration Statement) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, copies of all Illinois charitable fundraising consultant contracts and an affidavit stating that the professional fundraising consultant has not or will not at any time have custody or control of contributions.

e) A registrant shall notify the Attorney General of any changes in registration information within ten days after the change.

History

• Source: Amended at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.40 Religious Exemption

a) Religious organizations are subject to the Act and must register under the Act. If the Attorney General has issued a religious exemption to an organization pursuant to the provisions of Section 3(a) of the Act, that organization is exempt from filing annual reports.

b) To obtain a religious exemption, an organization must file a completed registration statement, request an exemption and submit a religious exemption questionnaire in the form prescribed by the Attorney General entitled "CO-3" (Charitable Organization Religious Organization Exemption Form) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

c) The Attorney General may require the organization to supply supplemental information as is necessary to determine its religious character.

d) The Attorney General may issue either a blanket or an individual religious exemption.

e) An individual religious exemption covers a single named religious group.

f) A blanket religious exemption is issued to and upon the request of the central body of a church or denomination and covers the church and all of the affiliated agencies listed in the exemption request.

g) Any religious organization with multiple subdivisions may request a blanket exemption.

h) An application for a blanket religious exemption must be filed by the central governing authority of the church and shall contain the information required by Section 400.40(b) and also a list of the affiliated organizations and agencies that are directed and controlled by the central church.

i) If, upon the filing of an application for religious exemption, the Attorney General determines that the organization is religious within the definition of Section 3(a) of the Act and that its purposes are actual and genuine, a religious exemption will be issued.

j) Organizations receiving blanket exemptions shall periodically supply the Attorney General with current lists of their affiliates.

History

• Source: Amended at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.50 Not Subject Organizations (Repealed)

History

• Source: Repealed at 24 Ill. Reg. 14684, effective September 21, 2000

Chapter II Attorney General

Part 400 Solicitation for Charity Act

14 Ill. Adm. Code 400.60 Annual Reports for Charitable Organizations

a) To complete a proper annual report filing, all annual reports required under the Act must be filed on the form prescribed by the Attorney General entitled "AG990-IL" (Illinois Charitable Organization Annual Report) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, and with the attachments prescribed by the form and this Section, signed by both the president of the organization or other authorized officer, and the chief fiscal officer, and with all required statutory fees paid prior to the due date.

b) Each annual financial report is due within six months after the close of the organization's fiscal year. An organization may request a 60-day extension of the due date pursuant to Section 4(f) of the Act.

c) Failure to file a complete annual report including all required attachments, along with payment of fees due prior to the due date, shall result in the organization being classified delinquent, and shall subject the organization to the payment of a late filing fee.

d) On each annual report an organization must report separately all program costs associated with a joint cost fundraising appeal to the extent such was allocated to charitable program service expense and included on the annual report as charitable program service expense. The organization must maintain written records showing how the allocation was determined and the reasoning behind it.

e) The form and attachments required for an organization's annual report are determined by the amount of its contributions during the reporting fiscal period or whether it has used the services of a paid professional fund raiser as follows:

1. Any organization that received contributions of more than $500,000 in any reporting fiscal year or any organization that employed professional fund raisers during any part of the fiscal year who raised contributions totaling more than $25,000 during the organization's fiscal year must file:

A) The Illinois Charitable Organization Annual Report form signed by the president or other authorized officer and the chief fiscal officer of the organization;

B) A copy of the Federal Internal Revenue return and/or report as required by the Internal Revenue Code and incorporated attachments for the same period;

C) Financial statements and the certification of an independent certified public accountant. Certification must be in the form of an unqualified or unmodified opinion letter;

D) All required statutory fees, including all late fees and re-registration fees; and

E) If the organization employs a professional fund raiser, the Illinois Fundraising Campaign form for each professional fundraising campaign conducted during the fiscal period in the form prescribed by the Attorney General entitled "Form IFC" (Report of Individual Fundraising Campaign) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

2. Any organization that received contributions of more than $300,000 but less than $500,000 that did not employ professional fund raisers during any part of the fiscal year who raised contributions totaling more than $25,000 during the organization's fiscal year must file:

A) The Illinois Charitable Organization Annual Report form entitled "AG990-IL" (Illinois Charitable Organization Annual Report) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, signed by the president or other authorized officer and the chief fiscal officer of the organization;

B) A copy of the federal Internal Revenue return and/or report as required by the federal Internal Revenue Code and incorporated attachments for the same period;

C) Reviewed financial statements that include a report signed by an independent certified public accountant stating that the independent certified public accountant is not aware of any material modifications that should be made to the financial statements in order to permit public evaluation of its operations; and

D) All required statutory fees, including all late fees and re-registration fees.

3. Any organization that received contributions of more than $25,000 but not in excess of $300,000, or any organization that employed professional fund raisers who raised contributions of $25,000 or less during the organization's fiscal year, need not file an independent certified public accountant's opinion or reviewed financial statement but must submit all of the other items required and listed in subsection (e)(1) above.

4. Any organization that received contributions of more than $15,000 but not in excess of $25,000 during its fiscal year must file an annual report, but it may make a simplified filing by submitting:

A) A financial statement using the Illinois Charitable Organization Annual Report form disclosing total receipts, total disbursements and assets on hand at the fiscal year end, accompanied by an attestation to the truth of the financial statement; and

B) All required statutory fees.

5. Certain organizations registered under the Act that are not required to file an annual report for a specific fiscal year under the Act, may be required to file under the Charitable Trust Act [760 ILCS 55].

f) Charitable organizations that have made a consolidated registration pursuant to Section 2(g) of the Act shall include in their annual report such additional detailed financial information as will fairly represent the financial position of each of the affiliated groups.

g) Extensions of Time

1. The Attorney General shall, upon written request, extend for 60 days the time for filing the annual financial report. For organizations that are in compliance with the registration and annual report requirements of the Solicitation for Charity Act, written extension requests are automatically granted if received on or before the due date. The Attorney General will accept written requests submitted by mail, email, fax, or in-person drop-off at the following office address, email address, or fax number:

Office of the Illinois Attorney General

Charitable Trust Bureau

115 South LaSalle Street

Chicago, Illinois 60603

Email: Attorney_General@ilag.gov

Fax: (312) 814-2596

The Attorney General may also accept written requests submitted to other Attorney General office locations, email addresses, or fax numbers.

2. If an organization receives an extension of time from the federal Internal Revenue Service, that would extend its federal tax return or report due date to a date later than the Attorney General's due date, the organization may obtain an additional extension from the Attorney General coinciding with the same Internal Revenue Service due date. The request for extension of time made pursuant to this section must be made in writing and include a copy of the extensions of time granted by the federal Internal Revenue Service or a copy of the Internal Revenue Service Form 8868 requesting an extension of time.

3. An organization may make a request for extension of time pursuant to subsection (g)(1), (g)(2), or both (g)(1) and (g)(2). An organization may make a request for extension of time pursuant to subsection (g)(1) or (g)(2) separately or at the same time. An organization need not make an extension request pursuant to subsection (g)(1) in order to make a request for extension of time pursuant to subsection (g)(2).

4. All requests for extension of time must be made in writing prior to the organization's original or extended Annual Report due date.

h) Failure to file a timely and complete financial report will result in penalty fees and/or a fine and subjects the organization's registration to cancellation.

i) Upon cancellation the organization must cease operations.

History

• Source: Amended at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.65 Mid-Year and Annual Reports for Professional Fund Raisers

a) Mid-Year Reports:

1. Every registered professional fund raiser who takes possession or control of charitable funds directly, indirectly, by an agent, or as an escrowee shall file a full written accounting to the charitable organization of all funds it or its agents collected on behalf of the charitable organization during the six month period ending June 30 of each year, and file a copy of the accounting with the Attorney General by September 30 of each year.

2. The accounting shall be in writing and signed under oath on the form prescribed by the Attorney General entitled "IFC" (Report of Individual Fundraising Campaign), available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

b) Annual Reports:

1. Every registered professional fund raiser shall file a calendar year written financial report with the Attorney General. The report shall contain such information as the Attorney General may require, and shall use the forms prescribed by the Attorney General entitled "PFR-02" (Professional Fund Raiser Annual Financial Report), "IFC" (Report of Individual Fundraising Campaign), "PFR-04" (Professional Solicitor Compensation Report), and "PFR-05" (Explanation of Professional Fundraising Fees) available on the Attorney General's website at https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities. Separate financial reports for each fundraising campaign conducted shall be filed, together with the statutory report filing fee.

2. The required report shall be filed on or before April 30 of the following calendar year, signed and verified under penalty of perjury, together with the required statutory fees. The Attorney General will grant a 30 day extension of the due date pursuant to Section 6(d) of the Act if such extension is requested in writing prior to the due date.

3. The professional fund raiser shall provide a copy of the report to the charitable organization by the due date of the filing.

History

• Source: Amended at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.70 Professional Fund Raiser Renewal

a) The registration of all professional fund raisers expires on the next June 30 following their registration.

b) A registered professional fund raiser who wishes to continue to act as professional fund raiser in Illinois must apply for renewal of its registration during June of the year in which his registration expires.

c) To renew, a professional fund raiser must file a new, completed registration statement, an annual financial report as provided by the Attorney General, professional fund raiser bond which meets the requirements of Section 400.30(b)(3) for the period beginning July 1 and ending June 30 of the next year, and copies of active contracts and all required statutory fees.

d) All Illinois professional fund raisers must file a copy of each professional fundraising contract prior to conducting a fundraising campaign.

e) All charitable organizations and professional fund raisers shall retain copies of their professional fundraising contracts for three years following the completion of the contract.

History

• Source: Amended at 24 Ill. Reg. 14684, effective September 21, 2000

14 Ill. Adm. Code 400.80 Professional Solicitor Renewal

a) The registration of all professional solicitors shall expire on the next June 30 following their registration.

b) A registered professional solicitor who intends to continue to act as a professional solicitor in Illinois must apply for renewal of its registration during June of the year in which its registration expires.

c) To renew, a professional solicitor must file a new, completed registration statement.

History

• Source: Amended at 24 Ill. Reg. 14684, effective September 21, 2000

Chapter II Attorney General

Part 400 Solicitation for Charity Act

14 Ill. Adm. Code 400.85 Professional Fundraising Consultant Renewal

a) The initial registration of all professional fundraising consultants shall expire on the June 30 following two years of registration. Successive two year re-registration periods shall also expire on June 30.

b) A registered professional fundraising consultant who intends to continue to act as a consultant in Illinois must apply for renewal of its registration during the month preceding expiration of the two year registration period.

History

• Source: Added at 24 Ill. Reg. 14684, effective September 21, 2000

14 Ill. Adm. Code 400.90 Public Records

All registrations and reports filed with the Attorney General under the Act are public records and may be inspected in the office of the Attorney General during ordinary business hours.

History

• Source: Amended at 24 Ill. Reg. 14684, effective September 21, 2000

14 Ill. Adm. Code 400.100 Registration Not an Endorsement

a) Any representation made by a charitable organization, professional fund raiser, or professional solicitor in connection with its solicitation that it is registered or has otherwise complied with the Act, or that indicates the Attorney General endorses the organization, is unlawful, except as provided in Section 17 of the Solicitation for Charity Act [225 ILCS 460/17].

b) The Attorney General may immediately cancel the registration of any person or organization violating Section 400.100(a). An affidavit from a person to whom such an illegal representation was made shall be sufficient to warrant an immediate cancellation.

History

• Source: Amended at 24 Ill. Reg. 14684, effective September 21, 2000

14 Ill. Adm. Code 400.APPENDIX A Charitable Organization Forms (repealed)

Section 400.ILLUSTRATION A Registration Statement and Instructions (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX A Charitable Organization Forms (repealed)

Section 400.ILLUSTRATION B Financial Information Form (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX A Charitable Organization Forms (repealed)

Section 400.ILLUSTRATION C Religious Organization Exemption Form (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX A Charitable Organization Forms (repealed)

Section 400.ILLUSTRATION D Annual Report and Instructions (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX A Charitable Organization Forms (repealed)

Section 400.ILLUSTRATION E Report of Individual Fundraising Campaign (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION A Registration Statement and Instructions (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION B List of Charities and Contracts (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION C Bond (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION D Annual Financial Report (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION E Report of Individual Fundraising Campaign (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION F Professional Solicitor Compensation Report (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX B Professional Fund Raiser Forms (repealed)

Section 400.ILLUSTRATION G Explanation of Professional Fundraising Fees (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX C Professional Solicitor Forms (repealed)

Section 400.ILLUSTRATION A Registration Statement (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

14 Ill. Adm. Code 400.APPENDIX D Professional Fund Raising Consultant Forms (repealed)

Section 400.ILLUSTRATION A Registration Statement (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16061, effective October 29, 2024

Part 440 Crimes and Offenses, Impersonating Officer, Advertisements

14 Ill. Adm. Code 440.10 General

a) The Springfield office of the Attorney General's Charitable Trusts and Solicitations Division (hereafter Attorney General) will maintain the principal register of applicants and solicitors certified under Section 17-2 of the Criminal Code of 1961 (Ill. Rev. Stat. 1985, ch. 38, par 17-2) (Act).

b) The register will consist of index or computer cards, organization file folders, a list, a computer printout or any combination of the above.

c) The Chicago Office of the Attorney General will supervise the registration of all advertisement solicitors and will also maintain a register of applicants and solicitors certified under the Act in the Counties of Cook, DuPage, Lake and McHenry.

14 Ill. Adm. Code 440.20 Definitions

The words used in this Part are used with the same meaning assigned to them by statute unless clarified below:

A "Certificate of Qualification" is a document issued by the Attorney General which certifies that the applicant and solicitor is qualified to solicit advertisements for publications in this State on behalf of a bonafide and legitimate law enforcement, police officers' or firefighters' association or organization under Section 17-2(c) of the Act.

A "person" is any individual, organization, group, association, partnership, corporation, trust or any combination of the above.

A "solicitor" is any person who for compensation, consideration, or otherwise, plans, conducts, manages, or carries on any drive or campaign in this State for the purpose of soliciting advertisements to appear, or for the alleged purpose of appearing in any firefighters', law enforcement or police officers' magazine, journal or other publication, or who engages in the business of, or holds, himself out to persons in this State as engaged in the business of soliciting advertisements for such purposes.

14 Ill. Adm. Code 440.30 Organization Requirements

The applicant and solicitor must have a written contract or agreement with a bona fide and legitimate law enforcement, police officers' or firefighters' association or organization to solicit advertisements for a publication, in order to qualify for the issuance of a Certificate of Qualification.

14 Ill. Adm. Code 440.40 Application for a Certificate of Qualification

a) The application for a certificate of qualification must be made on the form prescribed by the Attorney General. The soliciting organization must file a complete application together with the appropriate attachments as required by this Part. The use of substitute forms or computer printouts may be used if they contain the same information as required herein.

b) The completed application filed with the Attorney General shall contain the following information:

1. The name and address of the business of the advertisement solicitor.

2. The name and address of the Illinois registered agent, if the advertisement solicitor's business is a corporation.

3. If the advertisement solicitor's business is not located in Illinois, then the principal Illinois address, if any, where records are kept.

4. If the business is not a corporation, but is a partnership or individual, then a listing of name, address, title, birthdate, driver's license number and state of issuance, of all individuals or partners.

5. If the business is a corporation, then information concerning all officers, directors, executive personnel and owners of ten percent or more of the capital stock shall be listed, which includes name, address, title, percent of stock owned, birthdates, driver's license numbers and state of issue of each such person.

6. Provide information as to when and where the advertisement solicitor's firm was first organized to do business.

7. If either an Illinois corporation or a non-resident corporation, when it was organized to do business in Illinois and the Illinois Secretary of State's file number.

8. The nature of any business, other than advertisement soliciting conducted by the applicant and the states in which such business was conducted.

9. The names and addresses of any, law enforcement, police or firefighters' organizations with which the applicant has written publishing contracts to act as an advertisement solicitor in Illinois. Provide the name of the law enforcement, police or firefighters' organization, address and date of contract.

10. A list of the names, and mailing addresses of each employee or agent of the applicant or independent contractor associated with the applicant, who will also be engaged in soliciting law enforcement, police officers' or firefighters' advertisements in Illinois.

c) The application must also include the following attachments:

1. A copy of the Articles if Incorporation or Certificate of Authority of the Applicant and advertising solicitor as issued by the Illinois Secretary of State, or if unincorporated, a copy of establishing instrument (charter, constitution, by-laws or filing with the county under the assumed name statutes)

2. A copy of the written publishing agreement between the advertisement solicitor and the bona fide and legitimate law enforcement, police or firefighters' organization or association.

3. A copy of the Articles of Incorporation or other establishing instrument (charter, constitution, by-laws, or filing with the county under the assumed name acts) of each law enforcement, police or firefighters' organization being represented by the applicant.

4. A copy of the Federal Internal Revenue Service determination letter indicating tax exempt status for the law enforcement, police officer's or firefighters' association or organization being represented by the advertisement solicitor.

d) All information and requested attachments must be submitted to the Attorney General in order for the solicitor to qualify for the issuance of a Certificate of Qualification.

e) The solicitor shall notify the Attorney General of any changes in information within ten (10) days of the change.

Part 450 Consumer Protection

14 Ill. Adm. Code 450.10 Complaint Procedures

a) Filing of Complaint. All complaints must be in writing, signed by the complainant and, if the complainant is represented by an attorney, signed by the complainant and such attorney. Complaints may be filed in person or by mail. Copies of all relevant documents including advertisements should be attached to the complaint.

b) Docketing and Numbering Complaints. Each complaint filed shall be docketed and given a number. Correspondence with the Division should bear the complaint number.

c) Determination of Jurisdiction. Within a reasonable time after filing, each complaint will be reviewed to determine whether the Attorney General has jurisdiction thereof. The Division shall notify the complainant by mail respecting its determination concerning jurisdiction.

d) Notice of Complaint. If the Division determines that it has jurisdiction, it shall inform the respondent by mail:

1. the substance of the complaint filed against him;

2. when and by whom is was filed;

3. that the respondent has the right to respond to the complaint;

4. that any response must be sent by mail within 5 days following receipt of the Division's letter;

5. that unless a response is made demonstrating clearly that the Division lacks jurisdiction or that there is no substantial claim, a hearing may be set on the matter.

14 Ill. Adm. Code 450.20 Hearings

a) Calling and Notice of Hearing. The Division may call a hearing respecting any complaint and fix the date and place of hearing. The Division shall mail to each party, at least 5 days prior to the hearing date, a notice stating:

1. the time and place of the hearing;

2. any statute or rule involved, and

3. unless the substance of the complaint was adequately stated in the original notice of complaint, the substance of the complaint.

b) Conduct of Hearing.

1. A hearing is an informal proceeding. The parties shall appear before a duly assigned Hearing Officer. Opportunity shall be afforded to the complainant and respondent to present evidence and argument on all issues involved and to cross-examine all witnesses who have testified. The Hearing Officer may question any party or witness.

2. The Division may, on its own motion, subpoena witnesses or tangible evidence. A party may, within a reasonable time before the hearing date, request the Division to subpoena witnesses or tangible evidence. Such request shall be granted when the Hearing Officer deems it appropriate.

3. Any relevant evidence which is not privileged is admissible without regard to whether such evidence is hearsay or otherwise inadmissible in a court of law. The Hearing Officer may exclude irrelevant, immaterial or unduly repetitious evidence.

4. Each party has the right to representation by counsel at his own expense.

5. Either party or the Division may cause the hearing to be transcribed at his or its own expense.

6. The Hearing Officer may make a finding, based on substantial evidence, that a violation of any statute under the Division's jurisdiction has occurred. The finding shall be reflected in a written order. The respondent and complainant shall be notified either personally or by mail of any such finding or order.

7. A Hearing Officer may administer an oath or affirmation to any person upon request of either party or upon his own initiative.

8. A Hearing Officer may expel any party or attorney from any hearing for improper, disorderly, or contemptuous conduct.

c) Failure to Appear at Hearing.

1. Upon failure of a duly notified respondent to appear at a hearing, the Division may cause a subpoena to be issued compelling the respondent to appear at a hearing on a future date certain. Failure of one party to appear at a scheduled hearing does not preclude the Hearing Officer from receiving evidence from and hearing arguments by the other party. The Hearing Officer may make a finding notwithstanding the absence of one of the parties.

2. Upon failure of the complainant to appear, the Hearing Officer may, in his discretion, terminate the matter.

d) Hearing Officer to be Impartial. No person with financial or other interest relative to a complaint shall serve as Hearing Officer. Any party may challenge the impartiality of any Hearing Officer by presenting an objection in writing to the Hearing Officer or to the Chief of the Division. The Chief of the Division shall consider and determine such objection.

e) Continuance of Date of Hearing. A continuance may be granted in the discretion of the Hearing Officer for good cause. A request for a continuance must be made not later than 48 hours prior to the hearing whenever possible. Requests for continuances made within 48 hours of the hearing will be granted only in a case of unexpected emergency.

f) Compliance with Order. Upon a finding by a Hearing Officer that a violation has occurred, the respondent shall have 5 days to comply with the order of the Division except that if a later date is specified in the order, the later date is the effective date.

14 Ill. Adm. Code 450.30 Assurance of Voluntary Compliance

a) The Chief of the Division may, in his discretion, in lieu of or in addition to calling a hearing, accept an Assurance of Voluntary Compliance from any respondent. Giving an Assurance of Voluntary Compliance does not constitute an admission that a violation of any law has taken place. An Assurance may include a stipulation for payments by respondent to the complainant and to other consumers. An Assurance may include a stipulation for payment by respondent to the Division of the costs incurred in connection with the complaint against the respondent. An Assurance may, in the discretion of the Chief of the Division, be made open to public inspection or disseminated to the public media. An Assurance may be filed with the trial court of general jurisdiction of any county in which the respondent does business. From time to time, a person who has made an Assurance of Voluntary Compliance must provide such information as the Division reasonably requests to determine whether such person is in compliance with his Assurance.

b) The Division is not precluded from further action by its acceptance of an Assurance of Voluntary Compliance.

Part 460 Buyers Clubs

14 Ill. Adm. Code 460.5 Preamble (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.10 Definitions

For purposes of this Part, the terms used in this Part have the meanings ascribed herein.

"Attorney General": means the Attorney General of the State of Illinois or his or her delegate.

"Business Day" means any calendar day except Sunday or the following business holidays: New Year's Day, Martin Luther King Jr.'s Birthday, Presidents' Day, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day.

"Buyer" means any person who for consideration obtains the right to purchase club merchandise from a buyers club at discount prices.

"Buyers club" means any person who for consideration provides or purports to provide its buyers with the right to purchase club merchandise at discount prices.

"Buyers club contract" means any contract between a buyer and a buyers club by which the buyer for consideration receives the right to obtain club merchandise from the buyers club at discount prices.

"Club merchandise" means furniture, motor vehicles, carpeting, food for home consumption, or appliances.

"Discount prices" means prices represented to be lower on all or most club merchandise than those generally charged for club merchandise in the locality where the representation is made.

"Person" means any natural person or his legal representative, partnership, corporation (domestic and foreign), company, trust, business entity or association, and any agent, employee, salesman, partner, officer, director, member, stockholder, associate, trustee or cestui que trust thereof.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.20 Application of This Part

This Part shall apply to all existing and future buyers clubs located, or with buyers residing, in the State of Illinois.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.30 Transfer of Obligations

If a buyers club transfers to another person obligations to provide club merchandise to buyers, that person shall be bound by this Part to the same extent as the transferring buyers club would be bound.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.40 Merchandise Purchasing Entities (Repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

Chapter II Attorney General

Part 460 Buyers Clubs

14 Ill. Adm. Code 460.50 Exceptions from Application

This Part shall not apply to:

a) Any buyers club who for $50.00 or less sells the right to purchase club merchandise at discount prices.

b) Any buyers club (including any travel club, motor club, airline travel club, charter group or credit card company) whose total revenue obtained from the sale of club merchandise at discount prices is less than 20% of its annual gross revenue.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.60 Waiver

Any waiver by the buyer of any Section or subsection of this Part is contrary to public policy and shall be void and unenforceable.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.70 Effect of This Part

This Part shall neither supersede the requirements in applicable statutes and regulations nor eliminate any private right of action of a buyer.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.80 Violations of This Part

As provided by Section 4 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1985, ch. 121½, par. 264) ("Act"), this Part has the force and effect of law. Any violation of any Section or subsection of this Part constitutes an unfair or deceptive act or practice within the meaning of Section 2 of the Act (Ill. Rev. Stat. 1985, ch. 121½, par. 262), subject to the remedies contained in Section 7 of the Act (Ill. Rev. Stat. 1985, ch. 121½, par. 267).

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.90 Administration of This Part

All notices required by this Part shall be made to the Office of the Attorney General, 500 South Second Street, Springfield, Illinois 62706.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.205 Required Written Disclosures

A buyers club engages in an unfair or deceptive act or practice if it fails to provide prospective buyers, before the signing of the buyers club contract, with the following information in writing:

a) A list, current as of the time the buyer signs the buyers club contract, of the names of at least 10 manufacturers for each of the 5 major categories of club merchandise listed in the definition of that term in Section 460.10 and sold by or through the buyers club, unless the buyers club can obtain club merchandise for buyers from fewer than 10 manufacturers in a particular category, in which case all the manufacturers in that category shall be listed. A buyers club shall not be required to deliver this list if the sales presentation takes place in the buyers club showroom.

b) A list of the names of all manufacturers, other than those listed in subsection (a) above, mentioned orally by the buyers club as ones from which buyers can purchase club merchandise.

c) A statement of the buyers club's policy regarding the following:

1. warranties and guarantees on club merchandise;

2. the return of ordered club merchandise;

3. the cancellation of club merchandise orders;

4. deposit refunds for the cancellation of club merchandise orders.

d) A description of any costs (such as freight costs, handling fees, suppliers' and buyers clubs' markups) that are incidental to the purchase of club merchandise and that are payable by the buyer.

e) A list stating the categories of club merchandise available to buyers from retail merchants granting a discount to buyers, and stating the percentage of the discount from the regular price.

f) If applicable, a statement that the retail installment sales contract signed by the buyer will be transferred, sold or assigned to a third party.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.210 Prohibited Sales Representations or Practices

A buyers club engages in an unfair or deceptive act or practice if it:

a) Represents, either explicitly or implicitly, that it has an affiliation with another buyers club, unless an affiliation exists.

b) Represents, either explicitly or implicitly, that the prospective buyer will be entitled to particular club merchandise, unless the buyer is able to obtain that club merchandise.

c) Uses the terms "member," "initiation fee," "dues," or "club" in the sales presentation, the buyers club contract, its business name or elsewhere, unless

1. its buyers have the right to terminate the buyers club contract without obligation to make further payments under the contract, or

2. the buyers club provides prospective buyers with a written disclaimer stating that buyers do not have the right to terminate the buyers club contract without paying the amount remaining under the contract.

d) Represents, either explicitly or implicitly, that it offers its buyers the lowest prices available on any category of club merchandise, unless representation is true.

e) Represents, either explicitly or implicitly, that club merchandise is available to its buyers from a particular manufacturer or supplier, unless that representation is true.

f) Promises, either explicitly or implicitly, that it will provide prospective buyers with gifts or other consideration to attend a sales presentation without providing the promised gifts or other consideration.

g) Fails to inform each prospective buyer orally, at the time he signs the buyers club contract, of his right to cancel pursuant to Section 460.215(b) of this Part.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.215 Execution of the Buyers Club Contract

A buyers club engages in an unfair or deceptive act or practice if it fails to provide its buyers with a copy of the buyers club contract containing the following provisions:

a) The date(s) on which the contract was signed by the buyer and the buyers club.

b) Words to the following effect:

NOTICE OF CANCELLATION

(Enter date of transaction)

DATE

YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION, WITHIN 3 BUSINESS DAYS FROM THE ABOVE DATE.

IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS YOU MADE, AND ANY NEGOTIABLE INSTRUMENT YOU EXECUTED UNDER THE CONTRACT OR TRANSACTION WILL BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING THE BUYERS CLUB'S RECEIPT OF YOUR CANCELLATION NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE TRANSACTION WILL BE CANCELLED.

TO CANCEL THIS TRANSACTION, MAIL OR DELIVER THE SIGNED AND DATED NOTICE OF CANCELLATION PROVIDED BELOW OR ANY OTHER WRITTEN NOTICE OF CANCELLATION, OR SEND A TELEGRAM TO (Name of Seller) AT (Address of Seller's Place of Business), NOT LATER THAN MIDNIGHT OF (date).

YOU MAY CANCEL THIS CONTRACT BY USE OF THE FOLLOWING WORDS OR WORDS TO THE FOLLOWING EFFECT:

I HEREBY CANCEL THE CONTRACT ENTERED INTO WITH (insert name of buyers club) ON (insert date contract signed).

Buyer

Date

YOU MAY ALSO CANCEL THIS CONTRACT BY DELIVERING NOTICE OF CANCELLATION BY TELEPHONE, PROVIDED THAT YOU FOLLOW TELEPHONE NOTICE BY WRITTEN NOTICE WITHIN 2 DAYS OF THE DATE THAT YOU GAVE TELEPHONE NOTICE.

Agency Note: This subsection does not apply to any transaction in which the buyer is accorded the right of rescission by the provisions of the Federal Trade Commission trade regulation rule entitled "Cooling-Off Period For Door-To-Door Sales" (16 Code of Federal Regulations, Part 429, 1985) or by the provisions of Section 2B of the Act (Ill. Rev. Stat. 1985, ch. 121½, par. 262(B)). No later editions or amendments are included.

c) The percentage of the purchase price required as a down payment on club merchandise orders.

d) The physical location or locations from which the buyer may pick up his or her club merchandise.

e) A statement that, if the original estimated delivery date has passed, the buyers club, upon receiving a request for the status of a buyer's order for club merchandise, shall provide the buyer, within a reasonable time, not to exceed 14 days, following the request's receipt, with the revised estimated delivery date of the buyer's order.

f) The duration of the buyers club contract, stated clearly and conspicuously and in at least 14 point, bold face, type.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.220 Duration of the Buyers Club Contract

A buyers club engages in an unfair or deceptive act or practice if it:

a) Writes a buyers club contract for a term in excess of 5 years from the date the contract is signed.

b) Replaces any current buyers club contract with a new buyers club contract for a term in excess of 5 years from the date the new contract is signed by both parties.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.225 Consistency of Contracts

A buyers club engages in an unfair or deceptive act or practice if it:

a) Nullifies or modifies, or attempts to nullify or modify, the rights and remedies provided to the buyer by this Part; or

b) Enters into any contract with the buyer in conjunction with the buyers club contract that is inconsistent with the buyers club contract on any material term, including but not limited to terms regarding cancellation and warranties.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.230 Rights and Defenses (Repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

Chapter II Attorney General

Part 460 Buyers Clubs

14 Ill. Adm. Code 460.235 Down Payment Requirements

A buyers club engages in an unfair or deceptive act or practice if it requires from a buyer a down payment on a club merchandise order whose percentage of the order amount is in excess of the down payment percentage allowed by the buyers club contract.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.240 Proof of Merchandise Purchasing (Repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

Chapter II Attorney General

Part 460 Buyers Clubs

14 Ill. Adm. Code 460.245 Misuse of Club Merchandise Deposits

A buyers club engages in an unfair or deceptive act or practice if it uses any monies (excluding the handling fees, service fees, shipping costs, and sales taxes) deposited with the buyers club by the buyer as partial or full payment for club merchandise except toward the purchase of the ordered club merchandise. This Section shall not require a buyers club to establish a separate bank account for each individual buyer.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.250 Estimated Delivery Date of Club Merchandise

A buyers club engages in an unfair or deceptive act or practice if it, upon receiving any club merchandise order from a buyer, fails to provide the buyer, in writing, with the estimated delivery date of the ordered club merchandise.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.255 Buyers' Rights to Rescission and Refund

A buyers club engages in an unfair or deceptive act or practice if it:

a) Transfers to another person its obligation to provide club merchandise to buyers if the result of that transfer would give to buyers substantially less club merchandise to choose from, unless the buyers club, after making full disclosure of the categories of club merchandise to be provided by the new buyers club, allows buyers to rescind their buyers club contracts and obtain a pro rata refund based upon the time remaining on the contract compared with the time on the contract when it was signed.

b) Fails to provide those buyers entitled to rescission, at their last known addresses, with a notice that they have 30 days from the date they receive the notice in which to rescind their contracts and thereby receive a pro rata refund as set forth above.

c) Fails to honor any notice of rescission received within 30 days from a buyer, and within 30 days after the receipt of any valid notice, to rescind the buyer's contract and refund the buyer's pro rata portion as set forth above.

d) Fails, within 10 days of its cessation of business from any of its locations, to notify the Attorney General of its new location.

e) Fails, within 20 days of the transfer to another person of a buyers club's obligations to provide club merchandise to buyers, to notify the Attorney General of the name and address of the person to whom the obligations are to be transferred.

History

• Source: Amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.260 Affiliated Organizations (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.265 Maintaining Books and Records

A buyers club engages in an unfair or deceptive act or practice if it:

a) Fails to maintain a record of each buyers club contract for a period of 3 years following the expiration of the contract.

b) Fails to maintain a record of each club merchandise order for a period of 1 year following the disposition of the club merchandise order.

History

• Source: Renumbered from Section 460.460 and amended at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.310 Financial Requirements (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.320 Audited Financial Statement (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.330 Escrow of Merchandise Deposit (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.340 Bonds (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.350 Surety Bond (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.360 Liability of Sureties (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.410 Public Disclosure Statement (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.420 Business Materials (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.430 Buyer Benefit Agreement (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.440 Notification of Relocation (repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.450 Notification of Transfer (repealed)

Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986)

14 Ill. Adm. Code 460.460 Maintaining Books and Records (Renumbered)

History

• Source: Renumbered to Section 460.265 at 10 Ill. Reg. 10957, effective June 6, 1986

14 Ill. Adm. Code 460.APPENDIX A Sample Bond (Repealed)

History

• Source: Repealed at 10 Ill. Reg. 10957, effective June 6, 1986

Chapter II Attorney General

Part 465 Price Gouging

14 Ill. Adm. Code 465.10 General

The purpose of this Part is to describe circumstances in which the charging of unconscionably high prices for petroleum products constitutes an unfair or deceptive act or practice. This Part shall not be construed to limit the ability of the Attorney General or the courts to determine that acts and practices other than those described in this Part are unfair or deceptive acts of price gouging in the absence of market emergencies.

14 Ill. Adm. Code 465.20 Definitions

"Market emergency": Any abnormal disruption of any market for petroleum products, including, but not limited to, any actual or threatened shortage in the supply of petroleum products or any actual or threatened increase in the price of petroleum products, resulting from severe weather, convulsion of nature, failure or shortage of electric power or other source of energy, strike, civil disorder, act of war, terrorist attack, national or local emergency, or other extraordinary adverse circumstances.

"Petroleum product": Includes, but shall not be limited to, motor fuels, as defined in Section 1.1 of the Motor Fuel Tax Law [35 ILCS 505/1.1], and fuel oil used for heating or cooking purposes.

"Petroleum-related business": Any producer, supplier, wholesaler, distributor or retail seller of any petroleum product.

14 Ill. Adm. Code 465.30 Petroleum Products

a) It shall be an unfair or deceptive act or practice, during any market emergency, for any petroleum-related business to sell or offer to sell any petroleum product for an amount that represents an unconscionably high price.

b) A price is unconscionably high if:

1. the amount charged represents a gross disparity between the price of the petroleum product and:

A) the price at which the same product was sold or offered for sale by the petroleum-related business in the usual course of business immediately prior to the onset of the market emergency, or

B) the price at which the same or similar petroleum product is readily obtainable by other buyers in the trade area; and

2. the disparity is not substantially attributable to increased prices charged by the petroleum-related business suppliers or increased costs due to an abnormal market disruption.

c) There is a rebuttable presumption that a market emergency lasts for 45 days from the occurrence of the market disruption or other event that constitutes the market emergency.

Part 470 Retail Advertising

14 Ill. Adm. Code 470.110 Preamble

Price comparison advertising is a form of advertising used in the sale of products whereby current prices are compared with the seller's former or future prices, the prices of other sellers, or other stated values, to demonstrate price reductions or cost savings. It is the intent of this Part to ensure that the comparative price used in any price comparison advertisement provides accurate information and meaningful guidance to the consumer. The use of misleading price comparisons is injurious to both the consuming public and competitors and is an unfair or deceptive act and an unfair method of competition under Section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 121½, par. 262).

14 Ill. Adm. Code 470.120 Definitions

Except as hereinafter stated and unless a different meaning of a term is clear from its context, the definitions of terms used in this Part shall be the same as those used in the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1987, ch. 121½, par. 261 et seq.).

"Advertisement" (including the terms "advertise" and "advertising"), as defined in Section 1 of the Act, means any oral, written, graphic, or pictorial statement made by a seller in any manner in the course of the solicitation of business. Advertisement includes, without limitation, any statement or representation made in a newspaper, magazine, or other publication or on radio or television or contained in any notice, handbill, sign, billboard, banner, poster, display, circular, pamphlet, or letter, or printed on or contained in any tag or label which is attached to or accompanies any product offered for sale.

"Clear and conspicuous" (including the terms "clearly and conspicuously") means that the statement, representation or term being disclosed is in such size, color contrast, or audibility and is so placed and presented as to be: in close proximity to the information it modifies, readily noticeable, and reasonably understandable by the person or persons to whom it is being disclosed.

"Comparative price" means the price or value of a product to which a seller is comparing its current price in any advertisement.

"List price or manufacturer's suggested retail price" means the prices issued to retailers by national brand manufacturers as a suggested retail price for the manufacturer's product.

"Person" means any association, corporation, individual, institution, natural person, organization, partnership, trust or any other legal entity.

"Price comparison" means the direct or indirect comparison in any advertisement (whether or not expressed wholly or in part in dollars, cents, fractions, or percentages) of a seller's current price for a product with any other price or statement of value, whether or not such price is actually stated in the advertisement. Price comparison includes any price reduction claim or savings claim which a seller makes with respect to the seller's current price for any product.

"Product" means any and all goods, whether tangible or intangible, real, personal or mixed and any and all services or franchise or distribution system of any nature.

"Seller" means any person who offers any product for retail sale, rental or lease at any location and disseminates advertisements for that product in Illinois. Seller may include any officer, agent, employee, salesperson, or representative of a seller and any advertising agency employed by a seller.

"Trade area" means the geographic area where the seller's outlets are located and where the seller's advertisements are disseminated.

14 Ill. Adm. Code 470.210 Identifying Basis of Price Comparison

It is an unfair or deceptive act for a seller to make a price comparison or claim a savings as to any product it offers (for example: "$29.99 – Save $10.00" – or – "20% Off all men's shirts") unless the seller clearly and conspicuously describes the basis for the price comparison or the savings claimed; provided, however, a seller may compare a higher and a lower price without describing the basis for the price comparison or the savings claimed if the higher price is the seller's own former (regular) price as determined in accordance with Section 470.220 of this Part. Terms such as "formerly," "regularly," "originally," or words of similar meaning may be used by the seller to identify the higher price as its own former (regular) price.

14 Ill. Adm. Code 470.220 Comparison to Seller's Own Former (regular) Prices

It is an unfair or deceptive act for a seller to compare current price with its former (regular) price for any product or service, (for example: "$99, Now $69 – Save $30"; "Regularly $99, Now $69"; "Originally $99, Now $69"; "Save $30, Now $69") unless one of the following criteria are met:

a) the former (regular) price is equal to or below the price(s) at which the seller made a substantial number of sales of such products in the recent regular course of its business; or

b) the former (regular) price is equal to or below the price(s) at which the seller offered the product for a reasonably substantial period of time in the recent regular course of its business, openly and actively and in good faith, with an intent to sell the product at that price(s).

14 Ill. Adm. Code 470.230 Comparison to Future Prices

It is an unfair or deceptive practice for a seller to make an introductory offer or to compare its current price for a product with the price at which the product will be offered in the future (for example: "Introductory Sale, Now $69, will be $90"), unless:

a) the future price takes effect within a reasonable time after the introductory offer or price comparison is published; and

b) the product's future price is, subsequent to the end of an introductory sale, properly established as the seller's former (regular) price in accordance with Section 470.220 of this Part.

14 Ill. Adm. Code 470.240 Range of Savings or Price Comparison Claims

It is an unfair or deceptive act to state or imply that any products are being offered for sale at a range of prices or at a range of percentage or fractional discounts (for example: "Save from 10% to 50% Off") unless the highest price or lowest discount in the range is clearly and conspicuously disclosed in the advertisement and a reasonable number of these items in the advertisement are offered with at least the largest advertised discount. If at least 5% of the items in the advertisement are offered with at least the largest advertised discount it shall create a rebuttable presumption that a reasonable number were offered with at least the largest advertised discount.

14 Ill. Adm. Code 470.250 Use of "list Price" or Similar Comparison

It is an unfair or deceptive act to claim an actual savings from a "list price", "manufacturer's suggested retail price", or term of similar meaning unless the "list price" is the price at which the product is offered by a reasonable number of sellers in the seller's trade area (for example: "List Price $99, our price $69, save $30.00). However, a seller may reference a list price in relation to its regular price as long as no savings are claimed and the seller discloses that the list price may not necessarily be the price at which the product is sold in the trade area.

14 Ill. Adm. Code 470.260 Comparison to Other Sellers' Price for Identical Product

It is an unfair or deceptive act for a seller to compare his price with a price currently being offered by another seller for an identical product (for example: "Sold elsewhere for $99, our price $69") unless the stated higher comparative price is at or below the price at which the identical product is currently being offered in the seller's trade area by:

a) a reasonable number of other sellers in the same trade area; or

b) another seller(s) is specifically identified in the advertisement.

14 Ill. Adm. Code 470.270 Comparison to Sellers' Own or Other Sellers' Price for Comparable Product

It is an unfair or deceptive act for a seller to compare his price with the price at which he or any other seller is offering a comparable product (for example: "69, compare at $99", "Comparable value $99") unless:

a) The comparable product is currently being offered at the stated higher comparative price by the seller or by a reasonable number of other sellers in the sellers' trade area or another seller(s) specifically named in the ad; and

b) There are no substantial differences in quality, grade, materials, or craftsmanship between the comparable product and the product offered by the seller; and

c) If the comparable product is sold by the seller, the comparative price is determined in accordance with Section 470.220 of this Part.

14 Ill. Adm. Code 470.280 Use of Terms "two for Price of One", "buy One, Get One Free"

It is an unfair or deceptive act for a seller to state or imply that products are being offered at the usual price of a smaller number of the same or a different product (for example, "Four pillows for the price of three" or "buy one pair of shoes, second pair free") unless:

a) The seller clearly and conspicuously discloses all material conditions which are imposed on the sale; and

b) The price indicated by the seller as its usual and customary price for the smaller number of products is the sellers' own former (regular) price for such products as determined in accordance with Section 470.220 of this Part.

14 Ill. Adm. Code 470.290 Use of "sale" Terminology

Where a direct price comparison is not utilized as provided elsewhere in this Part, it is an unfair or deceptive act for a seller to use such terminology as "sale", "sale prices" "Now only $____" or other words and phrases that imply a price savings unless the price of the product is reduced by a reasonable amount from the product's former (regular) price as determined in accordance with Section 470.220 of this Part. If the seller reduces the price by 5% or more a rebuttable presumption shall exist that the price reduction was of a reasonable amount. However, the term "sale" can be used in an advertisement where not all items are offered at a reduction to regular price if such items are clearly identified.

14 Ill. Adm. Code 470.310 Customer Demand

It is an unfair or deceptive act for a seller to advertise any product for sale when the seller does not have that product in stock in sufficient quantities to meet reasonably anticipated customer demand during the effective period of the advertisement, except where:

a) The seller clearly and conspicuously discloses in its advertisement that quantities are limited or that restrictions apply to the advertised offer; or

b) Conditions beyond the seller's control (i.e. bankruptcy of source, labor stoppage, Act of God, etc.) interrupted the supply of the product; or

c) The seller has, in good faith, ordered the product in adequate time for delivery and in sufficient quantity to satisfy reasonably anticipated consumer demand, and the seller has maintained sufficient records to substantiate such orders; or

d) The seller tenders a raincheck entitling prospective purchasers to buy the advertised product at the advertised price and redeems the raincheck within a reasonable time after the issuance thereof; or

e) The seller offers prospective customers a product of an equal or greater value at the same price which is acceptable to a reasonable consumer or is of a lesser value at the same dollar or percentage savings.

Part 475 Motor Vehicle Advertising

14 Ill. Adm. Code 475.110 Definitions

"Advertisement" (including the terms "advertise" and "advertising") means any oral, written, graphic, or pictorial statement made concerning motor vehicles by publication, dissemination, solicitation or circulation, in the course of "trade" and "commerce", as those terms are defined in this Section. Advertisement includes any statement or representation made in a newspaper, magazine, or other publication; or on radio or television; or appearing in any notice, handbill, sign, billboard, banner, poster, display, circular, pamphlet, letter, or other printed material; or contained in any window sticker or price tag.

"Buy-down rate" means a financing rate which, as a result of the dealer's advance payment of finance charges to a third party, is below the prevailing market financing rate.

"Clear and conspicuous " (including the terms "clearly" and "conspicuously") means that the statement, representation or term being conveyed is in close proximity to the statement, representation or term it clarifies, modifies, or explains, or to which it otherwise relates; readily noticeable; reasonably understandable by the person(s) to whom it is directed; and not contradictory to any terms it purports to clarify, modify or explain.

A statement, representation or term is not clear and conspicuous unless it shall:

For printed, written, typed or graphic advertisements:

employ abbreviations only if they are commonly understood by the public (e.g., abbreviations commonly understood – AC, AM/FM, AUTO, AIR, 2DR, CYL, MSRP, and e.g., abbreviations not commonly understood – WAC, PEG) or approved by federal or State law (e.g., terms allowed by the Federal Truth in Lending Act, 15 USC 1601, et seq., or the Consumer Leasing Act of 1976, 15 USC 1601, et seq., such as "APR");

be of sufficient prominence in terms of print, size and color contrast, as compared with the remainder of the advertisement, so as to be readily noticeable to the person(s) to whom it is directed. Any type size which is 10-point type or larger is deemed readily noticeable.

For radio advertisements and the audio portion of television advertisements or advertisements in any other audio-visual medium:

be at a decibel level equal to the highest decibel level used in the advertisement; and

be at a speed equal to or slower than any other statement, representation or term contained in the advertisement.

For required superimposed written copy ("super") in a television advertisement or advertisements in any other audio-visual medium:

the minimum height of supers should be:

capital and lower case letters: 24 video scanlines;

capital letters only: 18 video scanlines;

appear on the screen for a duration sufficient to allow a viewer to have a reasonable opportunity to read and understand the statement, representation or term.

It shall be a rebuttable presumption that the super is sufficient if the super meets the following on-screen minimum display time:

three seconds for the first line of text; and

one second for each additional line.

"Dealer" means a dealer as defined in the Illinois Vehicle Code and includes used car dealers, also as defined in the Vehicle Code [625 ILCS 5].

"Dealer's cost " (including but not limited to: "cost", "factory invoice", "factory billing") means the actual cost or total consideration paid by the dealer to the manufacturer for the vehicle, and where no other consideration, fee or charge, including, without limitation, overhead, rebates, promotional fees, advertising, or any other consideration, has been or will be paid by the manufacturer or a third party to the dealer prior or subsequent to the purchase of the vehicle, which in any way reduces, diminishes or offsets the cost to the dealer of purchasing the vehicle.

"Demonstrator" means a motor vehicle of a current or previous model year that has not been registered or titled to a member of the public prior to the appearance of the advertisement, and had been used by the dealership personnel for demonstration purposes.

"Documentary service fee" or words of similar import, including, without limitation, "documentation and handling" fee or "D and H" fee, means a fee for services actually rendered to, for, or on behalf of the retail buyer in preparing, handling, and processing documents pertaining to the motor vehicle and the closing of the transaction, and shall not exceed the amount of $40; provided, however, this fee may be adjusted on January 1 of each calendar year for inflation, employing the Consumer Price Index published by the United States Department of Labor as the basis for adjustment.

"Executive vehicle" or "official vehicle" means a motor vehicle that has been driven exclusively by executives of the parent motor vehicle manufacturer's personnel or by an executive of an authorized dealer in the same make of car, as defined in the Illinois Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505].

"Free" means without charge or cost, monetary or otherwise, to the recipient, and includes terms of essentially identical import, such as "give away". A free offer in conjunction with the sale or lease of goods or services is one that conveys to customers the message that the goods or services are offered at no cost in conjunction with the purchase of other goods or services for no more than their regular price.

"Leased vehicle " means a vehicle that has been driven for a specific period of time pursuant to a lease, as that term is defined in the Illinois Vehicle Code.

"Limited rebate" means any payment of money to a consumer, or any payment to a dealer or third party on behalf of a consumer, on the condition that the consumer purchase or lease a motor vehicle, and that is confined, restricted, or circumscribed to a certain class of consumers, such that it is not generally available to every consumer seeking to purchase or lease the motor vehicle, including, but not limited to, on the basis of the consumer's status, sponsorship, affiliation, or association.

"Motor vehicle " means a motor vehicle as defined in the Illinois Vehicle Code.

"New motor vehicle " means a motor vehicle that is of the current or previous model year and that has not been previously registered or titled except to a franchised distributor or franchised new vehicle dealer.

"Rebate" means the payment of money to a consumer or payment to a dealer or third party on behalf of a consumer on the condition that the consumer purchase or lease a motor vehicle, unless the rebate is offered through a manufacturer's rebate program or a third party independent of the dealer.

"Rental vehicle " means a vehicle that has been offered to the public for business or personal use driving for short periods of time, such as on a daily or weekly basis.

"Shopped area" means the geographic area where the motor vehicle advertisements are disseminated and where the shopped dealerships are located.

"Trade" and "commerce " mean the advertising, offering for sale, sale, or distribution of any services and any property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value wherever situated, and shall include any trade or commerce directly or indirectly affecting the people of this State, as defined in the Consumer Fraud and Deceptive Business Practices Act.

"Trade area" means the geographic area where the motor vehicle dealership is located and where the dealer's advertisements are disseminated.

History

• Source: Amended at 27 Ill. Reg. 7960, effective April 16, 2003

14 Ill. Adm. Code 475.210 Clear and Conspicuous - Disclosure of Material Terms

It is an unfair or deceptive act to advertise, offer for sale or sell any motor vehicle without disclosing all material terms and conditions relating to the offer clearly and conspicuously at the outset of the offer so as to leave no reasonable probability that the offering might be misunderstood. Material terms include, without limitation, those mandated by federal law including, but not limited to, those Acts listed in Section 475.250, or state law, or without which the advertisement would be false or misleading.

14 Ill. Adm. Code 475.220 Footnotes and Asterisks

It is an unfair or deceptive act to use, in any advertising, one or more footnotes or asterisks which, alone or in combination, confuse, contradict, materially modify or unreasonably limit the material terms of an advertisement.

14 Ill. Adm. Code 475.230 Print Size

It is an unfair or deceptive act to, in any advertising, use any print in type size so small as to be not readily noticeable. In print advertisements, any type size which is 10-point type or larger is deemed readily noticeable.

14 Ill. Adm. Code 475.240 Photographs and Illustrations

It is an unfair or deceptive act to use, in any advertising, inaccurate photographs or illustrations when describing specific automobiles; for example, advertising a fully-loaded car when the advertisement actually refers to a minimally-equipped automobile in text.

14 Ill. Adm. Code 475.250 Abbreviations

It is an unfair or deceptive act to use in any advertising an abbreviation which is confusing, misleading or not commonly understood by the general public (e.g., abbreviations commonly understood--AC, AM/FM, AUTO, AIR, 2DR, CYL, MSRP, DOC, and e.g., abbreviations not commonly understood--WAC, PEG) or approved by federal law or state law (e.g., terms allowed by the Federal Truth in Lending Act, 15 U.S.C. 1601 et seq., and the Consumer Leasing Act of 1976, 15 U.S.C. 1601, et seq., such as "APR").

14 Ill. Adm. Code 475.310 Advertised Price

It is an unfair or deceptive act to advertise the total price of a motor vehicle without including in the advertised price all costs to the purchaser at the time of sale, or which are necessary or usual prior to delivery of such vehicle to the purchaser, including any costs of delivery, dealer preparation and any other charges of any nature; provided, however, taxes, license and title fees and a documentary service fee, as defined herein, may be excluded from the advertised price if clearly disclosed in the advertisement that these costs are excluded from the advertised price. Purchasers shall be able to purchase all vehicles described by the advertisement at the advertised price.

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.320 Advertising Limitations

It is an unfair or deceptive act to fail to clearly and conspicuously disclose in an advertisement any limitations, including, but not limited to the availability of a single vehicle or a number of vehicles in stock, or period of time during which the offer is in effect, or other applicable restrictions, to which the advertised price may be subject.

14 Ill. Adm. Code 475.330 Low Prices (repealed)

History

• Source: Repealed at 27 Ill. Reg. 7960, effective April 16, 2003

14 Ill. Adm. Code 475.340 Lowest Prices - Guaranteed Lowest Prices

It is an unfair or deceptive act to advertise the terms "lowest prices," "guaranteed lowest prices," "prices lower than anyone else", or words of similar import, in the advertisement, unless the dealer systematically monitors and continues to monitor competitive prices in the trade area and can substantiate such claim.

14 Ill. Adm. Code 475.350 Price Matching

It is an unfair or deceptive act to use terms "meet your best offer" or "we won't be undersold", or terms of similar import which suggest that a dealer will beat or match a competitor's price unless:

a) the advertisement clearly and conspicuously discloses price matching policy and any limitations; and

b) such policy does not require the presentation of any evidence which places an unreasonable burden on the consumer.

14 Ill. Adm. Code 475.360 Disclosure of Basis for Price Comparison

a) It is an unfair or deceptive act to advertise any advertising term(s) which compare the dealer's current selling price with a higher price, explicitly or implicitly, unless the basis for the price comparison is clearly and conspicuously disclosed; provided, however, in a new vehicle context, a dealer may compare the higher and lower price without disclosing the basis for the price comparison, if the higher price is the dealer's own former (regular) price, and only if:

1. the former (regular) price is equal to or below the price(s) at which the dealer made a substantial number of sales of such vehicles in the recent regular course of its business; or

2. the former (regular) price is equal to or below the price(s) at which the dealer offered the vehicle(s) for a reasonably substantial period of time in the recent regular course of its business, openly and actively and in good faith, with an intent to sell the vehicle(s) at that price(s).

b) It is an unfair or deceptive act to use any advertising term(s) which compare the dealer's current selling price with a price currently being offered by another dealer for an identical vehicle, explicitly or implicitly, unless the stated higher comparative price is at or below the price at which the identical vehicle is currently being offered in the dealer's trade area by:

1. a reasonable number of other dealers in the same trade area; or

2. another dealer(s) is specifically identified in the advertisement.

c) In a new vehicle context, it is an unfair or deceptive act to use any advertising term(s) which compares the dealer's current selling price with a "list price", or other similar terms, to claim a savings, unless such list price is the manufacturer's suggested retail price ("MSRP"), and is the price at which the vehicle is offered by a reasonable number of dealers in the dealer's trade area, or is the dealer's own former (regular) price as defined in subsection (a)(1) or (2) above. However, an advertisement may reference a MSRP in relation to the dealer's (regular) price if no savings are claimed, and the MSRP figure is disclosed and identified as such in the advertisement, and the advertisement discloses that the MSRP may not be the price at which the vehicle is sold in the trade area.

d) In a used vehicle context, it is an unfair or deceptive act to use terms such as "was $, now $", which compare the dealer's current selling price with a higher price; provided, however, a dealer may compare an advertised price with a retail value listed in a current, nationally recognized, and published price guide book. Said book price must be from the current regional issue from the trade area where the advertisement appears, and the advertisement must clearly and conspicuously disclose which book is quoted in close proximity to the advertised price. In addition, the advertisement must clearly and conspicuously include the following disclaimer in at least ten-point bold-faced type: "The value of used vehicles varies with mileage, usage and condition. Book values should be considered estimates only." Under no circumstances may the Manufacturers Suggested Retail Price (MSRP) be used as a basis for price comparisons for used vehicles.

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.370 Sales

It is an unfair or deceptive act to advertise the words "sale", "discount", "savings", "price cut", "reduced", "clearance", "tent sale", and other similar terms, which state or imply a price savings, unless the current selling price of the vehicle is reduced by a reasonable amount from the vehicle's former (regular) price as defined in Section 475.360(a)(1) or (2). If the dealer reduces the price by 5% or more, a rebuttable presumption shall exist that the price reduction was of a reasonable amount. On vehicles where the mark-up from dealer invoice is less than 5%, the dealer may use sale terms if the vehicle has been reduced by a reasonable amount. It is an unfair or deceptive act to advertise the term "clearance" without clearly and conspicuously disclosing, if such is the fact, that such "clearance" is limited to certain vehicles. It is an unfair or deceptive act to advertise the words "sale", "discount", "savings", "price cut", "reduced", "clearance", "tent sale", and other similar terms that state or imply a price savings, without disclosing the duration of the words that state or imply a price savings by stating the number of days or termination date. However, in a new vehicle context, if the model cannot be reordered from the manufacturer, then the word "clearance" can be used without stating the number of days or a termination date.

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.380 Liquidation Sale

It is an unfair or deceptive act to use any advertising terms such as "Liquidation Sale", "Public Notice", "Closing Out Sale", "Lost Our Lease Sale", "Forced to Vacate Sale" or similar terms used to connote or imply a court-ordered or other forced liquidation of assets, or to induce a belief that upon disposal of the stock of goods on hand, the business will cease and be discontinued at the premises where the sale is conducted, unless such is the case.

14 Ill. Adm. Code 475.390 Range of Savings or Price Comparison Claims

It is an unfair or deceptive act to advertise that any vehicles are being offered for sale at a range of prices or at a range of percentage or fractional discounts, through the use of the terms "As Low As" or "From," or terms of similar import, unless:

a) the highest price or lowest discount in the range is clearly and conspicuously disclosed in the advertisement; and

b) a reasonable number of these vehicles in the advertisement are offered with at least the largest advertised discount; and

c) the vehicles are readily available for sale in sufficient quantity likely to meet reasonable expectable public demand.

If at least 5% of the vehicles in the advertisement are offered with at least the largest advertised discount, it shall create a rebuttable presumption that a reasonable number were offered with at least the largest advertised discount.

14 Ill. Adm. Code 475.410 Dealer Cost/Invoice Pricing

It is an unfair or deceptive act to advertise the terms "dealer's cost," "cost," "dealer's invoice," "invoice price," "factory invoice," "factory billing," or terms of like import or other representation that a vehicle will be sold at, above, or below a cost or price standard, unless:

a) The advertising exclusively uses the term "invoice" or "invoice price";

b) The advertising complies with the following:

1. clearly and conspicuously discloses that the dealer's profit is not limited to the amount of dollars charged over invoice; or

2. the price standard represents the total consideration paid by the dealer to the manufacturer for the vehicle, and no other consideration, fee or charge, including without limitation, overhead, rebates, promotional fees, advertising or other consideration has been or will be paid by the manufacturer or a third party to the dealer prior or subsequent to the purchase of the vehicle, which in any way reduces, diminishes or offsets the cost to the dealer of purchasing the vehicle;

c) Subject to Section 475.320, purchasers shall be able to purchase all vehicles described by the advertisement at the advertised price. If some vehicles in stock may not be purchased at advertised prices because of nonfactory options installation, the advertisement shall clearly and conspicuously disclose that the advertised price applies only to a specified number of vehicles or to one or more vehicles by stock number; and

d) The invoice shall be readily available for inspection by prospective customers.

14 Ill. Adm. Code 475.420 Buy-Down Rate

a) It is an unfair or deceptive act to advertise the sale of any motor vehicle at a "buy-down" rate, as that term is defined in Section 475.110, without clearly and conspicuously disclosing in the advertisement that the interest rate is not exclusively sponsored or subsidized by the manufacturer, if such is, in fact, true.

"Manufacturer" includes any subsidiaries of the manufacturer that advertise or offer motor vehicle financing.

b) It is an unfair or deceptive act to advertise or offer below market finance rates, unless the advertised "buy-down" rate complies with the Federal Truth In Lending Act.

History

• Source: Amended at 27 Ill. Reg. 7960, effective April 16, 2003

14 Ill. Adm. Code 475.510 Demonstrator, Executive, Official, or Promotional Vehicles

a) It is an unfair or deceptive act to advertise any "demonstrator" vehicle without clearly and conspicuously disclosing:

1. the year, make, and model; and

2. that the vehicle is a "demonstrator" or has been previously driven.

b) It is an unfair or deceptive act to advertise any "executive" or "official" vehicle unless that vehicle when so advertised has been used exclusively by executives of the parent motor car manufacturer's personnel or by an executive of an authorized dealer in the same make of car, or has been designated by the manufacturer as a promotional vehicle. The vehicle so advertised shall not have been previously titled or sold to a member of the public prior to the appearance of the advertisement. Such executive vehicles shall be described as "executive driven" and such promotional vehicles shall be described as "official driven".

c) Any reference to the term "new" in connection with a "demonstrator" cannot be more prominent than and must appear in close proximity to the term "demonstrator" or previously driven.

d) Any reference to the term "new" in connection with an "executive" or "official" vehicle cannot be more prominent than and must appear in close proximity to the term "pre-driven" or "previously driven."

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.520 Rental Vehicles

It is an unfair or deceptive act to advertise any vehicle which has been leased or rented on an individual or fleet basis without clearly and conspicuously disclosing:

a) the year, make and model; and

b) the fact that such vehicle has been previously titled, using the word "used".

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.530 Rebates

a) It is an unfair or deceptive act to advertise any cash rebates, including, without limitation, a payment or an offset to a consumer or payment to a dealer or third party on behalf of the consumer on the condition that the consumer purchase or lease a motor vehicle, unless the rebate is funded solely by a manufacturer pursuant to a manufacturer's rebate program.

b) It is an unfair or deceptive act to advertise a price or amount of an installment payment, wherein rebates have been deducted, unless every consumer seeking to purchase or lease the advertised vehicle is eligible for the rebate.

c) The availability of a limited rebate may be advertised if the terms of the limitation are clearly and conspicuously disclosed. It is an unfair or deceptive act to advertise a price or amount of an installment payment in which limited rebates have been deducted, or to advertise a total amount of rebate if a portion of the total consists of a limited rebate.

History

• Source: Amended at 27 Ill. Reg. 13992, effective August 11, 2003

14 Ill. Adm. Code 475.540 Trade-Ins

a) It is an unfair or deceptive act to advertise or offer a specific trade-in allowance (i.e., "$2500 minimum trade-in"), or a range of amounts for trade-ins (e.g., "up to $1,000" or "as much as $1,000"), including, without limitation, that the trade-in will be valued at a specific amount or guaranteed minimum amount.

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.550 No Money Down

It is an unfair or deceptive act to advertise using the phrase "no money down" or words of similar meaning, where a down payment is, in fact, required and the consumer is required to finance the down payment by a loan or make the down payment in cash.

14 Ill. Adm. Code 475.560 Shopped Price

It is an unfair or deceptive act to advertise any sale or lease price modified by phrases such as "based on shopped price", "based on a recent survey of prices", or similar terms, unless:

a) the model of vehicle selected is a model sold and available at most dealer stores of the same line make in the shopped area in which the advertisement appears;

b) the survey conducted is independent, and the survey agency used to conduct the survey was not related to or affiliated with any manufacturer or dealer carrying that vehicle in inventory;

c) the survey takes place immediately prior to the first advertisement being placed;

d) at least one half of the dealers of the applicable line make in the shopped area were surveyed;

e) the survey result has not been used over an extended period if costs or other factors change such that the average survey price has become significantly less than the prevailing price in the shopped area, and in no event shall be used for a period exceeding 90 days;

f) if the product is pictured in the survey ad, the picture is of the exact type and model surveyed; also the picture includes only features included in the survey price;

g) the dates of the survey period and the numbers of dealers shopped are disclosed in the ad, with a statement that individual dealer prices may be higher or lower; and

h) all dealerships shopped for the survey are located within the shopped area.

History

• Source: Added at 27 Ill. Reg. 7960, effective April 16, 2003

14 Ill. Adm. Code 475.570 Factory Outlet

It is an unfair or deceptive act to advertise using the terms "Factory Outlet", "Authorized Distribution Center", "Factory Authorized Sale", or similar special affiliation, connection or relationship with the manufacturer that is greater or more direct than that of any other dealer.

14 Ill. Adm. Code 475.580 Contract Add-Ons

It is an unfair or deceptive practice for a dealer to negotiate the terms of a sale and thereafter add the cost of items including, without limitation, extended warranties, credit life, dealer preparation, or undercoating, to the contract without previously disclosing same to the consumer and without the consumer's consent.

14 Ill. Adm. Code 475.590 Gifts and Free Offers

a) It is an unfair or deceptive act to advertise or offer free prizes, gifts or other incentives in connection with the purchase or lease of a vehicle where the vehicle is sold or leased at a price arrived at through bargaining or negotiation, unless the dealer meets the requirements of subsection (b) of this Section.

b) A free prize, gift or other incentive may be advertised or offered in connection with the purchase or lease of a vehicle if:

1. the free prize, gift or other incentive is offered through a manufacturer's program or a manufacturer's authorized and approved dealer advertising association without any participation by the dealer, excluding dues or assessments that are required to participate in the advertising association. The program or association shall be clearly and conspicuously disclosed; and

2. all material terms and conditions relating to the offer are clearly and conspicuously disclosed at the outset of the offer.

c) Nothing in this Section shall prohibit a dealer from including a warranty with the purchase or lease of a vehicle. A warranty shall not be advertised as free using the word "free".

History

• Source: Amended at 27 Ill. Reg. 7960, effective April 16, 2003

14 Ill. Adm. Code 475.610 Credit Sales Advertising Disclosures

It is an unfair or deceptive act to advertise "closed-end credit" terms in the advertisement, offer of sale, or sale of any motor vehicle if the advertisement contains any one of following five "triggering terms": amount or percentage of down payment; number of payments; period of repayment; amount of any payment (expressed as percentage or dollar amount); or amount of any finance charge, without clearly and conspicuously disclosing:

a) amount or percentage of any down payment, terms of repayment, and "annual percentage rate" using that term spelled out in full or the abbreviation "APR". If the annual percentage rate may be increased after the contract is signed, that fact must be disclosed. An advertisement that complies with the Federal Truth in Lending Act (15 USC 1601 et seq.) and amendments thereto, and any regulations issued or that may be issued under that federal statute, shall be deemed in compliance with the provisions of this subsection.

b) the contractual amount owing at the conclusion of a pre-determined schedule of installment payments, in close proximity to and, where applicable, in the same decibel tone as, the "triggering term" when a dealer advertises the availability of balloon-note financing. For the purpose of this subsection (b), balloon-note financing shall mean the manner of purchase whereby a consumer agrees to select and perform, at the conclusion of a pre-determined schedule of installment payments made in periodic or monthly amounts, one of the following options:

1. satisfy the balance of the contractual amount owing;

2. refinance any balance owing, on the terms previously agreed upon at the time of executing the retail installment contract; or

3. surrender the vehicle at such time and manner agreed upon at the time of executing the retail installment contract.

c) a manufacturer's or manufacturer captive finance company's tiered financing offer. For the purpose of this subsection (c), tiered financing shall mean the manner of financing a purchase whereby a consumer must qualify for a specific manufacturer's or manufacturer captive finance company's offer according to pre-established credit qualifications.

Proper disclosures might include:

Ad copy: 1.9% APR for 48 months

Disclosure: Financing subject to credit approval and insurability. 1.9% financing for 48 months on (vehicle make/model) in lieu of rebate to qualified buyers and ends (date). 48 months at ($ amount) per month per $1000 financed at 1.9% APR (level a, b, c) with 10% down on (vehicle make/model). Finance rate varies depending on credit worthiness of customer as determined by (captive finance company). Some customers will not qualify.

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.620 Advertised Terms Unavailable

It is an unfair or deceptive act to advertise credit terms that are not actually available.

14 Ill. Adm. Code 475.630 Advertised Finance Rate

It is an unfair or deceptive act to advertise a finance rate (APR) without disclosing, if such is the fact, the following:

a) that such rate is limited to certain models;

b) that the price may be increased by a dealer's contribution to lower the rate;

c) that to take advantage of such a reduced rate, a customer must purchase additional options or services;

d) that taking advantage of the rate will increase the final price of the vehicle or options or services purchased;

e) that the offer expires after a limited time period; and

f) any other conditions, qualifications or limitations which materially affect the availability of such rate.

14 Ill. Adm. Code 475.640 Advertisement of Credit Terms

It is an unfair or deceptive act to advertise credit using the terms "bank rates", "bank financing" or words of like import unless it is a bank, banking association or trust company authorized to do business under the laws of Illinois or of the United States.

14 Ill. Adm. Code 475.710 Lease Advertising Disclosures

a) It is an unfair or deceptive act to advertise the offer of a "consumer lease" if the advertisement contains any one of the following two "triggering terms": amount of any payment or a statement of any capitalized cost reduction or other payment required prior to or at consummation or by delivery, if delivery occurs after consummation, without clearly and conspicuously disclosing:

1. that the transaction is a lease in close proximity to and, where applicable, in the same decibel tone as, the amount of the periodic payment;

2. The total amount due prior to or at consummation or by delivery, if delivery occurs after consummation;

3. The number, amounts, and due dates or periods of scheduled payments under the lease;

4. A statement of whether a security deposit is required; and

5. A statement that an extra charge may be imposed at the end of the lease term where the lessee's liability (if any) is based on the difference between the residual value of the leased property and its realized value at the end of the lease term.

b) Except for the statement of a periodic payment, any affirmative or negative reference to a charge that is part of the total amount due at lease signing shall not be more prominent than that disclosure.

c) An advertisement which complies with the Consumer Leasing Act of 1976 (15 USC 1601 et seq.), and amendments thereto, and any regulations issued or which may be issued thereunder, shall be deemed in compliance with the provisions of this Section.

History

• Source: Amended at 25 Ill. Reg. 4819, effective March 20, 2001

14 Ill. Adm. Code 475.720 Other Limitations, Restrictions or Conditions (Repealed)

History

• Source: Repealed at 25 Ill. Reg. 4819, effective March 20, 2001

Chapter II Attorney General

Part 475 Motor Vehicle Advertising

14 Ill. Adm. Code 475.810 Exemption

Motor vehicle advertising shall not be subject to the provisions of the Illinois Retail Advertising Regulations, 14 Ill. Admin. Code Part 470.

Part 480 Charitable Trust Act

14 Ill. Adm. Code 480.10 General

a) The Charitable Trusts Bureau of the Attorney General's Chicago Office (hereafter Bureau) will maintain the principal register of charitable trusts registered under the Illinois Charitable Trust Act.

b) The register of charitable trusts will consist of records, such as index or computer cards, organization or trust file folders, a list, a computer printout or a combination thereof.

History

• Source: Amended at 24 Ill. Reg. 14665, effective September 21, 2000

14 Ill. Adm. Code 480.20 Definitions

a) "A Trustee" holds property when he has title or possession of the property and controls its distribution subject to conditions which devote the property to a charitable purpose. A custodian or depository does not hold property.

b) "A Charitable Remainder Trust" is one where the income goes to the donor or designated individual for life, with remainder to an operating charity on the death of the life tenant. The Trust must be irrevocable, as to the remainder, to fall within this regulation. Registration is required of all such trusts. A Charitable Remainder Trust may qualify for alteration of the reporting requirement pursuant to Section 480.60 of this Part and 14 Ill. Adm. Code 400.10 and 400.20.

c) "Charitable Purposes" includes without limitation any funds which are to be applied for the benefit of an indefinite number of people to provide them with:

1. Education,

2. The benefit of religion,

3. Relief from poverty, sickness or disease,

4. A means of establishing themselves in life,

5. Public building or recreational activities, or

6. Services which lessen the burden of government.

d) "Charitable Trusts" means any relationship whereby real or personal property is held for a charitable purpose or purposes.

e) "Trustee" is any person, group of persons or other legal entity who holds property intended to be used for charitable purposes.

f) "Trustees" who hold property for charitable purposes with a value exceeding $4,000, are required to register.

1. For the purposes of registration, the value of a trust's assets is fair market value.

2. Where the value of trust assets fluctuate, the value is determined by its greatest value during the year or the total amount disbursed, whichever is greater.

History

• Source: Amended at 2 Ill. Reg. 37, p. 185, effective September 30, 1978

14 Ill. Adm. Code 480.30 Registration

a) Trustees subject to the Act holding property with a value in excess of $4,000 must file with the Attorney General a registration statement in the forms set forth by the Attorney General entitled "CO-1" (Charitable Organization Registration Statement) and "CO-2" (Charitable Organization Financial Information Form) available on the Attorney General's website at: https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, prior to any disbursement or within six months after property is received for charitable purposes, whichever occurs first.

b) Trustees who hold property in excess of $4,000 during any 12 month period are required to register.

c) Upon termination of, or resignation by, a charitable trustee, the charitable organization shall notify the Attorney General in writing within ten days of such fact.

d) Each trustee, officer or director is responsible for accurate record keeping and for the timely and accurate filing of financial reports required by the Attorney General. Resignation of such trustee, officer or director shall not avoid or diminish these record keeping and filing responsibilities for any period during which such person held office.

e) Each trustee has a fiduciary obligation toward: the trustee's charitable organization; charitable monies; donors; and unknown charitable beneficiaries as described by the charitable organization's stated purpose or the purpose for which charitable monies were collected.

f) To register, a charitable trust must file a completed registration statement, all required statutory fees and all appropriate attachments. All registrations must be accompanied by copies of the instrument under which the property is administered, financial statements for each year during the past three years in which the organization has held or solicited charitable funds in Illinois, along with executed copies of the tax returns or reports filed with the Internal Revenue Service for those three years. Organizations that have been in existence for less than one year must submit the form prescribed by the Attorney General entitled "CO-2" (Charitable Organization Financial Information Form), available on the Attorney General's website at: https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities. Where there is no written instrument, the trustee must prepare an affidavit setting forth the conditions of the trust. The registration must be made by two officers of a corporate charitable organization or by two trustees if not a corporate organization. One signature will be accepted if there is only one officer or trustee. Additional prior years' reports and schedules may be required at the discretion of the Attorney General.

g) The Attorney General may, by pre-approval, accept registration forms used by other states that contain the information required in the form prescribed by the Attorney General entitled "CO-1" (Charitable Organization Registration Statement) available on the Attorney General's website at: https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities.

h) When a registration is cancelled, to return to compliance, a re-registration must be made. Re-registration requires the submission of all of the above as applicable, including the re-registration penalty fees as provided by Section 5(b) of the Act.

i) When a charitable trust combines the interest of living private individuals with charitable interests, confidential registration may be made.

j) A confidential registration statement shall contain the information required by Section 480.30(f) and also two additional copies of the trust instrument from which are redacted the names of the individual beneficiaries who have an interest in a trust that is combined with a charitable interest as described in Section 480.30(i).

k) The trustee shall notify the Attorney General of any changes in the registration information within 30 days of the changes.

History

• Source: Amended at 48 Ill. Reg. 16115, effective October 29, 2024

14 Ill. Adm. Code 480.40 Organizations and Activities Exempt from Registration

a) Trustees who hold property with a value of less than $4,000 are not required to register with the Attorney General provided that, if assets exceed $4,000 during any 12 month period, no exemption is available and registration is required.

b) The Federal, state and local governments and their duly authorized agencies and subdivisions are exempt from the registration requirements of the Act (see 760 ILCS 55/4).

c) Religious organizations, their agencies or affiliates directly supervised by such religious organizations are exempt from the registration requirements of the Act (see 760 ILCS 55/4) for exclusively religious activities.

d) Individual officers and directors of religious bodies who hold property in their official capacity are exempt from registration under the Act (see 760 ILCS 55/4).

e) Trustees who hold property for the purpose of and who are exclusively operating schools or hospitals are exempt from the registration requirements of the Act (see 760 ILCS 55/4).

f) Trustees engaged in any of the above exempt activities, if engaged in non-exempt activities, must still register and account for all non-exempt activities.

History

• Source: Amended at 48 Ill. Reg. 16115, effective October 29, 2024

14 Ill. Adm. Code 480.50 Annual Reports

a) All trustees subject to the Act must file annual financial reports with the Attorney General on the form prescribed by the Attorney General entitled "AG990-IL" (Illinois Charitable Organization Annual Report) available on the Attorney General's website at: https://www.illinoisattorneygeneral.gov/Consumer-Protection/Charities, with the attachments prescribed by the form and this Section and with all required statutory fees paid prior to the due date.

b) The annual financial report is due within six months after the close of an organization's fiscal year.

c) The annual financial report shall be signed as required by the Act and must include the following:

1. The Illinois Charitable Organization Annual Report form;

2. A copy of the federal Internal Revenue return and/or report, as required by the federal Internal Revenue Code and incorporated attachments for the same period; and

3. Required statutory fees.

d) The use of substitute forms or computer printouts may be approved in writing by the Attorney General for good cause upon a timely request.

e) Alternative Annual Accountings in lieu of compliance with subsection (c) above:

1. A trustee of a trust subject to court supervision must: notify the Attorney General pursuant to the Act; provide a copy of the court accounting signed under oath by the trustees; provide a copy of the court order approving the accounting; and submit the required statutory fees.

2. Bank and trust companies and their cofiduciaries may file a copy of the trust's federal return and the required fees instead of an annual report required by the Act.

3. Trusts holding and receiving less than $25,000 in assets and less than $25,000 in revenue during a fiscal year may file a simplified financial statement using the Illinois Charitable Organization Annual Report form disclosing gross receipts, total disbursements, and assets on hand at the year's end and signed by the trustee.

f) Extension of Time

1. The Attorney General shall, upon written request, extend for 60 days the time for filing the annual financial report. For organizations that are in compliance with the registration and annual report requirements of the Charitable Trust Act, written extension requests are automatically granted if received on or before the due date. The Attorney General will accept written requests submitted by mail, email, fax, or in-person drop-off at the following office address, email address, or fax number:

Office of the Illinois Attorney General

Charitable Trust Bureau

115 South LaSalle Street

Chicago, Illinois 60603

Email: Attorney_General@ilag.gov

Fax: (312) 814-2596

The Attorney General may also accept written requests submitted to other Attorney General office locations, email addresses, or fax numbers.

2. If an organization receives an extension of time from the federal Internal Revenue Service that would extend its federal tax return or report due date to a date later than the Attorney General's due date, the organization may obtain an additional extension from the Attorney General coinciding with the same federal Internal Revenue Service due date. The request for extension of time made pursuant to this subsection must be made in writing and include a copy of the extension of time granted by the federal Internal Revenue Service or a copy of the Internal Revenue Service Form 8868 requesting an extension of time.

3. An organization may make a request for extension of time pursuant to subsection (f)(1), (f)(2) or both (f)(1) and (f)(2). An organization may make a request for extension of time pursuant to subsection (f)(1) or (f)(2) separately or at the same time. An organization need not make an extension request pursuant to subsection (f)(1) in order to make a request for extension of time pursuant to subsection (f)(2).

4. All requests for extension of time must be made in writing and received prior to the organization's original or extended Annual Report due date.

g) All financial reports or substitutes must be signed by two trustees or, if a corporation, the president and chief fiscal officer. One signature shall be accepted if there is only one officer or trustee.

h) Organizations registered under both the Charitable Trust Act and the Solicitation for Charity Act [225 ILCS 460], may file one report, but it must meet the requirements of both the Solicitation for Charity Act and the Charitable Trust Act.

i) An organization may alter its fiscal year only upon written notice to the office of the Attorney General and after providing whatever financial reports are necessary to furnish a complete picture of its operation during any gap period. The Attorney General will accept written notices submitted by mail, email, fax, or in-person drop-off at the following office address, email address, or fax number:

Office of the Illinois Attorney General

Charitable Trust Bureau

115 South LaSalle Street

Chicago, Illinois 60603

Email: Attorney_General@ilag.gov

Fax: (312) 814-2596

The Attorney General may also accept written notices submitted to other Attorney General office locations, email addresses, or fax numbers.

j) The Attorney General may, for good cause, alter or suspend the reporting period of a charitable trust for a reasonable and specifically designated time.

1. Anyone requesting a change in reporting period or suspension of the reporting requirement shall file a written request with the Attorney General setting forth the reasons for the request and accompanied by a financial report showing the current financial condition of the trust.

2. The Attorney General will make a written determination on the request. The request will only be granted if the beneficiary will not be prejudiced and periodic reporting is not required for the proper supervision of the trust.

k) All trustees must notify the Attorney General of the termination of a charitable trust and file a final financial report within six months after termination, upon the same forms and using the same attachments as required for an annual financial report.

l) Failure to file a timely and complete financial report will result in penalty fees and/or a fine and subjects the organization's registration to cancellation (see 760 ILCS 55/5 and 7).

m) Upon cancellation the organization must cease operations.

History

• Source: Amended at 48 Ill. Reg. 16115, effective October 29, 2024

14 Ill. Adm. Code 480.60 Public Records

The registration and annual reports, except for confidential registrations, made with the Bureau are public records. They may be examined by interested members of the public in the office of the Attorney General during ordinary business hours.

History

• Source: Amended at 24 Ill. Reg. 14665, effective September 21, 2000

14 Ill. Adm. Code 480.EXHIBIT A Registration Statement and Instructions (Repealed)

History

• Source: Repealed at 48 Ill. Reg. 16115, effective October 29, 2024

Chapter II Attorney General

Part 480 Charitable Trust Act

14 Ill. Adm. Code 480.EXHIBIT B Financial Information Form (repealed)

History

• Source: Repealed at 48 Ill. Reg. 16115, effective October 29, 2024

14 Ill. Adm. Code 480.EXHIBIT C Annual Report and Instructions (repealed)

History

• Source: Repealed at 48 Ill. Reg. 16115, effective October 29, 2024

Part 485 Immigration Services

14 Ill. Adm. Code 485.10 Registration

Persons engaged in the offering of immigration assistance service (hereafter "immigration service providers") must complete and file with the Office of the Attorney General an annual registration statement in the form set forth in Exhibit A of this Part and must comply with the terms of that statement. The registration statement shall be filed each year on or before the anniversary date of the original filing.

14 Ill. Adm. Code 485.20 Malpractice Insurance and/or Surety Bond

Persons engaged in the provision of immigration assistance service shall secure malpractice insurance with a minimum policy limit of $100,000, or a surety bond in the amount of $100,000, and shall submit to the Office of the Attorney General verification of the surety in the form set forth in Exhibit B or C of this Part, respectively. Reverification shall be submitted annually with the registration statement.

14 Ill. Adm. Code 485.30 Changes in Registration or Verification

Registrants must provide written notification to the Attorney General of any changes in the information reported in the registration statement or in the insurance or surety bond verification forms within 90 days after the changes.

14 Ill. Adm. Code 485.40 Maximum Fees for Services

a) Preparation and Completion of Forms. Immigration service providers shall charge no more than $5 per quarter hour (15 minutes) for permissible services listed below:

1. Completing a government agency form, requested by the customer and appropriate to the customer's needs, only if the completion of that form does not involve a legal judgment for that particular matter.

2. Transcribing responses to a government agency form that is related to an immigration matter, but not advising a customer as to his or her answers on those forms.

3. Translating information on forms to a customer and translating the customer's answers to questions posed on those forms.

4. Securing for the customer supporting documents currently in existence, such as birth and marriage certificates, that may need to be submitted with government agency forms.

5. Translating documents from a foreign language into English.

6. Preparing or arranging for the preparation of photographs and fingerprints.

7. Arranging for the performance of medical testing (including X-rays and AIDS tests) and the obtaining of reports of such test results.

b) No Attorney Referral Fees. No person subject to these regulations may charge fees directly or indirectly for referring an individual to an attorney who could undertake legal representation for a person in an immigration matter.

c) Notarization Fees. Persons subject to these regulations may charge a fee for notarizing documents as permitted by the Illinois Notary Public Act [5 ILCS 312].

d) English, Civics Courses. Persons subject to this Part may charge reasonable fees for the provision of English and Civics courses, but these fees shall not exceed $5 per classroom hour of instruction.

e) Envelopes, Photographs. Any person subject to this Part may charge for the provision of envelopes and photographs only if the person who is charged is advised, orally and in writing, and in a language understood by that person, that s/he is free to obtain his or her own photographs and envelopes, and may supply them for use in any submission to INS at no additional charge. No person subject to this Part may charge for the provision of more photographs than are required by the INS and that are to be provided to INS as part of any submission prepared in whole or in part by such person.

14 Ill. Adm. Code 485.50 Contracts: Time and Manner of Cancellation

A person subject to this Part shall provide the consumer with a contract written in English and in the language of the consumer. The contract shall state a time and manner for cancellation as follows:

a) Time for Cancellation: 3-Day Right of Cancellation. The contract for services must inform the consumer that s/he may rescind the contract within 72 hours, or 3 business days, after entering into the contract. This right of cancellation is in addition to any right of cancellation provided for by Section 2B of the Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505/2B] or any other statute.

b) Business Day Defined. For purposes of calculating the 3-day period discussed in subsection (a) above:

1. Sunday shall not be calculated as a business day.

2. Saturday shall be calculated as a business day.

c) Manner of Cancellation. The contract must inform the consumer how s/he may cancel the contract for services.

14 Ill. Adm. Code 485.60 Signs and Advertising

a) A person subject to this Part shall post on his or her premises the signs described below in English and in every other language in which the person provides or offers to provide assistance in immigration matters. English and foreign language signs shall be posted on separate signs. These individual signs shall be posted in a location where they will be visible to customers. Each sign shall be at least 11 inches by 17 inches, and the print on each sign shall be at least 1-1/2 inches tall. Each sign shall contain the following words or their substantial equivalents:

1. The statement "I AM NOT AN ATTORNEY OR A LEGAL REPRESENTATIVE ACCREDITED BY THE IMMIGRATION AND NATURALIZATION SERVICE."

2. The statement "I AM NOT ACCREDITED TO REPRESENT YOU BEFORE THE IMMIGRATION AND NATURALIZATION SERVICE OR THE UNITED STATES BOARD OF IMMIGRATION APPEALS," if applicable.

3. Any fee schedule or fees charged for services rendered.

4. The statement "YOU MAY CANCEL ANY CONTRACT WITHIN 3 BUSINESS DAYS AND HAVE YOUR MONEY AND DOCUMENTATION RETURNED TO YOU FOR SERVICES NOT PERFORMED."

b) Every person engaged in immigration assistance service who is not an attorney and who advertises immigration assistance service in a language other than English, whether by radio, television, signs, pamphlets, newspapers, or other written communication, with the exception of a single desk plaque, shall post or otherwise include with such advertisement a notice in English and the language in which the advertisement appears. This notice shall be of a conspicuous size, if in writing, and shall state: "I AM NOT AN ATTORNEY LICENSED TO PRACTICE LAW AND MAY NOT GIVE LEGAL ADVICE OR ACCEPT FEES FOR LEGAL ADVICE." If such advertisement is made by radio or television, the statement may be modified but must include substantially the same message.

14 Ill. Adm. Code 485.EXHIBIT A Registration Statement

STATE OF ILLINOIS

OFFICE OF THE ATTORNEY GENERAL

CONSUMER FRAUD BUREAU

100 WEST RANDOLPH STREET - FLOOR 12

CHICAGO, ILLINOIS 60601

REGISTRATION STATEMENT OF IMMIGRATION SERVICE PROVIDER

NOTE: The Registrant shall not, by completing this form, construe such action as an approval or sanction of the business practices of the Registrant by the State of Illinois or the Office of the Attorney General.

Today's Date:______________________

This registration statement, together with verification of malpractice insurance and/or a surety bond in the amount of $100,000, is to be filed with the Office of the Attorney General. When a change in the information contained in either of these statement occurs, the registered immigration service provider must file a statement of amendments within 90 days.

Name of immigration service provider:

Address, City, Zip Code:

Area Code and Telephone:

Legal description of immigration service provider (i.e., corporation, partnership, assumed name, etc.):

Name, address and telephone number of individuals authorized to accept service of process on behalf of the immigration service provider.

Name, address and telephone number of any and all persons who directly or indirectly own or control 10% or more of the immigration service provider's business. (If additional space is needed, attach listing.)

Malpractice Insurance and/or Surety Bond Information.

Please check one of the following, and complete relevant sections below:

____ I have Malpractice Insurance ___ I have a Surety Bond

A. MALPRACTICE INSURANCE INFORMATION

1. Name, address, telephone of Malpractice Insurance

Carrier:

2. Policy No.:

3. Policy Amount:

4. Expiration Date:

B. SURETY BOND INFORMATION

1. Name, address, telephone of Bonding Company:

2. Bond No.:

3. Bond Amount:

4. Expiration Date:

5. Has there, during the existence of the immigration service provider's business operation, ever been any litigation or complaint filed against it by a local or governmental authority of the State of Illinois, any other state, or the United States, relating to the business operations of the registering immigration service provider?

yes no

7. If the answer to question 6 above is "no," complete and notarize the following statement:

I, , under oath, do hereby affirm there has been no litigation or complaint filed against (name of provider) by any local or governmental authority of the State of Illinois, any other state, or the United States.

Signature of Affirmant, Title or Official Capacity

Subscribed and affirmed to before me this day of , .

NOTARY PUBLIC

(Seal)

8. If the answer to question 6 above is "yes," answer the following:

i) Name and address of the plaintiff or complainant.

ii) Name and address of the court or governmental office where the lawsuit or complaint was filed.

iii) Filing number of the lawsuit or complaint brought against the immigration service provider.

iv) Date when the lawsuit or complaint was filed

v) A brief description of the nature of the lawsuit or complaint.

(Attach additional pages if necessary.)

vi) What outcome (i.e., trial, settlement)?

9. If the answer to question 6 above is "yes," complete and notarize the following statement:

I, , under oath, do hereby affirm the foregoing statements and affirm any and all attachments are true and correct.

Signature of Affirmant, Title or Official Capacity

Subscribed and affirmed to before me this

day of , .

NOTARY PUBLIC

(Seal)

14 Ill. Adm. Code 485.EXHIBIT B Verification of Malpractice Insurance

STATE OF ILLINOIS

OFFICE OF THE ATTORNEY GENERAL

CONSUMER FRAUD BUREAU

100 WEST RANDOLPH STREET - FLOOR 12

CHICAGO, ILLINOIS 60601

VERIFICATION OF MALPRACTICE INSURANCE

BY IMMIGRATION SERVICE PROVIDER

NOTE: The Registrant shall not, by completing this form, construe such action as an approval or sanction of the business practices of the Registrant by the State of Illinois or Office of the Attorney General.

Today's Date ________________

Insurance Carrier:

---

---

Address, City, Zip Code

Policy No.: ________________ Coverage Amount: $ _________________________________

Expiration Date: ________________________________________________________________

KNOW ALL PERSONS BY THESE PRESENTS:

That _________________________________________________, (Name of Insured) providing immigration services as defined by Section 2AA of the Illinois Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505/2AA] (hereinafter, "the Act") and located at ______________________________ (address), as insured, and ________________________ (Name of Insurer), are held firmly bound unto the People of the State of Illinois in the penal sum of $100,000, for the payment of which, we bind ourselves, our heirs, executors, successors and assigns, jointly and severally, firmly by these presents.

The insured is engaged in the business of providing immigration services within the meaning of the Act and is required to furnish verification of malpractice insurance coverage.

Violation of the Act by the insured shall constitute malpractice notwithstanding any exclusionary clauses in the policy statement of said malpractice insurance coverage, a copy of which is attached hereto and incorporated herein as Exhibit A.

The Attorney General or State's Attorney of any County may bring an action against the insured for violations of the Act, and the insured shall be obligated for any and all judgments entered against the insured.

The liability of insurer for indemnifying any claim shall be limited to actual damages arising from insured's violation of the Act.

The aggregate liability of the insurer on all claims whatsoever shall not exceed the amount of this policy.

This policy is executed by the insurer to comply with the provisions of the Act, and the policy shall be subject to all of the terms and provisions thereof.

IN WITNESS WHEREOF, the named insured, by a duly authorized officer or representative, has hereunto set its seal, and the named insurer has caused these presents to be signed by its duly authorized officer this _____ day of_____________, ____.

Insured

Insurer

By:

By:

Signature of officer

Signature of officer

or agent

or agent

Address

Address

City, State, Zip Code

City, State, Zip Code

Notary Public

(Seal)

---

AN IMMIGRATION SERVICE PROVIDER IS REQUIRED TO CONTINUOUSLY MAINTAIN MALPRACTICE INSURANCE WITH MINIMUM COVERAGE OF $100,000, OR A SURETY BOND IN THE AMOUNT OF $100,000. THE PROVIDER SHALL ALSO MAINTAIN A SURETY BOND FOR A PERIOD OF 2 YEARS FOLLOWING THE DATE ON WHICH IT CEASES OPERATIONS.

14 Ill. Adm. Code 485.EXHIBIT C Verification of Surety Bond

STATE OF ILLINOIS

OFFICE OF THE ATTORNEY GENERAL

CONSUMER FRAUD BUREAU

100 WEST RANDOLPH - FLOOR 12

CHICAGO, ILLINOIS 60601

VERIFICATION OF SURETY BOND

BY IMMIGRATION SERVICE PROVIDER

NOTE: The Registrant shall not, by completing this form, construe such action as an approval or sanction of the business practices of the Registrant by the State of Illinois or the Office of the Attorney General.

Today's Date: __________________

Bond Number: __________ Bond Amount: $ ________

Expiration Date: _______________________________

KNOW ALL PERSONS BY THESE PRESENTS:

That __________________________________________________, (Name of Principal)

providing immigration services as defined by Section 2AA of the Illinois Consumer Fraud and Deceptive Business Practices Act [815 ILCS 505/2AA] (hereinafter, "the Act"), located at ________________________________________ (address), as principal, and ________________________________________, (Name of Surety) a corporation authorized to transact a general surety business in the State of Illinois, as surety, are held firmly bound unto the People of the State of Illinois in the penal sum of $100,000, for the payment of which, we bind ourselves, our heirs, executors, successors and assigns, jointly and severally, firmly by these presents.

The principal is engaged in the business of providing immigration services within the meaning of the Act and is required to furnish a bond conditioned as herein set forth; and this bond is executed and tendered in accordance therewith.

The conditions of this obligation are that if the principal complies with the provisions of the Act and does not damage any person by any violation of the Act, then this obligation is to be void; otherwise, it is to remain in full force and effect.

The Attorney General or State's Attorney of any County may bring an action against the principal and surety on this bond to recover damages, and the surety shall be obligated for any and all judgments entered against the principal.

The liability of surety for any claim arising under this bond shall not exceed the actual damage arising from principal's violation of the Act.

The aggregate liability of the surety on all claims whatsoever shall not exceed the amount of this bond.

This bond is executed by the surety to comply with the provisions of the Act, and this bond shall be subject to all of the terms and provisions thereof.

IN WITNESS WHEREOF, both the principal and surety, by duly authorized officers or representatives, have hereunto set their seal, and the surety has caused these presents to be signed by its duly authorized officer this _____ day of _____________, ___.

Principal

Surety

By:

By:

Signature of agent

Signature of agent

Address

Address

City, State, Zip Code

City, State, Zip Code

Notary Public

(Seal)

---

AN IMMIGRATION SERVICE PROVIDER IS REQUIRED TO CONTINUOUSLY MAINTAIN MALPRACTICE INSURANCE WITH MINIMUM COVERAGE OF $100,000, OR A SURETY BOND IN THE AMOUNT OF $100,000. THE PROVIDER SHALL ALSO MAINTAIN A SURETY BOND FOR A PERIOD OF 2 YEARS FOLLOWING THE DATE ON WHICH IT CEASES OPERATIONS.

Chapter I Department of Commerce and Economic Opportunity

Part 500 Metropolitan Civic Center Support Program

14 Ill. Adm. Code 500.10 Authority

The Illinois Department of Commerce and Community Affairs, having been created pursuant to Chapter 127, Paragraph 46.1 et seq., Illinois Revised Statutes, has been empowered to administer "An Act creating the Metropolitan Exposition, Auditorium and Office Building Fund and providing for the distribution of proceeds therefrom", effective July 1, 1970, as amended (Ill. Rev. Stat. 1981, ch. 85, pars. 1391 et seq.), which is also known as the "Metropolitan Civic Center Support Act".

14 Ill. Adm. Code 500.20 Definitions

"Act:" means the Metropolitan Civic Center Support Act (Ill. Rev. Stat. 1985, ch. 85, pars. 1391 et seq.).

"Agreement:" means a signed and written document defining the duties and obligations of the Applicant in order to receive financial support from the State.

"Applicant:" means an Authority recognized by the Director as being created and organized prior to July 1 of a program year which submits an Application to the Department pursuant to this Part promulgated by the Department for the administration of the Metropolitan Civic Center Support Act.

"Application:" is that written document submitted by the Applicant in the approved format of the Department seeking State Financial Support for a Project. The following information and documentation must be included in an application: an economic feasibility report, an economic impact report, master building plan and design, documented evidence that the Authority has been created by a county board in accordance with Section 3 of the Metropolitan Civic Center Act (Ill. Rev. Stat. 1985, ch. 85, pars. 1361 et seq.) or by an act of the Illinois General Assembly, a financial plan, and the required local share of total project costs, including evidence that the local share was authorized at a public meeting.

"Authority:" means the Village Board of Trustees of the Village of Rosemont for the sole purposes of rehabilitating, developing and making improvements to the O'Hare Exposition Center, or any Metropolitan Exposition, Auditorium and Office Building Authority, Metropolitan Exposition and Auditorium Authority or Civic Center Authority created or hereafter created by a county board in accordance with Section 3 of the Metropolitan Civic Center Act or by an act of the Illinois General Assembly, except those created pursuant to the Metropolitan Fair and Exposition Authority Act (Ill. Rev. Stat. 1985, ch. 85, pars. 1221 et seq.).

"Base Sum:" means a sum equal to the lessor of:

75% of the Total Project Costs as determined from the Applicant's estimate as contained in the Application; or

.0310 times the Total Assessed Valuation of all taxable property located within the area under the jurisdiction of the Authority for the year 1975 or 1983, whichever is greater, as equalized by the Illinois Department of Revenue in accordance with Sections 146-152 of 'AN ACT to revise the law in relation to the assessment of property and the levy and collection of taxes, and to repeal certain Acts herein named' (Ill. Rev. Stat. 1985, ch. 120, pars. 482 et seq.)

$20,000,000.

"Certification:" means the act of the Director which determines that

the Applicant has been selected through the competitive application process (see Section 500.70) and is eligible to receive State financial support because, in the Director's judgment, the Applicant has satisfied the requirements of the Act and this Part;

adequate funding is available in the Civic Center Bond Fund or, if adequate funds are not available, the Director has received written certification from the Director of the Illinois Bureau of the Budget that the revenues for the last completed fiscal year paid into the MEAOB Fund equal or exceed 175% of the annual debt service required for previously certified applicants and the application(s) under consideration; and,

the total aggregate amounts of Principal certified and outstanding in Civic Center Bonds, other than refunded bonds, in any given time shall not exceed the sum of one-hundred million dollars ($100,000,000) and the Director has determined that Civic Center Bonds can and will be issued based on, but not limited to, such factors as current interest rates, revenue flow in the MEAOB fund.

"Civic Center Bond Fund:" means that Fund referred to in the Act and created in Section 5.158 of "AN ACT in relation to State Finance" (Ill. Rev. Stat. 1985, ch. 127, par. 141.158).

"Department:" means the Illinois Department of Commerce and Community Affairs.

"Director:" means the Director of the Illinois Department of Commerce and Community Affairs.

"Economic Feasibility Report:" The economic feasibility of a proposed Project will be established by a report submitted with and as a part of the Application containing evidence

that the proposed Project has been objectively analyzed in relation to the needs and/or the wants of the Applicant's community;

that the proposed Project responds to specific current and future levels of activity in the Applicant's community;

that the proposed Project will attain operating revenues sufficient to cover operating expenses, local debt service and reasonable reserves, or that by intergovernmental agreement or other satisfactory arrangement, operating deficits, if any, shall be funded from other available sources; and

that the proposed Project will accommodate the proposed set of activities.

The report shall cover the following areas:

Identification of the market area and population to be served by the proposed facility.

Analysis of current Project related activities and projections of those existing and new activities under consideration for the future proposed facility in relation to the inventory of current facilities.

Projection of the most appropriate future levels of activity to be served by the Project.

Conclusion as to the most appropriate facility program to allow current and future activities to be accommodated in an optimum environment.

Identification as to the specific type and size of structural components to meet the appropriate facility program indicated to be economically feasible.

Analysis of operational costs for 5 years i.e., staffing, maintenance and specific costs related to the activities and facilities under consideration.

The evaluation of economic feasibility shall include analysis of the fiscal operation of the proposed Project taking into account the impact of existing and other proposed metropolitan exposition, civic center, or other similar public or private facilities within the market area of the proposed Project.

"Economic Impact Report:" The economic impact of a proposed Project will be established by a report submitted with and as a part of the Application which includes an analysis of the primary and secondary economic benefits due to the influence of the proposed project upon the surrounding area, front-end investment for attracting other investment activities, and other short-term and long-term impacts. The evaluation of the economic impact of a project shall also include an analysis of the impact on existing and other proposed metropolitan exposition, civic center, or other similar public or private facilities within the market area of the proposed project.

"Financial Plan:" means that document submitted with and as a part of the Application which includes but is not limited to:

the estimated Total Project Costs;

the amount of the anticipated Base Sum;

the amount of the required Local Share and a statement of projected annual principal and interest costs of Local Bonds if such bonds are issued to provide payment for the estimated Local Share;

the amount of the required Local Share;

the amount and mechanism for funding any additional Local Share of the estimated Total Project Cost (if applicable); and

the sources of and procedures for obtaining the Local Shares of the estimated Total Project Costs.

"Local Share:" means that portion of Total Project Costs which

in no case shall be less than 25% of the Total Project Costs and must include cash or pledges available on demand for construction in an amount equivalent to 10% of Total Project Costs;

is provided by the Applicant and directly related to the application project under consideration;

is authorized at a public meeting(s); and,

is irrevocably obligated to the Project during the life of the State Support Agreement.

"Master Building Plan and Design" means that document submitted with and as a part of the Application which includes but is not limited to:

Description of Project Location;

Site plan including location of Project facilities on the site(s);

Schematic drawings and design; and

Program statement including Project description and purpose, spatial requirements, estimated construction schedule, and estimated cost of construction.

"Metropolitan Exposition, Auditorium and Office Building (MEAOB) Fund:" means that Fund referred to in the Act and created in Section 5.67 of "AN ACT in relation to State Finance" (Ill. Rev. Stat. 1985, ch. 127, par. 141.67).

"Project:" means those facilities which are single or multi-purpose whose primary function is to provide public entertainment, exhibitions or conventions or to provide related parking facilities described in the Application, and are approved by the Department as acceptable component facilities for the proposed Project, and which the Applicant may purchase, own, construct, improve, extend, repair, reconstruct, regulate, operate, equip and maintain pursuant to the Applicant's rights and powers derived from Article VII of the 1970 Illinois Constitution and applicable statutes and ordinances. Office facilities may be included as an incidental rather than a primary function of a project. Application projects may be divided into phases by the Authority, but dividing the project into phases shall not imply subsequent approval for funding for the delayed phase(s). Each phase will be considered as a separate project by the Department.

"Public Hearing:" means one or more hearings held by the Department on the applications. Such hearings or hearings will be held in compliance with the Open Meetings Act (Ill. Rev. Stat. 1985, ch. 102, pars. 41 et seq.).

"Public Meeting:" means a meeting held in compliance with the Open Meetings Act (Ill. Rev. Stat. 1985, ch. 102, pars. 41 et seq.).

"State:" means the State of Illinois acting through the Director and the Illinois Department of Commerce and Community Affairs.

"State Financial Support:" means a grant by the Department to an Authority with a certified application in an amount which, when added to interest earned by the Authority on such grant, is equal to the Base Sum. This grant is provided from the proceeds of Civic Center Bonds issued by the State pursuant to the Act.

"Total Assessed Valuation:" means the assessed valuation for the year 1975 or 1983, whichever is greater, as equalized by the Illinois Department of Revenue of all taxable property located within the area under the jurisdiction of the Applicant as defined in the statutes under which the Applicant has been created.

"Total Project Cost:" means all necessary and reasonable costs related to the completion of the Project, such as:

rehabilitation, construction, repair or remodeling of existing or new structures;

costs of survey, studies, plans and specifications, and professional services such as architectural, engineering, legal, financial, planning or related services;

property assembling costs, such as acquisition of land and other property, easements and privileges, or rights or interests therein;

demolition and site preparation;

cost of constructing site improvements, public works or improvements;

relocation costs to the extent that the Applicant determines that such costs may be paid or such costs are required by Federal, State or local law;

cost of fixtures, equipment which is necessary for the proper functioning of the facility for its intended purpose, conveyances or appurtenances of a capital nature;

reasonable and documented costs of administration directly related to the completion of construction of the Project and activities related thereto incurred on or after the date of the commencement of preparation of the Economic Feasibility Report or the retention of a planning consultant for the purposes of the development of the Project; and

cost of issuance of insurance and performance bonds, when applicable.

Total Project Cost shall not include normal administrative expenses of the Authority nor Operating Expenses of the completed facility.

History

• Source: Amended at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.30 Computation of Time

a) Computation of any period of time prescribed by this Part shall begin with the first business day following the day on which the act, event or development initiating such period of time occurs and shall run until the end of the last day or the next following business day if the last day is a Saturday, Sunday, legal holiday or State holiday.

b) Notice requirements shall be construed to mean notice received, but proof that notice was dispatched by means reasonably calculated to be received by the prescribed date shall be prima facie proof that notice was timely received.

c) The program year begins July 1 and ends June 30.

d) The period for submission of applications to the Department is from July 1 to August 1 during any program year.

History

• Source: Amended at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.40 Objectives

a) The Legislative objective of the Act is to enhance the ability of those citizens of the State of Illinois to avail themselves of civic and cultural centers situated throughout the entire State.

b) The objectives of the Department are:

1. to provide an equal opportunity for all eligible Authorities as defined in the Act and this Part to apply for State financial support;

2. to uniformly apply this Part in considering all Applications;

3. to assure that an Applicant meets the requirements of the Act and this Part;

4. to provide procedures for expeditious review of Applications;

5. to enhance development of civic and cultural centers throughout the State and thereby enhance economic opportunities of the applicant community;

6. to establish standards under which an Application will be reviewed, competitively ranked, and an Applicant chosen for Certification;

7. to ensure that certified Applicants comply with existing Federal, State and local law; and

8. to assure that all projects are built, constructed and/or renovated in accordance with the Application as Certified.

History

• Source: Amended at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.50 Eligibility

a) Only Authorities as herein defined which have been created and organized prior to a program year are eligible to submit an Application.

b) Only those projects as herein defined may qualify for State financial support under the Act.

c) No Authority may make application for State financial support for projects, singularly or cumulatively, in excess of the Base Sum.

d) Any Authority which files an Application must have held a pre-application consultation with the Department prior to submission of an application.

e) Any Authority which plans to file an Application for State financial support shall inform the Department in writing of such intent at least 90 days prior to the beginning of the period for submission of an Application. Such letter and its date of receipt is not meant to nor does it establish any type of priority for consideration of one application over another.

History

• Source: Amended at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.60 Form of Application

a) All communications relating to application procedures herein defined shall be sent to the Director of the Illinois Department of Commerce and Community Affairs, ATTN: Civic Center Support Program, 620 East Adams Street, Springfield, Illinois 62701.

b) An application shall be in writing and in the approved format provided by the Department upon request.

c) An application shall be submitted as one (1) original and three (3) copies.

d) Information requested within the application includes the following:

1. Legal name and address of Applicant;

2. Amount of financial support in the base sum requested by the Applicant;

3. Name and type of proposed facility and project including address;

4. Names, addresses and telephone numbers of the following persons:

A) contact person;

B) architect, if selected;

C) construction manager, if selected;

D) counsel for applicant, if selected;

5. Data on Applicant eligibility, including type of authority, area of jurisdiction, area population, 1975 or 1983 equalized assessed valuation, date of preapplication consultation;

6. Summary of the enclosed economic feasibility and economic impact studies;

7. Brief description of the facility, including square footage, seating capacity and anticipated functions or activities;

8. A financial plan for funding the facility which must include the amount of State funding requested and the amount of local funding to be provided, with a list of the sources of local funding;

9. A proposed time schedule with estimated completion dates for the following activities:

A) design of facility, program and schematics, design development, working drawings and specifications;

B) construction bid packages;

C) financing for local bond sale, if applicable;

D) construction contract award;

E) construction start and completion;

10. Project budget information, including estimates for professional fees, construction costs, site development costs, off-site work, permanently attached equipment, movable equipment, contingency, purchase of land, purchase of building(s), other expenses with explanation, and total project cost;

11. A five (5) year financial operating plan which includes a forecast of income and expenses with analytical justification for such forecast, plus an operating budget detailing administrative, operation, maintenance and promotional expenses and projecting net profit/loss. If a net loss is projected, the Applicant must designate the source of funds for payment of a deficit;

12. Provision for and information relating to principal and interest payments on a local bond issue, if applicable.

e) All documents and attachments submitted with the Application shall be submitted in the same order in which they appear in the Application format provided by the Department, and each page thereof must be sequentially numbered on the bottom right-hand corner beginning with page 1. The documentation shall include the following:

1. A copy of the Act creating the Authority;

2. Certification by the municipality(ies) or county(ies) of the most recent population count encompassing the area in which the Authority is located;

3. Certification by the County Clerk(s) of the total assessed valuation for the area under the jurisdiction of the applicable Authority for 1975 and 1983;

4. Legal opinion of Applicant's counsel which states:

A) the Authority is eligible to apply for, receive, and use State financial support pursuant to the Act;

B) there are no provisions in the Authority's charter, in the State or federal statutes, or in any municipal or local ordinance which prohibits the Authority from making application to the State to receive funding or from entering into an agreement to receive such funding; and

C) the Applicant's counsel has no knowledge of pending or threatened litigation, in either the State or federal courts which would adversely affect the application;

5. Certified copy of the resolution or ordinance authorizing this application;

6. Certified copy of the resolution, ordinance, or intergovernmental agreement authorizing the local share of the project;

7. Certification by the executive officer of the applicant that all information contained in the application is true and correct;

8. Certified copy of resolution, ordinance, or intergovernmental agreement authorizing payment of deficit in operating and maintenance costs if a deficit is projected;

9. Draft opinion of bond counsel as to the legality of the proposed local bond issue(s) if bonds are to be issued for the local share;

10. Minutes of all meetings of the Authority;

11. Copy of minutes of meeting(s) by appropriate authority in which appointments to the Applicant board was made if the board is an appointed body;

12. Copies of oaths of office of Authority members filed with the Secretary of State;

13. Copies of written commitments to provide local share of total project costs;

14. An independent appraisal of site if it is to be included as part of the local share;

15. An economic feasibility study;

16. An economic impact study; and

17. A master building plan.

f) Each Application including documents and attachments shall be contained in three (3) ring binder cover(s).

g) All documents and attachments submitted in support of the Application shall be submitted with a general index and tab for easy reference.

h) If the application format and requirements outlined above are not followed, the application will not be accepted and will be returned to the Applicant.

History

• Source: Amended at 12 Ill. Reg. 22159, effective December 8, 1988

14 Ill. Adm. Code 500.61 Pre-Application Consultation

a) A Pre-Application Consultation provides an Authority with the opportunity to discuss any of the following topics with the Department:

1. Authority duties and responsibilities;

2. program rules; and

3. requirements contained in the State Support Agreement.

b) Any Authority which plans to file an Application must have a Pre-Application Consultation with the Department prior to submission of an Application. The Pre-Application Consultation shall include a discussion of the proposed project, the financial plan, and the application requirements and procedures.

c) This Pre-Application Consultation shall take place within the year prior to the program year in which the Authority intends to submit an Application for consideration.

History

• Source: Added at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.70 Application Procedures

a) An Application will be considered received when delivered to the office of the Director at 620 East Adams Street, Springfield, Illinois 62701 during the period for submission of applications in a program year.

b) The Director, or the Director's designee, shall issue a receipt to the Applicant acknowledging delivery of the Application including the date the Application was received.

c) Applications shall be made available for public inspection during regular business hours at the principal office of the Authority and the Department's office at 620 East Adams Street, Springfield, Illinois.

d) Initial Review

1. The Director, or the Director's designee, shall notify the Applicant by August 15, or the first business day thereafter that, after an initial review, the Application and attached exhibits are complete on their face. This notice is not in any way an acknowledgement by the Director as to the adequacy or acceptability of the substance of the Application.

2. In the event the Director, or the Director's designee, determines that the Application and its attached exhibits are not complete on their face, and in accordance with the format prescribed by the Department and this Part, the Director, or the Director's designee, shall notify the Applicant by August 15, or the first business day thereafter of such fact along with a list of such deficiencies.

3. Should the Director, or the Director's designee, send a notice of deficiency as required in subsection (d)(2), the Applicant shall have fourteen (14) days from the date of such notice to cure such deficiency. The Application shall be considered null and void and returned to the Applicant if

A) the Applicant fails to supply additional material to cure the deficiency; or

B) the Applicant submits additional material to the Director which in the opinion of the Director does not cure the deficiency.

4. If the deficiency as noted in the list pursuant to subsection (d)(2) is cured, the Director shall notify the Applicant that the Application and attached exhibits are complete on their face in the form and manner provided for in subsection (d)(1).

e) Substantive Review

1. Within sixty (60) days from the date of notification issued pursuant to subsection (d)(1) or (4), the Director shall have conducted the initial review of the application and notify the Applicant of any substantive deficiencies contained in the Application and/or questions needed to clarify information provided in the Application. Substantive deficiencies means the absence of documentation, information or reports required in the application or the failure to complete such materials.

2. The Applicant shall have thirty (30) days from the date of receipt of notice of substantive deficiencies issued pursuant to the provision of subsection (e)(1) to cure such substantive deficiencies through the submission of additional material and/or respond to Department questions.

3. Following the period for submission of additional material to cure the substantive deficiencies and/or answer Department questions, the Director shall notify the Applicant that a public hearing will be held concerning the application.

f) The Department shall hold one or more public hearings on the applications of Authorities which have been notified under subsection (e)(3). Applications may be grouped for hearings by geographic area. Notice of such hearings shall be placed in a newspaper of general circulation in the area of each applicant not more than ten (10) days but at least five (5) days prior to hearing.

g) The applications will be reviewed and competitively ranked. Ranking will be based upon the following criteria:

1. the application is in the prescribed format accompanied by an economic feasibility report, an economic impact report, master building plan and design, documented evidence that the Authority was created pursuant to law, a financial plan, and the required local share of total project costs;

2. the application proposes a facility which accommodates a documented community need. Such documentation should include evidence that the proposed facility does not duplicate existing facilities;

3. the application shows evidence of community support;

4. the application proposes a facility which will provide primary and secondary economic benefits in the area of the Authority as projected in the economic impact report, including such things as job creation, private investments and other benefits; and

5. the application proposes a facility the operational expenses of which are met by the Authority or through other means available to the Authority.

h) Applications will be funded in order of highest rank. However, if the amount available for certification in a given year is insufficient to fund a higher ranked application, the Director shall select the next highest ranked project for which funds are sufficient.

i) Following the public hearing and the application review, the Director shall deny all or a portion of an application if, in the judgment of the Director, the substantive deficiencies contained in the list provided pursuant to subsection (e)(1) have not been cured, the applicant has failed to show that the project's economic feasibility report, master building plan and design, financial plan, or economic impact report satisfies the requirements of Section 500.20.

j) The Director shall prepare and distribute to all Applicants a list of applications selected and the amount approved, and a list of applications denied and the amount denied. Applicants whose requests have been denied shall be provided with the reason for denial in writing.

k) The Director shall certify those applications selected if funding is available in the Civic Center Bond Fund to fund the selected projects or, if funds are not available for the selected projects, to fund the next highest ranked project for which funds are available or after he has sought and received a written certification from the Illinois Bureau of the Budget that the revenues for the last completed fiscal year paid into the MEAOB Fund equal or exceed 175% of the annual debt service required with respect to Civic Center Bonds for previously certified applications and the application(s) under consideration; and, if the Director determines that the sale of Civic Center Bonds for the application(s) under consideration would not, when added to the amount of principal issued and outstanding, exceed the sum of one-hundred million dollars ($100,000,000); and, if the Director determines that the Department will issue Civic Center Bonds based on, but not limited to, such factors as current interest rates, revenue flow in the MEAOB fund.

l) If at any time during the application process, the Department determines that no funding will be available for any projects during a program year, the Department shall return all applications to the Applicants without completing the review process for that program year. Applications returned under this subsection shall be considered denied for that program year.

m) Applications not certified in one year may be updated, e.g., to reflect changes in market conditions, community need and support, financial position and resubmitted in another program year.

n)

1. An Applicant may request that the Director reconsider any adverse decision made by the Director pursuant to subsection (i) above.

2. The Applicant must file a petition with the Department for reconsideration within ten (10) days from the date of the notice to the Applicant of such adverse decision.

3. The petition required by subsection (n)(2) shall contain at a minimum:

A) substantive evidence, except that evidence that was not included in the Application, Amended Application, response to Department request for clarification, or Public Hearing shall not be considered;

B) arguments of fact as to why the Director's decision should be modified; and

C) arguments of law as to why the Director's decision should be modified.

4. The Director shall render a decision based on the petition with all deliberate speed.

5. A petition for review shall stay the effect of subsections (h), (i), (j) and (k) as they pertain to the selection and funding of applications for that program year.

6. An adverse decision as to a petition submitted pursuant to this Section shall be considered a final administrative decision.

History

• Source: Amended at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.80 Department Review Procedures

The Application shall be reviewed by the Department and the Director may, in his discretion, obtain the assistance of other persons and entities either within or outside State government to assist in this review procedure. Such assistance may include professional consultants, such as accountants, architects, attorneys, engineers, planners, etc., applying ordinary professional standards to such review to the extent the Department, pursuant to its administrative abilities, is lacking professional and technical services required to assess feasibility, adequacy, sufficiency and other relevant factors contained in the Application.

History

• Source: Amended at 11 Ill. Reg. 10212, effective May 19, 1987

14 Ill. Adm. Code 500.90 Agreements

a) Agreement between the State and the Applicant – Form. Upon certification, and the Department sale of State of Illinois Civic Center Bonds, if such bonds are required to fund the project, an Agreement must be signed by

1. the Director on behalf of the State, and

2. by the Applicant's officer(s) on behalf of the Applicant, whose signature shall be appropriately witnessed, dated, and accompanied by a certified copy of the resolution of the governing board of the Applicant authorizing the execution of the Agreement.

b) Agreement between the State and the Applicant – Substantive. The Agreement shall contain certain substantive provisions including, but not limited to the following:

1. A recitation of legal authority pursuant to which the Agreement is made;

2. The identification of the Base Sum;

3. The conditions essential to payment of State financial support subject to appropriations, and the irrevocable payment of the Local Share;

4. The amount of financial support provided by the State and the local share provided by the Applicant pursuant to the Agreement;

5. Covenants of the Applicant to the State, which may include, but are not limited to the following including:

A) exercise of diligence in performing its legal duties;

B) compliance with all Federal, State and local laws in executing its responsibilities;

C) application of the State financial support for Total Project Costs only;

D) engagement of professional and other qualified personnel for the purpose of supervising and performing the duties of the Applicant;

E) employment of construction management whose duties shall include the supervision of construction of the Project;

F) construction, operation, maintenance and preparation of all Project facilities prudently, including the development and adoption of procedures containing such controls, techniques, standards and guidelines for Project design and implementation, construction progress and the monitoring thereof, and operation of the Project as the Authority may determine;

G) operate, or cause the Project facilities to be operated through Intergovernmental or Management Agreement approved by the Department, prudently and in a sound and economic manner, and maintain, preserve, and keep the same or cause the same to be maintained, preserved and kept, with the appurtenances and every part and parcel thereof, in good repair, working condition, and from time to time make or cause to be made, all necessary and proper repairs, replacements and renewals so that at all times the operation of the Project may be properly and advantageously conducted;

H) commitment to secure funds for the payment of operating deficits, if any, from sources authorized by Resolution, Ordinance, Intergovernmental Agreement or from private sources;

I) maintenance of insurance with insurers, authorized to do business in the State, to cover the loss of or damage to the entire Project and against public and other liabilities and such other insurance with responsible insurers as is appropriate with such variations as shall reasonably be required to conform to customary insurance practices and necessary to protect the interest of the Applicant and the State. During construction of the project, shall maintain such builder's risk insurance as is customarily carried by owners of buildings with respect to such facilities while under construction, but shall not be required to maintain such insurance to the extent that such insurance is carried for the Authority's benefit by others. Shall also maintain during construction coverage as is normally carried by corporations to meet liability under "AN ACT providing for the protection and safety of persons in and about the construction, repairing, alteration, or removal of buildings, bridges, viaducts, and other structures, and to provide for the enforcement thereof" (Ill. Rev. Stat. 1987, ch. 48, pars. 60 et seq.);

J) abiding by its duties and enforcement of its rights under an intergovernmental cooperation agreement, if the Applicant has entered into an intergovernmental cooperation agreement with another unit of local government, with regard to the Project;

K) agrees that upon completion of the design development phase, the Authority will furnish the Department with a copy of the proposed plans, as submitted by the architect, not less than ten (10) business days prior to approval by the Authority;

L) provide a reconciliation of the monies and revenues available to the Authority, along with a comprehensive Project Construction Budget and the Annual Authority Budget, in such detail, and with such account classifications as determined by generally accepted accounting principles upon the determination of the final costs estimate, and prior to advertising for any bids for a major component facility (as determined by the architect) of the Project, for the Department's approval;

M) prior to commencement of construction of each of the major component facilities of the Project, provide a summary of bid awards along with a trade payment breakdown consistent with such bid awards;

N) building the Project in conformity with the Master Building Plan on file with the Department, and obtaining the consent of the Department prior to authorizing any amendment to the Master Building Plan;

O) proceed to implement and complete the Project within the timetable set forth in the Project application, and expend or obligate all project funds no later than two years from the date of the agreement as required under the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1987, ch. 127, pars. 2301 et seq., as amended by Public Act 85-1214, effective August 30, 1988);

P) agrees to promptly notify the Department upon the occurrence of any events or circumstances (e.g., work stoppages, weather, delays in receiving materials) which may create substantial delays in complying with the timetable set forth in the application, and in such cases shall take due account of recommendations made by the Department to remedy such delays;

Q) providing the Department with copies of all agreements and contracts which the Authority may enter into for the construction, maintenance and operation of the Project and notify the Department of any defaults under any construction contracts let by the Authority;

R) agrees to pay, cause to be discharged or make provision to satisfy and discharge within sixty (60) days after the same shall accrue all lawful claims and demands for labor, materials, supplies or other objects which, if unpaid, might by law become a lien upon the Project or any part therefrom, provided, however, that nothing contained in the Agreement shall require the Authority to pay or cause to be discharged, or make provision for any such lien or charge, so long as the validity thereof shall be contested in good faith and by legal proceedings;

S) requiring, to the extent feasible, that each supplier, developer, prime contractor and subcontractor, which is engaged in the construction or operation of the Project, shall provide opportunities to:

i) minority individuals, women, and lower income persons for training and employment arising in connection with the planning and furnishing of its services and materials; and

ii) business concerns which are owned in substantial part by minority persons and/or women, including where applicable those individuals or firms located in and owned in substantial part by persons residing and doing business in the area of the Project development;

T) providing the Department with copies of all change orders and periodic construction reports from the construction manager for the Project;

U) providing the Department with Closing Docket(s) for all bonds, if any, issued by a unit of local government for the project;

V) providing the Department with copies of the minutes of each meeting of the Authority;

W) providing the Department quarterly account reports during construction and with an audited copy of the Final Construction Cost Report and Final Acceptance Certificate;

X) assurance of sufficient property interest in land or air rights on which construction or reconstruction of the Project will occur;

Y) provision that, if Total Project Costs on completion of the Project are less than the estimated Total Project Cost as indicated in the Application, that portion of State financial support which is in excess of 75% of Revised Total Project Costs shall be returned to the State;

Z) returning all State funds advanced to the Authority, including interest earned thereon, should construction not begin within one year of the agreement;

AA) covenants that no portion of the State financial support provided hereunder will be used, directly or indirectly, in any trade or business carried on by any person other than a governmental unit;

BB) submit to the Department, the annual operating budget and annual audit of the Authority as required by the Act;

CC) agree to pay all taxes and assessments or other municipal or government charges, if any, lawfully levied or assessed upon or in respect of the Project or upon any part thereof when the same shall become due and shall duly observe and comply with all valid requirements of any municipal or governmental authority relative to any part of the project; and

DD) covenants that the Authority shall not create or suffer to be created any lien or charge upon the Project or any part thereof or upon the revenues therefrom;

6. Covenants of the State to the Applicant that the Department agrees to include in its appropriation request an amount necessary to make payments of State financial support to the Applicant;

7. The Interest Income from the investment of State financial support is the property of the State pursuant to the Illinois Grant Funds Recovery Act. Final payment to the Authority when added to interest earned on previous payment(s) plus the payment(s) shall equal the base sum;

8. The State shall have the remedy of enforcing the terms of this Agreement including obtaining a specific performance if it is breached by the Applicant;

9. None of the rights, duties or obligations of the Applicant can be assigned or transferred without the express written consent of the State;

10. The Agreement when executed by the State and the Applicant shall be complete on its face and any modification of the terms or conditions of the Agreement shall be allowed only by the written and signed consent of both parties.

c) Agreement between the State and Applicant – Audit Report and Operating Plan. The Authority agrees to file with the Department an annual audit report and operating plan on the Authority's operation in accordance with Section 6 of the Act.

History

• Source: Amended at 12 Ill. Reg. 22159, effective December 8, 1988

14 Ill. Adm. Code 500.100 Project Changes

a) The Applicant shall make its professional staff consultants who have assisted in the preparation of the Application available at the request of the Department during the period of review.

b) The Applicant shall immediately inform the Department in writing of any material changes in the facts and circumstances described in its Application. At the time of Certification, the Applicant shall certify to the Department that no material changes in the facts and circumstances described in its Application have occurred.

14 Ill. Adm. Code 500.110 Provision for Amendment to This Part

Any interested person or party may petition the Department requesting the promulgation, amendment or repeal of this Part. The petitioner shall specify those portions of this Part affected by the proposed change, and each proposal shall include a statement of the reasons supporting the proposal, including a short and plain statement of the facts known to the proponents which support the proposal, and a short and plain statement of the purpose and effect of the proposal. Where the proposal covers more than one substantive point, the supporting statement shall include statements in support of each point. The petitioner shall submit an original and ten (10) copies of each such proposal to the Department. If, within thirty (30) days after submission of a petition, the Department has not initiated rulemaking proceedings in accordance with this Section, the petition shall be deemed to have been denied.

14 Ill. Adm. Code 500.120 Severability

If any Section, subsection, subdivision, paragraph, sentence, clause or phrase in this Part or any part thereof is for any reason held to be unconstitutional or invalid or ineffective by any Court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Part or any part thereof. It is hereby declared to be the intent of the Department that this Part would have been adopted had such unconstitutional or invalid Section, subsection, subdivision, paragraph, sentence, clause, phrase or part thereof not then been included.

Part 510 Illinois Promotion Act Programs

14 Ill. Adm. Code 510.10 Authority

The Illinois Department of Commerce and Economic Opportunity, having been created pursuant to Executive Order No. 3 (effective 1979), has been empowered to administer the Illinois Promotion Act [20 ILCS 665].

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.20 Definitions

The following definitions are applicable to this Part:

"Act": means the Illinois Promotion Act [20 ILCS 665].

"Applicant": means an organization, unit of local government or other eligible entity, as defined in Section 510.110, 510.210, 510.310 or 510.410, submitting a written request for Program funds appropriated under the Act.

"Application": means a written request for grant funds containing the required information and attachments.

"Convention Center Authority": means an Authority, as defined by the Civic Center Code [70 ILCS 200/2-5], that operates a municipal convention center with contiguous exhibition space ranging between 30,000 and 125,000 square feet. [20 ILCS 665/3(h)]

"Department": means the Department of Commerce and Economic Opportunity of the State of Illinois [20 ILCS 665/3(a)].

"Director": means the Director of the Department of Commerce and Economic Opportunity.

"Economic Impact": means the direct financial result of visitor spending at a tourism destination, attraction or event.

"Eligible Project": means a project that is eligible for funding as defined in Sections 510.120, 510.220, and 510.320.

"Festival": means an organized series of public activities for a specific duration that may include, but are not limited to, cultural performances, exhibitions, fairs, or carnivals that may include music and the service of food and beverages.

"Fiscal Year": means July 1 through June 30, the Fiscal Year of the State of Illinois.

"Grant Agreement": means a written document executed between the Grantee and the Department setting forth the obligations of the Parties, describing the purpose of the grant, identifying the manner in which Grant Funds will be paid and expended, specifying the grant terms during which Grant Funds may be expended, and requiring unspent Grant Funds to be returned to the State.

"Grant Amount" or "Grant Funds": means a monetary amount that the Department shall award to a Grantee for its expenditure on an Eligible Project.

"Grantee": means an organization, unit of local government or other eligible entity, as defined in Section 510.110, 510.210 or 510.310, eligible to receive Program funds appropriated under the Act.

"Incentive": means:

an incentive provided by a municipal convention center or convention center authority for a convention, meeting, or trade show held at a municipal convention center that, but for the incentive, would not have occurred in the State or been retained in the State; or

an incentive provided by a unit of local government for a sporting event held at a municipal amateur sports facility that, but for the incentive, would not have occurred in the State or been retained in the State. [20 ILCS 665/3(i)]

"Ineligible Project": means a project that is ineligible for funding as defined in Sections 510.120, 510.220 and 510.320.

"In Kind Contribution": means noncash contributions necessary to complete the Project for which the cash value is easily documented (i.e., donated labor, equipment, supplies and materials), and that are eligible grant and match line-item expenditures identified in the budget of the Grant Agreement.

"Local Promotion Group": means any non-profit corporation, organization, association, agency or committee thereof formed for the primary purpose of publicizing, promoting, advertising or otherwise encouraging the development of tourism in any Municipality, county or region of Illinois. [20 ILCS 665/3(b)]

"Matching Funds": means the portion of the Total Project Cost that is provided by the Grantee. Matching Funds shall not be funds from other Department funded grant programs or used to match any other grant, and are necessary and irrevocably obligated to the Project.

"Municipal Amateur Sports Facility": means a sports facility that:

is owned by a unit of local government;

has contiguous indoor sports competition space;

is designed to principally accommodate and host amateur competitions for youths, adults, or both; and

is not used for professional sporting events for which participants are compensated for their participation. [20 ILCS 665/3(f)]

"Municipal Convention Center": means a convention center or civic center owned by a unit of local government or operated by a convention center authority, or a municipal convention hall as defined in Section 11-65-1(1) of the Illinois Municipal Code [65 ILCS 5], with contiguous exhibition space ranging between 30,000 and 125,000 square feet. [20 ILCS 665/3(g)]

"Municipality": means "Municipality" as defined in Section 1-1-2(1) of the Illinois Municipal Code. [20 ILCS 665/3(d)]

"Office of Tourism": means the division of the Department that has delegated authority to perform all administrative functions relating to the Act.

"Private Sector": means any non-governmental entity.

"Program": means the Tourism Marketing Partnership Program, Tourism Attraction Development Loan and Grant Program, or the Tourism Private Sector Grant Program described in this Part.

"Project": means the activity or program of activities, described by the Applicant in the Application and approved by the Department, for which a grant is awarded.

"Promotional Activities" means:

preparing, planning and conducting campaigns of information, advertising and publicity through such media as newspapers, radio, television, magazines, trade journals, moving and still photography, posters, outdoor signboards and personal contact within and without the State of Illinois;

dissemination of information, advertising, publicity, photographs and other literature and material designed to carry out the purpose of the Act; and

participation in and attendance at meetings and conventions concerned primarily with tourism, including travel to and from those meetings. [20 ILCS 665/3(c)]

"Supporting Visitor Services": means accommodations, restaurants, shopping, and recreational and cultural activities located within a reasonable distance from the location of the Tourism Attraction, Tourism Destination or Tourism Event being promoted.

"Total Project Cost": means all necessary and reasonable costs related to the completion of the Project as identified in the budget of the Grant Agreement.

"Tourism": means travel 50 miles or more one-way, or an overnight trip outside of a person's normal routine. [20 ILCS 665/3(e)]

"Tourism Attraction": means fishing and hunting areas, State parks, historical/cultural sites, areas of historic or scenic interest, museums, recreation areas, botanical gardens, theme/amusement parks, interpretive programs and other facilities or businesses that attract or serve visitors that are open to the public for a minimum of 100 days per year (if the Tourism Attraction is entirely event driven, then it shall be open for a minimum of 200 hours per year), and are marketed and promoted to visitors from more than 50 miles away.

"Tourism Destination": means a city, town or other area the economy of which is dependent on revenues accruing from tourism.

"Tourism Event": means an event, such as a major convention, trade show, sporting activity or festival, with potential to attract visitors from outside a 50-mile radius and to produce significantly increased Economic Impact for the State of Illinois through overnight stays.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.30 Form of Application

a) All communications relating to the Application procedures defined in Section 510.40 shall be sent to the Illinois Office of Tourism of the Illinois Department of Commerce and Economic Opportunity at the address identified in the Notice of Funding Opportunity.

b) An Application shall be typed or computer generated using the current approved format provided by the Department.

c) An Application shall include information and supporting documents that will enable the Department to evaluate the Application based on the criteria described in Sections 510.160, 510.260 and 510.360.

d) Each Application, including supporting documents and attachments, shall be contained under a single cover.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.40 Application Procedures

a) Upon request, the Department shall supply interested entities with Application guidelines and instructions that describe the Program rules, required information, and attachments. Applications under these Programs will be accepted on an ongoing basis beginning May 1, with grants awarded July 1 through the end of each Fiscal Year, or until all appropriated funds have been awarded. Applicants should submit their Application at least 60 days prior to the Project initiation date in order to be considered for funding. However, depending on the purpose of the grant, the need for the grant, the Economic Impact to the State, and the timeliness of the event, it is within the Department's discretion to waive this 60 day period.

b) An Application will be considered delivered and submitted on the date it is postmarked or hand delivered to the Office of Tourism at the Department's Springfield address: 620 East Adams, Springfield, IL 62701; or received electronically at the email address identified in the Notice of Funding Opportunity.

c) Within 30 business days after the Department receives the Application, the program manager shall notify the Applicant whether, after a brief review, the Application and attachments, if any, are complete. This notice is not in any way an acknowledgment by the Department as to the adequacy of the substance of the Application. If the Application and attachments are incomplete, the Applicant shall be notified of the deficiencies. The Applicant will then have 20 business days to cure any deficiencies. In the event the Applicant fails to cure all deficiencies within the 20 business days, the Application shall be considered null and void and returned to the Applicant.

d) Within 90 days from the date an Application is determined to be complete, the program manager shall notify the Applicant whether the Application has been approved or rejected. If the Application has been rejected, the notification shall state the reasons for that determination.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.50 Grant Agreement

a) When an Application has been approved for funding, the Grantee and the Department shall execute a Grant Agreement. If the Project is initiated and costs are incurred before the Department approves the Application, the Department bears no responsibility for those costs in the event the Application is denied or the grant is funded at less than the amount requested.

b) The Grant Agreement shall contain substantive provisions, including, but not limited to, the following:

1. A recitation of legal authority pursuant to which the agreement is made;

2. An identification of the Project scope and schedule, and the work or services to be performed or conducted by the Grantee;

3. An identification of the Grant Amount;

4. The conditions and manner in which the Department shall pay the Grant Amount subject at all times to annual appropriation by the Illinois General Assembly;

5. The Grantee agrees to provide and pay the applicable Matching Funds of the Total Project Cost;

6. The Grantee agrees not to assign or transfer any of the rights, duties or obligations of the Grantee without the written consent of the Department;

7. The Grantee agrees not to amend the Project scope or budget without the Department's written consent. Failure to do so will result in a cost disallowance. The Project must be completed by the end date stated in the Grant Agreement unless a written modification request for an extension of time is submitted before the grant end date and approved by the Department;

8. The Grantee agrees to expend the Grant Amount and any accrued interest only for the purposes of the Project as stated in the Grant Agreement and approved by the Department;

9. The Grantee agrees not to enter into any written or oral agreement or understanding with any party that might be construed as an obligation of the State of Illinois or the Department for the payment of any funds under the Act; and

10. The Grantee agrees to acknowledge the Department's participation in the Project by displaying the Department's current logo and/or providing a statement that identifies the Project as being developed and/or funded in cooperation with the Department/Office of Tourism. Grantee's failure to utilize the Department logo correctly (e.g., size, placement, etc.) or statement may result in a 10% deduction of the Total Project Cost.

History

• Source: Amended at 35 Ill. Reg. 18608, effective October 28, 2011

14 Ill. Adm. Code 510.60 Computation of Time

Computation of any period of time prescribed by this Part shall begin with the first business day following the day on which the act, event or development initiating that period of time occurs, and shall run until the end of the last day or the next business day if the last day is a Saturday, Sunday or federal or State holiday. Timeliness shall be deemed by the date of postmark, the date of hand delivery, or the date received electronically by the designated email address.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.70 Severability (repealed)

History

• Source: Repealed at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.80 Administrative Requirements for Grants

a) Termination of Grant – Grants shall be terminated for the following reasons:

1. Termination Due to Loss of Funding – In the absence of State funding for a Fiscal Year, all grants for that year will be terminated in full. In the event of a partial loss of State funding, the Department will make proportionate cuts to all Grantees. In the event the Department suffers such a loss of funding in full or part, the Department will give the Grantee written notice setting forth the effective date of full or partial termination or, if a change in funding is required, setting forth the change in funding and changes in the approved budget.

2. Termination for Cause

A) If the Department determines that the Grantee has failed to comply with the terms and conditions of the grant or this Part, the Department may terminate the grant in whole, or in part, at any time before the date of completion. Circumstances that will result in the termination of a grant include, but are not necessarily limited to, the following: consistent failure to submit required reports; failure to maintain required records; evidence of fraud and abuse; and consistent failure to meet performance standards. These circumstances are explained in the Grant Agreement.

B) The Department shall notify the Grantee in writing, within 10 working days after the determination to terminate, of the reasons for the termination and the effective date of the termination. Payments made to the Grantee or recoveries by the Department shall be made in accordance with legal rights and liabilities in the Grant Agreement and the Illinois Grant Funds Recovery Act [30 ILCS 705].

3. Termination by Agreement – The Department and the Grantee shall terminate the grant in whole or in part when the Department and the Grantee agree that the continuation of the Program objectives would not produce beneficial results commensurate with the future expenditure of funds. The Department and the Grantee shall agree upon termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. The Grantee shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the Grantee for the Department's share of the noncancelable obligations, properly incurred by the Grantee prior to termination.

b) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act, all interest earned on Grant Funds held by the Grantee under the grant shall become part of the grant when earned. Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department under the grant close-out process described in subsection (c).

c) Grant Close-out – In accordance with Section 4 of the Illinois Grant Funds Recovery Act, any Grant Funds not expended or legally obligated, including any interest, remaining at the end of the grant period or at the expiration of the period of time Grant Funds were available for expenditure or obligation by the Grantee, shall be returned to the Department within 45 days after the end of the grant term.

d) Audits – A Grantee shall be responsible for securing an audit for any grant award exceeding $500,000. Additionally, an audit may be required when certain risk conditions exist, including, but not limited to, a negative compliance history and disclosure of previous material audit findings. The audit shall be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act [225 ILCS 450]. The audit shall be conducted in accordance with generally accepted auditing standards contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York, New York 10036 (June 2015, no later editions are incorporated).

e) Special Audits – The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours, of the funds expended under Department grants.

f) Monitoring and Evaluation – Grantee shall permit any agent authorized by the Department, the Office of Inspector General, the Auditor General of the State of Illinois, or any of their duly authorized representatives, upon presentation of credentials, in accordance with the constitutional limitation on administrative searches, to have full access to and the right to examine any documents, papers and records of the Grantee involving transactions related to a grant from the Department. Once the Department has concluded its monitoring activities, the Grantee will be notified of the Department's determination and findings, if any. If a determination containing findings of noncompliance has been made by the Department, the Grantee will be allowed an opportunity to cure any and all noncompliance issues. If any noncompliance issues cannot be resolved, the Department will issue a final determination requesting that the Grantee repay any funds that are determined by the Department to have been spent in violation of the Grant Agreement. If the Grantee fails to comply with the Department's final determination, the Department shall issue a final notice to the Grantee providing it the opportunity to invoke its rights under the Illinois Grant Funds Recovery Act.

g) Complaint Process – An administrative hearing is initiated by a party serving a Petition for Hearing on the Department, or by the Department serving a Notice of Charges on the Grantee. In either case, the Department and the Grantee shall follow the Administrative Hearing Rules set forth in 56 Ill. Adm. Code 2605.

h) Certifications – The Grantee shall certify that it has not been barred from contracting with a unit of State or local government as a result of a violation of Sections 33E-3 and 33E-4 of the Criminal Code [720 ILCS 5].

i) Reports – Grantee shall submit, as required by the Department, reports on the financial status of the Project and reports on outcomes and results of the Project.

History

• Source: Amended at 40 Ill. Reg. 10844, effective July 29, 2016

14 Ill. Adm. Code 510.110 Purpose

Section 5 of the Act authorizes the Department to make grants to counties, municipalities, not-for-profit organizations, and Local Promotion Groups located in the State of Illinois to assist in the promotion of Tourism Attractions, Tourism Destinations, and Tourism Events in Illinois.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.120 Eligible Uses of Grant Funds

a) Eligible Promotional Projects and Activities – The Program shall provide matching grants to eligible Applicants to assist in promotional activities including, but not limited to, the following:

1. Travel Related Promotional Materials: Costs related to production, design and distribution of travel related brochures, visitor guides, direct mail literature or travel guides that are primarily used to promote areas outside of 50 miles from the Tourism Attractions, Tourism Destinations or Tourism Events in Illinois;

2. Media: Costs related to production, design and placement for print advertising, radio advertising, on line advertising, out of home advertising and television advertising directed toward areas outside of 50 miles from the Tourism Attraction, Tourism Destination or Tourism Event in Illinois;

3. Billboards: Costs related to design and production of billboard artwork and rental of billboard space directed toward areas outside of 30 miles from the Tourism Attraction, Tourism Destination or Tourism Event in Illinois, unless the billboard is placed on an intrastate;

4. Web Sites: Costs related to Web site development, including hosting fees, domain registration and related maintenance fees, search engine optimization and key word searches;

5. Market Research: Costs to conduct research to optimize the effectiveness of marketing the Tourism Attraction, Tourism Destination or Tourism Event in Illinois to areas outside of 50 miles;

6. Travel/Trade Shows: Costs related to travel/trade show booth space rental and related expenses, including travel show registration fees for domestic and international marketing, utilities, furniture rental, cleaning, etc.;

7. Visitor Inquiries: Costs related to telephone expenses for toll free telephone numbers for visitor inquiries;

8. Mail Promotions: Costs of the purchase and use of mailing lists for direct mail promotions, provided the promotional material is printed under this Program and provided the postage is billed at bulk rate;

9. Promotional Publications: Expenses for shipping and distribution of promotional publications printed under this Program to State funded Tourism information centers;

10. Ad Campaigns: Costs related to email newsletters and ad mail campaigns primarily directed towards visitors outside a 50 mile radius from the Tourism Attraction, Tourism Destination or Tourism Event in Illinois; and

11. Maps: Costs related to the design and production of maps illustrating the Tourism Attractions of an area being promoted.

b) Ineligible Promotional Projects and Activities – Projects and activities ineligible for funding are those that do not contribute to increasing visitation and travel expenditures in the State, including, but not limited to:

1. Administrative expenses (e.g., stationery, envelopes, basic telephone service charges except for toll free number phone expenses for visitor inquiries, rent, newsletters, supplies, personnel or equipment, and grant management fees);

2. Normal postage, distribution and shipping expenses, except for those allowed in subsections (a)(8) and (a)(9);

3. Association or organizational dues;

4. Street banners, bumper stickers, placemats, or any type of specialty items;

5. Any type of quick-print materials;

6. Purchase or rental of projectors, television sets, or video recorders;

7. Projects solely promoting for-profit entities;

8. Event production expenses (e.g., audio equipment, awards, entertainment, fireworks, portable restrooms, hired labor, refreshments, etc.);

9. Travel expenses (transportation, lodging, per diem); and

10. Promotion of county fairs.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.130 Allocation of Appropriations

Annual appropriations made by the Illinois General Assembly to the Department for the purpose of making grants under Section 5 of the Act for promotional activities are allocated by the Department pursuant to Section 8(1) of the Act.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.140 Funding Limitation

The Total Project Cost must equal or exceed $20,000 in order to be considered for a grant award.

a) Up to 50 percent of the Total Project Cost may be funded for Projects that generate significant visitation and overnight stays to the area.

b) The maximum Grant Amount for any one Grantee in a Fiscal Year shall be $100,000, unless a Project is a cooperative marketing project initiated by the Department that includes multiple partners across multiple Local Tourism Convention Bureau jurisdictions. Grantees are limited to one grant application per Fiscal Year. However, if on February 1 of any given year, remaining Grant Funds are available, Grantees who have reached the maximum Grant Amount of $100,000 may submit an additional application for consideration.

c) Grantees that charge "for-profit" participants for inclusion in promotional projects must also include the promotion of the entire destination in advertisements. Charges for participation from any source cannot exceed the match requirement or it will lower the Department's grant award.

History

• Source: Amended at 35 Ill. Reg. 18608, effective October 28, 2011

14 Ill. Adm. Code 510.150 Matching Funds

As provided for in Section 510.140, the Grantee shall provide Matching Funds to the Total Project Cost that:

a) Are identified in the budget of the Grant Agreement;

b) In no case shall be less than 50 percent of the Total Project Cost;

c) Are not funds from other Department funded grant programs or funds used to match any other grants; and

d) Are necessary and irrevocably obligated to the Project.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.160 Evaluation and Selection Process

a) The Department's internal review committee shall conduct an evaluation of each Application. Each question will be scored using a rating system of 1-10 with 10 being the highest possible score per question, with a maximum possible score of 100. The criteria used in determining whether an Application will be considered for a grant award include, but are not limited to, the following:

1. To what extent does the Project promote a viable Tourism Attraction, Tourism Destination or Tourism Event located within 30 miles of an area with Supporting Visitor Services?

2. To what extent is the Project part of the Applicant's overall marketing plan?

3. To what extent does the Project include repeat marketing efforts and to what extent do the results from those efforts justify repeat funding?

4. To what extent do the geographic advertising markets appear reasonable and based upon research?

5. To what extent will a majority of the marketing be targeted to attract visitors from outside 50 miles?

6. To what extent does the Project encompass multiple attractions, municipalities, or counties?

7. To what extent does the Project demonstrate how it will increase visitation, length of stay and/or Tourism expenditures from outside 50 miles?

8. To what extent does the Project include tracking and evaluation measures?

9. To what extent will the Project have a significant impact on the area's overall tourism efforts?

10. To what extent will the Project have a significant impact on the State's overall tourism efforts?

b) The scores of the Department's internal review committee are averaged to obtain the Application's total score. An Application must receive a minimum of 60 of 100 possible points to be considered eligible for funding. The internal review committee shall forward all eligible Applications, together with its recommendations, to the Director for final determination. During the final review process, the Director will determine whether an eligible Application is awarded a grant.

History

• Source: Amended at 35 Ill. Reg. 18608, effective October 28, 2011

14 Ill. Adm. Code 510.210 Purpose

Section 8a of the Act authorizes the Department to make grants and loans to counties, municipalities, not-for-profit organizations, local promotion groups, and for-profit businesses for the development or improvement of tourism attractions in Illinois.

14 Ill. Adm. Code 510.220 Eligible Uses of Grant and Loan Funds

a) Eligible Projects and Activities – The Program shall provide grants and loans to eligible Applicants for Projects and activities including, but not limited to, the following:

1. Capital Projects – land and building acquisition, construction and renovation of buildings for the purpose of creating or enhancing a Tourism Attraction;

2. Equipment – purchase and installation of machinery and equipment designed to create or enhance the Tourism Attraction, or rental of equipment for a Festival;

3. Training – development and presentation of hospitality, quality service and/or other types of tourism training programs intended to provide a competitive workforce for the tourism industry of Illinois;

4. Interpretive Programs – creation, implementation and staffing of, and fabrication of exhibits for, interpretive programs located within historic/cultural sites.

b) Ineligible Projects and Activities – Projects and activities ineligible for funding include, but are not limited to, the following:

1. Debt refinancing;

2. Contingency funding;

3. Normal operating expenses; and

4. Administrative expenses except administrative expenses to hire temporary staff for Festivals; and

5. Purchase of alcoholic beverages.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.230 Allocation of Appropriations

Annual appropriations made by the General Assembly to the Department for the purpose of making loans and grants under Section 8a of the Act may be used by the Department in any county in the State.

14 Ill. Adm. Code 510.240 Funding Limitation

a) For grants awarded under Section 8a(1) of the Act, the Department shall provide no more than 50 percent of the entire amount of actual expenditures for a single Project, with grants not to exceed $1,000,000.

b) For grants awarded under Section 8a(2) of the Act, the Department shall provide no more than 75 percent of the entire amount of actual expenditures for a single Project, with grants not to exceed $1,000,000.

c) For grants awarded under Section 8a(1) and 8a(2) of the Act to for profit businesses, the Department shall provide no more than 25 percent of the entire amount of actual expenditures for a single Project, with grants not to exceed $1,000,000.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.250 Matching Funds

a) The Grantee shall provide Matching Funds to the Total Project Cost that:

1. Are identified in the budget of the Grant Agreement;

2. Conform to the requirements of Section 510.240 for match amount;

3. Are not funds from other Department funded grant programs or funds used to match any other grants; and

4. Are necessary and irrevocably obligated to the Project.

b) Allowable match includes:

1. Term loan proceeds, bond sale proceeds, or other forms of financial institution participation;

2. Other public grant or loan program funds;

3. Retained earnings, proceeds of a public stock offering, or other cash equity, excluding pre-project officer notes payable, off-balance sheet debt financing and goodwill;

4. Local hotel/motel tax, membership dues, or other cash contributions; and

5. In Kind Contributions necessary to complete the Project and for which the cash value is easily documented (i.e., donated labor, equipment, supplies and materials), and that are eligible grant and match line-item expenditures identified in the budget of the Grant Agreement. In Kind Contributions may only be used as allowable match by municipalities, counties, not-for-profit organizations, or Local Promotion Group and cannot exceed 25 percent of the match requirement.

c) Unallowable match includes:

1. Costs incurred or funds expended prior to the date of the grant or loan award, unless those costs are approved by the Department as being otherwise compliant with the provisions of this Part and consistent with the purposes of the Act;

2. Funds from other Department funded grant programs (although they may be used to further the Project);

3. Existing equipment, buildings, furnishings, or inventory, already owned;

4. Lines of credit;

5. Contract for deed without a due and payable clause or that is an apparent substitution for simple rent;

6. Post-Project costs such as normal operational expenses;

7. Debt refinancing; and

8. In Kind Contributions, if the Grantee is a for-profit business.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.260 Evaluation and Selection Process

a) The Department's internal review committee shall conduct an evaluation of each Application, with a maximum cumulative score of 100. The criteria used in determining whether an Application will be considered for a grant award include, but are not limited to, the questions listed on the Notice of Funding Opportunity and the following:

1. Description of activities proposed to be undertaken during the grant period;

2. Budget requesting grant funds for eligible costs including justification for costs requested; and

3. The impact of the Project on the local economy.

b) The scores of the Department's internal review committee are averaged to obtain the Application's total score. An Application must receive a minimum of 60 out of 100 possible points to be considered eligible for funding. The internal review committee shall forward all eligible Applications, together with its recommendations, to the Director for final determination. During the final review process, the Director will determine whether an eligible Application is awarded a grant.

c) Financial Evaluation Component − The Department shall conduct a financial analysis of the loan Application submitted by for-profit companies. The Department shall review the company's financial statements, including the annual balance sheets and profit and loss statements for the past 3 years, as well as the most recent 90 days, and a 3 year projected balance sheet and profit and loss statement, and a one year monthly cash flow statement. A comprehensive business plan or company annual reports may be submitted in lieu of the aforementioned material. This shall be reviewed through a standard credit analysis that will determine the: liquidity and debt coverage for the Project; ability of the company to manage debt; business trends; and projected earnings. This data will be compared to similar data for companies in the same industry using the 1999-2000 (no later amendments or editions included) "RMA Annual Statement Studies", published by Risk Management Association, One Liberty Plaza, 1650 Market, Suite 2300, Philadelphia PA 19103, or a comparable source if the industry is evaluated by this source or a comparable source. This standard credit analysis will determine the financial stability of the company and need for funding.

History

• Source: Amended at 46 Ill. Reg. 11991, effective July 1, 2022

14 Ill. Adm. Code 510.270 Administrative Requirements for Loans

a) Loan Terms – The Department shall negotiate the loan terms and amortization schedule. All payments shall be applied first to interest and then to principal.

b) Default – Upon default, the entire principal of the loan, and any interest accrued thereon, shall become immediately due and payable upon the written demand of the Department, without any other notice or demand of any kind or any presentiment of protest, when one of the following events occurs. However, if the Borrower's payments have been deferred, the Borrower shall remit payments in accordance with the deferred payment plan. The Department may grant payment deferrals on a case by case basis after reviewing the Borrower's financial statements and projections in determining whether the Borrower will be able to make payments at a future date.

1. Failure to Remit Payments – The Borrower shall be considered to have breached the loan agreement when a scheduled payment is not timely remitted and remains unpaid for 15 days from the due date.

2. Inaccurate Representation – The Borrower shall be considered to have breached the loan agreement if it furnishes any inaccurate information, whether expressed or implied, to the Department in connection with the execution and/or delivering of the loan agreement.

3. Breach of Terms – If the Borrower fails to perform or comply with any of its obligations or duties under the terms of the loan agreement and if that nonperformance is not cured within 30 days after notice to the Borrower, the Borrower shall be held in default after either:

A) the nonperformance becomes known to an executive officer of the Borrower; or

B) written notice is given to the Borrower by the Department.

c) Notice of Default – The Department shall give the Borrower written notice of any breach specified in this Section. In the event the Borrower fails to cure the breach within 30 days after the notice, the Borrower shall be held in default.

d) Maintenance and Insurance of Property

1. The Borrower shall at all times maintain the property provided as security for the loan in such condition and repair that the Department's security will be adequately protected.

2. The Borrower shall maintain, during the term of the loan, adequate (at least covering the amount of the loan) hazard (e.g., tornado, hail, acts of God) insurance policies providing fire and extended coverage for all such other hazards. Insurance coverage shall be issued by an insurance company authorized to do business in the State of Illinois, with loss payee clauses in favor of the Department.

3. If at any time during the life of the loan, the Borrower's property is declared to be within a flood hazard area, the Borrower shall purchase federal flood insurance, if available. The flood insurance shall be equal to the amount of the loan.

4. The Borrower shall maintain liability and worker's compensation insurance.

5. The Borrower shall provide written notice to the Department of any public hearing or meeting before any administrative or other public agency that may, in any manner, affect the chattel, personal property or real estate securing the loan.

14 Ill. Adm. Code 510.310 Purpose

Section 5(b) of the Act authorizes the Department to make grants to Illinois not-for-profit organizations, for-profit entities, counties, municipalities and Local Promotion Groups to match funds from sources in the Private Sector for the purpose of attracting and hosting Tourism Events.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.320 Eligible Uses of Grant Funds

a) Eligible Projects and Activities – Activities eligible for funding include, but are not limited to, the following costs associated with attracting and hosting events:

1. Advertising and marketing activities directed toward areas outside of 50 miles from the event;

2. Transportation and housing;

3. Prize/award money;

4. Building or equipment rental;

5. Receptions and banquets;

6. Registrations;

7. Entertainment and speakers;

8. Programming;

9. Photography, postage and printing;

10. Audiovisual;

11. Telemarketing;

12. Promotional items; and

13. Temporary staff.

b) Ineligible Projects and Activities – Activities that are ineligible for funding include, but are not limited to, the following:

1. Developing or making permanent improvements to facilities;

2. Purchase of equipment;

3. Normal payroll or operating expenses; and

4. Purchase of alcoholic beverages.

c) Grant Funds cannot be used to assist one community in attracting an existing Illinois event from another Illinois community. If multiple eligible Illinois entities apply for a grant associated with attracting the same event, no entity will receive Grant Funds for the attraction of that event. If an Illinois entity is successful in its bid and gets the event, Grant Funds may be available to that entity for the hosting of the event.

d) Costs associated with hosting existing or repeat events will not be eligible unless documentation can be provided that the event was secured in direct competition with other states or significant enhancements will be made to the event to increase the attendance from travel outside 50 miles.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.330 Allocation of Appropriations

Annual appropriations made by the Illinois General Assembly to the Department for the purpose of making grants under Section 5 of the Act to match funds from the Private Sector may be used by the Department in any county of this State.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.340 Funding Limitation

The Department shall provide no more than 50 percent of the entire amount of eligible expenditures for a single Project. Total Project Costs must be a minimum of $20,000.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.350 Matching Funds

a) The Grantee shall provide Matching Funds to the Total Project Cost that:

1. Are identified in the budget of the Grant Agreement;

2. In no case shall be less than an amount equal to the grant award;

3. Are not other government funds or funds used to match any other grants; and

4. Are necessary and irrevocably obligated to the Project.

b) Allowable Match

1. Private Sector funds − Grant funds must be matched with dollar-for-dollar cash funding from the Private Sector.

2. Up to 25 percent of the amount required in subsection (b)(1) may be substituted with In Kind Contributions from the Private Sector for which the value is easily documented, such as hotel services and transportation company services.

c) Unallowable match includes:

1. Costs incurred or funds expended prior to the date of the grant award, unless those costs are approved by the Department as being otherwise compliant with the provisions of this Part and consistent with the purposes of the Act;

2. Post-Project costs not identified in the budget of the Grant Agreement;

3. Funds from sources other than the Private Sector (although they may be used to further the Project);

4. Funds used as match for other grant programs; and

5. Normal operational expenses such as payroll costs, office and equipment rental, utilities, etc.

History

• Source: Amended at 32 Ill. Reg. 13443, effective July 29, 2008

14 Ill. Adm. Code 510.360 Evaluation and Selection Process

a) The Department's internal review committee shall conduct an evaluation of each Application. Each question will be scored using a rating system of 1-10 with 10 being the highest possible score per question, with a maximum possible score of 100. The criteria used in determining whether an Application will be considered for a grant award includes, but is not limited to, the following:

1. To what extent is the event being held within 30 miles of an area with Supporting Visitor Services?

2. To what extent are the costs itemized on the budget reasonable and necessary to hold the event?

3. To what extent will the event be marketed to visitors from areas outside 50 miles of the event?

4. To what extent will the event attract visitors from outside a 50-mile radius?

5. To what extent will the event generate media coverage outside the local area?

6. To what extent will the event increase visitation, length of stay and/or Tourism expenditures from outside 50 miles?

7. To what extent are there established tracking and evaluation measures for the event?

8. To what extent will State and local tax revenue will be generated (assuming 6.9 cents in State and local taxes generated for every $1 in visitor expenditures) in comparison to the amount requested?

9. To what extent will the event have a significant impact on the area's overall tourism efforts?

10. To what extent will the event have a significant impact on the State's overall tourism efforts?

b) The scores of the Department's internal review committee are averaged to obtain the Application's total score. An Application must receive a minimum of 60 out of 100 possible points to be considered eligible for funding. The internal review committee shall forward all eligible Applications, together with its recommendations, to the Director for final determination. During the final review process, the Director will determine whether an eligible Application is awarded a grant.

History

• Source: Amended at 35 Ill. Reg. 18608, effective October 28, 2011

14 Ill. Adm. Code 510.410 Purpose

Section 8b of the Act authorizes the Department, until July 1, 2020, to make grants to a unit of local government, municipal convention center, or convention center authority that provides incentives for the purpose of attracting conventions, meetings and trade shows to municipal convention centers and attracting sporting events to municipal amateur sports facilities.

History

• Source: Added at 40 Ill. Reg. 10844, effective July 29, 2016

14 Ill. Adm. Code 510.420 Eligible Applicant

a) Eligible Projects and Activities – The Municipal Convention Center and Sports Facility Incentive Grant Program shall provide grants to a unit of local government, municipal convention center, or convention center authority for Projects and activities including, but not limited to, publicizing, promoting, advertising or otherwise attracting:

1. conventions, meetings and trade shows to municipal convention centers; or

2. sporting events to municipal amateur sports facilities.

b) Grants awarded under Section 8b of the Act shall be based upon the net proceeds received under the Hotel Operators' Occupation Tax Act [35 ILCS 145] for the renting, leasing or letting of hotel rooms in the municipality for the month in which the convention, meeting, trade show or sporting event occurs.

History

• Source: Added at 40 Ill. Reg. 10844, effective July 29, 2016

14 Ill. Adm. Code 510.430 Allocation of Appropriations

Annual appropriations made by the General Assembly to the Department for the purpose of making grants under Section 8b of the Act may be used by the Department in any county in the State.

History

• Source: Added at 40 Ill. Reg. 10844, effective July 29, 2016

14 Ill. Adm. Code 510.440 Funding Limitations

a) The net proceeds received under the Hotel Operators' Occupation Tax Act for the same month in the three immediately preceding years must exceed the average of those three years in order to be reimbursed.

b) Grants shall not exceed 80% of the incentives amount provided by the unit of local government, municipal convention center, convention center authority or municipal sports facility.

c) In no event may the aggregate amount of grants awarded to a single municipal convention center, convention center authority or municipal sports facility exceed $200,000 in any calendar year.

History

• Source: Added at 40 Ill. Reg. 10844, effective July 29, 2016

14 Ill. Adm. Code 510.450 Annual Certification

a) The unit of local government, municipal convention center, convention center authority or municipal sports facility shall certify, no later than May 15 of each year through May 15, 2020, to the Department the amounts of funds expended in the previous fiscal year to provide qualified incentives; however, in no event may the amount certified exceed $200,000 for any municipal convention center, convention center authority or municipal amateur sports facility in any calendar year.

b) The unit of local government, convention center, convention center authority or municipal sports facility shall certify:

1. The net proceeds received under the Hotel Operators' Occupation Tax Act for the renting, leasing or letting of hotel rooms in the municipality for the month in which the convention, meeting or trade show occurs; and

2. The average of the net proceeds received under the Hotel Operators' Occupation Tax Act for the renting, leasing or letting of hotel rooms in the municipality for the same month in the three immediately preceding years.

c) The unit of local government, municipal convention center, convention center authority or municipal sports facility shall include the incentive amounts as part of its regular audit identified in subsection (a).

History

• Source: Added at 40 Ill. Reg. 10844, effective July 29, 2016

14 Ill. Adm. Code 510.460 Certification Supporting Documentation

When Grantee submits a Department approved application for reimbursement, it shall also include the supporting documentation, including the following:

a) A statement, with documentation, reflecting the net proceeds received under the Hotel Operators' Occupation Tax Act for the month in which the convention, meeting or trade show occurs; and

b) A statement, with documentation, comparing the average net proceeds received under the Hotel Operators' Occupation Tax Act for the same month in the three immediately preceding years; and

c) A letter from the Grantee certifying that the statements, as appropriate, were reviewed and audited by the appropriate staff of the Grantee or an independent monitor or accountant and that the monitor or accountant concurs with and certifies the findings.

History

• Source: Added at 40 Ill. Reg. 10844, effective July 29, 2016

Part 515 Regional Tourism Development Organization Program

14 Ill. Adm. Code 515.10 Purpose

Section 605-710 of the Civil Administrative Code of Illinois authorizes the Department of Commerce and Community Affairs to make grants to not-for-profit regional tourism development organizations that assist the Department in developing tourism throughout a multi-county geographical area designated by the Department.

14 Ill. Adm. Code 515.20 Definitions

The following definitions are applicable to this Part:

"Act": means Section 605-710 of the Civil Administrative Code of Illinois [20 ILCS 605/605-710].

"Agreement": means a written document executed between the Grantee and the Department defining the rights and obligations with respect to the Project.

"Applicant": means a not-for-profit entity submitting a written request for certification and funds appropriated under the Act.

"Application": means a written request for program funds containing the required information and attachments.

"Bureau of Tourism": means the division of the Department that has the delegated authority to perform all administrative functions relating to the Act.

"Department": means the Department of Commerce and Community Affairs of the State of Illinois.

"Department Logo": means a form of recognition as stipulated and supplied by the Department to identify a Promotional Project/Product as being produced in whole or in part through grant funds from the Department.

"Director": means the Director of the Department of Commerce and Community Affairs.

"Economic Impact": means the direct financial result of visitor spending at a tourism destination, attraction or event.

"Eligible Project": means administrative and promotional activities that are approved and funded by the Department.

"Fiscal Year": means July 1 through June 30, the Fiscal Year of the State of Illinois.

"Fiscal Year Work Plan": means the Regional Tourism Development Organization's 12 month work plan including a description of specific goals, objectives, strategies, and anticipated results.

"Grant Amount": means an amount that the Department shall pay to a Grantee for its use on the Eligible Project.

"Grantee": means a certified Regional Tourism Development Organization that has been awarded a grant in accordance with the Act.

"Ineligible Project": means a project that is ineligible for funding as defined in Section 515.40.

"Program": means the Regional Tourism Development Organization Program described in this Part.

"Project": means the activities described by the Applicant in the Fiscal Year Work Plan and approved by the Department.

"Project Budget": means an itemized list of costs associated with the activities described in the Fiscal Year Work Plan.

"Promotional Projects": means activities that are designed to encourage overnight visits or visitors to travel to and through Illinois or encourage attendance at local events in accordance with Section 515.40(a).

"Regional Service Area": means a multi-county geographical area designated by the Department for the development and promotion of tourism products.

"Regional Tourism Development Organization (RTDO)": means a not-for-profit entity that meets the certification criteria and is designated by the Department to receive funds under the Act.

"Tourism": means travel 50 miles or more one-way, or an overnight trip outside of a person's normal routine.

"Tourism Attraction": means fishing and hunting areas, State parks, historical/cultural sites, areas of historic or scenic interest, museums, recreation areas, botanical gardens, theme/amusement parks, interpretive programs and other facilities or businesses that attract or serve visitors that are open to the public for a minimum of 100 days per year (if the tourism attraction is entirely event driven, then it shall be open for a minimum of 200 hours per year), and are marketed and promoted to visitors from more than 50 miles away.

"Travel/Trade Show": means an exhibit/marketplace of travel related products and/or services.

14 Ill. Adm. Code 515.30 Eligible Applicants

Illinois Regional Tourism Development Organizations (RTDO) recognized by the Department as certified are eligible to receive grant funds.

14 Ill. Adm. Code 515.40 Eligible Use of Grant Funds

a) Examples of eligible Promotional Projects include, but are not limited to:

1. Production and printing of travel related brochures that are primarily used as fulfillment for advertising placed 50 miles outside of the regional service area;

2. Advertising primarily directed toward areas 50 miles outside of the regional service area being promoted;

3. Rental of billboard space and artwork, design and production of billboard advertising to promote a regional service area;

4. Web site development for the regional service area;

5. Marketing research for the regional service area;

6. Travel/trade show booth space rental and expenses (i.e., electric, furniture rental, cleaning, etc.), and travel/trade show registration fees for domestic marketing that represents the regional service area;

7. 1-800 number telephone expenses for regional service area visitor inquiries; and

8. Purchase and use of mailing lists for direct mail promotions.

b) Examples of projects eligible for grant administrative funding include, but are not limited to:

1. Photocopies;

2. All postage, distribution and shipping expenses;

3. Insurance;

4. Audits;

5. Accounting services;

6. Phone;

7. Rent;

8. Supplies;

9. Maintenance fees associated with a website;

10. Travel expenses (transportation, lodging, per diem) in accordance with the latest State of Illinois Department of Central Management Services Travel Regulations;

11. Salaries;

12. Membership dues for travel related associations or organizations; and

13. Equipment leasing/rental.

c) Activities ineligible for funding include, but are not limited to:

1. Purchase of equipment;

2. Purchase of any alcoholic beverages;

3. Penalties, fines, late payment fees, service or interest charges; and

4. Any project that receives funding through the Tourism Marketing Partnership Program, Tourism Attraction Development Grant Program, or Tourism Private Sector Grant Program.

14 Ill. Adm. Code 515.50 Form of Certification and Application

All communications relating to the certification and Application procedures defined in Section 515.60 shall be sent to the RTDO Program Manager, Department of Commerce and Community Affairs, Bureau of Tourism, 620 East Adams Street, Springfield, IL 62701. The certification and Application shall:

a) Be typed or computer generated using the current approved format provided by the Department to Applicants upon request;

b) Contain on original and three copies; and

c) Include supporting documents and attachments under a single cover.

14 Ill. Adm. Code 515.60 Certification and Application Process

The certification and Application process shall be as follows:

a) Any Applicant seeking certification as a Regional Tourism Development Organization shall be certified annually by the Department.

1. An Applicant must meet the following eligibility criteria in order to be considered for certification:

A) Be a not-for-profit entity governed by a board of directors in good standing with applicable State authorities, including, but not limited to, the Illinois Secretary of State, Illinois Department of Revenue, Illinois Department of Labor, and Office of the Illinois Attorney General, prior to submitting a request for certification.

B) Have the ability to represent a multi-county regional service area as designated by the Department;

C) Employ one full time professional executive director that devotes a minimum of 35 hours per week to the development and marketing of tourism within the regional service area;

D) Possess the qualifications/experience to serve as a resource center for the counties not served by the jurisdiction of a certified Convention and Visitors Bureau, hereafter referred to as uncovered areas;

E) Have the ability to assist the Department with the development and marketing of tourism projects of the entire regional service area; and

F) Possess the ability and the equipment necessary to maintain the DCCA/Bureau of Tourism product database information.

2. To be considered for certification, Applicants shall submit, on or before March 31 of each Fiscal Year, the following material:

A) A request for certification;

B) Documentation to verify the Applicant is an Illinois not-for-profit entity governed by a board of directors and a listing of current Board Members, officers, directors, or trustees;

C) A statement that the organization will employ one professional executive director that will devote a minimum of 35 hours per week to the development and marketing of tourism within the organization's regional service area prior to receiving State grant funds;

D) A statement listing the organization executive director's training and experience in tourism development, marketing, collecting research data and reporting project measurements, and other aspects of the tourism industry;

E) A statement listing the organization's office address within the regional service area and its ability to maintain a staffed office accessible to the public between the hours of 8:30 a.m. to 5:00 p.m., Monday-Friday, except for designated State holidays;

F) An outline of the current challenges, opportunities, weaknesses and needs of the regional service area;

G) A Fiscal Year Work Plan, with monthly timelines, describing all activities to be initiated and funded through the RTDO grant;

H) A Project Budget, based upon the allocation of funding using the RTDO grant budget form, itemizing the expenses required to complete the project as described in the Fiscal Year Work Plan; and

I) Name, title and sample signatures for those persons who will be required to authorize all account transfers, with two signatures required.

b) Within 60 days after receipt of requests for certification, the Department shall send a notice to each Applicant seeking certification, informing the Applicant of its status.

1. When a single RTDO for a designated regional service area seeks certification and has submitted all documentation, and that documentation meets the approval of the Department, the RTDO shall be certified by the Department and the Department shall send notice of the grant award and the amount of funds available.

2. When more than one RTDO for a designated regional service area seeks certification for the same regional service area, the Department's internal review committee shall conduct an evaluation of each Application in order to determine certification.

A) The evaluation criteria includes, but is not limited to, the following:

i) Does the Applicant employ an executive director that has experience and training in tourism development, marketing and other aspects of the tourism industry?

ii) Does the Applicant have an office accessible to the public, the qualifications/experience to serve as a resource center for the uncovered areas and the ability to assist with the development and marketing of tourism projects in the regional service area?

iii) Does the Applicant possess the ability and the equipment necessary to maintain the DCCA/Bureau of Tourism product database information?

iv) Does the Applicant have experience in collecting research data and developing and reporting project measurements?

v) Does the Applicant have experience in coordinating regional meetings?

vi) Does the Applicant have the capability to meet the current challenges, opportunities and needs of the regional service area included in the Fiscal Year Work Plan?

vii) Are timelines and terms of measurement identified for the Fiscal Year Work Plan?

viii) Does the Project Budget demonstrate the personnel, office location and resources necessary to complete the tasks outlined in the Application?

B) The Department's internal review committee shall evaluate the criteria using a point system with ratings of 1 through 10, using the following guidelines:

i) A rating of 1 means that the Application meets the criteria at the minimum level;

ii) A rating of 3 means that the Application meets the criteria at a below average level;

iii) A rating of 5 means that the Application meets the criteria at an average level;

iv) A rating of 7 means that the Application meets the criteria at an above average level; and

v) A rating of 10 means that the Application meets the criteria at an exceptional level.

C) The scores of the Department's internal review committee are averaged to obtain the Application's total score. An Application must receive a minimum of 40 points to be considered certified for funding. The internal review committee shall forward all eligible Applications, together with its recommendations, to the Director for final determination. During the final review process, the Director will determine which RTDO is certified to receive the grant.

3. An RTDO that is not certified shall have the right to appeal the Department's certification decision to the Director within 10 calendar days after receipt of that notice. The request for review shall be submitted in writing to the Department and shall contain the reasons for appeal and any additional tourism related information the Applicant chooses to submit in support of the appeal. The Director shall render a decision no later than 30 calendar days after receipt of the request. The Director shall make a determination based upon a review of the information and any additional material submitted by the Applicant with the appeal.

14 Ill. Adm. Code 515.70 Allocation of Appropriations

Annual appropriation made by the General Assembly to the Department for the purpose of making grants under this Program may be used by the Department in any region of the State.

14 Ill. Adm. Code 515.80 Funding Limitation

The maximum grant amount for any one Grantee is subject to the appropriations approved by the General Assembly for any given fiscal year.

14 Ill. Adm. Code 515.90 Grant Agreement

a) When a grant has been awarded, the Grantee and the Department shall execute an Agreement. The Agreement shall be executed by the Grantee and the Director of the Department or the Director's designee on behalf of the Department.

b) The Agreement shall contain substantive provisions including, but not limited to, the following:

1. A recitation of legal authority under which the Agreement is made;

2. An identification of the Project scope and schedule, and the work or services to be performed or conducted by the Grantee;

3. An identification of the grant amount;

4. The conditions by and manner in which the Department shall pay the grant amount subject at all times to annual appropriation by the General Assembly;

5. A promise by the Grantee not to assign or transfer any of the rights, duties or obligations of the Grantee without the written consent of the Department;

6. A promise by the Grantee not to amend the Agreement without the written consent of the Department. Failure to do so will result in a cost disallowance. The Project must be completed by the completion date on the notice of grant award unless a written request for an extension is submitted no later than 30 days prior to the award completion date;

7. A covenant that the Grantee shall expend the grant amount and any accrued interest only for the purposes of the Project as stated in the Grant Agreement and approved by the Department; and

8. A covenant that the Grantee shall refrain from entering into any written or oral agreement or understanding with any party that might be construed as an obligation of the State of Illinois or the Department for the payment of any funds under the Program.

14 Ill. Adm. Code 515.100 Computation of Time

Computation of any period of time prescribed by this Part shall begin with the first business day following the day on which the act, event or development initiating that period of time occurs, and shall run until the end of the last day or the next business day if the last day is a Saturday, Sunday or federal or State holiday. When the period of time is 5 days or less, Saturday, Sunday and federal or State holidays shall be excluded in the computation of time. Timeliness shall be determined by the date of postmark or the date of hand delivery.

14 Ill. Adm. Code 515.110 Severability

If any Section, subsection, subdivision, paragraph, sentence, clause or phrase in this Part or any portion thereof is for any reason held to be unconstitutional or invalid or ineffective by any forum of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Part or any portion thereof.

14 Ill. Adm. Code 515.120 Administrative Requirements

a) Termination of Grant – Grants shall be terminated for the following reasons:

1. Termination Due to Loss of Funding – In the absence of State funding for a fiscal year, all grants for that year will be terminated in full. In the event of a partial loss of State funding, the Department will make proportionate cuts to all Grantees. In the event the Department suffers such a loss of funding in full or part, the Department will give the Grantee written notice setting forth the effective date of full or partial termination, or if a change in funding is required, setting forth the change in funding and changes in the approved budget.

2. Termination for Cause

A) If the Department determines that the Grantee has failed to comply with the terms and conditions of the grant, the Department shall terminate the grant in whole, or in part, at any time before the date of completion. Circumstances that will result in the termination of a grant include, but are not necessarily limited to, the following: consistent failure to submit required reports; failure to maintain required records; evidence of fraud and abuse; and consistent failure to meet performance standards. These circumstances are explained in the Grant Agreement.

B) The Department shall notify the Grantee in writing, within 10 working days after the determination to terminate, of the reasons for the termination and the effective date of the termination. Payments made to the Grantee or recoveries by the Department shall be made in accordance with legal rights and liabilities specified in the Grant Agreement.

3. Termination by Agreement – The Department and the Grantee shall terminate the grant in whole, or in part, when the Department and the Grantee agree that the continuation of the program objectives would not produce beneficial results commensurate with the future expenditure of funds. The Department and the Grantee shall agree on termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. The Grantee shall not incur new obligations for the terminated portion after the effective date and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the Grantee for the Department's share of the noncancelable obligations properly incurred by the Grantee prior to termination.

b) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act [30 ILCS 705/10], all interest earned on funds held by the Grantee under the grant shall become part of the grant when earned, as long as this amount does not exceed the maximum allowable grant award. Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

c) Grant Close-out – In accordance with Section 4 of the Illinois Grant Funds Recovery Act [30 ILCS 705/4], all funds, including any interest, remaining at the end of the grant period or at the expiration of the period of time grant funds are available for expenditure or obligation by the Grantee, shall be returned to the Department within 45 days after the end of the relevant period. The Grantee agrees to repay the Department for any funds that are determined by the Department to have been spent in violation of the Grant Agreement.

d) Audits – A Grantee shall be responsible for securing a compliance audit for any grant award exceeding $300,000. Additionally, an audit may be required when certain risk conditions exist, including, but not limited to, a negative compliance history and disclosure of previous material audit findings. The audit shall be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act [225 ILCS 450]. The audit shall be conducted in accordance with generally accepted auditing standards contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, Harborside Financial Center, 201 Plaza 3, Jersey City, New Jersey 07311 (June 2000, no later editions are incorporated).

e) Special Audits – The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours, of the funds expended under Department grants.

f) Monitoring and Evaluation – Grantee shall permit any agent authorized by the Department, upon presentation of identification, in accordance with the constitutional limitation on administrative searches, to have full access to and the right to examine any documents, papers, and records of the Grantee involving transactions related to a grant from the Department. Once the Department has concluded its monitoring activities, the Grantee will be notified of the Department's findings. If a determination of noncompliance has been made by the Department, the Grantee will be allowed an opportunity to cure any and all noncompliance issues. If any noncompliance issues cannot be resolved, the Department will issue a notice requesting that the Grantee repay any funds that are determined by the Department to have been spent in violation of the Agreement. If the Grantee fails to comply with the Department's notice, the Department shall issue a final notice providing the Grantee the opportunity to request an administrative hearing pursuant to the Department's Administrative Hearing Rules found at 56 Ill. Adm. Code 2605.

g) Complaint Process – An administrative hearing is initiated by a party serving a Petition for Hearing on the Department, or by the Department serving a Notice of Charges on the Grantee. In either case, the Department and the Grantee shall follow the Administrative Hearing Rules set forth in 56 Ill. Adm. Code 2605.

h) Certifications – The Grantee shall certify that it has not been barred from contracting with a unit of State or local government as a result of a violation of 720 ILCS 5/33E-3 and 33E-4 (Bid-rigging and Bid rotating).

i) Reports – Grantee shall submit, as required by the Department, reports on the financial status of the Project and reports on outcomes and results of the Project.

14 Ill. Adm. Code 519.10 Definitions

The following definitions are applicable to this Part.

"Act" means Section 605-1115 of the Department of Commerce and Economic Opportunity Law [20 ILCS 605/1115].

"Applicant" means a government entity, non-profit, taxpayer, educational institution or research and development entity that seeks to establish a quantum computing campus located in Illinois, or a taxpayer, educational institution or research and development entity that seeks to be a tenant on a quantum computing campus.

"Capital Investment" means the purchase, renovation, rehabilitation, or construction of permanent land, buildings, structures, equipment and furnishings used directly for or in the project, and any goods or services for the project that are purchased and capitalized under GAAP or an equivalent accounting principles system approved by the Department, including any organizational costs and research and development costs incurred in Illinois. Capitalized lease costs for land, buildings, structures or equipment shall be included in "Capital Investment" only if the lease term, including any extensions or options to extend, equals or exceeds the term of the memorandum of understanding, and provided that the lease costs are valued at their present value using the corporate interest rate prevailing at the time the applicant filed its application with the Department.

"Certificate of Exemption" means the certificate issued by the Department pursuant to the memorandum of understanding entered into between the Department and the tenant that authorizes the tenant to receive the tax exemptions set forth in Section 605-1115(b) of the Act.

"Data Center" means a facility:

whose primary services include, but are not limited to, the storage, management, and processing of digital data; and

that is used to house:

computer and network systems, including associated components such as servers, network equipment and appliances, telecommunications, and data storage systems;

systems for monitoring and managing infrastructure performance;

internet-related equipment and services;

data communications connections;

environmental controls;

fire protection systems; and

security systems and services. [20 ILCS 605/605-1115(a)]

"Department" or "DCEO" means the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5]

"Director" means the Director of the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5]

"Full-time equivalent job" means a job in which an employee works for a tenant of the quantum campus at a rate of at least 35 hours per week. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 605/605-1115(a)]

"Memorandum of Understanding" or "MOU" means the memorandum of understanding entered between a taxpayer establishing or joining a quantum computing campus as a tenant and the Department under Section 605-1115(d) of the Act and Section 519.120 of this Part.

"New Employee" means a full-time employee in a qualifying full-time equivalent job or employee first employed by the tenant on the quantum computing campus and who is hired on or after the effective date of the MOU entered into between the tenant and the Department.

The term "New Employee" does not include:

an employee of the tenant of a certified quantum computing campus who was previously employed in Illinois by a related member (as that term is defined in Section 5.5 of the Economic Development for a Growing Economy Act [35 ILCS 10] of the tenant and whose employment was shifted to the quantum computing campus after the tenant entered into the MOU;

an employee of the tenant located on the quantum computing campus who was previously employed in Illinois by the tenant of the quantum computing campus and whose employment was shifted to the project after the tenant entered into the MOU; or

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer, or a child, grandchild, parent, or spouse (other than a spouse who is legally separated from the individual) of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the tenant on the quantum computing campus.

However, an employee shall be considered a new employee under the MOU if:

the employee performs a job that was previously performed by an employee who was treated under the MOU as a new employee and promoted by the tenant of the quantum computing campus to another job; or

the employee fills a job vacancy that had been continuously vacant for the 184-day period immediately preceding the date of the MOU. A job vacancy whose incumbent is on approved leave, is locked out, or is on strike is not a vacancy.

"Placed in Service" means the earlier of:

when the project identified in the application or MOU is in a state or condition of readiness and availability for specifically assigned functions; or

the end of the 60-month period identified in the MOU.

"Project" means the development at the location set forth in the application or MOU.

"Quantum Computing Activities" means the research, development, and use of computing methods that generate and manipulate quantum bits in a controlled quantum state in order to support the demand for quantum computing research, development, and implementation for practical use. This includes the use of photons, semiconductors, superconductors, trapped ions, and other industry and academically regarded methods for simulating quantum bits.

"Quantum Computing Campus" or "Campus" is a contiguous area located in the State of Illinois that is designated by the Department as a quantum computing campus in order to support the demand for quantum computing research, development, and implementation for practical use. A quantum computing campus may include educational institutions, nonprofit research and development organizations, and for-profit research and development organization serving as anchor tenants and joining tenants that, with approval from the Department, may change.

"Tenant" is an entity located or that intends to be located on a quantum computing campus that has a direct or supporting role in quantum computing activities. Tenants include quantum computer operators and research facilities, data centers, manufacturers and assemblers of quantum computers and component parts, cryogenic or refrigeration facilities, and other facilities determined, by industry and academic leaders, to be fundamental to the research and development of quantum computing for practical solutions.

"Underserved Area" means a geographic area that meets any one of the following criteria:

the area has a poverty rate of at least 20%, according to the latest federal decennial census, the most recent American Community Survey released by the U.S. Census Bureau, or other appropriate data source produced by the U.S. Census Bureau;

75% or more of the children in the area are eligible to participate in the federal free lunch or reduced-price meals program, according to reported statistics from the State Board of Education;

20% or more of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP) according to data from the U.S. Census Bureau; or

the area has an average unemployment rate, as determined by the Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the U.S. Department of Labor, for a period of at least 2 consecutive calendar years preceding the date of the application. [35 ILCS 5/229(a)(1) through (4)]

14 Ill. Adm. Code 519.20 Eligible Applicants

a) A government entity, non-profit, educational institution, research entity or for-profit entity located in Illinois may apply to the Department for certification of a quantum computing campus.

b) Eligible applicants seeking to establish a quantum computing campus shall apply to the Department for designation. The campus shall meet the following criteria:

1. Must comprise a contiguous area of at least 100 acres and not more than 640 acres;

2. Must contain tenants that demonstrate a substantial plan for using the campus to encourage participation by organizations owned by minorities, women, and persons with disabilities, as those terms are defined in Section 2 of the Business Enterprise Minorities, Women, and Persons with Disabilities Act [30 ILCS 575/2]; and

3. Must contain tenants that, within 60 months after the tenants' project is placed in service, certify to the Department that the project is carbon neutral or attains certification under one or more of the green building standards as set forth in Section 519.70(a)(3).

14 Ill. Adm. Code 519.30 Form of Application

a) The Department will provide applications to parties interested in establishing a quantum computing campus upon request. Submission of an application does not commit the Department to award assistance or pay any costs, including any application fee, incurred by the applicant in the preparation of an application.

b) Applications shall be submitted to the Department office location or electronic mail address identified in the application. The application shall include:

1. Legal Applicant:

A) name, address, telephone number of each applicant;

B) key contact, title, telephone number and electronic mail address;

C) each applicant Federal Employer Identification Numbers (FEIN) or the Illinois Business Tax (IBT) numbers, if applicable;

D) applicant related organizations, applicant background and whether the proposed quantum computing campus is in an underserved area, an energy transition zone, or an opportunity zone; and

E) unless the applicant is a government entity, the application shall be accompanied by a Certificate of Good Standing from the Office of the Illinois Secretary of State for each applicant or other proof of authority to transact business in the State.

2. Campus Summary: a detailed description of the contiguous area of land in Illinois, and a substantial plan for using the designation to encourage participation by minorities, women and persons with disabilities.

3. Green Building Certification: detailed information demonstrating that the campus will contain tenants that, within 60 months after the tenants' project is placed in service, will certify to the Department that property related to the tenant's project is carbon neutral or attains certification under one or more of the green building standards as set forth in Section 519.70(a)(3).

4. Tax Clearance, as follows:

A) to the Department of Revenue, a Form ITR-1; and

B) to DCEO, proof of tax clearance from the Department of Revenue.

5. Other provisions – any other provisions or information that the Department determines is necessary to facilitate the Department's evaluation of the application.

c) The applicant is responsible for the accuracy of all data, information and documentation required by subsection (b). Once submitted, applications shall become the property of the Department.

d) Any materials or data made available or received by any agent or employee of the Department from an applicant for, or a recipient of a tax exemption, that is exempt from disclosure under Section 7 of the Freedom of Information Act [5 ILCS 140/7] shall not be disclosed.

14 Ill. Adm. Code 519.40 Application Review and Approval

a) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation.

b) The Department shall issue a certificate of designation as a quantum computing campus to each applicant notified for approval.

c) The Department shall, within 10 days after the designation, send a letter of notification to each member of the General Assembly whose legislative district or representative district contains all or part of the designated area. [20 ILCS 605/605-1115(d)]

14 Ill. Adm. Code 519.50 Eligibility Determination

a) Tenants must be involved in quantum computing activities located or to be located on a quantum computing campus.

b) Tenants must have either a direct or supporting role in quantum computing activities as defined in this Section. Tenants include quantum computer operators and research facilities, data centers, manufacturers and assemblers of quantum computers and component parts, cryogenic or refrigeration facilities, and related business that are fundamental to the research and development of quantum computing for practical solutions.

c) A taxpayer may not execute more than one application with respect to a single address or location for the same period of time.

d) This provision does not preclude the tenant from entering into an additional MOU after the expiration of an earlier MOU to the extent the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department.

14 Ill. Adm. Code 519.60 Form of Application

a) The Department will provide interested applicants with a tenant application package upon request. Submission of an application does not commit the Department to award assistance or pay any costs, including any application fee, incurred by the applicant in the preparation of an application.

b) Written applications are required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the Department office location or electronic mail address identified in the application.

14 Ill. Adm. Code 519.70 Application Review and Approval

a) Written applications must be submitted on the standard application form provided by the Department. The application shall include:

1. Legal Applicant:

A) name, address, telephone number of each applicant;

B) key contact, title, telephone number and electronic mail address;

C) applicant related companies;

D) applicant Federal Employer Identification Numbers (FEIN) or the Illinois Business Tax (IBT) numbers;

E) address in which the applicant's project will be located; and

F) a Certificate of Good Standing from the Office of the Illinois Secretary of State for each applicant or other proof of authority to transact business in the State.

2. Project Summary:

A) a detailed description of the project, including the quantum computing activities to be performed at the project;

B) general location of the project on a designated quantum computing campus;

C) amounts of capital investment, new jobs created and retained;

D) a timeline to achieve the capital investment and new jobs creation goals;

E) whether the project will require the construction of new facilities; and

F) a substantial plan for encouraging participation by minorities, women and persons with disabilities at or in constructing the project.

3. Green Building Certification: supporting documentation that the buildings associated with applicant's project meets or will meet the green building standards under one or more of the following designations:

A) BREEAM for New Construction or BREEAM In-Use;

B) ENERGY STAR;

C) Envision;

D) ISO 50001-energy management;

E) LEED for Building Design and Construction or LEED for Operations and Maintenance;

F) Green Globes for New Construction or Green Globes for Existing Buildings;

G) UL 3223; or

H) an equivalent program approved by the Department. [20 ILCS 605/605-1115(a)]. In the event the applicant seeks to demonstrate an alternative certification, an explanation and supporting documentation as to how the program is "equivalent" to those programs and categories specifically enumerated in the Act.

4. Other provisions: any other provisions or information that the Department determines is necessary to facilitate the Department's evaluation of the application.

5. Tax Clearance, as follows:

A) to the Department of Revenue, a Form ITR-1; and

B) to DCEO, proof of tax clearance from the Department of Revenue.

b) The applicant is responsible for the accuracy of all data, information and documentation required by subsection (a). Once submitted, applications shall become the property of the Department.

c) Any materials or data made available or received by any agent or employee of the Department from an applicant for, or a recipient of a tax exemption or credit under this Part, that is exempt from disclosure under Section 7 of the Freedom of Information Act [5 ILCS 140/7], shall not be disclosed.

14 Ill. Adm. Code 519.80 Approval or Denial

Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation. If the applicant disagrees with the Department's decision, it may seek relief through the process afforded in the Department's Administrative Hearing Rules (56 Ill. Adm. Code 2605).

14 Ill. Adm. Code 519.90 Memorandum of Understanding

a) Upon approval of an application, the Department and tenant located, or to be located, in a quantum computing campus seeking a certificate of exemption shall enter into an MOU. The MOU shall specify the terms and conditions of the exemptions and shall define the rights and responsibilities of the Department and tenant. Provisions with which the tenant will be contractually bound to comply include, but are not limited to, the following:

1. the details for determining the amount of capital investment to be made;

2. the number of new jobs to be created, including a specific method for determining the number of new employees and any relevant baseline headcount numbers;

3. the timeline for achieving the capital investment and new job goals;

4. repayment obligation should those goals not be achieved and any conditions under which repayment by the tenant claiming the exemption will be required;

5. the duration of the exemptions; and

6. other provisions as deemed necessary by the Department. [20 ILCS 605/605-1115(d)]

b) Tenants seeking a certificate of exemption and credits related to the construction of required facilities shall require the contractor and all subcontractors to:

1. comply with the requirements of Section 30-22 of the Illinois Procurement Code [30 ILCS 500/30-22] and to present satisfactory evidence of that compliance to the Department; and

2. enter into a project labor agreement submitted to the Department.

14 Ill. Adm. Code 519.100 Determination of Term of Exemptions

a) Tenants shall receive an initial 5-year designation certificate. At the expiration of this initial 5-year period, tenants may apply to the Department for renewals of certificates of exemption for additional 5-year periods not to exceed the 20-year period running from the effective date of the MOU. Applications for renewal of certificates of exemption will be provided by the Department 90 days prior to the expiration.

b) This provision does not preclude the applicant from entering into an additional MOU after the expiration of an earlier MOU to the extent the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department.

14 Ill. Adm. Code 519.110 Designation Certificate

a) Upon completion of a fully executed MOU between the tenant and the Department, the Department will issue a designation certificate certifying the tenant as eligible to receive the exemptions listed in Section (b) of the Act.

b) Upon designation by the Department under this Section, the Department shall notify the Department of Revenue of the designation, and the Department of Revenue shall issue and administer the exemptions listed in Section (b) of the Act.

14 Ill. Adm. Code 519.120 Noncompliance with Designation, Memorandum of Understanding

a) If the Department determines that a tenant is not complying with the requirements of the designation certificate, MOU or all of the provisions of the Act, the Director shall:

1. Notify the tenant, in writing, that its designation certificate is temporarily revoked, the date of revocation, the reason for the revocation, and the option to cure or seek a hearing contesting the revocation.

2. Temporarily suspend the designation certificate, except in instances of noncompliance where the use of certified quantum computing campus no longer supports tenants or quantum computing activities.

3. Notify the Department of Revenue of the temporary suspension and the starting date.

b) Upon notice of noncompliance, the tenant will have 30 days to either:

1. Cure the cause of the noncompliance and provide documentation sufficient to demonstrate the tenant has cured the noncompliance; or

2. Request a hearing under Article 10 of the Illinois Administrative Procedure Act [5 ILCS 100].

c) If within the 30 days after receipt of the notice described in subsection (a)(1), the certified tenant provides documentation sufficient to demonstrate cure of the noncompliance, then the Director will inform the Department of Revenue of the date the temporary suspension is lifted.

d) If, after notice and any hearing, the Director determines that a noncompliance event exists, the Director shall issue to the Department of Revenue notice to that effect, stating the noncompliance date and requesting proceedings be initiated to recover wrongfully exempted State taxes or an erroneous refund, within the meaning of the Illinois Income Tax Act [35 ILCS 5].

e) If a tenant neither cures the cause of noncompliance nor requests a hearing within the prescribed period, the temporary suspension shall become permanent and the Director shall notify the Department of Revenue of the permanent revocation and request proceedings be initiated to recover wrongfully exempted State taxes or an erroneous refund, within the meaning of the Illinois Income Tax Act.

f) Alleged noncompliance shall include, but is not limited to, the following:

1. a demonstration that the tenant failed materially to comply with the terms and conditions of the MOU;

2. determination, upon investigation, that the tenant, or any of their agents or representatives, provided false or misleading information to the Department; or

3. a failure to submit any reports as required by the MOU.

14 Ill. Adm. Code 520.100 Definitions

"Act" means the Illinois Enterprise Zone Act [20 ILCS 655].

"Agency" means each officer, board, commission, and agency created by the Constitution in the executive branch of State government, other than the State Board of Elections; each officer, department, board, commission, agency, institution, authority, university, body politic and corporate of the State; and each administrative unit or corporate outgrowth of the State government that is created by or pursuant to statute, other than units of local government and their officers, school districts and boards of election commissioners; each administrative unit or corporate outgrowth of the above and as may be created by executive order of the Governor. No entity shall be considered an "agency" for the purposes of this Act unless authorized by law to make rules and regulations.

"Board" means the Enterprise Zone Board created in Section 5.2.1 of the Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Designated Zone Organization" or "DZO" means an association or entity:

The Members of which are substantially all residents of the Enterprise Zone;

The Board of Directors of which is elected by the members of the organization;

Which satisfies the criteria set forth in section 501(c)(3) or 501(c)(4) of the Internal Revenue Code (26 USC 501(c)(3) or (4)); and

Which exists primarily for the purpose of performing within such area or zone for the benefit of the residents and businesses therein any of the functions set forth in Section 8 of the Act [20 ILCS 655/3].

For the purpose of this definition, "resident" means an individual whose place of residence is within the Enterprise Zone, or a partnership, corporation, association, or sole proprietorship whose principal business office is within the Enterprise Zone.

"Enabling ordinance" means a certified ordinance passed by a city or county to designate, establish and provide for an Enterprise Zone as specified in Section 5(c) of the Act.

"Enterprise Zone" means an area of the State certified by the Department as an Enterprise Zone pursuant to the Act.

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1,750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"General projections" means number of jobs and amount of investments that are determined based upon general economic forecasting models. Overall, these totals are estimates and would include indirect, direct and induced figures based on trend of past area job growth, which may or may not be a result of the Enterprise Zone Designation.

"Latest federal decennial census" means the most recent American Community Survey released by the U.S. Census Bureau or other appropriate data source produced by the U.S. Census Bureau.

"Local labor market area" means an economically integrated area within which individuals can reside and find employment within a reasonable distance or can readily change jobs without changing their place of residence. [20 ILCS 655/3(h)] A local labor market area must be contiguous, compact and entirely within the State of Illinois and shall be, to the extent practicable, comprised of whole Census Tracts. A local labor market area must, at a minimum, contain the entire area within the boundaries of the Enterprise Zone to which it relates. A local labor market area may take into account communities of interest.

"New employee" means a full-time equivalent job that represents a net increase in the number of the recipient's employees statewide.

"New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the recipient who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

Employee positions being filled or refilled as a result of strikes or layoffs or replacement workers to replace recipient company locked out employees.

"Public infrastructure" means local roads and streets, access roads, bridges and sidewalks; waste disposal systems; water and sewer line extensions, water distribution and purification facilities, and sewage treatment facilities; rail or air or water port improvements; gas and electric utility facilities; transit capital facilities; development and improvement of publicly owned industrial and commercial sites; or other public capital improvements that are an essential precondition to business retention, development or expansion.

"Specific commitments" means a written commitment from a specific company that has agreed to invest, create and/or retain a certain number of jobs as a condition of the Enterprise Zone designation.

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

Chapter I Department of Commerce and Economic Opportunity

Part 520 Enterprise Zone and High Impact Business Programs

14 Ill. Adm. Code 520.200 Eligible Applicants

A municipality or county within the State of Illinois may apply to the Department for certification of an Enterprise Zone, in accordance with the requirements set forth in Sections 4 and 5 of the Act and this Part.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.210 Eligibility Criteria

A municipality or county may qualify an area for designation as an Enterprise Zone, subject to certification by the Department, in accordance with the criteria set forth in Section 4 of the Act and the following:

a) Contiguous Area. The area is contiguous, which means the area has a solid continuous boundary. Boundaries shall be clearly defined and follow natural or man-made entities such as rivers, highways, and boundaries of units of government. The zone area may exclude wholly surrounded territory within its boundaries.

b) Calculating Total Area. For purposes of calculating total area, the minimum is one-half square mile and the maximum is 12 square miles, or 15 square miles if the zone is located within the jurisdiction of four or more counties or municipalities, excluding lakes or waterways. Where the Enterprise Zone is a joint effort of three or more units of government, or two or more units of government, if located in a township divided by a municipality of 1,000,000 or more inhabitants, and where the certification has been in effect at least one year, the minimum is one-half square mile and the maximum is 13 square miles, excluding lakes and waterways. Boundaries that are connecting strips shall be not less than three, nor more than 10, feet wide. Waterways shall not be used as connecting strips.

c) Coverage of Area. The areas must:

1. be entirely within a municipality; or

2. be entirely within the unincorporated areas of a county, except when reasonable need is established for the zone to cover parts of more than one municipality or county; or

3. comprise all or part of a municipality and an unincorporated area of a county.

d) Required Tests. The area must meet at least three of the following tests:

1. Unemployment: All or part of the local labor market area has had an annual average unemployment rate of at least 120% of the State's annual average unemployment rate for the most recent calendar year or the most recent fiscal year as reported by the Department of Employment Security. [20 ILCS 655/4(1)(f)(1)]

2. Employment Opportunities: Designation will result in the development of substantial employment opportunities by creating or retaining a minimum aggregate of 1,000 full-time equivalent jobs due to an aggregate investment of $100,000,000 or more, and will help alleviate the effects of poverty and unemployment within the local labor market area. [20 ILCS 655/4(1)(f)(2)] Applicants shall specify the time periods over which full-time equivalent jobs will be created or retained and aggregate investments will be made. These time periods should not exceed 15 years from the expected date of designation. Applicants should submit as many written specific commitments as possible with respect to job creation or retention, as well as aggregate investment. While some consideration will be given to general projections, the Department allocates more weight for specific commitments. Applicants are encouraged to describe how the creation and retention of full-time equivalent jobs and new investment will help alleviate the effects of poverty and unemployment with the local labor market area.

3. Poverty: All or part of the local labor market area has a poverty rate of at least 20% according to the latest data from the U.S. Census Bureau, 50% or more of children in the local labor market area are eligible to participate in the federal free or reduced-price meals program according to reported statistics from the State Board of Education, or 20% or more households in the local labor market area receive SNAP benefits according to the latest data from the U.S. Census Bureau. [20 ILCS 655/4(1)(f)(3)]

4. Abandoned Coal Mine, Brownfield or Federal Disaster Area: An abandoned coal mine or a brownfield (as defined in Section 58.2 of the Environmental Protection Act [415 ILCS 5]) is located in the proposed zone area, or all or a portion of the proposed zone was declared a federal disaster area in the 3 years preceding the date of application. [20 ILCS 655/4(1)(f)(4)] To be considered an abandoned coal mine, the coal mine must be listed on the Illinois Department of Natural Resources Abandoned Mine Locator, or the federal Office of Surface Mining Reclamation and Enforcement's Abandoned Mine Lands Portal. To document that a portion of the proposed zone was declared a federal disaster area in the three years preceding the date of the application, the applicant must provide the major disaster declaration number, the area designated as adversely affected by the major disaster, and the date of the declaration. Applicants are encouraged to use copies of the appropriate notices in the Federal Register of a major disaster declaration and related determinations. This does not include emergency declarations or fire management assistance declarations. A brownfield site must be listed in the Illinois Environmental Protection Agency Site Remediation Program database. Applicants are encouraged to provide the 10-digit Illinois Environmental Protection Agency identification number (LPC #) for the site.

5. Large Scale Business Closings: The local labor market area contains a presence of large employers that have downsized over the years, the local labor market area has experienced plant closures in the 5 years prior to the date of application affecting more than 50 workers, or the local labor market area has experienced State or federal facility closures in the 5 years prior to the date of application affecting more than 50 workers. [20 ILCS 655/4(1)(f)(5)] Applicants are encouraged to use data from filings made pursuant to the Illinois Worker Adjustment and Retraining Notification Act [820 ILCS 65] and the State Facilities Closure Act [30 ILCS 608] as evidence of job losses under this test.

6. Vacant Structures: Based on data from Multiple Listing information or other suitable sources, the local labor market area contains a high floor vacancy rate of industrial or commercial properties, vacant or demolished commercial and industrial structures are prevalent in the local labor market area, or industrial structures in the local labor market area are not used because of age, deterioration, relocation of the former occupants, or cessation of operation. [20 ILCS 655/4(1)(f)(6)] Vacancy prevalence rates are determined by dividing the total vacant and/or demolished square feet by the total square feet. The applicant's vacancy rate and prevalence must meet or exceed the state's annual average vacancy rate and minimum prevalence base for each category.

7. Tax Base Improvement 5 year Plan: The applicant demonstrates a substantial plan, over the next five years from the date of designation, for using the designation to improve the State and local government tax base, including income, sales, and property taxes. [20 ILCS 655/4(1)(f)(7)] Applicant should compare the current tax base to the final tax base after 5 years. Applicant must address each tax category: income, sales and property taxes.

8. Public Infrastructure Improvement Plan: Significant public infrastructure is present in the local labor market area in addition to a 5 year plan from date of designation for infrastructure development and improvement. [20 ILCS 655/4(1)(f)(8)]

9. Career Skills Programs: High schools or community colleges located within the local labor market area are engaged in ACT Work Keys, Manufacturing Skills Standard Certification, or industry-based credentials that prepare students for careers. [20 ILCS 655/4(1)(f)(9)] The applicant must provide written documentation from more than one high school and/or community college within the local labor market area that the institution is providing ACT Work Keys, Manufacturing Skills Standard Certification, or industry-based credentials that prepare students for careers at some time during the current school year.

10. Equalized Assessed Valuation: The increase in equalized assessed valuation of industrial and/or commercial properties in the 5 years prior to the date of application in the local labor market area is equal to or less than 50% of the State average increase in equalized assessed valuation for industrial and/or commercial properties, as applicable, for the same period of time as reported by the Illinois Department of Revenue [20 ILCS 655/4(1)(f)(10)]; however, if the change in EAV in the State of industrial and/or commercial properties in the 5 years prior to the date of application is negative, then the applicant should instead demonstrate that the decrease in EAV of industrial and/or commercial properties in the 5 years prior to the date of application in the local labor market area is equal to or greater than 50% of the State average decrease in EAV for industrial and/or commercial properties, as applicable, for the same period of time as reported by the Department of Revenue. Applicants are encouraged to use data on EAV of industrial and/or commercial properties in the local labor market area from the Illinois Department of Revenue, if the local labor market area is the entire county, or from the chief assessment official of the municipality, municipalities, county or counties in which at least a portion of the local labor market area is contained.

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.220 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Eligibility Criteria. Information establishing that the necessary eligibility criteria as specified in Section 520.210 has been met;

b) Economic Development Goals of the Zone. A statement concerning the economic development goals and objectives of the zone, including: specific three-year development goals and objectives of the zone, and a zone implementation plan describing the specific tasks, activities, and commitments that must be accomplished to achieve each three-year objective;

c) Local Incentives and Programs. Information concerning each local incentive, program, special activity, or commitment to be provided in support of the zone, including: a description of each, how it will be implemented, who will provide it, the estimated impact on the revenue of the local government, any special qualifications or conditions imposed on its applicability, and the period of availability and the effective date provided. However, each incentive, program, special activity, or commitment to be provided may not be offered on a case-by-case basis, and must assure that all taxpayers or participants eligible under similar circumstances are treated in a similar manner;

d) Role of the DZO. A statement describing the role of the DZO, including the functions, programs and services to be performed by the DZO;

e) Municipality or County Incentives. A statement detailing any tax, grant, and other financial incentives or benefits, and any programs, to be provided by the municipality or county to business enterprises within the zone, other than those provided in the designating ordinance, which are not provided throughout the municipality or county;

f) Economic Impact of the Zone. An estimate of the economic impact of the zone, considering all of the tax incentives, financial benefits and programs contemplated, upon the revenues of the municipality or county;

g) Management Structure of the Zone. A statement describing the management structure of the zone;

h) Transcript of Public Hearings. A transcript of all public hearings;

i) Copy of Public Notice. A copy of the public notice;

j) Designating Ordinance. A certified copy of the local government designating ordinance;

k) Joint Applicant Information. In the case of a joint application, a statement detailing the need for a zone covering portions of more than one municipality or county, and a description of the agreement between joint applicants;

l) Boundary Description. A legal description of the Enterprise Zone and a map of the Enterprise Zone that clearly identifies the zone's boundaries and provides names of streets and highways; applicants are encouraged to submit geospatial data as ESRI ARCGIS Shape files; applicants shall clearly indicate any territory within the Enterprise Zone that is already within an existing Enterprise Zone; and

m) Local Labor Market Area. A specific definition of the applicant's local labor market area, along with a statement explaining why the local labor market area used is appropriate for the Enterprise Zone to which it relates; applicants are encouraged to include data on commuting patterns and public transportation or other information demonstrating that for the local labor market area used individuals can reside and find employment within a reasonable distance or can readily change jobs without changing their place of residence. [20 ILCS 655/3(h)]

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.230 Application Procedures

a) Application Deadline. Applications shall be submitted to the Department by December 31 for designation prior to September 30 of the following year. Any application received after December 31 of any calendar year shall be held by the Department for consideration and action during the following calendar year. [20 ILCS 655/5.2(a)]

b) All applications for Enterprise Zones that expire on or before December 31, 2016, including the extension provided for in Section 520.315(b)(3), shall be submitted to the Department by December 31, 2014. At that time, the zone becomes available for either the previously designated area or a different area to compete for designation. No preference for designation as a zone will be given to the previously designated area. [20 ILCS 655/5.3(f)]

c) For Enterprise Zones that are scheduled to expire on or after January 1, 2017, an application process shall begin 2 years prior to the year in which the zone expires. At that time, the zone becomes available for either the previously designated area or a different area to compete for designation. No preference for designation as a zone will be given to the previously designated area. [20 ILCS 655/5.3(f)]

d) All applications filed by December 31 of the preceding calendar year and deemed qualified by the Department shall be approved or denied by the Board. If such application is not approved by September 30, the application shall be considered denied. If an application is denied, the Board shall inform the applicant of the specific reasons for the denial. [20 ILCS 655/5.2.1(e)]

e) A majority of the Board will determine whether an application is approved or denied. The Board is not, at any time, required to designate an Enterprise Zone. [20 ILCS 655/5.2.1(f)]

f) In determining which designated areas shall be approved and certified as Enterprise Zones, the Board shall give preference to the extent to which the area meets the criteria set forth in Section 520.210. [20 ILCS 655/5.2.1(g)]

g) Each Enterprise Zone that reapplies for certification but does not receive a new certification shall expire on its scheduled termination date. [20 ILCS 655/5.3(f)]

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.240 Joint Application

a) Joint Application. Under a joint application, two or more local governments are the applicants and share responsibility for operation of the Enterprise Zone. Other units of government may participate by offering or supplementing tax incentives and other benefits available in the Enterprise Zone. Submission of a joint application is required in those instances where the proposed Enterprise Zone covers portions of more than one county or municipality. b) Enabling Ordinance for Joint Applicants. A joint application must be supported by enabling ordinances passed by participating units of local government in accordance with Section 5(a) and (b) of the Act.

b) Enabling Ordinance for Joint Applicants. A joint application must be supported by enabling ordinances passed by participating units of local government in accordance with Section 5(a) and (b) of the Act.

c) Intergovernmental Agreement for Joint Applicants. An intergovernmental agreement signed and approved by all joint applicants shall be executed and submitted as a part of the joint application package. The intergovernmental agreement shall include:

1. Duration. The duration of the Enterprise Zone;

2. Description. A description of the Enterprise Zone;

3. Incentives. The provisions for the tax incentives, programs, and other benefits to be offered;

4. Zone Administrator. A provision for the position of Zone Administrator, and a description of the responsibilities of the position and the selection process;

5. Management Structure. A management structure for the operation of the Enterprise Zone; and

6. Designated Zone Organizations (DZO). The methods of selecting Designated Zone Organizations and coordinating their activities with each designating unit of government.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.250 Application Evaluation and Ranking

a) All applications submitted on or before the deadline established in Section 520.230 shall receive an initial review by the Department. This initial review shall determine if the application contains all the information required pursuant to Section 520.220 and if the application meets at least three of the criteria in Section 520.210(d). Upon meeting the minimum eligibility thresholds, applications will compete in a formalized ranking system.

b) The Department shall issue recommendations to the Board by assigning a score to each application. The scores will be determined by the Department, based on the extent to which an application meets the criteria under Section 520.210.

1. Up to 50 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(1) with points awarded according to the severity of the unemployment as indicated by the percentage that the unemployment rate in the local labor market area exceeds 120% of the State's annual average unemployment rate for the most recent calendar year or the most recent fiscal year as reported by the Department of Employment Security. [20 ILCS 655/4.1(a)(1)]

2. Up to 50 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(2), with points awarded in accordance with the number of jobs created and retained and the aggregate amount of investment promised in the Enterprise Zone as well as the alleviation of the effects of poverty and unemployment within the local labor market area. [20 ILCS 655/4.1(a)(2)] More points are awarded for specific commitments.

3. Up to 40 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(3). [20 ILCS 655/4.1(a)(3)] Applicants will receive:

A) up to 10 points for the poverty rate in the local labor market area, according to the latest data from the Census Bureau;

B) up to 10 points for the percentage of children in participating schools and institutions in the local labor market area are eligible for free and reduced-price meals under the National School Lunch Program according to the most recent data available from the Illinois State Board of Education;

C) up to 10 points for the percentage of households in the local labor market area that receive SNAP benefits, according to the latest data from the Census Bureau; and

D) up to 10 points for the severity of the situations described in subsections (b)(3)(A) through (C).

4. Up to 30 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(4), with points awarded in accordance with the severity of the environmental impact of the abandoned coal mine, brownfield, or federal disaster area. [20 ILCS 655/4.1(a)(4)] More points will be awarded for abandoned coal mines in the proposed Enterprise Zone that are a priority 1 or 2 site, as determined by the Illinois Department of Natural Resources, Office of Mines and Minerals, Division of Abandoned Mined Lands Reclamation or Federal Office of Surface Mines. More points will be awarded for brownfields in the proposed Enterprise Zone that are listed on the U.S. Environmental Protection Agency's National Priorities List. Points will be awarded for major disaster declarations when a county or counties in the proposed Enterprise Zone are included in the Federal Emergency Management Agency (FEMA)individual assistance program, the FEMA public assistance program, or both programs. More points will be awarded for multiple major disaster declarations.

5. Up to 50 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(5), with points awarded in accordance with the severity of the applicable facility closures or downsizing. [20 ILCS 655/4.1(a)(5)] Severity of the applicable facility closures or downsizing will be measured by the number of workers affected as shown by notices filed pursuant to the Illinois Worker Adjustment and Retraining Notification Act [820 ILCS 65] in the 10 years prior to the date of application, notices filed pursuant to the State Facilities Closure Act [30 ILCS 608] in the 5 years prior to the date of application, or reliable evidence of the number of workers affected by federal facility closures in the 5 years prior to the date of application.

6. Up to 40 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(6) with points awarded in accordance with the severity and extent of the high floor vacancy or deterioration. [20 ILCS 655/4.1(a)(6)] Applicants shall list affected commercial or industrial parcels and/or units and describe how those parcels or units were determined to be vacant or deteriorated. To show a vacancy rate or prevalence, applicants shall provide data of the total number or square feet of commercial and industrial parcels or units in the local labor market area in comparison to total number or square feet of vacant and demolished commercial and industrial parcels or units. Applicants shall describe how that data was collected or determined. (See Section 520.210(d)(6).)

7. Up to 30 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(7) with points awarded in accordance with the extent to which the application addresses a plan to improve the State and local government tax base. [20 ILCS 655/4.1(a)(7)] Applicants shall address the State and local sales tax base, the State income tax base, and the local property tax base.

8. Up to 50 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(8) with points awarded in accordance with the existence of significant public infrastructure in addition to a plan for infrastructure development and improvement. [20 ILCS 655/4.1(a)(8)] Applicants shall provide an inventory of the public infrastructure that demonstrates that significant public infrastructure exists in the local labor market area to support economic development at the time of the application. Applicants shall provide a three-year public infrastructure improvement and development plan for each municipality and/or county applicant government that provides for large, physical improvements that are permanent in nature and that are needed for the functioning of the community, including transportation, utilities, etc. The plans shall include a listing of the capital improvement projects, the plan for financing the projects, a timetable for the construction or completion of the projects, and justification for the projects. Points will be awarded for both the inventory of existing public infrastructure and the public infrastructure improvement and development plan, with a majority of the points awarded based on the public infrastructure improvement and development plan.

9. Up to 40 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(9) with points awarded in accordance with the extent to which educational programs exist for career preparation. Applicants shall list all high schools and community colleges in the local labor market area and indicate which high schools and community colleges are engaged in ACT Work Keys, Manufacturing Skills Standard Certification, or other industry-based credentials that prepare students for careers. Applicants shall provide documentation that high schools and community colleges in the local labor market are engaged in these programs. More points will be awarded to applicants with a higher percentage of high schools and community colleges engaged in ACT Work Keys, Manufacturing Skills Standard Certification, or other industry-based credentials that prepare students for careers. [20 ILCS 655/4.1(a)(9)]

10. Up to 40 points for the extent to which the applicant meets or exceeds the criteria in Section 520.210(d)(10) with points awarded according to the severity of the change in equalized assessed valuation. [20 ILCS 655/4.1(a)(10)]

A) If the change in statewide equalized assessed valuation in the State of industrial and/or commercial properties in the 5 years prior to the date of application is positive, the applicant should demonstrate that the increase in EAV of industrial and/or commercial properties in the 5 years prior to the date of application in the local labor market area is equal to or less than 50% of the State average increase in EAV for industrial and/or commercial properties, as applicable, for the same period of time as reported by the Department of Revenue.

B) If the change in statewide EAV of industrial and/or commercial properties in the 5 years prior to the date of application is negative, the applicant should demonstrate that the decrease in EAV of industrial and/or commercial properties in the 5 years prior to the date of application in the local labor market area is equal to or greater than 50% of the statewide average decrease in EAV for industrial and/or commercial properties, as applicable, for the same period of time as reported by the Department of Revenue.

C) Applicants are encouraged to use data on EAV of industrial and/or commercial properties in the local labor market area from the Department of Revenue or from the chief assessment official of the municipality, municipalities, county or counties in which at least a portion of the local labor market area is contained. Severity will be measured by the difference in the local labor market area's industrial and/or commercial EAV from the State average change in EAV for industrial and/or commercial properties beyond the threshold for this test.

c) No later than June 30, the Department shall notify all applicant municipalities and counties of the Department's determination of the qualification of their respective designated Enterprise Zone areas, and shall send qualifying applications, including the applicant's scores for the items listed in subsection (b) and the applicant's final score under this Section, to the Board for the Board's consideration, along with supporting documentation of the basis for the Department's decision. [20 ILCS 655/5.2(c)]

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.300 Application to Amend an Ordinance

a) Amending an Ordinance. An application for amending an approved ordinance that creates an Enterprise Zone shall follow the conditions set forth in Section 5.4 of the Act. An amendment to such an ordinance is not effective unless and until the Department approves the application and the amending ordinance, and files an amended certificate and the designating ordinance with the Secretary of State and local recorder of deeds as provided in Section 5.3 of the Act.

b) Standardized Application. The Department shall furnish upon request a standardized application form to a municipality or county that seeks to amend a certified designating ordinance.

c) Joint Submissions. Where there are two or more designating units of government, an application for amending the terms of an approved Enterprise Zone ordinance shall be a joint submission, certified by the chief elected official or a representative of each designating municipality or county.

d) Including Part of Another Municipality or County. An application for amending an approved ordinance to include a territory of another municipality or county shall be a joint submission, certified by the chief elected official or a representative of each designating municipality or county.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.310 Application to Change Boundaries

a) Eligibility Criteria for Proposed Additions. The boundaries of an approved Enterprise Zone may be amended to add areas on forms provided by the Department. An area is eligible if it meets the qualifications described in Section 4 of the Act, and the application to amend the Enterprise Zone ordinance provides analyses and documentation that:

1. Required Tests. The area meets at least three of the tests described in Section 520.210(d); or

2. Immediate Benefit. The proposed addition provides an immediate benefit to the established Enterprise Zone and its residents within two years or less by:

A) Full-Time Jobs. Creating or retaining permanent full-time jobs; or

B) Removing Impediments. Removing or correcting an impediment to economic development that exists in the established Enterprise Zone; or

C) Stimulating Revitalization. Stimulating neighborhood residential or commercial revitalization.

b) Eligibility Criteria for Proposed Deletions. The boundaries of an approved Enterprise Zone may be amended, on forms provided by the Department, to delete areas. An area is eligible if it meets the qualifications described in Section 4 of the Act, and the application to amend the Enterprise Zone ordinance provides analyses and documentation that:

1. Required Assurance. The area does not meet any one of the tests described in Section 520.210(d); or

2. Accomplishment of Local Objectives. The area is an area in which the local objectives for economic development or neighborhood revitalization of the Enterprise Zone have been accomplished.

c) Overlapping Territory. Any territory that is part of an Enterprise Zone initially certified by the Department on or after January 1, 2015 that is part of a previously certified Enterprise Zone shall be deleted from the older Enterprise Zone and shall be part of the newly certified Enterprise Zone, provided that:

1. An application to delete territory under this Section does not need to be filed with the Department for territory to be deleted pursuant to this subsection (c);

2. The application for certification of the new Enterprise Zone and the designating ordinance must indicate any territory within the new Enterprise Zone that is to be deleted from the older Enterprise Zone; and

3. The "benefit entitlement" provisions of Section 5.4(e) and (f) of the Act (described in Section 520.315(a)(2)(A), (B) and (C)) shall apply.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.315 Application to Change Incentives, Alter Termination Date, and Make Technical Corrections

a) Application to Expand, Limit, or Repeal Incentives

1. Changing Incentives. An applicant shall apply to the Department to expand, limit, or repeal the incentives provided in the ordinance on forms provided by the Department, and shall comply with the procedures described in Section 5.4 of the Act.

2. Continuation of Incentives. Sections 5.4(e) and (f) of the Act provide that all incentives and benefits previously offered shall continue for the original term of the zone for three groups:

A) Receiving Benefits. Business enterprises that are receiving benefits or incentives in the zone on the effective date of the amending ordinance;

B) Proposed Expansions. Business enterprises or expansions that are proposed or under development on the effective date of the amending ordinance, if the business enterprise demonstrates that:

i) The proposed business enterprise or expansion has been committed to locating or expanding in the zone; and

ii) Substantial and binding financial obligations have been made in reasonable reliance on the benefits and programs that would have been available because of the Enterprise Zone;

C) Individuals in Homestead/Shopstead. Individuals participating in urban homestead or shopstead programs.

3. Local Government Duties. With respect to businesses that are already receiving Enterprise Zone benefits, the local government has the responsibility to attempt to inform eligible businesses through public notice or mailings, and to take administrative steps necessary to assure compliance.

4. Evidence of Financial Commitment. Evidence of commitment under subsection (a)(2)(B)(ii) shall include, but not be limited to: internal memoranda; purchase orders; construction plans and schematics; evidence of financial commitment from financial institutions and/or State, local, or federal governments; and written contracts. Proposed business locations or expansions shall also demonstrate reliance on Enterprise Zone benefits by applying for the incentives, provided that all other requirements are met.

5. Local Government Duties. With respect to homestead and shopstead programs, the local government shall inform affected parties and meet its obligations concerning transfer of title to the property and any other provisions that relate to the rights and privileges of the affected parties.

b) Application to Alter Termination Date

1. Altering Termination Date. An applicant shall apply to the Department to alter the termination date provided in the ordinance, on forms provided by the Department, and shall comply with the procedures described in Section 5.4 of the Act.

2. Reducing Duration of Zone. If the amendatory ordinance reduces the duration of the Enterprise Zone, the "benefit entitlement" provisions of Section 5.4(e) and (f) of the Act and described in subsections (a)(2)(A), (B) and (C) shall apply.

3. Any Enterprise Zone in existence on July 25, 2013 that has a term of 20 calendar years may be extended for an additional 10 calendar years upon amendment of the designating ordinance by the designating municipality or county and submission of the ordinance to the Department. The amended ordinance must be properly recorded in the Office of Recorder of Deeds of each county in which the Enterprise Zone lies. [20 ILCS 655/5.3(c)]

4. Each Enterprise Zone in existence on August 7, 2012 that is scheduled to expire before July 1, 2016 may have its termination date extended until July 1, 2016 upon amendment of the designating ordinance by the designating municipality or county extending the termination date to July 1, 2016 and submission of the ordinance to the Department. The amended ordinance must be properly recorded in the Office of Recorder of Deeds of each county in which the Enterprise Zone lies. [20 ILCS 655/5.3(c)]

5. Enterprise Zones designated after August 7, 2012, shall be in effect for a term of 15 calendar years, or for a lesser number of years specified in the certified designation ordinance. Those Enterprise Zones shall be subject to review by the Board after 13 years for an additional 10-year designation. During the review process, the Board shall consider the costs incurred by the State and units of local government as a result of tax benefits received by the Enterprise Zone. [20 ILCS 655/5.3(c)] The application for the additional 10 years must be approved by majority vote of the Board.

c) Application to Make Technical Corrections

1. Making Technical Corrections. An applicant shall apply to the Department to make a technical correction in the ordinance, on forms provided by the Department, and shall comply with the procedures described in Section 5.4 of the Act.

2. Definition of Technical Correction. A "technical correction" shall mean a non-substantive change that corrects or clarifies the wording, terms, or conditions of an Enterprise Zone ordinance or intergovernmental agreement. A technical correction is not one that affects any rights and privileges accorded to residents of the zone.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.320 Decertification

a) Decertification – Two Methods. In accordance with Section 5.4 of the Act, an Enterprise Zone may be decertified in two ways:

1. Joint Action. By joint action of the Department and the designating county or municipality in accordance with Section 5.4(c) of the Act; or

2. For Cause. For cause by the Department in accordance with Section 5.4(d) of the Act. Cause for decertification shall be defined as the designating unit of government's failure to implement the Enterprise Zone program, which can be evidenced by: the lack of an economic development strategy (no clearly defined objectives or course of action for improving zone performance); the failure to implement a business retention and expansion plan (little or no contact with zone businesses, or zone benefits not explained or publicized to businesses); the failure to comply with program monitoring as set forth in Section 520.410; and the failure to implement incentives uniformly throughout the Enterprise Zone as described in Section 520.220(c).

b) Notice of Probation. The Department shall notify each designating unit of government of the commencement of the probationary status pending action to decertify the Enterprise Zone. Notice shall include: the date the probationary term begins; the duration of the probationary term; the deficiencies involved; and the date and location of the public hearing. The probationary status shall commence on the date the notice is postmarked.

1. Work Plan. Within 30 days after the date of the Department notice, the designating unit of government shall submit a work plan that explains corrective actions to be taken and any evidence refuting the deficiencies.

2. Public Hearing. Upon expiration of the 30-day response period, the Department shall conduct a public hearing within the boundaries of the Enterprise Zone in order to receive evidence and testimony regarding decertification. Written and oral testimony, including supporting documentation, will be accepted from any affected party, regardless of whether the party resides within the Enterprise Zone boundaries. The Department shall place public notice of the public hearing in one newspaper of general circulation within the Enterprise Zone, not more than 20 days nor less than 5 days before the public hearing. A tape recording of the public hearing shall be made. Interested persons may access the tape recordings of public hearings in accordance with procedures provided in the Department's Freedom of Information rules (2 Ill. Adm. Code 801).

3. Corrective Steps. The Department shall be available to arrive at an agreement with the designating unit of government regarding the specific corrective steps to be taken. Within 15 days after the date of the public hearing, the Department shall issue a letter to the designating unit of government stating the final terms of the plan for corrective action.

4. Progress Reports. The designating unit of government shall submit written monthly progress reports and shall make personnel available for meetings and interviews to ensure compliance with the plan of corrective action.

5. Notice of Decertification. The Department shall notify the designating unit of government, 21 days prior to the end of the probationary period, as to whether decertification will proceed.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.400 Zone Administration

a) The administration of an Enterprise Zone shall be under the jurisdiction of the designating municipality or county. Each designating municipality or county shall, by ordinance, designate a Zone Administrator for the certified zones within its jurisdiction. A Zone Administrator must be an officer or employee of the municipality or county. The Zone Administrator shall be the liaison between the designating municipality or county, the Department, and any Designated Zone Organizations within zones under his or her jurisdiction. Where there are two or more designating units of government for an Enterprise Zone, only one Zone Administrator is required for designation. The Zone Administrator must be an officer or employee of at least one of the designating units of government and must be selected in accordance with the intergovernmental agreement (see Section 520.240(c)).

b) Each Zone Administrator shall post a copy of the boundaries of the Enterprise Zone on its official Internet website and shall provide an electronic copy to the Department. The Department shall post each copy of the boundaries of an Enterprise Zone that it receives from a Zone Administrator on its official Internet website. [20 ILCS 655/8.2(a)] Administrators are encouraged to submit geospatial data in the form of ESRI ARCGIS Shape files.

c) 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. [20 ILCS 655/8.2(b)]

d) 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. [20 ILCS 655/8.2(c)]

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.410 Reporting and Monitoring by Zone Administrators

a) Reporting. Zone administrators shall collect and report to the Department information required to meet the reporting requirement set forth in Section 6(A)(1) of the Act. The data shall be summarized on forms provided by the Department.

b) Monitoring. The Zone Administrator shall monitor the accomplishment of local Enterprise Zone objectives.

History

• Source: Amended at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.420 Business Cessation Notification

a) Notification of Business Cessation. Section 11.1 of the Act requires a business located within an Enterprise Zone that has received tax credits or exemptions, regulatory relief, or any other benefits under the Act to notify the Department and the officials of the county and municipality in which the business is located, within 60 days after the cessation, of the cessation of business operations. For purposes of this regulation, business cessation shall mean:

1. Business Closed. The business has closed and is not conducting business in any capacity within the boundaries of the Enterprise Zone;

2. Business Relocated. The business has relocated its operations in whole to another area outside the boundaries of the Enterprise Zone; or

3. Business Acquired. The acquisition or assumption of the existing business (which has been certified to receive either the Enterprise Zone Utility Tax Exemption or the Enterprise Zone Expanded Manufacturing Machinery and Equipment/Pollution Control Facilities Sales Tax Exemption) and/or assets by another entity.

b) Notice for Closed or Relocated Businesses. In the case of business cessation under the categories specified under subsections (a)(1) and (a)(2), notification shall consist of a letter from the person in charge at the affected facility identifying:

1. Date of Cessation. The date of business cessation; and

2. Number of Employees. The number of employees at the time of business cessation.

c) Notice for Acquired Businesses. In the case of a business cessation under the category specified in subsection (a)(3), notification shall consist of a letter from the person in charge at the affected facility identifying:

1. Date of Purchase. The date of purchase;

2. Name of New Business. The name of the new business; and

3. Exemption the Acquired Business Received. The type of exemption that the acquired or assumed business was receiving (either the Enterprise Zone Utility Tax Exemption or the Enterprise Zone Expanded Manufacturing Machinery and Equipment/Pollution Control Facilities Sales Tax Exemption).

d) People to Notify. Notification of the business cessation shall be submitted to:

1. DCEO. Office of Business Development, Department of Commerce and Economic Opportunity, 500 East Monroe, Springfield, Illinois 62701;

2. Enterprise Zone. The chief elected official of the Enterprise Zone community in which the business was located; and

3. Joint Enterprise Zone. In the case of a joint zone, the chief elected official of the municipality and the County Board Chairperson of the participating county.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.500 General

A designating municipality or county may designate one or more Designated Zone Organizations qualified under Section 3(d) of the Act to perform within the area or zone for the benefit of the residents and businesses in the zone. The Department shall furnish a standard application to an entity or association seeking certification as a Designated Zone Organization (DZO). No organization shall be considered a DZO unless and until the Department verifies eligibility in accordance with Section 3(d) of the Act, and the organization is authorized by local ordinance to function as a DZO. Once certified, the DZO may provide services or perform functions in coordination with the municipality or county that is listed in Section 8 of the Act.

History

• Source: Amended at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.510 Project Eligibility and Approval

A business entity may receive a deduction against income subject to State taxes for a contribution to a DZO if the project for which the contribution is made has been specifically approved by the designating municipality or county, and by the Department. Any DZO seeking to have a project approved for contribution must submit an application to the Department describing the nature and benefit of the project and its potential contributors.

a) Standard Applications. The Department shall provide a standard application to any DZO seeking to qualify a project for contributions eligible for tax deductions in accordance with Section 11 of the Act. The applications shall be processed in accordance with Section 11(e) of the Act.

b) Project Approval Period. Applications shall be approved for a period of one project fiscal year. Continuation of project approval and eligibility for contributions in future years shall require a new application and current documentation including:

1. Project Balance Sheet. A project balance sheet showing assets and liabilities, in accordance with the most recent accounting standards of the Financial Standards Board of the American Institute of Certified Public Accountants as contained in the publication entitled AICPA Professional Standards, 1211 Avenue of the Americas, New York NY 10036-8775 (June 2011, no later editions are incorporated);

2. Project Budget. A project budget; and

3. Accomplishment of Project Objectives. Project information regarding the extent to which objectives have been accomplished.

c) Renewal Applications. All renewal applications shall be submitted at least 90 days prior to the start of the budget fiscal year or program year for which approval is requested.

1. Notice of Project Renewal. Within 15 days after receipt of the application, the Department shall notify the DZO in writing regarding project renewal. In the event the renewal application is determined deficient, the Department will notify the DZO of the deficiencies.

2. Notice of Deficiency. The DZO shall have 15 days from the date of the notice of deficiency to submit corrected or additional information.

3. Notice of Acceptance or Denial. Within 5 days from the start of the budget fiscal year for which the project renewal is requested, the Department shall notify the DZO that the application is accepted and that the project shall be renewed, or that the application is deficient and the renewal is denied.

d) Written Endorsement Requirement. In no case shall a project be approved by the Department that does not have the written endorsement of the designating units of government.

e) Project Proposal. A proposed project shall enhance the Enterprise Zone in accordance with Section 11(c) of the Act. In describing how the proposed project will enhance the Enterprise Zone, the DZO shall address the following:

1. Assessment of Need. The applicant shall identify the specific need, problem or objective that will be addressed by the proposed project.

2. Project Objectives. The applicant shall identify how the project will offer relief from the identified problems or meet the identified need.

3. Project Criteria. In accordance with Section 11(b) of the Act, a DZO must demonstrate that the proposed project meets all of the following criteria:

A) Self-Help. That the project will contribute to the self-help efforts of zone residents (Self-help means the project can reasonably be expected to improve the ability of participating residents to live and/or work in the Enterprise Zone.);

B) Participation by Zone Residents. That the zone residents will actively participate in the project's planning and implementation;

C) Lack of Sufficient Resources. That the project lacks sufficient resources; and

D) DZO is Fiscally Responsible. That the DZO will be fiscally responsible for the project.

f) Project Modifications. Project modifications, either programmatic or budgetary, require the prior approval of the Department.

g) DZO Project Administrative Responsibility. The DZO shall furnish the Department an annual status report on each project. The report must be submitted no later than 30 calendar days following the anniversary, and shall consist of the following information:

1. Financial Statement. A financial statement, in accordance with the most recent generally accepted accounting principles of the American Institute of Certified Public Accountants; and

2. Achieving Objectives. A statement describing the project's success in achieving the objectives outlined in the approved application.

History

• Source: Amended at 36 Ill. Reg. 16067, effective October 26, 2012

14 Ill. Adm. Code 520.520 Charitable Contributions

a) Amount of Contributions. The Department is authorized under Section 11(d) of the Act to specify the amount of contributions a DZO is eligible to receive for a project. The Department will deny amounts requested if:

1. Excessive/Inappropriate Items. The amount requested or the items sought are excessive or inappropriate to the project goals and objectives; or

2. Exceeding Contribution Limit. Approval of the project would, in total, with all other project amounts approved in any calendar year, exceed the contribution limitation set or established in Section 11(g) of the Act.

b) Eligibility of a Contribution for a Tax Deduction. The DZO shall provide to the Department information necessary to determine the eligibility of a contribution for a tax deduction in accordance with Section 203(b)(2)(N) of the Illinois Income Tax Act [35 ILCS 5/203(b)(2)(N)] and Section 170(c) of the Internal Revenue Code (26 USC 170(c)).

c) Claim for Tax Deduction. In order to determine and certify the amount of contribution, a taxpayer may file a claim for a tax deduction.

1. Request for Contribution Approval. The taxpayer shall submit to the Department a request for contribution approval that shall include:

A) Taxpayer Information. The name of the taxpayer, the taxpayer's address, and the Federal Employer Identification Number (FEIN);

B) Name of Zone, DZO, and Project. The name of the Enterprise Zone, the DZO, and the project;

C) Amount of Contribution. The amount of cash or the value of the in-kind contribution as determined in accordance with Section 170(c) of the Internal Revenue Code; and

D) In-Kind Contribution. In the case of an in-kind contribution, the DZO must maintain documentation sufficient to support the claim, such as appraisals of fair market value.

2. Receipt to Taxpayer. The DZO shall issue a receipt to the taxpayer when a contribution is made. The receipt shall include:

A) Taxpayer Information. The exact name of the taxpayer, the address, and the Federal Employer Identification Number (FEIN);

B) Date of Contribution. The date the contribution was made;

C) Name of DZO and Project. The name of the DZO and of the project to which the contribution has been made; and

D) Amount of Contribution. The amount and a description of the contribution made to the project.

3. Verification of Contribution Value. The DZO shall forward a copy of such receipt to the Department and verification of the contribution value as determined under Section 170(c) of the Internal Revenue Code and the most recent Accounting Standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA).

History

• Source: Amended at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.600 Definitions

The following definitions are applicable to Subpart F.

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible investment" means the required amount of investments in qualified property, as defined by Section 201(h) of the Illinois Income Tax Act [35 ILCS 5/201(h)] that qualifies a business for the High Impact Business designation.

"Fertilizer plant" means a newly constructed or upgraded plant utilizing gas used in the production of anhydrous ammonia and downstream nitrogen fertilizer products for resale. [20 ILCS 655/5.5(a)(3)(F)]

"Foreign Trade Zone" or "Foreign Trade Sub-Zone" means a geographic area designated by the federal government under the Foreign Trade Zone Act of 1934, as amended (19 USC 81(a)) or rules promulgated under that Act (15 CFR 400 (1986)).

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1,750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"High Impact Business" means a business located in Illinois designated as a High Impact Business by the Department pursuant to Section 5.5 of the Illinois Enterprise Zone Act [20 ILCS 655/5.5].

"Job creation" means at least 500 full-time equivalent employees are to be hired at a designated location in Illinois over the number of full-time equivalent employees that were employed by the applicant prior to January 1, 1989. Job titles being filled or refilled as a result of strikes or layoffs or replacement workers to replace company locked out employees cannot be counted as job creation. Job creation must occur within 36 months after the designation date, except that, in the case of a High Impact business designated under Section 5.5(a)(3)(F) of the Act, job creation must occur within 48 months after the designation date.

"Job retention" means at least 1,500 full-time employees are to be retained by the High Impact Business as a direct result of the eligible investment, and that the employees would have lost their jobs had the eligible investment not been made. Job retention means maintaining all full-time jobs of a company that existed at the designated locations at the time of application submittal.

"Large scale investment and development project" means a project of a High Impact Business that is the result of a minimum eligible investment of $12 million that will be placed in service in qualified property and causes the creation of 500 full-time equivalent jobs, or is the result of a minimum eligible investment of $30 million that will be placed in service in qualified property and causes the retention of 1,500 full-time jobs at a designated location in Illinois.

"New electric generating facility" means a newly-constructed electric generation plant or a newly-constructed generation capacity expansion at an existing electric generation plant, including the transmission lines and associated equipment that transfers electricity from points of supply to points of delivery, and for which such new foundation construction commenced not sooner than July 1, 2001.

"New employee" means a full-time equivalent job that represents a net increase in the number of the High Impact Business' employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the High Impact Business who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the High Impact Business;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the High Impact Business;

Employee positions being filled or refilled as a result of strikes or layoffs or replacement workers to replace High Impact Business company locked out employees.

"New gasification facility" means a newly constructed coal gasification facility that generates chemical feedstocks or transportation fuels derived from coal (which may include, but are not limited to, methane, methanol, and nitrogen fertilizer) that supports the creation or retention of Illinois coal-mining jobs, and that qualifies for financial assistance from the Department before December 31, 2010. [20 ILCS 655/5.5(a)(3)(B-5)]

"New Illinois coal mining jobs" means coal mining jobs created in Illinois coal mines, not sooner than July 1, 2001, not including a call back from a layoff, supported by a "new electric generating facility" as described in this Section. Alternatively, a "new Illinois coal mining job" can be indirectly determined from quantities of coal purchased, or to be purchased, annually, based on the average amount of coal produced per Illinois miner in calendar year 2000, as published in the Annual Statistical Report of the Division of Mines and Minerals, Illinois Department of Natural Resources. Illinois miners produced an average of 9,691 tons of coal in calendar year 2000.

"New wind power facility" means a newly constructed electric generation facility, or a newly constructed expansion of an existing electric generation facility, placed in service on or after July 1, 2009, that generates electricity using wind energy devices, and such facility shall be deemed to include all associated transmission lines, substations, and other equipment related to the generation of electricity from wind energy devices. [20 ILCS 655/5.5(a)(3)(E)]

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function. An eligible investment in qualified property as defined in Section 201(h)(2) of the Illinois Income Tax Act [35 ILCS 5/201(h)(2)] shall be considered placed in service on the date the property is placed in a condition of readiness and availability for use, or the date on which the depreciation period of that property begins.

"Prevailing wage" means the hourly cash wages plus fringe benefits for training and apprenticeship programs approved by the U.S. Department of Labor, Bureau of Apprenticeship and Training, health and welfare, insurance, vacations and pensions paid generally, in the locality in which the work is being performed, to employees engaged in work of a similar character on public works. [20 ILCS 655/5.5(a)(3)(F)]

"Transmission facilities" means transmission lines with a voltage rating of 115 kilovolts or above, including associated equipment, that transfer electricity from points of supply to points of delivery and that transmit a majority of the electricity generated by a new electric generating facility designated as a High Impact Business in accordance with Section 5.5(d) of the Act.

"Wind energy device" means any device, with a nameplate capacity of at least 0.5 megawatts, that is used in the process of converting kinetic energy from the wind to generate electricity. [20 ILCS 655/5.5(a)(3)(E)]

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.610 Eligible Applicants

Any business located in Illinois, excluding businesses located in Illinois Enterprise Zones, may apply to the Department for designation as a High Impact Business pursuant to the provisions of Section 5.5 of the Act.

History

• Source: Added at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.620 Eligibility Criteria

A business qualifies for designation by the Department as a High Impact Business if the business:

a) Is located in Illinois and is not located in an Enterprise Zone; and

b) The business intends to do one or more of the following:

1. Minimum Eligible Investment. Intends to make a minimum eligible investment of $12 million that will be placed in service in qualified property in Illinois and intends to create 500 full-time equivalent jobs at a designated location in Illinois; or intends to make a minimum eligible investment of $30 million that will be placed in service in qualified property in Illinois and intends to retain 1,500 full-time equivalent jobs at a designated location in Illinois. The business must certify in writing that the investments would not be placed in service in qualified property and the job creation or job retention would not occur without the tax credits and exemptions set forth in Section 5.5(b) of the Act. The terms "placed in service" and "qualified property" have the same meanings as described in Section 201(h) of the Illinois Income Tax Act [20 ILCS 655/5.5(a)(3)(A)]; or

2. New Electric Generating Facility. Intends to establish a new electric generating facility at a designated location in Illinois. Such facility shall be designed to provide baseload electric generation and shall operate on a continuous basis throughout the year; and shall have an aggregate rated generating capacity of at least 1,000 megawatts for all new units at one site if it uses natural gas as its primary fuel and foundation construction of the facility is commenced on or before December 31, 2004, or shall have an aggregate rated generating capacity of at least 400 megawatts for all new units at one site if it uses coal or gases derived from coal as its primary fuel and shall support the creation of at least 150 new Illinois coal mining jobs. The business must certify in writing that the investments necessary to establish a new electric generating facility would not be placed in service and the job creation in the case of a coal-fueled plant would not occur without the tax credits and exemptions set forth in Section 5.5(b-5) of the Act [20 ILCS 655/5.5(a)(3)(B)]; or

3. New Gasification Facility. Intends to establish a new gasification facility at a designated location in Illinois. A new gasification facility does not include a pilot project located within Jefferson County or within a county adjacent to Jefferson County for synthetic natural gas from coal [20 ILCS 655/5.5(a)(3)(B-5)]; or

4. Production Operations at a New Coal Mine. Intends to establish production operations at a new coal mine, re-establish production operations at a closed coal mine, or expand production at an existing coal mine at a designated location in Illinois not sooner than July 1, 2001; provided that the production operations result in the creation of 150 new Illinois coal mining jobs as described in Section 5.5(a)(3)(B) of the Act; and further provided that the coal extracted from the mine is utilized as the predominant source for a new electric generating facility. The business must certify in writing that the investments necessary to establish a new, expanded, or reopened coal mine would not be placed in service and the job creation would not occur without the tax credits and exemptions set forth in Section 5.5(b-5) of the Act. The term "placed in service" has the same meaning as described in Section 201(h) of the Illinois Income Tax Act [20 ILCS 655/5.5(a)(3)(C)]; or

5. New or Upgraded Transmission Facilities. Intends to construct new transmission facilities or upgrade existing transmission facilities, at designated locations in Illinois, for which construction commenced not sooner than July 1, 2001. The business must certify in writing that the investments necessary to construct new transmission facilities or upgrade existing transmission facilities would not be placed in service without the tax credits and exemptions set forth in Section 5.5(b-5) of the Act [20 ILCS 655/5.5(a)(3)(D)]; or

6. New Wind Power Facility. Intends to establish a new wind power facility at a designated location in Illinois. [20 ILCS 655/5.5(a)(3)(E)] The construction of a new wind power facility by a business designated as a High Impact Business under Section 5.5(a)(3)(E) of the Act is a "public works" as defined by Section 2 of the Prevailing Wage Act [820 ILCS 130/2]; or

7. Qualifying Fertilizer Plant

A) The business commits to:

1. make a minimum investment of $500,000,000, which will be placed in service in a qualified property;

2. create 125 full-time equivalent jobs at a designated location in Illinois;

3. establish a fertilizer plant at a designated location in Illinois that complies with the set-back standards described in Table 1: Initial Isolation and Protective Action Distances in the 2012 Emergency Response Guidebook published by the United States Department of Transportation (USDOT; 1200 New Jersey Avenue, SE, Washington DC 20590);

4. pay a prevailing wage for employees at that location who are engaged in construction activities; and

5. secure an appropriate level of general liability insurance to protect against catastrophic failure of the fertilizer plant or any of its constituent systems.

B) In addition, the business must agree to enter into a construction project labor agreement including provisions establishing wages, benefits, and other compensation for employees performing work under the project labor agreement at that location. [20 ILCS 655/5.5(a)(3)(F)]

C) This subsection (b)(7) applies only to businesses that submit an application to the Department within 60 days after July 25, 2013.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.630 Form of Application

An application shall be submitted on the standard application form provided by the Department. The application shall include:

a) Investment Information. For each eligible investment, a description of the planned investment; documentation to substantiate that the investment is qualified (e.g., construction schedules, schematics, and specifications or lists, and approximate value of equipment to be purchased as provided by contractors and/or architects and engineers); and a statement of when the eligible investment will be placed in service in qualified property.

b) Job Creation. For investments in which full-time equivalent jobs are to be created, organized by job titles, the number of current and new full-time equivalent employees and the starting date of the new employees; and an explanation of how and why the investment causes additional full-time employment at the designated location in Illinois in which the investment is made.

c) Job Retention. For each designated location in Illinois in which full-time jobs are to be retained, organized by job titles, the number of full-time employees; and an explanation of how and why the investment causes the retention of full-time employees.

d) Existing Illinois Businesses. Existing Illinois businesses qualifying under the job retention criteria must provide a prospective plan that demonstrates that 1,500 full-time jobs would be eliminated in the event the business is not designated. The prospective plan shall include, but is not limited to, written information such as non-Illinois sites under consideration, cost-benefit analyses of moving or closing the business, financial statements, internal memoranda, or any other financial documentation evidencing that the business would either relocate to a non-Illinois site or close down in the event the business is not designated. This provision does not apply to new wind power facilities.

e) Newly Proposed Facilities. Newly proposed facilities qualifying under the job creation criteria must provide proof of alternative non-Illinois sites that would receive the proposed investment and job creation in the event the business is not designated. Such proof shall include, but is not limited to, incentive letters, prospective offers from other states, or other documentation indicating a firm interest in alternative non-Illinois locations. This provision does not apply to new wind power facilities.

f) Certification. A signed and dated statement that the investments would not be placed in service in qualified property and the job creation or retention would not occur without the tax credits and exemptions set forth in Section 5.5(b) of the Act; a signed and dated statement indicating application information is true and correct, and granting the Department access to material, documentation, and other data required to verify application information. The signed and dated statement that the investments would not be placed in service in qualified property and the job exemptions set forth in Section 5.5(b) of the Act applies only to the initial application for designation and not to any subsequent renewals.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.640 Application Approval Process

a) Application Submissions. Applications may be submitted to the Department at any time during the year.

b) Approvals and Denials. The Department shall approve or deny an application within 30 days. If the Department denies the initial application, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit the application. Resubmitted applications will be approved or denied in writing within 30 days after receipt. In no event shall the review period last longer than 90 days. In the event of a complaint by the applicant, the Department will follow the procedures outlined in 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

c) Notification of Designation. If the applicant is eligible, in accordance with Section 520.620, the Department will notify the applicant in writing of designation as a High Impact Business and transmit a copy of the designation to the Illinois Department of Revenue.

d) Tax Credits and Exemptions (Investments). Applicants designated as High Impact Business pursuant to Section 5.5(a)(3)(A) of the Act shall qualify for the credits and exemptions described in the following Acts: Sections 9-222 and 9-222.1A of the Public Utilities Act [220 ILCS 5/9-222 and 9-222.1A]; Section 201(h) of the Illinois Income Tax Act [35 ILCS 5/201(h)]; and Sections 1d, 1e, and 5l of the Retailers' Occupation Tax Act [35 ILCS 120/1d, 1e and 5l]; provided that the credits and exemptions described in these Acts shall not be authorized until the minimum investments have been placed in service in qualified properties, and in the case of the exemptions described in the Public Utilities Act and the Retailers' Occupation Tax Act, the minimum full-time equivalent jobs or full-time jobs shall have been created or retained.

e) Tax Credits and Exemptions (New Electric Generating Facility, New Coal Mine, and New Transmission Facility). Applicants designated as High Impact Businesses pursuant to Section 5.5(a)(3)(B), (a)(3)(C), and (a)(3)(D) of the Act shall qualify for the credits and exemptions described in the following Acts: Section 5l of the Retailers' Occupation Tax Act, Sections 9-222 and 9-222.1A of the Public Utilities Act, and Section 201(h) of the Illinois Income Tax Act, however, the credits and exemptions authorized under Sections 9-222 and 9-222.1A of the Public Utilities Act, and Section 201(h) of the Illinois Income Tax Act, shall not be authorized until the new electric generating facility, the new transmission facility, or the new, expanded, or reopened coal mine is operational; and except that a new electric generating facility whose primary fuel source is natural gas is eligible only for the exemption under Section 5l of the Retailers' Occupation Tax Act.

f) Tax Credits and Exemptions (New Wind Power Facility). Applicants designated as High Impact Businesses pursuant to Section 5.5(a)(3)(E) of the Act shall qualify for the exemptions described in Section 5l of the Retailers' Occupation Tax Act. [20 ILCS 655/5.5(b-6)]

g) Additional Tax Credits and Exemptions (Foreign Trade Zones and Sub-Zones). High Impact Businesses located in federally designated foreign trade zones or sub-zones are also eligible for additional credits, exemptions, and deductions as described in the following Acts: Section 9-221 of the Public Utilities Act; Sections 201(g) and 203 of the Illinois Income Tax Act; and Section 51 of the Retailers' Occupation Tax Act.

h) Duty to Notify of Investments. Prior to authorization for the credits and exemptions described in Section 9-222 of the Public Utilities Act and Section 1d of the Retailers' Occupation Tax Act, businesses shall notify the Department, on forms provided by the Department, when the minimum eligible investment has been placed in service in qualified property and the minimum full-time equivalent or full-time jobs have been created or retained.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.650 Revocation of the High Impact Business Designation

a) Failure to Need the Designation. The Department shall revoke a High Impact Business designation in the event that it demonstrates that the business would have placed in service in qualified property the minimum eligible investment and created or retained the requisite number of jobs without the benefits of the High Impact Business designation. Proof of this shall include, but is not limited to, correspondence, financial plans and prospectuses, internal memoranda, and other written documentation demonstrating that the business would have made the eligible investment without the designation.

b) Failure to Comply with Certification. The Department shall revoke a High Impact Business designation if the business fails to comply with the terms and conditions of the certification.

c) Failure to Provide True Information on the Application. The Department shall revoke a High Impact Business designation if it is determined upon investigation that the business falsified application information in violation of Section 520.630(f).

d) Notification of Revocation. The Department shall notify a High Impact Business in writing that it is subject to revocation. The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

e) Recovery of Wrongfully Exempted State Taxes. Following revocation, the Department will contact the Director of the Illinois Department of Revenue and request he begin proceedings to recover wrongfully exempted State taxes with interest under the provisions of Sections 4 and 5 of the Retailers' Occupation Tax Act.

f) Ineligibility for State Funded Programs. Any business whose High Impact Business designation is revoked shall be ineligible for all State funded Department programs for 10 years.

g) The penalties for new wind power facilities or Wind Energy Businesses for failure to comply with any of the terms or conditions of the Illinois Prevailing Wage Act shall be only those penalties identified in the Illinois Prevailing Wage Act, and the Department shall not revoke a High Impact Business designation as a result of the failure to comply with any of the terms or conditions of the Illinois Prevailing Wage Act in relation to a new wind power facility or a Wind Energy Business (a business generating electricity from wind kinetic energy devices with a nameplate capacity of at least 0.5 megawatts). [20 ILCS 655/5.5(g)]

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.700 List of Available Tax Incentives

a) Several tax incentives are available to businesses in Enterprise Zones and those designated as a High Impact Business. The following four are available to both Enterprise Zones and High Impact Businesses:

1. Investment Tax Credit found in the Illinois Income Tax Act [35 ILCS 5/201(f) and (h)];

2. Utility Tax Exemption found in the Public Utilities Act [220 ILCS 5/9-222.1 and 9-222.1A];

3. Machinery and Equipment/Pollution Control Facilities Sales Tax Exemption found in the Retailers' Occupation Tax Act [35 ILCS 120/1d - 1f]; and

4. Building Material Sales Tax Exemption found in the Retailers' Occupation Tax Act [35 ILCS 120/5k and 5l].

b) Two tax incentives available to High Impact Businesses that are located within a Foreign Trade Zone or Sub-Zone:

1. Dividend Income Deduction found in the Illinois Income Tax Act [35 ILCS 5/203(a)(2)(K), (b)(2)(L), (c)(2)(O) and (d)(2)(M)]; and

2. Interest Income Deduction for Financial Institutions found in the Illinois Income Tax Act [35 ILCS 5/203(b)(2)(M) and (M-1).

c) A tax incentive available to businesses in Enterprise Zones as well as High Impact Businesses located within a Foreign Trade Zone or Sub-Zone is the Telecommunications Excise Tax Exemption on Originating Calls found in the Telecommunications Excise Tax Act [35 ILCS 630].

d) A special tax incentive exists that is limited only to a High Impact Business Service Facility in an Enterprise Zone. This tax incentive is known as the High Impact Service Facility Machinery and Equipment Sales Tax Exemption and is found in the Retailers' Occupation Tax Act [35 ILCS 120/li and 1j].

e) A tax incentive is available to a certified High Impact Business labeled the High Impact Business construction jobs credit, which is only available to businesses that have been designated as High Impact Businesses by the Department (see 35 ILCS 5/201(h-5)).

f) A tax incentive available to businesses located within a certified Enterprise Zone is the Enterprise Zone construction jobs credit (see 35 ILCS 5/201(a) and (b)).

History

• Source: Amended at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.710 Eligible Applicants (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.720 Eligibility Criteria (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.730 Form of Application (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.740 Application Review and Approval (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.750 Revocation of the High Impact Business Designation (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.800 General

The Investment Tax Credit found in the Illinois Income Tax Act [35 ILCS 5/201(f) and (h)] provides for a 0.5% credit against the State income tax for investments made in qualified property that are placed in service in an Enterprise Zone [35 ILCS 5/201(f)] or by a High Impact Business [35 ILCS 5/201(h)]. The credit shall be 0.5% of the basis for such property. The specific terms and conditions governing this tax credit are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 100.2110 and 86 Ill. Adm. Code 100.2130).

History

• Source: Old Section repealed at 15 Ill. Reg. 8683, effective May 30, 1991; new Section adopted at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.810 Eligibility Criteria (repealed)

History

• Source: Repealed at 15 Ill. Reg. 8683, effective May 30, 1991

14 Ill. Adm. Code 520.820 Form of Application (repealed)

History

• Source: Repealed at 15 Ill. Reg. 8683, effective May 30, 1991

14 Ill. Adm. Code 520.830 Application Review and Approval Process (repealed)

History

• Source: Repealed at 15 Ill. Reg. 8683, effective May 30, 1991

14 Ill. Adm. Code 520.900 Definitions

The following definitions are applicable to Subpart I.

"Act" means Sections 9-221, 9-222 and 9-222.1 of the Public Utilities Act [220 ILCS 5/9-221, 9-222 and 9-222.1].

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible investment" means:

Investments in qualified property that are placed in service in an Enterprise Zone or by a designated High Impact Business in Illinois. Qualified properties are statutorily defined in Section 201(f) and (h) of the Illinois Income Tax Act [35 ILCS 5/201(f) and (h)]; or

Noncapital/nonroutine investments, and associated service costs (direct labor or contractual fees), placed in service in an Enterprise Zone and made for the improvement or renovation of qualified properties. These activities are undertaken for the purpose of improving productive capacity, efficiency, product quality, or competitive position. The investments cannot be repetitious, commonplace, or associated with regular maintenance expenditures, and would include, for example, rebuilt cast house furnaces, rebuilt soaking furnaces, a rebuilt hot line control system, a restructured plant layout, and installed equipment to rebuild a logeman baler. Noncapital/nonroutine investments are those that do not qualify for the investment tax credit pursuant to Section 201(f) of the Illinois Income Tax Act.

Businesses utilizing this definition must provide detailed information regarding the purpose, scope, justification, and benefits of these noncapital/nonroutine investments, including defined project start and completion target dates, and a level of expenditures of at least $40,000.

"Foreign Trade Zone" or "Foreign Trade Sub-Zone" means a geographic area designated by the federal government under the Foreign Trade Zone Act of 1934, as amended (19 USCA 81(a)) or rules promulgated under that Act (15 CFR 400 (1986)).

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1,750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"High Impact Business" means a business that designated as a High Impact Business by the Department pursuant to the provisions of Section 5.5 of the Illinois Enterprise Zone Act [20 ILCS 655/5.5] and 14 Ill. Adm. Code 520.600.

"Job creation" means at least 200 full-time equivalent employees have been hired over the number of full-time equivalent employees that were employed by the applicant as of January 1, 1986, or the date the Enterprise Zone was certified, whichever is later. Job titles being filled or refilled as a result of strikes or layoffs or replacement workers to replace company locked out employees cannot be counted as job creation. A majority of the "jobs created" must be made in the Enterprise Zone in which the eligible investment is made.

"Job retention" means that at least 1,000 full-time employees will remain employed in Illinois as a direct result of the eligible investment, and that the employees would have lost their jobs had the investment not been made. A majority of the "jobs retained" must be in the Enterprise Zone in which the eligible investment was made.

"Minimum investment" means the amount of eligible investment that must be made to qualify for the exemption. Under the job creation criteria, the minimum eligible investment that must be made in an Enterprise Zone is $5 million. Under the job retention criteria the minimum eligible investment that must be made in an Enterprise Zone is $20 million.

"New employee" means a full-time equivalent job that represents a net increase in the number of the recipient's employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the recipient who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

Employee positions being filled or refilled as a result of strikes or layoffs or replacement workers to replace recipient company locked out employees.

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.910 Eligibility Criteria

a) Enterprise Zones

1. Minimum Eligible Investment. Eligibility for the tax exemption is contingent on the business making a minimum eligible investment of $5 million in an Enterprise Zone, which causes the creation of a minimum of 200 full-time equivalent jobs in Illinois; or a minimum eligible investment of $20 million in an Enterprise Zone, which causes the retention of a minimum of 1,000 full-time jobs in Illinois.

2. More Than One Facility. Businesses owning and operating more than one facility located in Illinois Enterprise Zones shall qualify for this exemption by combining their investments and jobs created or retained if the business can demonstrate that the manufacturing processes at each location are interrelated. The Department considers the manufacturing processes to be interrelated if the facilities act as one functional unit in the manufacture of the final product. Proof of such interrelationship shall include, but is not limited to, internal memoranda, flow charts, narrative descriptions, organization charts, annual reports, or any other written documentation that demonstrates that the manufacturing processes are interrelated. The majority of jobs shall be located in one or more Illinois Enterprise Zones.

b) High Impact Business

Minimum Eligible Investment. In the case of a designated High Impact Business, eligibility is contingent on the business making a minimum eligible investment of $12 million placed in service in qualified property at a designated location in Illinois, which causes the creation of 500 full-time equivalent jobs at the designated location; or making a minimum eligible investment of $30 million placed in service in qualified property in a designated location in Illinois, which causes the retention of 1,500 full-time equivalent jobs at a designated location in Illinois.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.920 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Investment Information. A summary of the eligible investment, and a statement of when the eligible investment in qualified property was or will be placed in service.

b) Job Information

1. Job Creation. Information on new employment that will occur in the Enterprise Zone as a result of the investment, which includes, by job titles, the number of current and new employees, the starting date of new employees, and an explanation of how and why the investment causes additional employment, both inside and outside of the Enterprise Zone; or

2. Job Retention. Information on the full-time jobs that have been retained in an Enterprise Zone as a result of the investment, which includes, by job titles, the number of employees in and outside of the Enterprise Zone.

3. Employment Requirement for Job Creation. Applicants utilizing the job creation criterion for eligibility for the exemption must actually employ 200 full-time equivalent employees prior to certification for this exemption.

4. Submit Applications Prior to Job Creation. Applicants are encouraged to submit applications to the Department prior to the actual creation of 200 full-time equivalent jobs. The Department will conditionally approve the application subject to the requirements of Section 520.910 being met.

c) Audit. An examination by public accountants certified by the State of Illinois, in accordance with generally accepted accounting practices, containing the unqualified opinion of such public accountants that the minimum eligible investment has been made and that minimum jobs have been created or retained.

d) Certification. A signed and dated statement indicating that the data and information in the application is correct, that the Department will be provided access to any material, documentation, or other data required to verify application information, and a statement that the number of jobs created or retained shall be maintained for the term of exemption, otherwise the Department will be notified and the exemption terminated.

History

• Source: Amended at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.930 Application Approval Process

a) Application Approval Requirements. Applications shall be submitted to the Department, which shall approve or deny the application in writing within 90 days after receipt. The application shall be approved if it meets the requirements of Sections 520.910 and 520.920, utilizing one of the two following options:

1. Investments Placed in Service. The applicant has substantiated, in accordance with Section 520.920(a), that the eligible investment in qualified property has been placed in service; or

2. Spending Plan and Financial Commitments. The applicant has not placed in service in qualified property the eligible investment. However, a spending plan and financial commitments for the proposed eligible investment have been submitted. The spending plan must include a detailed "project by project" description, as well as the estimated eligible investment for each specific project. The spending plan must further include the date when the eligible investment in each project will be placed in service. The applicant's financial commitments must include the sources of financing for the project. Should the applicant choose to follow this option, it must sign a written agreement with the Department obligating the business to place in service the eligible investment in qualified property within 12 months after certification pursuant to this Section. Should the business fail to place in service the eligible investment in qualified property within 12 months after certification pursuant to this Section, the business shall be decertified for the tax exemption and required to repay the exempted taxes. Should the business place in service the eligible investment subsequent to this decertification, the business may reapply to the Department for recertification. However, this reapplication must utilize the procedures set forth in subsection (a)(1), and contain the same information as required pursuant to Section 520.920.

b) Application Denial Requirements. When the Department denies an application, it shall specify in writing the reasons for denial and allow the applicant 45 days from the date of application denial to amend and resubmit the application. Resubmitted applications shall be approved or denied in writing within 45 days after receipt.

c) Certificates for "Investment" Applicants. Applicants determined eligible by the Department, in accordance with subsection (a)(1), will be issued a Certificate of Exemption. The exemption shall take effect six months after certification.

d) Certificates for "Spending Plan" Applicants. Applicants determined eligible by the Department, in accordance with subsection (a)(2), will be issued a Certificate of Exemption 12 months prior to the eligible investment in qualified property being placed in service as set forth in the applicant's spending plan submitted pursuant to this Section.

e) Department's Right to Inspect and Audit. The Department shall have the right to inspect and conduct its own audit of all books and records relied upon by the business to demonstrate that the eligible investment in qualified property has been placed in service. Certified businesses shall also submit information annually to the Department documenting the maintenance of the minimum job creation or job retention criterion. Certified businesses that fail to comply with this subsection shall be decertified for the tax exemption and shall repay the exempted taxes. The jobs created or retained must be documented through personnel records.

f) Five-Year Exemption Period. All certified businesses shall receive a five-year exemption from the State utility tax.

g) Additional Exemption Period for Certified Businesses. At the expiration of this initial five-year period, certified businesses may apply to the Department for renewals of the exemption for additional five-year time periods not to exceed the termination date of the Enterprise Zone. The Department shall grant an exemption to a certified business for an additional five-year period at 100% of the State utility taxes provided that at the time of the application for each renewal:

1. Jobs Retained are in an Enterprise Zone. In the case of a business certified pursuant to the job creation criterion of Section 520.920, the business has retained a minimum of 200 full-time equivalent jobs in Illinois; or in the case of a business certified pursuant to the job retention criterion of Section 520.910, the business has retained a minimum of 1,000 full-time jobs in Illinois. A majority of the "jobs retained" must be in the Enterprise Zone in which the eligible investment is made.

2. Business is Located in an Enterprise Zone. The business is located in an Enterprise Zone established pursuant to the Illinois Enterprise Zone Act [20 ILCS 655].

3. Business Provides an Audited Financial Statement. The business provides a financial statement, including balance sheets and income statements, audited according to generally accepted auditing standards by a public accountant certified in the State of Illinois as contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York NY 10036-8775 (June 2011, no later editions are incorporated). In addition, the certified business' chief financial officer shall attest in writing that the certified business is not aware of a condition or occurrence that would result in a bankruptcy or closure.

4. Maximum Period of Exemption. This exemption shall not be allowed beyond the term of the certified Enterprise Zone.

h) Exemptions for Certified Businesses Located in Enterprise Zones Successful in Reapplying for Designation. Certified businesses located in Enterprise Zones that successfully reapplied for designation as an Enterprise Zone to be effective on or after January 1, 2016, and that expired or terminated solely by operation of Section 5.3(c) of the Act, shall continue to be eligible for the renewals of exemptions in accordance with subsection (g). Any Certificate of Exemption issued under this Section shall not, after taking into account the time for which the exemption existed under the prior zone designation, exceed a total of five years. Thereafter, certified businesses located in Enterprise Zones may apply to the Department in accordance with subsection (g).

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1000 Definitions

The following definitions are applicable to Subpart J.

"Act" means Sections 1d-1f of the Retailers' Occupation Tax Act [35 ILCS 120/1d-1f].

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible investment" means:

Investments in qualified property that are placed in service in an Enterprise Zone or by a designated High Impact Business in Illinois. Qualified properties are statutorily defined in Section 201(f) and (h) of the Illinois Income Tax Act [35 ILCS 5/201(f) and (h)]; and

Noncapital/nonroutine investments, and associated service costs (direct labor or contractual fees), placed in service in an Enterprise Zone and made for the improvement or renovation of qualified properties. These activities are undertaken for the purposes of improving productive capacity, efficiency, product quality, or competitive position. The investments cannot be repetitious, commonplace, or associated with regular maintenance expenditures, and would include, for example, rebuilt cast house furnaces, rebuilt soaking furnaces, a rebuilt hot line control system, a restructured plant layout, and installed equipment to rebuild a logeman baler. Noncapital/nonroutine investments are those that do not qualify for the investment tax credit pursuant to Section 201(f) of the Illinois Income Tax Act.

Businesses utilizing this definition must provide detailed information regarding the purpose, scope, justification, and benefits of these noncapital/nonroutine investments, including defined project start and completion target dates, and a level of expenditures of at least $40,000.

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1,750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"High Impact Business" means a business that is designated as a High Impact Business by the Department pursuant to the provisions of Section 5.5 of the Illinois Enterprise Zone Act [20 ILCS 655/5.5].

"Job creation" means at least 200 full-time equivalent employees have been hired over the number of full-time equivalent employees that were employed by the applicant as of September 25, 1985 or the date the Enterprise Zone was certified, whichever is later. Job titles being filled or refilled as a result of strikes or layoffs or replacement workers to replace company locked out employees cannot be counted as job creation. A majority of the "jobs created" must be made in the Enterprise Zone in which the eligible investment is made.

"Job retention" means:

At least 2,000 full-time employees, a majority of whom are located in the Enterprise Zone in which the eligible investment is made, will remain employed in Illinois as a direct result of the eligible investment, and would have lost their jobs had the investment not been made. The number originally retained in the Enterprise Zone must be retained for the duration of the exemption; or

At least 90% of the full-time jobs in place in the Enterprise Zone on the date on which the exemption is granted will remain in place in the Enterprise Zone for the duration of the exemption. If the business utilizes full-time jobs retained at Illinois facilities outside of the Enterprise Zone to qualify for this exemption, 90% of the total full-time jobs must also be retained for the duration of the exemption.

"Minimum investment" means the amount of eligible investment that must be made to qualify for the exemption. Under the job creation criteria, the minimum eligible investment that must be made in an Enterprise Zone is $5 million. Under the job retention criteria, the minimum eligible investment that must be made in an Enterprise Zone is $40 million.

"New employee" means a full-time equivalent job that represents a net increase in the number of the recipient's employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the recipient who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

Employee positions being filled or refilled as a result of strikes or layoffs or replacement workers to replace recipient company locked out employees.

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function as defined in 26 CFR 1.46-3(d) (July 1, 2012). An eligible investment in qualified property as defined in Section 201(f) of the Illinois Income Tax Act shall be considered placed in service on the earlier of:

The date the property is placed in a condition of readiness and availability for use; or

The date on which the depreciation period of that property begins. Eligible noncapital/nonroutine investments shall be considered placed in service if 80% of the allocated monies have been expended.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.1010 Eligibility Criteria

a) Enterprise Zone

1. Minimum Eligible Investment. Eligibility for the tax exemption is contingent on the business making:

A) a minimum eligible investment of $5 million in an Enterprise Zone that causes the creation of a minimum of 200 full-time equivalent jobs in Illinois, or

B) a minimum eligible investment of $40 million in an Enterprise Zone that causes the retention of a minimum of 2,000 full-time jobs in Illinois; or

C) a minimum eligible investment of $40 million that causes the retention of at least 90% of the jobs in place on the date on which the exemption is granted for the duration of the exemption.

2. More Than One Facility. Businesses owning and operating more than one facility located in Illinois Enterprise Zones shall qualify for this exemption by combining their investments and jobs created or retained if the business can demonstrate that the manufacturing processes at each location are interrelated. The Department considers the manufacturing processes to be interrelated if the facilities act as one functional unit in the manufacture of the final product. Proof of such interrelationship shall include, but is not limited to, internal memoranda, flow charts, narrative descriptions, organization charts, annual reports, or any other written documentation that demonstrates that the manufacturing processes are interrelated. The majority of jobs shall be located in one or more Illinois Enterprise Zones.

b) High Impact Business

Minimum. In the case of a designated High Impact Business, eligibility is contingent on the business making a minimum eligible investment of $12 million placed in service in qualified property at a designated location in Illinois, which causes the creation of 500 full-time equivalent jobs at the designated location; or making a minimum eligible investment of $30 million placed in service in qualified property in a designated location in Illinois, which causes the retention of 1,500 full-time equivalent jobs at a designated location in Illinois.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.1020 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Investment Information. A summary of the eligible investment and a statement of when the eligible investment in qualified property was or will be placed in service.

b) Job Information

1. Job Creation. Information on new employment that will occur in the Enterprise Zone as a result of the investment, which includes, by job titles, the number of current and new employees, the starting date of new employees, and an explanation of how and why the investment causes additional employment, both inside and outside of the Enterprise Zone.

2. Job Retention. Information on the full-time jobs that have been retained in an Enterprise Zone as a result of the investment, which includes, by job titles, the number of employees in and outside of the Enterprise Zone.

3. Employment Requirements for Job Creation. Applicants utilizing the job creation criterion for eligibility for the exemption must actually employ 200 full-time equivalent employees prior to certification for this exemption.

4. Submit Applications Prior to Job Creation. Applicants are encouraged to submit applications to the Department prior to the actual creation of 200 full-time equivalent jobs. The Department will conditionally approve the application subject to the requirements of Section 520.1010 being met.

c) Audit. An examination by public accountants certified by the State of Illinois, in accordance with generally accepted accounting practices, containing the unqualified opinion of such public accountants that the minimum eligible investment has been made and that the minimum jobs have been created or retained.

d) Certification. A signed and dated statement indicating that the data and information in the application is correct, that the Department will be provided access to any material, documentation, or other data required to verify application information, and a statement that the number of jobs created or retained shall be maintained for the term of exemption, otherwise the Department will be notified and the exemption terminated.

History

• Source: Amended at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1030 Application Approval Process

a) Application Approval Requirements. Applications shall be submitted to the Department, which shall approve or deny the application in writing within 90 days after receipt. The application shall be approved if it meets the requirements of Sections 520.1010 and 520.1020.

b) Application Denial Requirements. When the Department denies an application, it shall specify in writing the reasons for denial and allow the applicant 45 days from the date of application denial to amend and resubmit the application. Resubmitted applications shall be approved or denied in writing within 45 days after receipt.

c) Certificates of Exemption. Applicants determined eligible by the Department, in accordance with Section 520.1010, will be issued a Certificate of Exemption. A copy of the Certificate of Exemption will be filed by the Department with the Illinois Department of Revenue in accordance with Section 1f of the Retailers' Occupation Tax Act.

d) Exemption Includes. Subject to Section 520.1010, and in accordance with Section 1d of the Retailers' Occupation Tax Act, this exemption includes:

1. Tangible Personal Property. All tangible personal property used or consumed in the process of manufacturing or assembling tangible personal property for wholesale or retail sale or lease, or in the process of graphic arts production;

2. Repair and Replacement Parts. Repair and replacement parts for machinery and equipment used in the manufacturing or assembling of tangible personal property, or in the process of graphic arts production for wholesale or retail sale or lease; and

3. Equipment Manufacturing, Etc. Equipment, manufacturing or graphic arts fuels, material, and supplies for the maintenance, repair, or operation of such manufacturing or assembling or graphic arts machinery or equipment.

e) Department's Right to Inspect and Audit. The Department shall have the right to inspect and conduct its own audit of all books and records relied upon by the business to demonstrate that the eligible investment in qualified property has been placed in service. Certified businesses shall also submit information annually to the Department documenting the maintenance of the minimum job creation or job retention criterion. Certified businesses that fail to comply with this subsection shall be decertified for the tax exemption and shall repay the exempted taxes. The jobs created or retained must be documented through personnel records.

f) Five-Year Exemption Period. All certified businesses shall receive a five-year exemption from this tax.

g) Additional Exemption Period for Certified Businesses. At the expiration of this initial five-year period, certified businesses may apply to the Department for renewals of the exemption for additional five-year time periods not to exceed the termination date of the Enterprise Zone. The Department shall grant an exemption to a certified business for an additional five-year period, provided that at the time of application for renewal:

1. Job Creation/Retention Criteria. The following job creation/retention criteria are met:

A) In the case of a business certified pursuant to the job creation criterion of Section 520.1010, the business has retained a minimum of 200 full-time equivalent jobs in Illinois.

B) In the case of a business certified pursuant to the job retention criterion of Section 520.1010, the business has:

i) Retained a minimum of 2,000 full-time jobs in Illinois; or

ii) Has made an eligible investment of $40 million resulting in the retention of 90% of the full-time jobs in place on the date on which the exemption is granted for the duration of the exemption.

C) A majority of the "jobs retained" must be in the Enterprise Zone in which the eligible investment is made.

2. Business is Located in an Enterprise Zone. The business is located in an Enterprise Zone established pursuant to the Illinois Enterprise Zone Act [20 ILCS 655].

3. Business Provides an Audited Financial Statement. The business provides an audited Financial Statement, including balance sheets and income statements, audited according to generally accepted auditing standards by a public accountant certified in the State of Illinois as contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York NY 10036-8775 (June 2011, no later editions are incorporated). In addition, the certified business' chief financial officer shall attest in writing that the certified business is not aware of a condition or occurrence that would result in a bankruptcy or closure.

4. Maximum Period of Exemption. This exemption shall not be allowed beyond the term of the certified Enterprise Zone.

h) Exemptions for Certified Businesses Located in Enterprise Zones Successful in Reapplying for Designation. Certified businesses located in Enterprise Zones that successfully reapplied for designation as an Enterprise Zone to be effective on or after January 1, 2016, and that expired or terminated solely by operation of Section 5.3(c) of the Act, shall continue to be eligible for the renewals of exemptions in accordance with subection (g). Any Certificate of Exemption issued under this Section shall not, after taking into account the time for which the exemption existed under the prior zone designation, exceed a total of five years. Thereafter, certified businesses located in Enterprise Zones may apply to the Department in accordance with subection (g).

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1100 General

The Building Material Sales Tax Exemption found in the Retailers' Occupation Tax Act [35 ILCS 120/5k and 5l] allows each retailer in Illinois who makes a sale of building materials to be incorporated into real estate in an Enterprise Zone (see 35 ILCS 120/5k) or a High Impact Business (see 35 ILCS 120/5l) to deduct the receipts from such sales when calculating the tax imposed by the Retailers' Occupation Tax Act. The specific terms and conditions governing this tax exemption are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 130.1951 and 86 Ill. Adm. Code 130.1952).

History

• Source: Amended at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1110 Eligibility Criteria (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1120 Form of Application (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1130 Application and Approval Process (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1140 Use Tax Exemption (repealed)

History

• Source: Repealed at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1200 Definitions

The following definitions are applicable to this Subpart L.

"Blue Collar Jobs Act" or "Act" means the Act created by Article 20 of P.A. 101-9 that creates the Enterprise Zone construction jobs credit, the High Impact Business construction jobs credit, the River Edge construction jobs credit, and the New Construction EDGE credit (portions related to this Part codified at 20 ILCS 655/5.5 and 13).

"Enterprise Zone construction jobs credit" means an amount equal to 50% (or 75% if the project is located in an underserved area) of the incremental income tax attributable to Enterprise Zone construction jobs credit employees. [20 ILCS 655/13(e)]

"Enterprise Zone construction jobs credit employee" means a laborer or worker who is employed by an Illinois contractor or subcontractor in the actual construction work on the site of an Enterprise Zone construction jobs credit project. [20 ILCS 655/13(e)]

"Enterprise Zone construction jobs credit project" means building a structure or building or making improvements of any kind to real property commissioned and paid for by a business that has applied and been approved for an Enterprise Zone construction jobs credit pursuant to this Subpart. "Enterprise Zone construction jobs credit project" does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property. [20 ILCS 655/13(e)]

"High Impact Business construction jobs credit" means an amount equal to 50% (or 75% if the High Impact Business construction project is located in an underserved area) of the incremental income tax attributable to High Impact Business construction job employees. [20 ILCS 655/5.5(i)]

"High Impact Business construction job employee" means a laborer or worker who is employed by an Illinois contractor or subcontractor in the actual construction work on the site of a High Impact Business construction job project. [20 ILCS 655/5.5(i)]

"High Impact Business construction jobs project" means building a structure or building or making improvements of any kind to real property, undertaken and commissioned by a business that was designated as a High Impact Business by the Department. The term "High Impact Business construction jobs project" does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property. [20 ILCS 655/5.5(i)]

"Incremental income tax" means the total amount withheld during the taxable year from the compensation of High Impact Business construction job employees or Enterprise Zone construction jobs credit employees. [20 ILCS 655/5.5(i) and 13(e)]

"Underserved area" means a geographic area that meets one or more of the following conditions:

the area has a poverty rate of at least 20% according to the latest federal decennial census;

75% or more of the children in the area participate in the federal free lunch program, according to reported statistics from the State Board of Education;

at least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP); or

the area has an average unemployment rate, as determined by the Illinois Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the U.S. Department of Labor, for a period of at least 2 consecutive calendar years preceding the date of the application. [20 ILCS 655/5.5(i) and 13(e)]

History

• Source: Former Section 520.1200 repealed at 38 Ill. Reg. 457, effective December 20, 2013, and new Section added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1210 Available Tax Credits

The total aggregate amount of credits awarded under the Blue Collar Jobs Act shall not exceed $20,000,000 in any State fiscal year.

a) Enterprise Zone

A business entity in a certified Enterprise Zone deemed an eligible applicant may qualify to receive a tax credit against the tax imposed under Section 201(a) and (b) of the Illinois Income Tax Act (IITA) in an amount equal to 50% of the amount of the incremental income tax attributable to Enterprise Zone construction jobs credit employees employed while completing an Enterprise Zone construction jobs project. However, the Enterprise Zone construction jobs credit may equal 75% of the amount of the incremental income tax attributable to Enterprise Zone construction jobs credit employees if the Enterprise Zone construction jobs credit project is in an underserved area. The credit may not reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the taxpayer's liability, the excess may be carried forward and applied against the taxpayer's liability in succeeding calendar years. [35 ILCS 5/201(f)(8)] The Department will inform the Department of Revenue of eligible taxpayers and amount to be awarded. If the entity receives a credit, a certified payroll shall be maintained.

b) High Impact Business

A High Impact Business may receive a tax credit against the tax imposed under IITA Section 201(a) and (b) in an amount equal to 50% of the amount of the incremental income tax attributable to High Impact Business construction jobs credit employees employed while completing a High Impact Business construction jobs project. However, the High Impact Business construction jobs credit may equal 75% of the amount of the incremental income tax attributable to High Impact Business construction jobs credit employees if the High Impact Business construction jobs credit project is in an underserved area. The credit may not reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the taxpayer's liability, the excess may be carried forward and applied against the taxpayer's liability in succeeding calendar years. [35 ILCS 5/201(h-5)]. The Department will inform the Department of Revenue of eligible taxpayers and amount to be awarded. If the entity receives a credit, a certified payroll shall be maintained.

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1220 Eligibility

a) Enterprise Zones

A business entity in a certified Enterprise Zone shall be eligible for a jobs tax credit providing the entity has made a minimum eligible capital investment of $10,000,000 in an Enterprise Zone construction jobs project. The Enterprise Zone construction jobs credit project must be undertaken by the business entity in the course of completing a project that complies with the criteria contained in Section 4 of the Illinois Enterprise Zone Act and is undertaken in a certified Enterprise Zone.

b) High Impact Business

A business entity that has been certified as a High Impact Business and is engaged and executing a High Impact Business construction jobs project is eligible to receive a High Impact Business jobs credit for employees employed in the completion of that construction project.

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1230 Application Requirements

a) To qualify for a High Impact Business construction jobs credit or an Enterprise Zone construction jobs credit under the Act, an applicant must adhere to the requirements established by the Department. The Department will provide interested applicants with information upon request. Submittal of a tax credit claimant application does not commit the Department to award a tax credit or to pay any costs incurred by the applicant in the preparation of an application. Applications are valid only for the calendar year quarter in which they are submitted to the Department.

b) An application shall be submitted to the Department on a standard application form provided by the Department. An application shall, at a minimum, request the following:

1. The name, address, email, and telephone number of applicants; key contact and title; applicant Social Security Number or Federal Employer Identification Number (FEIN);

2. The total amount of investment the claimant has made in the Enterprise Zone construction jobs project if the applicant is applying for an Enterprise Zone construction jobs credit;

3. The nature and the benefit of the project to the certified Enterprise Zone and its potential contributors, if the applicant is applying for an Enterprise Zone construction jobs credit;

4. A copy of approval from the designating municipality or county for the Enterprise Zone construction jobs credit project, if the applicant is applying for an Enterprise Zone construction jobs credit;

5. Identification of whether the project is located in an underserved area; and

6. Any other information the Department determines necessary to facilitate the Department's evaluation.

c) The applicant is responsible for the accuracy of all data, information, and documentation submitted to the Department.

d) Any materials or data made available or received by any agent or employee of the Department from an applicant or a recipient of a tax credit under Section 201 of the Illinois Income Tax Act as amended by P.A. 101-009 shall not be disclosed, providing the contained information is exempt from disclosure under Section 7 of the Freedom of Information Act [5 ILCS 140/7].

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1240 Application Review and Approval Process

a) The Department shall accept applications for High Impact Business construction jobs credits and Enterprise Zone construction jobs credits. Applications will be reviewed in the order received by the Department. Application tracking procedures shall be determined and established at the discretion of the Department.

b) For businesses seeking an Enterprise Zone construction jobs credit, the Department, within 45 days after receiving an application, will give notice to the applicant as to whether the application has been approved. If the Department disapproves the application, it will specify the reasons for this decision and allow 60 days for the applicant to amend and resubmit its application. The Department will provide assistance, upon request, to applicants. Resubmitted applications shall receive the Department's approval or disapproval within 30 days after the application is resubmitted. Those resubmitted applications satisfying initial Department objectives shall be approved unless reasonable circumstances warrant disapproval. The objectives of the Department shall include selecting applicants that meet the statutory requirements of eligibility and the procedural requirements of an application made available by the Department. The Department will disapprove an application if the applicant is ineligible, if the application is incomplete, or if the Department has reached the maximum amount of credits it can award for the State fiscal year.

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1250 Applicant Reporting Requirements

a) Each applicant who qualifies for a High Impact Business construction jobs credit or an Enterprise Zone construction jobs credit shall agree to require each contractor and subcontractor who is engaged in and executing either a High Impact Business construction jobs project or an Enterprise Zone construction jobs project, for a business that is entitled to a credit, to:

1. Make and keep, for a period of 5 years from the date of the last payment made on or after June 5, 2019, [20 ILCS 655/5.5(j)(1)] on a contract or subcontract for a High Impact Business construction jobs project or an Enterprise Zone construction jobs project, records for all laborers and other workers employed by the contractor or subcontractor on the project. The records shall include the worker's:

A) Name;

B) Address;

C) Telephone number, if available;

D) Social Security Number;

E) Classification or classifications;

F) Gross and net wages paid in each pay period;

G) Number of hours worked each day;

H) Starting and ending times of work each day;

I) Hourly wage rate; and

J) Hourly overtime wage rate; and

2. No later than the 15th day of each calendar month, provide a certified payroll for the immediately preceding month to the taxpayer in charge of the High Impact Business construction jobs project or the Enterprise Zone construction jobs project. The taxpayer shall file a copy of the certified payroll with the Department of Labor and the Department of Commerce and Economic Opportunity within 5 business days after receiving the monthly certified payroll from all contractors and subcontractors engaged in and executing a High Impact Business construction jobs project or the Enterprise Zone construction jobs project. A certified payroll shall be filed for only those calendar months during which construction on a High Impact Business construction jobs project or an Enterprise Zone construction jobs project has occurred. The certified payroll shall consist of a complete copy of the records identified in subsection (a)(1), but may exclude the starting and ending times of work each day. The certified payroll shall be accompanied by a statement signed by the contractor or subcontractor, or an officer, employee, or agent of the contractor or subcontractor, stating that:

A) the certified payroll records have been examined and are true and accurate; and

B) the contractor or subcontractor is aware that filing a certified payroll that he or she knows to be false is a Class A misdemeanor.

b) A general contractor is not prohibited from relying on a certified payroll of a lower-tier subcontractor, if that general contractor does not knowingly rely upon a subcontractor's false certification. [20 ILCS 655/5.5(j) and 13(d)]

c) The records submitted under this Section shall be kept and maintained by the taxpayer in charge of the project for 5 years from the date of last payment for work on a contract or subcontract for the project. [20 ILCS 655/5.5(j) and 13(d)]

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1260 Books and Records

a) The records submitted in support of a certified payroll shall be considered public records and be made available in compliance with the Freedom of Information Act, excluding an employee's address, telephone number, and Social Security Number. A contractor, subcontractor, or public body may retain, in paper or electronic format, records required under this Section. [20 ILCS 655/5.5(j) and 13(d)]

b) Upon written or electronic notice, each contractor or subcontractor, within 7 business days, shall make all documents required by Section 520.1250(a)(1) available for inspection and copying at a location within the State, during its regular business hours, to the following entities:

1. The taxpayer in charge of the High Impact Business construction jobs project and its officers and agents;

2. The Director of the Department of Labor or the Director's designee; and

3. Federal, State, or local law enforcement agencies and prosecutors. [20 ILCS 655/5.5(j) and 13(d)]

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1270 Non-Applicant Reporting Requirements

a) For an Enterprise Zone construction jobs project, the designated zone organization shall annually submit to the Department a statement on the program and financial status of any approved project. The designated zone organization shall also submit to the Department an audited financial statement regarding the project.

b) The Department shall annually report and certify to the Department of Revenue:

1. The identity of taxpayers that are eligible for a High Impact Business construction jobs credit or an Enterprise Zone construction jobs credit; and

2. The amount of High Impact Business construction jobs credits and Enterprise Zone construction credits that are claimed pursuant to IITA Section 201.

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1280 Noncompliance

The following are violations of the Act and Class A misdemeanors:

a) Any contractor or subcontractor subject to this Subpart, and any officer, employee, or agent of the contractor or subcontractor, whose duty is to file a certified payroll under Section 520.1250(a)(2) and who willfully fails to file that certified payroll on or before the 15th day of the calendar month; and

b) Any person who willfully files a certified payroll that is false as to any material fact. [20 ILCS 655/5.5(j) and 13(d)]

History

• Source: Added at 46 Ill. Reg. 1817, effective January 11, 2022

14 Ill. Adm. Code 520.1300 General

The Dividend Income Deduction found in the Illinois Income Tax Act [35 ILCS 5/203(a)(2)(K), (b)(2)(L), (c)(2)(O), and (d)(2)(M)] provides that taxpayers may deduct from their taxable income an amount equal to those dividends that were paid to them by a High Impact Business located in a federally designated Foreign Trade Zone or Sub-Zone (see 35 ILCS 5/203(b)(2)(L)). The specific terms and conditions governing this tax deduction are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 100.2480).

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.1400 General

The Interest Income Deduction for Financial Institutions found in the Illinois Income Tax Act (see 35 ILCS 5/203(b)(2)(M-1)) allows any taxpayer that is a financial organization within the meaning of Section 304(c) of the Illinois Income Tax Act to deduct from their Illinois corporate income tax return an amount equal to the interest received from a High Impact Business located in a federally designated Foreign Trade Zone or Sub-Zone (see 35 ILCS 5/203(b)(2)(M-1)). The specific terms and conditions governing this tax deduction are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 100.2110).

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.1500 General

The Telecommunications Excise Tax Exemption on Originating Calls found in the Telecommunications Excise Tax Act [35 ILCS 630/2(a)(5)] allows a business enterprise a State tax exemption on the Illinois Commerce Commission's 0.1% administrative charge and excise taxes on the act or privilege of originating or receiving telecommunications as long as the business is located in an Enterprise Zone or is a High Impact Business located in a federally designated Foreign Trade Zone or Sub-Zone. The Machinery and Equipment/Pollution Control Facilities Sales Tax Exemption found in the Retailers' Occupation Tax Act [35 ILCS 120/1d-1f] allows a business enterprise that is certified by the Department a State sales tax exemption on all tangible personal property which is used or consumed within an Enterprise Zone in the process of manufacturing or assembly of tangible personal property for wholesale or retail sale or lease. This exemption includes repair and replacement parts for machinery and equipment used primarily in the wholesale or retail sale or lease, and equipment, manufacturing fuels, material and supplies for the maintenance, repair or operation of manufacturing or assembling machinery or equipment. The specific terms and conditions governing this tax deduction are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 510.131 and 86 Ill. Adm. Code 130.1951).

History

• Source: Added at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1600 Definitions

The following definitions are applicable to Subpart P.

"Act" means Sections 1i and 1j of the Retailers' Occupation Tax Act [35 ILCS 120/li and lj].

"Business enterprise", for the purpose of determining whether the minimum eligible investment has been made at the High Impact Service Facility, means the taxpayer and any related corporation. For purposes of this definition, related corporation includes any wholly-owned subsidiary of the taxpayer, any corporation that wholly owns the taxpayer, or any corporation that is wholly-owned by the same common parent corporation as the taxpayer.

"Business enterprise project" means a facility used primarily for the sorting, handling and redistribution of mail, freight, cargo or other parcels received from agents or employees of the handler or shipper for processing at a common location and redistribution to other employees or agents for delivery to an ultimate destination on an item-by-item basis, and that consists of an investment of $100 million or more and will cause the creation of 750 or more jobs in an Enterprise Zone established pursuant to the Illinois Enterprise Zone Act and certified by the Department.

"Contractually obligated" means the business enterprise has entered into a legally binding agreement with the Department to comply with Section 1i of the Retailers' Occupation Tax Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible investment" means:

Investments in qualified property that will be placed in service at a High Impact Service Facility located in an Enterprise Zone. Qualified properties are statutorily defined in Section 201(f) and (h) of the Illinois Income Tax Act [35 ILCS 5/201(f) and (h)]; or

Noncapital/nonroutine investments, and associated service costs (direct labor or contractual fees), that will be placed in service at a High Impact Service Facility located in an Enterprise Zone and made for the improvement or renovation of qualified properties. These activities are undertaken for the purposes of improving productive capacity, efficiency, product quality, or competitive position, and cannot be repetitious, commonplace, or associated with regular maintenance expenditures; or

Includes motor driven heavy equipment, not considered rolling stock, used for transporting parcels, machinery, or equipment, or is used to maintain and provide in-house services within the confines of the facility; and automated machinery and equipment used for the purposes of transporting parcels within the facility, along with all components contained in the electronic control systems.

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1,750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"High Impact Service Facility" means a facility used primarily for the sorting, handling, and redistribution of mail, freight, cargo, or other parcels received from agents or employees of the handler or shipper for processing at a common location and redistribution to other employees or agents for delivery to an ultimate destination on an item-by-item basis [35 ILCS 120/li].

"Job creation" means at least 750 or more full-time equivalent employees have been hired in an Enterprise Zone over the number of full-time equivalent employees that were employed by the applicant in the Enterprise Zone as of July 1, 1989 or the date the Enterprise Zone was certified, whichever is later. Job titles being filled or refilled as a result of strikes or layoffs or replacement workers to replace company locked out employees cannot be counted as job creation.

"New employee" means a full-time equivalent job that represents a net increase in the number of the recipient's employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the recipient who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

Employee positions being filled or refilled as a result of strikes or layoffs or replacement workers to replace recipient company locked out employees.

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function as defined in 26 CFR 1.46-3(d) (July 1, 2012). An eligible investment, as defined in this Section, shall be considered placed in service on the earlier of:

The date the property is placed in a condition of readiness and availability for use; or

The date on which the depreciation period of that property begins.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.1610 Eligibility Criteria

The business enterprise must provide a written description of a spending plan and financial commitments for the proposed eligible investment that will demonstrate to the Department that the minimum eligible investment will be placed in service and the required number of jobs will be created within eight years following the date of certification. Such information must include a detailed "project by project" description, as well as the estimated eligible investment for each specific project that obligates the business enterprise to place in service the minimum eligible investment and create the required number of jobs.

History

• Source: Added at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1620 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Investment Information. A description of the eligible investment with documentation to substantiate that the planned investment is eligible (e.g., balance sheets, construction schedules, schematics, and specifications, or lists and the cost of equipment purchased); and a spending plan and financial commitments demonstrating that the business enterprise will place the investment in service within eight years after certification.

b) Job Information. Information on new employment that will occur in the Enterprise Zone as a result of the investment, which includes, by job titles, the number of employees; and an explanation of how and why the investment causes the creation of full-time employees or full-time equivalent employees.

c) Certification. A signed and dated statement indicating that the data and information in the application is true and correct, that the Department shall be provided access to any material, documentation, or other data required to verify application information, and a statement that the number of jobs created shall be maintained for the term of the exemption, otherwise the Department will be notified and the exemption terminated.

d) Legally Binding Agreement. A dated statement executed by the Chief Executive Officer of the business enterprise and the Director of the Department obligating the business enterprise to create 750 or more full-time or full-time equivalent jobs and place in service a minimum of $100 million in qualified property at a High Impact Service Facility located in an Enterprise Zone within eight years. The agreement shall state that should the business fail to place in service the eligible investment in qualified property within eight years following certification, the business shall be decertified for the tax exemption and required to repay the exempted taxes, plus any penalties and interest as determined by the Department of Revenue. The agreement shall also state that the business shall submit quarterly progress reports describing the progress made toward the creation of 750 or more full-time or full-time equivalent jobs and the investment of $100 million in qualified property at the High Impact Service Facility, and that failure to do so shall result in termination of the exemption.

e) The Chief Executive Officer of the business enterprise must sign and immediately return to the Department a Company Tax Certification form that states that the business enterprise is in good standing, authorized to do business in Illinois and has no delinquent tax liabilities.

f) The business enterprise further authorizes the Department to seek a tax clearance letter from the Illinois Department of Revenue and authorizes the Department of Revenue to provide such letter stating whether the records of the Department of Revenue show that the business enterprise is in compliance with all tax Acts administered by the Department of Revenue and to which the business enterprise is subject.

g) The business enterprise also certifies that no tax liens, including, but not limited to, municipal, county, State or federal liens, have been filed against the business enterprise or majority shareholders of the business enterprise, or in the name of related business owned by the applicant.

h) The business enterprise certifies that all the information contained in the application, including the documentation, is true to the best of his/her knowledge and belief.

History

• Source: Added at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1630 Application Approval Process

a) Application Approval Requirements. Applications shall be submitted to the Department, which shall approve or deny the application in writing within 60 days after receipt. The application shall be approved if it meets the requirements of Sections 520.1610 and 520.1620 and the applicant has submitted a spending plan and financial commitments for the proposed eligible investment. The applicant must sign a written agreement with the Department obligating the business to place in service the eligible investment in qualified property within five years after the date of certification. Should the business fail to place in service the eligible investment in qualified property within five years following certification, the business shall be decertified for the tax exemption and required to repay the exempted taxes. Should the business place in service eligible investment subsequent to decertification, the business may reapply to the Department for recertification. However, this reapplication must utilize the procedures set forth in Section 520.1620, and contain the same information as required pursuant to Section 520.1610.

b) Application Denial Requirements. When the Department denies an application, it shall specify in writing the reasons for denial and allow the applicant 15 days from the date of application denial to amend and resubmit the application. Resubmitted applications shall be approved or denied within 30 days after receipt.

c) Certificate of Eligibility for Exemption. Applicants determined eligible by the Department in accordance with Sections 520.1610 and 520.1620 will be issued a Certificate of Eligibility for Exemption.

d) 10-Year Exemption Period. All certified businesses shall receive a 10-year exemption from the tax imposed by Section 2 of the Retailers' Occupation Tax Act on purchases of machinery and equipment used in the operation of a high impact service facility, as provided in Section 1j of the Retailers' Occupation Tax Act, and on purchases of jet fuel and petroleum products sold to and used in the conduct of its business of sorting, handling and redistribution of mail, freight, cargo or other parcels in the operation of a high impact service facility, defined in Section 1j of the Retailers' Occupation Tax Act.

e) Quarterly Reports Required. All certified businesses shall submit quarterly reports describing the progress made toward the creation of 750 or more full-time or full-time equivalent jobs, and the investment of $100 million in qualified property at the High Impact Service Facility.

f) Additional Exemption Periods. At the expiration of this initial 10-year period, certified businesses may apply to the Department for renewals of the exemption for additional 5-year time periods. Any previously certified business that had its exemption expire for the sole reason that it could not seek an additional renewal under the previous version of this Section may apply to the Department for a renewal, and the Department may grant an exemption to the business and make that exemption retroactively effective as of the date of its previous expiration. The Department shall grant an exemption to a certified business for an additional 5-year period provided that, at the time of application for renewal:

1. Minimum Jobs Created. The business has created a minimum of 750 or more full-time or full-time equivalent jobs at a High Impact Service Facility in Illinois.

2. Business is Located in an Enterprise Zone. The business is located in an Enterprise Zone established pursuant to the Illinois Enterprise Zone Act [20 ILCS 655].

3. Business Provides an Audited Financial Statement. The business provides a financial statement, including balance sheets and income statements, audited according to generally accepted auditing standards by a public accountant certified in the State of Illinois as contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York NY 10036-8775 (June 2011, no later editions are incorporated). In addition, the certified business chief financial officer shall attest in writing that the certified business is not aware of a condition or occurrence that would result in a bankruptcy or closure.

4. Maximum Period of Exemption. This exemption shall not be allowed beyond the term of the certified Enterprise Zone.

g) Exemptions for Certified Businesses Located in Enterprise Zones Successful in Reapplying for Designation. Certified businesses located in Enterprise Zones that successfully reapplied for designation as an Enterprise Zone to be effective on or after January 1, 2016, and that expired or terminated solely by operation of Section 5.3(c) of the Act, shall continue to be eligible for the renewals of exemptions in accordance with subection (f). Any Certificate of Exemption issued under this Section shall not, after taking into account the time for which the exemption existed under the prior zone designation, exceed a total of five years. Thereafter, certified businesses located in Enterprise Zones may apply to the Department in accordance with subection (f).

History

• Source: Amended at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1640 Use Tax Exemption

Pursuant to Section 12 of the Use Tax Act [35 ILCS 105/12], each facility certified under this Subpart P is also eligible for the use tax exemption described in the Use Tax Act.

a) Certificate for purchase of machinery and equipment. The certificate of eligibility for the exemption of a High Impact Service Facility under Section 1j of the Retailers' Occupation Tax Act (ROTA) [35 ILCS 120/1j] shall be presented to its supplier when making the initial purchase of machinery and equipment to be used in operation of the High Impact Service Facility project.

b) Certification for purchase of jet fuel and petroleum products. The certificate of eligibility for the exemption of a High Impact Service Facility under Section 1j of ROTA shall be presented to its supplier when making the initial purchase of jet fuel and petroleum products to be used in the conduct of its business of sorting, handling and redistribution of mail, freight, cargo or other parcels in the operation of a High Impact Service Facility project.

c) Exceptions. Pursuant to Section 1j of ROTA, High Impact Service Facilities qualifying under the Retailers' Occupation Tax Act and seeking the exemption under Section 1j shall be ineligible for the exemptions of taxes imposed under Section 9-222.1 of the Public Utilities Act [220 ILCS 5/9-222.1]. High Impact Service Facilities qualifying under the Act and seeking the exemption under Section 9-222.1 of the Public Utilities Act shall be ineligible for the exemptions as described in Section 1j of ROTA.

History

• Source: Added at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1650 Revocation of the High Impact Service Facility Designation

a) If it is later determined after a reasonable notice and an opportunity for a hearing as provided under the Illinois Administrative Procedure Act [5 ILCS 100] that a business would have placed in service in qualified property the minimum eligible investment and created the requisite number of jobs without the benefits of High Impact Service Facility designation, the Department shall contact the Director of the Department of Revenue who shall begin proceedings to recover wrongfully exempted State taxes with interest as allowed by law. The business shall also be ineligible for all State funded Department programs for a period of 10 years. Proof that the business would have made the investment without the benefit of the designation shall include, but is not limited to, correspondence, financial plans and prospectuses, internal memoranda and other written documentation demonstrating the business would have made the eligible investment without the designation.

b) The Department shall revoke a High Impact Service Facility designation if the business fails to make the minimum eligible qualified investment and create the requisite number of jobs as stipulated in the terms and conditions of the certification. The Department shall immediately notify the Director of the Department of Revenue and request he begin proceedings to recover wrongfully exempted taxes with interest as allowed by law under the provisions of 35 ILCS 120/4 and 5.

c) The Department shall revoke a High Impact Service Facility designation if it is determined upon investigation that the business falsified application information in violation of Section 520.1620(d).

d) The Department shall notify a business designated as a high impact service facility in writing that it is subject to revocation in accordance with Section 520.1640(c). The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

e) Following revocation in accordance with Section 520.1640(c), the Department will contact the Director of the Department of Revenue who shall begin proceedings to recover wrongfully exempted State taxes with interest as allowed by law.

f) Any business enterprise project whose High Impact Service Facility designation is revoked shall be ineligible for all State funded Department programs for 10 years.

History

• Source: Added at 27 Ill. Reg. 3282, effective February 14, 2003

14 Ill. Adm. Code 520.1700 Definitions

The following definitions are applicable to this Subpart Q:

"Act" means Section 1o of the Retailers' Occupation Tax Act [35 ILCS 120/1o].

"Aircraft support center" means a support center operated by a carrier for hire that is used primarily for the maintenance, rebuilding, or repair of aircraft, aircraft parts, and auxiliary equipment.

"Contractually obligated" means the business enterprise has entered into a legally binding agreement with the Department to comply with Section 1o of the Retailers' Occupation Tax Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible investments" means a $30,000,000 investment in qualified property at a joint use military and civilian airport at a federal Air Force Base that will be placed in service at an airport support center located in a joint use military and civilian airport at a federal Air Force Base. Qualified properties are statutorily defined in Section 201(f) of the Illinois Income Tax Act [35 ILCS 5/201(f)] or are noncapital/nonroutine investments, and associated service costs (direct labor or contractual fees) that will be placed in service at an airport support center located in a joint use military and civilian airport at a federal Air Force Base and made for the improvement or renovation of qualified properties. These activities are used primarily for the maintenance, rebuilding, or repair of aircraft, aircraft parts, and auxiliary equipment.

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1,820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1,750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"Job creation" means at least 750 full-time equivalent employees have been hired at an airport support center located in a joint use military and civilian airport at a federal Air Force Base. Job titles being filled or refilled as a result of strikes cannot be computed as job creation.

"New employee" means a full-time equivalent job that represents a net increase in the number of the recipient's employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the recipient who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

Employee positions being filled or refilled as a result of strikes or layoffs or replacement workers to replace recipient company locked out employees.

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function as defined in 26 CFR 1.46-3(d). Eligible investments as defined in this Section shall be considered placed in service on the earlier of: the date the property is placed in a condition of readiness and availability for use or the date on which the depreciation period of that property begins.

History

• Source: Amended at 38 Ill. Reg. 457, effective December 20, 2013

14 Ill. Adm. Code 520.1710 Eligibility Criteria

The business enterprise must provide a written description of a spending plan and financial commitments for the proposed eligible investment that will demonstrate to the Department that the minimum eligible investment will be placed in service and the required number of jobs will be created within three years following the date of certification. Such information must include a detailed "project by project" description, as well as the estimated eligible investment for each specific project that obligates the business enterprise to place in service the minimum eligible investment and create the required number of jobs.

History

• Source: Added at 27 Ill. Reg. 6165, effective March 28, 2003

14 Ill. Adm. Code 520.1720 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Investment Information – a description of the eligible investment with documentation to substantiate that the planned investment is eligible (e.g., balance sheets, construction schedules, schematics and specifications, or lists and cost of equipment purchased); and a spending plan and financial commitments demonstrating that the business enterprise will place the investment in service within three years after certification;

b) Job Information – information on new employment that will result at the aircraft support center, as a result of the investment, that includes by job titles the number of employees and an explanation of how and why the investment causes creation of full-time employees or full-time equivalent employees.

c) Certification – a signed and dated statement verifying that the data and information in the application are true and correct, that the Department shall be provided access to any material, documentation or other data required to verify application information, and a statement that the number of jobs created shall be maintained for the term of the exemption.

d) Legally Binding Agreement – a dated statement executed by the Chief Executive Officer of the business enterprise obligating the business enterprise to create 750 or more full-time equivalent jobs and place in service a minimum of $30,000,000 in qualified property at an airport support center located at a joint use military and civilian airport at a federal Air Force Base within three years. The agreement shall state that, should the business fail to place in service the eligible investments in qualified property within three years following certification, the business shall be decertified for the tax exemption and required to repay the exempted taxes, plus any penalties and interest as determined by the Department of Revenue. The agreement shall also state that, the business shall submit quarterly progress reports describing the progress made toward the creation of 750 or more full-time equivalent jobs and the investment of $30,000,000 in qualified property at the aircraft support center, and that failure to do so shall result in termination of the exemption.

History

• Source: Added at 27 Ill. Reg. 6165, effective March 28, 2003

14 Ill. Adm. Code 520.1730 Application and Approval Process

a) Upon receipt of a complete application, the Department shall approve or deny the application in writing within 60 days after receipt. The application shall be approved if it meets the requirements of Sections 520.1710 and 520.1720 and the applicant has submitted a spending plan and financial commitments for the proposed eligible investment. The applicant must have a Legally Binding Agreement as contained in Section 520.1720(d) that obligates the business to place in service the eligible investments within three years after the date of certification. If the business fails to meet any of the conditions of the agreement, including, but not limited to, failure to place in service the eligible investments in qualified property within three years after the date of certification, the business may be decertified for the tax exemption and required to repay the exempted taxes. Should the business place in service eligible investments subsequent to decertification, the business may reapply to the Department for recertification. However, this reapplication must utilize the procedures set forth in Section 520.1720 and contain the same information as required pursuant to Section 520.1710.

b) When the Department denies an application, it shall specify in writing the reasons for denial and allow the applicant 15 days from the date of application denial to amend and resubmit the application. Resubmitted applications shall be approved or denied within 30 days after receipt.

c) Applicants determined eligible by the Department in accordance with Sections 520.1710 and 520.1720 shall be issued a Certificate of Eligibility for Exemption.

d) All certified businesses shall receive a 10-year exemption from the tax imposed by Section 1o of the Retailers' Occupation Tax Act [35 ILCS 120/1o] on purchases of jet fuel and petroleum products used or consumed by any aircraft support center directly in the process of maintaining, rebuilding, or repairing aircraft, as provided in Section 1o of the Retailers' Occupation Tax Act.

e) All certified businesses shall submit quarterly reports describing the progress made toward the creation of 750 or more full-time equivalent jobs and the investment of $30,000,000 in qualified property at the aircraft support center.

f) At the expiration of this initial 10-year period, certified businesses may apply to the Department for a renewal of the exemption for an additional 10-year time period. The Department shall grant an exemption to a certified business for an additional 10-year period, provided that, at the time of application for renewal:

1. The business has created a minimum of 750 or more full-time equivalent jobs and the investment of $30,000,000 in qualified property for an aircraft support center in Illinois.

2. The business is located at a joint use military and civilian airport at a federal Air Force Base.

3. The business provides an audited financial statement, including balance sheets and income statements, audited according to generally accepted auditing standards by a public accountant certified in the State of Illinois as contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York NY 10036-8775 (June 2011, no later editions are incorporated). In addition, the firm's chief financial officer shall attest in writing that the firm is not aware of a condition or occurrence that would result in bankruptcy or closure.

4. The total period of the exemption from the taxes imposed under the Act shall not exceed 20 years.

History

• Source: Amended at 36 Ill. Reg. 16067, effective October 26, 2012

14 Ill. Adm. Code 520.1740 Revocation of an Aircraft Support Center Designation

a) If the business fails to meet any of the conditions of the agreement, including, but not limited to, failure to make the minimum eligible qualified investment and create or retain the requisite number of jobs, the business may be decertified for the tax exemption and required to repay the exempted taxes. The Department will contact the Director of the Illinois Department of Revenue and request he begin proceedings to recover wrongfully exempted taxes with interest as allowed by law.

b) The Department shall revoke an aircraft support center designation if it is determined upon investigation that the business falsified application information in violation of Section 520.1720(d).

c) The Department shall notify a business designated as an aircraft support center in writing that it is subject to revocation in accordance with subsection (c). The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

d) Following revocation in accordance with subsection (c), the Department will contact the Director of the Illinois Department of Revenue and request he begin proceedings to recover wrongfully exempted taxes with interest as allowed by law.

e) Any business whose aircraft support center designation is revoked shall be ineligible for all State funded Department programs for ten years.

History

• Source: Added at 27 Ill. Reg. 6165, effective March 28, 2003

14 Ill. Adm. Code 520.1800 Definitions

The following definitions are applicable to this Subpart R.

"Act" means Section 1k of the Retailers' Occupation Tax Act [35 ILCS 120/1k].

"Aircraft maintenance facility" means a facility operated by an interstate carrier for hire that is used primarily for the maintenance, rebuilding or repair of aircraft, aircraft parts and auxiliary equipment owned or leased by that carrier and used by that carrier as rolling stock moving in interstate commerce.

"Contractually obligated" means the business enterprise has entered into a legally binding agreement with the Department to comply with Section 1k of the Retailers' Occupation Tax Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible investments" means a $400,000,000 investment in qualified property at an aircraft maintenance facility located in a county with population not less than 150,000 and not more than 200,000 and that contained three enterprise zones as of December 31, 1990. Qualified properties are statutorily defined in Section 201(f) of the Illinois Income Tax Act [35 ILCS 5/201(f)] or are noncapital/nonroutine investments, and associated service costs (direct labor or contractual fees) that will be placed in service at an aircraft maintenance facility.

"Full-time equivalent job" means a job in which the new employee works for the recipient or for a corporation under contract to the recipient at a rate of at least 35 hours per week. A recipient who employs labor or services at a specific site or facility under contract with another may declare one full-time, permanent job for every 1820 man hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 655/3(i)]

"Full-time retained job" means any employee defined as having a full-time or full-time equivalent job preserved at a specific facility or site, the continuance of which is threatened by a specific and demonstrable threat, which shall be specified in the application for development assistance. A recipient who employs labor or services at a specific site or facility under contract with another may declare one retained employee per year for every 1750 man hours worked per year under that contract, even if different individuals perform on-site labor or services. [20 ILCS 655/3(j)]

"Job creation" means at least 5000 full-time equivalent employees have been hired at an aircraft maintenance facility. Job titles being filled or refilled as a result of strikes cannot be computed as job creation.

"New employee" means a full-time equivalent job that represents a net increase in the number of the recipient's employees statewide. "New employee" includes an employee who previously filled a new employee position with the recipient who was rehired or called back from a layoff that occurs during or following the base years. The term "new employee" does not include any of the following:

An employee of the recipient who performs a job that was previously performed by another employee in this State, if that job existed in this State for at least 6 months before hiring the employee;

Any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

A child, grandchild, parent or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership interest of at least 5% in the profits, capital or value of any member of the recipient;

Employee positions being filled or refilled as a result of strikes or layoffs, or replacement workers used to replace recipient company locked out employees.

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function as defined in 26 CFR 1.46-3(d). Eligible investments as defined in this Section shall be considered placed in service on the earlier of the date the property is placed in a condition of readiness and availability for use or the date on which the depreciation period of that property begins.

History

• Source: Added at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1810 Eligibility Criteria

The business enterprise must provide a written description of a spending plan and financial commitments for the proposed eligible investment that will demonstrate to the Department that the minimum eligible investment will be placed in service and the required number of jobs will be created within three years following the date of certification. This information must include a detailed "project by project" description, as well as the estimated eligible investment for each specific project that obligates the business enterprise to place in service the minimum eligible investment and create the required number of jobs.

History

• Source: Added at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1820 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Investment Information – a description of the eligible investment with documentation to substantiate that the planned investment is eligible (e.g., balance sheets, construction schedules, schematics and specifications, or lists and cost of equipment purchased); and a spending plan and financial commitments demonstrating that the business enterprise will place the investment in service within three years after certification;

b) Job Information – information on new employment that will result at the aircraft maintenance facility, as a result of the investment, that includes by job titles the number of employees and an explanation of how and why the investment causes creation of full-time employees or full-time equivalent employees.

c) Certification – a signed and dated statement verifying that the data and information in the application are true and correct, that the Department shall be provided access to any material, documentation or other data required to verify application information, and a statement that the number of jobs created shall be maintained for the term of the exemption.

d) Legally Binding Agreement – a dated statement executed by the Chief Executive Officer of the business enterprise obligating the business enterprise to create 5000 or more full-time equivalent jobs and place in service, within three years, a minimum of $400,000,000 in qualified property at an aircraft maintenance facility. The agreement shall state that, should the business fail to place in service the eligible investments in qualified property within three years following certification, the business shall be decertified for the tax exemption and required to repay the exempted taxes, plus any penalties and interest determined by the Department of Revenue. The agreement shall also state that the business shall submit quarterly progress reports describing the progress made toward the creation of 5000 or more full-time equivalent jobs and the investment of $400,000,000 in qualified property at the aircraft maintenance facility, and that failure to do so shall result in termination of the exemption.

History

• Source: Added at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1830 Application and Approval Process

a) Upon receipt of a complete application, the Department shall approve or deny the application in writing within 60 days after receipt. The application shall be approved if it meets the requirements of Sections 520.1810 and 520.1820 and the applicant has submitted a spending plan and financial commitments for the proposed eligible investment. The applicant must have a legally binding agreement (see Section 520.1820(d)) that obligates the business to place in service the eligible investments within three years after the date of certification. If the business fails to meet any of the conditions of the agreement, including, but not limited to, failure to place in service the eligible investments in qualified property within three years after the date of certification, the business may be decertified for the tax exemption and required to repay the exempted taxes. Should the business place in service eligible investments subsequent to decertification, the business may reapply to the Department for recertification. However, this reapplication must utilize the procedures set forth in Section 520.1820 and contain the same information as required by Section 520.1810.

b) When the Department denies an application, it shall specify in writing the reasons for denial and allow the applicant 15 days from the date of application denial to amend and resubmit the application. Resubmitted applications shall be approved or denied within 30 days after receipt.

c) Applicants determined eligible by the Department in accordance with Sections 520.1810 and 520.1820 shall be issued a Certificate of Eligibility for Exemption.

d) All certified businesses shall receive a 10-year exemption from the tax imposed by Sections 1m and 1n of the Retailers' Occupation Tax Act [35 ILCS 120] on machinery and equipment used primarily to maintain, rebuild or repair aircraft used as rolling stock moving in interstate commerce for hire by the operator of the aircraft maintenance facility and all tangible personal property to be used or consumed, within an enterprise zone established pursuant to the Illinois Enterprise Zone Act, by any aircraft maintenance facility operator, directly in the process of maintaining, rebuilding or repairing aircraft, as provided in Sections 1n and 1o of the Retailers' Occupation Tax Act.

e) All certified businesses shall submit quarterly reports describing the progress made toward the creation of 5000 or more full-time equivalent jobs and the investment of $400,000,000 in qualified property at the aircraft maintenance facility.

f) At the expiration of the initial 10-year period, certified businesses may apply to the Department for a renewal of the exemption for an additional 10-year time period. The Department shall grant an exemption to a certified business for an additional 10-year period, provided that, at the time of application for renewal:

1. The business has created a minimum of 5000 or more full-time equivalent jobs and invested $400,000,000 in qualified property for an aircraft maintenance facility.

2. The business is located in a county with population not less than 150,000 and not more than 200,000 and that contained three enterprise zones as of December 31, 1990.

3. The business provides an audited financial statement, including balance sheets and income statements, audited according to generally accepted auditing standards by a public accountant certified in the State of Illinois as contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York NY 10036-8775 (June 2014, no later editions are incorporated). In addition, the firm's chief financial officer shall attest in writing that the firm is not aware of a condition or occurrence that would result in bankruptcy or closure.

4. The total period of the exemption from the taxes imposed under the Act cannot exceed the life of the enterprise zone in which the business is located.

History

• Source: Added at 40 Ill. Reg. 10858, effective July 29, 2016

14 Ill. Adm. Code 520.1840 Revocation of an Aircraft Maintenance Facility Designation

a) If the business fails to meet any of the conditions of the legally binding agreement, including, but not limited to, failure to make the minimum eligible qualified investment and create or retain the requisite number of jobs, the business may be decertified for the tax exemption and required to repay the exempted taxes. The Department will contact the Director of the Illinois Department of Revenue and request that DOR begin proceedings to recover wrongfully exempted taxes, with interest as allowed by law.

b) The Department shall revoke an aircraft maintenance facility designation if it is determined upon investigation that the business falsified application information in violation of Section 520.1820(d).

c) The Department shall notify a business designated as an aircraft maintenance facility in writing that it is subject to revocation in accordance with subsection (b). The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

d) Following revocation in accordance with subsection (b), the Department will contact the Director of the Illinois Department of Revenue and request that DOR begin proceedings to recover wrongfully exempted taxes, with interest as allowed by law.

e) Any business whose aircraft maintenance facility designation is revoked shall be ineligible for all State funded Department programs for 10 years.

History

• Source: Added at 40 Ill. Reg. 10858, effective July 29, 2016

Part 521 Data Center Investment Program

14 Ill. Adm. Code 521.10 Purpose

The Department shall issue certificates of exemption from 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], all locally-imposed retailers' occupation taxes administered and collected by the Department of Revenue, the Chicago non-titled Use Tax, and a credit certification against the taxes imposed under Section 201(a) and (b) of the Illinois Income Tax Act [35 ILCS 5] to qualifying Illinois data centers. [20 ILCS 605/605-1025(a)]

14 Ill. Adm. Code 521.20 Definitions

The following definitions are applicable to this Part.

"Applicant" means a taxpayer that is an owner or operator of a data center located in Illinois that seeks certification of that data center in order to claim the exemptions or credits created by Section 605-1025(a) of the Statute.

"Application" means the data center owner or operator's application for approval of the data centers investment tax exemption.

"Capital Investment" means the purchase, renovation, rehabilitation, or construction of permanent land, buildings, structures, equipment and furnishings used directly for or in the project, and any goods or services for the project that are purchased and capitalized under GAAP or an equivalent accounting principles system approved by the Department, including any organizational costs and research and development costs incurred in Illinois. Capitalized lease costs for land, buildings, structures or equipment shall be included in "Capital Investment" only if the lease term, including any extensions or options to extend, equals or exceeds the term of the memorandum of understanding, and provided that the lease costs are valued at their present value using the corporate interest rate prevailing at the time the data center owner or operator filed its application with the Department.

"Certificate of Exemption" means the certificate issued by the Department pursuant to the Memorandum of Understanding entered into between the Department and the data center owner, operator, or tenant that authorizes the data center owner, operator, or tenant to receive the tax exemptions set forth in Section 605-1025(a) and (b) of the Statute.

"Credit" means 20% of the wages paid during the taxable year to a full-time or part-time employee of a construction contractor employed by a certified data center if those wages are paid for the construction of a new data center in an underserved area. [35 ILCS 5/229(a)]

"Data Center" means a facility:

whose primary services include, but are not limited to the storage, management, and processing of digital data; and

that is used to house:

computer and network systems, including associated components such as servers, network equipment and appliances, telecommunications, and data storage systems;

systems for monitoring and managing infrastructure performance;

internet-related equipment and services;

data communications connections;

environmental controls;

fire protection systems; and

security systems and services. [20 ILCS 605/605-1025(c)]

A data center may consist of a building or a series of buildings that is rehabilitated or constructed to house working servers in one physical location, several adjacent sites, or multiple locations within a municipality or county.

"Department" or "DCEO" means the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5]

"Director" means the Director of the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5]

"Full-time Equivalent Job" means a job in which the new employee works for the owner, operator, contractor, or tenant of a data center, or for a corporation under contract with the owner, operator or tenant of a data center, at a rate of at least 35 hours per week. An owner, operator or tenant who employs labor or services at a specified site or facility under contract with another may declare one full-time, permanent job for every 1,820 hours worked per year under that contract. Vacations, paid holidays, and sick time are included in this computation. Overtime is not considered a part of regular hours. [20 ILCS 605/605-1025(c)]

"Illinois Procurement Code" means 30 ILCS 500.

"Illinois State Income Taxes" means all of the taxes imposed against the data center owner or operator or a tenant of the data center under Section 201(a) and (b) of the Illinois Income Tax Act.

"Incremental Income Tax" means the total amount withheld during the taxable year from the compensation of new full-time and full-time equivalent employees under Article 7 of the Illinois Income Tax Act arising from employment at the project during the taxable year, as reflected on the IRS forms W-2 for each such employee.

"Memorandum of Understanding" or "MOU" means the memorandum of understanding entered between a taxpayer and the Department under Section 605-1025(d) of the Statute and Section 521.90 of this Part.

"New Employee" means a full-time employee in a qualifying full-time equivalent job or employee first employed by the data center owner or operator or a tenant of the data center in the project and who is hired on or after the effective date of the MOU entered into between the Department and the data center owner or operator.

The term "New Employee" does not include:

an employee of the data center owner or operator or a tenant of the data center who was previously employed in Illinois by a related member (as that term is defined in Section 5.5 of the Economic Development for a Growing Economy Act [35 ILCS 10]) of the data center owner or operator or a tenant of the data center and whose employment was shifted to the data center after the data center owner or operator entered into the MOU;

an employee of the data center owner or operator or a tenant of the data center who was previously employed in Illinois by the data center owner or operator or a tenant of the data center and whose employment was shifted to the project after the data center owner or operator entered into the MOU; or

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the data center owner or operator or a tenant of the data center.

However, an employee shall be considered a new employee under the MOU if:

the employee performs a job that was previously performed by an employee who was treated under the MOU as a new employee and promoted by the data center owner or operator or a tenant of the data center to another job; or

the employee fills a job vacancy that had been continuously vacant for the 184-day period immediately preceding the date of the MOU. A job vacancy whose incumbent is on approved leave, is locked out, or is on strike is not a vacancy.

"Operation and Maintenance" means the day-to-day activities related to systems and workflows within a data center, including, but not limited to, installing and maintaining network resources, ensuring data center security, monitoring power and cooling systems, upkeep, customer environment support, system and component upgrades and refreshes, and incident resolution.

"Payroll" shall mean the wages paid during the taxable year to a full-time or part-time employee of a construction contractor employed by a certified data center if those wages are paid for the construction of a new data center. [35 ILCS 5/229(a)]

"Placed in Service" means the earlier of:

when the project is in a state or condition of readiness and availability for specifically assigned functions; or

the end of the 60-month period identified in the MOU.

"Project" means the development at the location set forth in the MOU.

"Project Labor Agreement" means an agreement with a bona fide labor organization that satisfies the provisions of the Illinois Project Labor Agreements Act [30 ILCS 571] and that is approved by the Department. For an existing data center for which construction took place prior to June 28, 2019 (the effective date of the Statute) and for which no project labor agreement was entered into simultaneously, the applicant may provide evidence as required by the Department in the form of affidavits and other supporting documentation from the contractor and the applicant demonstrating compliance with the standard provisions of a project labor agreement. Proof of the project labor agreements must be accompanied by evidentiary materials from the labor organization affirming participation in the project. Data centers that use multiple contractors during the course of the 60-month period specified in the MOU must enter into a project labor agreement approved by the Department for the labor component of any construction used to achieve the minimum required capital investment.

"Project Costs" include all costs incurred or to be incurred by the data center owner or operator or a tenant of the data center directly related to the project, including, but not limited to, all:

capital investment;

infrastructure development costs;

debt service, except refinancing of current debt; and

non-capitalized research and development, job training and education, lease, and relocation costs.

The value of State or other governmental incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans, shall not be included as project costs.

"Qualified Tangible Personal Property" means:

electrical systems and equipment; climate control and chilling equipment and systems; mechanical systems and equipment; monitoring and security systems; emergency and back-up power generators; hardware; computers; servers; data storage devices; network connectivity equipment; racks; cabinets; telecommunications cabling infrastructure; raised floor systems; peripheral components or systems; software; mechanical, electrical or plumbing systems; battery systems; cooling systems and towers; temperature control systems; other cabling;

other data center infrastructure equipment and systems necessary to operate qualified tangible personal property, including fixtures;

component parts of any of the foregoing, including installation, maintenance, repair, refurbishment, and replacement of qualified tangible personal property to generate, transform, transmit, distribute or manage electricity necessary to operate qualified tangible personal property; and

all other tangible personal property that is essential to the operations of a computer data center.

"Qualified Tangible Personal Property" also includes building materials physically incorporated into the qualifying Illinois data center and any described tangible personal property detailed in Illinois Department of Revenue rules (see 86 Ill. Adm. Code 130.1957). [20 ILCS 605/605-1025(c)]

"Qualifying Illinois Data Center" means a new or existing data center that:

is located in the State of Illinois;

in the case of:

an existing data center, made a capital investment of at least $250,000,000 collectively by the data center operator and the tenants of the data center over the 60-month period immediately prior to January 1, 2020 or committed to make a capital investment of at least $250,000,000 over a 60-month period commencing before January 1, 2020 and ending after January 1, 2020; or

a new data center, or an existing data center making an upgrade, makes a capital investment of at least $250,000,000 over a 60-month period beginning on or after January 1, 2020;

results in the creation of at least 20 full-time or full-time equivalent new jobs over a period of 60 months by the data center operator and the tenants of the data center, collectively, associated with the operation or maintenance of the data center. Those jobs must have a total compensation equal to or greater than 120% of the average wage paid to full-time employees in the county where the data center is located, as determined by the U.S. Bureau of Labor Statistics; and

within 2 years after being placed in service, certifies to the Department that it is carbon neutral or attains certification under one or more of the following green building standards:

BREEAM for New Construction or BREEAM In-Use;

ENERGY STAR;

Envision;

ISO 50001-energy management;

LEED for Building Design and Construction or LEED for Operations and Maintenance;

Green Globes for New Construction or Green Globes for Existing Buildings;

UL 3223; or

an equivalent program approved by the Department. [20 ILCS 605/605-1025(c)]

"Responsible Bidder" means a person who has the capability in all respects to perform fully the contract requirements and the integrity and reliability that will assure good faith performance. A responsible bidder or offeror shall not include a business or other entity that does not exist as a legal entity at the time a bid or offer is submitted for a State contract.

"Statute" means Section 605-1025 of the Department of Commerce and Economic Opportunity Law [20 ILCS 605] (Data Center Investment).

"Taxable Year" means any 12 month consecutive accounting period for keeping records and reporting income and expenses. This does not preclude the data center owner or operator or a tenant of the data center from seeking a credit for a short or stub taxable year in the event that either:

the data center owner or operator or a tenant of the data center was not in existence for an entire taxable year; or

the data center owner or operator or a tenant of the data center changed its accounting period.

"Tenant" means a tenant of the data center owner or operator at the project.

"Underserved Area" means a geographic area that meets any one of the following criteria:

the area has a poverty rate of at least 20%, according to the latest federal decennial census, the most recent American Community Survey released by the U.S. Census Bureau, or other appropriate data source produced by the U.S. Census Bureau;

75% or more of the children in the area are eligible to participate in the federal free lunch or reduced-price meals program, according to reported statistics from the State Board of Education;

20% or more of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP) according to data from the U.S. Census Bureau; or

the area has an average unemployment rate, as determined by the Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the U.S. Department of Labor, for a period of at least 2 consecutive calendar years preceding the date of the application. [35 ILCS 5/229(a)(1) through (4)]

"Wages" means wages, salaries, commissions, tips and other compensation subject to Medicare tax as indicated in Box 5 of an employee's Internal Revenue Service Form W-2.

14 Ill. Adm. Code 521.30 Eligible Applicants

Any data center owner or operator of a data center located or to be located in the State of Illinois may apply to the Department for certification of the data center if the subject data center satisfies the definition of "qualifying Illinois data center" set forth in Section 605-1025(c) of the Statute.

14 Ill. Adm. Code 521.40 Eligibility Determination

a) Any taxpayer that owns or operates a data center in the State of Illinois, or a data center to be constructed and is planned to be located in the State of Illinois, may be an "applicant".

b) A taxpayer may not execute more than one MOU with respect to a single address or location for the same period of time. This provision does not preclude the applicant from entering into an additional MOU after the expiration of an earlier MOU to the extent the taxpayer's application otherwise satisfies the terms and conditions of the Statute and is approved by the Department.

c) In order to qualify for the tax exemptions under Section 605-1025(a) of the Statute, an applicant's project must meet the definition of a qualifying Illinois data center as defined in Section 521.20.

d) In order to qualify for the tax credits under Section 605-1025(a) of the Statute, an applicant's project must be approved as a qualifying Illinois data center and the new data center must be located in an underserved area as defined in Section 521.20.

14 Ill. Adm. Code 521.50 Form of Application

a) Applications will be accepted at any time during the year. The Department will provide interested applicants with an application package upon request. Submission of an application does not commit the Department to award assistance or pay any costs, including any application fee, incurred by the applicant in the preparation of an application.

b) Any taxpayer proposing a data center project either constructed or to be constructed in Illinois may request consideration by application to the Department in which the applicant states its intent to make a capital investment of at least $250,000,000 and to hire at least 20 new full-time equivalent employees, collectively between the applicant and tenants of the proposed data center, within a specified 60-month period.

c) Written applications are required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the Department office location or electronic mail address identified in the application.

1. The application shall include:

A) Legal Applicant – name, address, telephone number of each applicant; key contact, title, telephone number and electronic mail address; company Federal Employer Identification Number (FEIN) or the Illinois Business Tax (IBT) number; and whether the proposed project is in an underserved area. The application shall be accompanied by a Certificate of Good Standing from the Office of the Illinois Secretary of State for each applicant or other proof of authority to transact business in the State.

B) Investment Information – a detailed description of the capital investment the taxpayer or its tenants will make in the data center project. This shall include, but is not limited to, a summary of the eligible investment, when the qualified property will be placed in service, and a detailed description of the applicant's commitment to make a minimum eligible investment of at least $250,000,000, and the applicant's plan to create at least 20 new full-time or full-time equivalent jobs involved in the operation and maintenance of the data center, collectively with the applicant's tenants. The applicant should include supporting documentation regarding this investment information for the Department to properly evaluate the project.

C) Green Building Certification −

i) supporting documentation that the qualified property meets the green building standards, with the certification that designates the building as one or more of the following: carbon neutral; BREEAM for new construction; BREEAM In-Use; ENERGY STAR; Envision; ISO 50001-energy management; LEED for Building Design and Construction; LEED for Operation and Maintenance; Green Globes for New Construction; Green Globes for Existing Buildings; UL 3223; or another, substantially equivalent, designation approved by the Department.

ii) in the event the applicant seeks to demonstrate an alternative certification, an explanation and supporting documentation as to how the program is "equivalent" to those programs and categories specifically enumerated in the Act. In the event the certification has not yet been achieved at the time of application, the taxpayer must provide documentation pursuant to the terms of the MOU entered into between the company and the taxpayer.

D) Job Creation – a detailed description of the full-time and full-time equivalent jobs to be created at the data center, including both those jobs involved in the operations and maintenance of the data center and other positions, the annual average wages associated with these job categories, and the actual or anticipated start date for these positions. The application must also include the county average annualized pay for the county in which the data center is, or is to be, located. To the extent known at the time of application, the applicant shall identify any tenants, actual or anticipated new hiring by the tenants, and whether and how the new jobs will be associated with the operations or maintenance of the data center.

E) Other provisions – any other provisions or information that the Department determines is necessary to facilitate the Department's evaluation of the application.

2. The applicant shall additionally submit:

A) Tax Clearance, as follows:

i) to the Illinois Department of Revenue, a Form ITR-1; and

ii) to DCEO, proof of tax clearance from the Illinois Department of Revenue.

B) Project Labor Agreement − evidence of a project labor agreement with respect to the project at the time of the application. If the data center has not been constructed and when the evidentiary material is not available at the time of application, proof of the project labor agreement must be provided to the Department pursuant to the terms of the MOU applicable to the project.

d) The applicant is responsible for the accuracy of all data, information and documentation required by subsection (c). Once submitted, applications shall become the property of the Department.

e) Any materials or data made available or received by any agent or employee of the Department from an applicant for, or a recipient of a tax exemption or credit under this Part, that is exempt from disclosure under Section 7 of the Freedom of Information Act [5 ILCS 140/7], shall not be disclosed.

14 Ill. Adm. Code 521.60 Application Review

a) Prior to substantive evaluation of an application, the Department will screen all applications to determine that all requirements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given an opportunity to correct those deficiencies through submission of additional documentation.

b) The Department will evaluate applications in accordance with the policies and procedures adopted by the Department or its Director. In evaluating applications, the Department will determine that all of the following conditions exist:

1. the applicant's project intends to make capital investments of at least $250,000,000 in the State and hire at least 20 new employees involved in the operations or maintenance of the data center;

2. the applicant's project is or will:

A) be carbon neutral; or

B) attain certification under one or more of the green building standards required of a qualified Illinois data center as defined in see Section 521.20; and

3. the applicant's contractor has entered into a project labor agreement approved by the Department or attests by affidavit that a project labor agreement will be fully signed within 90 days of the effective date of the MOU; provided, however, that an existing data center for which construction was completed prior to June 28, 2019, the applicant shall provide evidence, as required by the Department, in the form of affidavits and other supporting documentation from the contractor and the applicant demonstrating compliance with the standard provisions of a project labor agreement. Data centers that use multiple contractors during the course of the 60-month period specified in the MOU must enter into a project labor agreement approved by the Department for the labor component of any construction used to achieve the minimum required capital investment.

14 Ill. Adm. Code 521.70 Application Denial/Approval

a) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation. If the applicant disagrees with the Department's decision, it may seek relief through the process afforded in the Department's Administrative Hearing Rules (56 Ill. Adm. Code 2605).

b) The Department will negotiate a formal MOU with applicants determined to be eligible under the Statute.

14 Ill. Adm. Code 521.80 Determination of Term of Exemptions and Amount of Credit

a) The Department will determine the duration of the term of exemptions and the amount of credit awarded under the Statute. The duration of the exemptions for any certified data center may not exceed 20 years.

b) All certified data centers, and, when applicable, data center tenants, shall receive an initial 5 year certificate of exemption. At the expiration of this initial 5 year period, certified data centers, and, when applicable, data center tenants, may apply to the Department for renewals of certificates of exemption for additional 5 year periods not to exceed the 20 year period running from the effective date of the MOU.

c) The amount of the credit for any certified data center determined by the Department to be located in an underserved area shall be 20% of the wages paid during the taxable year to a full-time or part-time employee of a construction contractor employed by a certified data center, if those wages are paid for the construction of a new data center. [35 ILCS 5/229(a)]

d) In no event shall a credit under the Statute reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. [35 ILCS 5/229(b)]

14 Ill. Adm. Code 521.90 Data Centers Memorandum of Understanding

a) The Department and each qualifying data center seeking a certificate of exemption or tax credits shall enter into an MOU. The MOU shall specify the terms and conditions of the exemptions or credits. It shall define the rights and responsibilities of the Department and of the data center owner or operator (and, if applicable, its tenants). Provisions with which the data center owner/operator/ tenants will be contractually bound to comply include, but are not limited to, the following:

1. a detailed description of the project that is the subject of the MOU, including the location and amount of the investment and jobs created above the current project or statewide baselines;

2. the duration of the exemptions or credits;

3. the details for determining the amount of capital investment to be made [20 ILCS 605/605-1025(d)];

4. the number of new jobs created, including a specific method for determining the number of new employees and any relevant baseline headcount numbers;

5. a provision that the certified data center provide an agreed upon procedures audit performed by an independent, licensed certified public accounting firm attesting that the certified data center has made the capital investment, hired the new employees specified in the MOU, and entered into a project labor agreement with respect to the project;

6. the timeline for achieving the capital investment and new job goals [20 ILCS 605/605-1025(d)];

7. a provision that the contractor and all subcontractors shall comply with the requirements of the Illinois Procurement Code as they apply to responsible bidders and to present satisfactory evidence of that compliance to the Department [20 ILCS 605/605-1025(f)];

8. a provision that new and existing data centers seeking a certificate of exemption for the rehabilitation or construction of data centers in the State shall require the contractor to enter into a project labor agreement approved by the Department [20 ILCS 605/605-1025(g)]; provided, however, that, for an existing data center for which construction began prior to June 28, 2019, the applicant shall provide evidence, as required by the Department, in the form of affidavits and other supporting documentation from the contractor and the applicant demonstrating compliance with the standard provisions of a project labor agreement. Proof of project labor agreements must be accompanied by evidentiary materials from the labor organization affirming participation in the project;

9. repayment obligations, should those goals not be achieved, and any conditions under which repayment by the qualifying data center or data center tenant claiming the exemption or credit will be required [20 ILCS 605/605-1025(d)];

10. a requirement that the qualifying data center or data center tenant claiming the exemption or credit shall annually report to the Department the number of new employees, including those specifically associated with the operation or maintenance of the data center, the total overall headcount associated with the data center, estimated value of taxes avoided due to the exemptions and credits received, and any other information the Department requires to ensure compliance with the Statute, the MOU, or other applicable law;

11. a requirement that the Director of the Department is authorized to verify with the appropriate State agencies information required to be reported by the qualifying data center or data center tenant;

12. a requirement that the qualifying data center shall provide written notification to the Department not more than 30 days after it makes or receives a proposal that would transfer the qualifying data center's State tax liability to a successor entity;

13. a requirement that the qualifying data center shall provide written notification to the Department not more than 30 days after the qualifying data center determines that the minimum job creation or retention, employment payroll, or investment no longer is being or will be achieved or maintained as set forth in the MOU;

14. a provision that, if the total number of new employees or baseline employment falls a specified level, the allowance of the exemptions or credits shall be suspended until the number of new employees or baseline employment equals or exceeds the amounts set forth in the MOU; and

15. other provisions as deemed necessary by the Department [20 ILCS 605/605-1025(d)].

b) Data center tenants seeking separate certificates of exemption in the name of the data center shall execute a separate MOU with the qualifying data center in the form provided by the Department. The MOU must be submitted to the Department. If the Department finds that the MOU is acceptable under the Statute and this Part, it will acknowledge the MOU's appropriateness prior to the execution of any certificate of exemption.

14 Ill. Adm. Code 521.100 Certificate of Exemption or Verification

a) Department-Qualifying Data Center MOU

Upon receipt of a fully-executed MOU between the qualifying data center and the Department, the Department will issue to the qualifying data center a certificate of exemption demonstrating that the qualifying data center's qualifying purchases are exempt from the taxes, as set forth in Section 605-1025(a).

b) Qualifying Data Center-Tenant MOU

Upon receipt of a fully-executed MOU between the qualifying data center and its tenant and acknowledged by the Department (or Tenant Participation Certificate Memorandum of Understanding, a form of which is included with the MOU between the Department and the data center owner or operator) as referenced in Section 90(b), the Department will issue to the data center tenant a certificate of exemption demonstrating that the data center tenant's qualifying purchases are exempt from the taxes, as set forth in Section 605-1025(a) of the Statute.

c) A qualifying data center located in an underserved area, as certified by the Department, for taxable years beginning on or after January 1, 2019, shall be awarded credits against the taxes imposed under Section 201(a) and (b) of the Illinois Income Tax Act, as provided in Section 229 of that Act. [20 ILCS 605/605-1025(d)]

1. The qualifying data center shall notify the Department, on forms provided by the Department, at the end of the taxable year for which a credit is sought, the wages paid during the taxable year to a full-time or part-time employee of a construction contractor employed by a certified data center, if those wages are paid for the construction of a new data center in an underserved area;

2. Upon receipt of valid proof from the qualifying data center, the Department will provide a certificate of verification equal to 20% of the wages paid during the taxable year to a full-time or part-time employee of a construction contractor employed by a certified data center if those wages are paid for the construction of a new data center in an underserved area. [35 ILCS 5/229(a)]

14 Ill. Adm. Code 521.110 Noncompliance with Memorandum of Understanding

a) If the Department determines that a certified data center or data center tenant that has received a certificate of exemption or verification for credits under the Statute is not complying with the requirements of the MOU or all of the provisions of the Statute, the Director shall:

1. Notify a certified data center or data center tenant, in writing, that its certification of exemption is temporarily revoked, the date of revocation, the reason for the revocation, and the option to cure or seek a hearing contesting the revocation;

2. Temporarily suspend the exemption, except in instances of noncompliance where the number of employees in new full-time equivalent jobs temporarily falls below the required number. The data center must provide documentation to the Department sufficient to show current insufficient employment is temporary; and

3. Notify the Illinois Department of Revenue of the temporary suspension and the starting date.

b) Upon notice of noncompliance, the certified data center will have 30 days to either:

1. Cure the cause of the noncompliance and provide documentation sufficient to demonstrate the certified data center has cured the non-compliance, or

2. Request a hearing under Article 10 of the Illinois Administrative Procedure Act [5 ILCS 100].

c) If within the 30 days after receipt of the notice described in subsection (a)(1), the certified data center provides documentation sufficient to demonstrate cure of the noncompliance, then the Director will inform the Illinois Department of Revenue of the date the temporary suspension is lifted.

d) If, after notice and any hearing, the Director determines that a noncompliance event exists, the Director shall issue to the Illinois Department of Revenue notice to that effect, stating the noncompliance date and requesting proceedings be initiated to recover wrongfully exempted State taxes or an erroneous refund, within the meaning of the Illinois Income Tax Act.

e) If a certified data center neither cures the cause of noncompliance nor requests a hearing within the prescribed period, the temporary suspension shall become permanent and the Director shall notify the Department of Revenue of the permanent revocation and request proceedings be initiated to recover wrongfully exempted State taxes or an erroneous refund, within the meaning of the Illinois Income Tax Act.

f) Alleged noncompliance shall include, but is not limited to, the following:

1. a demonstration that the certified data center or data center tenant failed materially to comply with the terms and conditions of the MOU;

2. a determination, upon investigation, that the certified data center or data center tenants, or any of their agents or representatives, provided false or misleading information to the Department; or

3. a failure to submit annual reports as required by the MOU.

Part 522 Apprenticeship Education Expense Credit Program

14 Ill. Adm. Code 522.10 Purpose

The Department is charged with implementing a program to certify applicants for an apprenticeship credit under this Section. Upon satisfactory review, the Department shall issue a tax credit certificate to an employer incurring costs on behalf of a qualifying apprentice stating the amount of the tax credit to which the employer is entitled. [P.A. 101-0207; 35 ILCS 5/229(c)].

14 Ill. Adm. Code 522.20 Definitions

The following definitions are applicable to this Part.

"Act" or "Illinois Income Tax Act" [35 ILCS 5/101 et seq.]

"Certificate" means the tax credit certificate issued by the Department under Section 229(c) of the Act as amended by P.A. 101-207.

"Department" or "DCEO" means the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5 and P.A. 101-0207; 35 ILCS 5/229]

"Employer" means an Illinois income taxpayer who is the employer of the qualifying apprentice. [P.A. 101-0207; 35 ILCS 5/229(a)]

"Qualifying apprentice" means an individual who:

is a resident of the State of Illinois;

is at least 16 years old at the close of the school year for which a credit is sought;

during the school year for which a credit is sought, was a full-time apprentice enrolled in an apprenticeship program which is registered with the United States Department of Labor, Office of Apprenticeship; and

is employed in Illinois by the taxpayer who is the employer. [P.A. 101-0207; 35 ILCS 5/229(a)]

"Qualified education expense" means the amount incurred on behalf of a qualifying apprentice not to exceed $3,500, or $5,000 for taxpayers qualifying for the underserved area increase (Section 522.80(c)) for tuition, book fees, and lab fees at the school or community college in which the apprentice is enrolled during the regular school year. [P.A. 101-0207; 35 ILCS 5/229(a)] Any amount paid for the purchase or rental cost of items that would be considered qualified education expenses but for the fact that the items are not substantially consumed during the school year and will remain the tangible personal property of a qualifying pupil or a custodian at the conclusion of the school year, or for items that are not required as part of the Program, shall not be considered qualified education expenses. Examples of expenses that are excluded include, but not limited to, computers, tablets, and tools. For purposes of this Section, an item is substantially consumed when, during the school year, the item is used to the extent that its fair market value has been reduced to a de minimis amount. Expenses that are paid, reimbursed, credited, or otherwise subsidized by other public or private sources are not qualified education expenses.

Tuition is the amount paid to a school as a condition of enrollment for a quarter, semester or year term in the program the qualifying apprentice is enrolled.

Book fees are amounts paid for the use of books (print or digital) that are essential to a qualifying apprentice's participation in the education program of the school. A book is essential when the school or instructor of the school requires its use by the qualifying pupil in order to participate in and complete a course of the education program.

Lab fees are amounts paid for the use of supplies, equipment, materials or instruments that are essential to a qualifying pupil's participation in a lab course of the school's education program. Supplies, equipment, materials or instruments are essential when the school or instructor of the school requires their use by the qualifying apprentice in order to participate in and complete a lab course of the education program. Lab courses include those courses that, in addition to classroom instruction by a teacher, provide an environment of organized activity involving observation, experimentation or practice in a course of study. Lab courses of study include those courses with a scientific, musical, artistic, technical or language skill content. Lab fees may be in the nature of a rental fee for supplies, equipment, materials or instruments that are used in the lab course. Fees incurred for the purchase of supplies, equipment, materials or instruments used in a lab course and which are substantially consumed by the assignments and activities of the lab are also considered qualifying lab fees.

"School" means any public or nonpublic secondary or post-secondary school in Illinois that is:

an institution of higher education that provides a program that leads to an industry-recognized postsecondary credential or degree;

an entity that carries out programs registered under the federal National Apprenticeship Act; or

another public or private provider of a program of training services, which may include a joint labor-management organization that provides an apprenticeship school curriculum and courses. [P.A. 101-0207; 35 ILCS 5/229(a)]

"School Year" shall mean the customary annual schedule of courses at a school during which students, including qualifying apprentice(s) attend school as distinguished from the calendar year.

"Underserved area" shall have the same meaning as provided in the Economic Development for a Growing Economy Tax Credit (35 ILCS 10/5-5), as amended.

14 Ill. Adm. Code 522.30 Maximum Amount of Available Credits

For taxable years beginning on or after January 1, 2020, and beginning on or before January 1, 2025, subject to appropriation the aggregate amount of the tax credits that may be claimed under this Section for qualified education expenses incurred by an employer on behalf of a qualifying apprentice, shall be limited to $5,000,000 per calendar year. If applications for a greater amount are received per year, credits shall be allowed on a first-come first-served basis, based on the date on which each properly completed application for a certificate of eligibility is received by the Department. If more than one certificate is received on the same day, the credits will be awarded based on the time of submission for that particular day. [P.A. 101-0207; 35 ILCS 5/229(b)] The aggregate amount will be determined based on the date the qualified education expenses were incurred by the employer. Employers must submit a claim for a credit by March 31 of the current calendar year to receive a credit for expenses incurred during the previous calendar year.

14 Ill. Adm. Code 522.40 Eligibility Requirements

a) In order to qualify for credits under the Act, an applicant must adhere to the requirements established by the Department in this Section and Section 522.50. The Department shall require that any application must be submitted via the Department's web-based application process.

b) The applicant shall be an Illinois taxpayer registered as a business entity with the Illinois Secretary of State's Office.

c) In order to qualify for a credit, the applicant must provide support, including but not limited to:

1. receipts obtained from the school in which the qualifying apprentices was enrolled;

2. a qualifying enrollment of apprentices in a program at a school that meets the definition under the Act; and

3. incurred or is incurring qualified education expenses on behalf of the qualifying apprentice.

14 Ill. Adm. Code 522.50 Form of Application

a) The application submitted by the employer shall at a minimum include the following information about the employer submitting the application:

1. The applicant name, address, email, and telephone number;

2. key contact name and title;

3. total number of qualifying apprentices employed;

4. employer industry by the North American Industry Classification System;

5. Federal Employer Identification Number (FEIN); and

6. Any other provisions or information the Department determines necessary to facilitate the Department's evaluation.

b) The application submitted by the employer shall also include the following information about the qualifying apprentices:

1. The name, age, residence address, and taxpayer identification number of each qualifying apprentice employed by the taxpayer during the taxable year;

2. the name of the school at which the qualifying apprentice is enrolled; [P.A. 101-0207; 35 ILCS 5/229(g)]

3. The total amount of education expenses incurred on behalf of the qualifying apprentices by the applicant, including expenses incurred that do not qualify as education expenses to be reimbursed;

4. The total amount of qualified education expenses incurred with respect to each qualifying apprentice; [P.A. 101-0207; 35 ILCS 5/229(g)] and

5. Any other provisions or information the Department determines necessary to facilitate the Department's evaluation.

c) The applicant is responsible for the accuracy of all data, information and documentation submitted to the Department.

d) Any materials or data made available or received by any agent or employee of the Department from an applicant for, or a recipient of a tax credit under Section 229(c) of the Act as amended by P.A. 101-207, that contain information that is exempt from disclosure under Section 7 of the Freedom of Information Act [5 ILCS 140/7] shall not be disclosed.

e) To aid an employer in claiming the apprenticeship education expense credit, a school should provide to the employer a written receipt documenting the apprenticeship education expenses paid to the school by the employer on behalf of qualifying apprentices during the school year. The written receipt should be provided to the employer on upon request. When a school provides a written receipt to an employer, it should use the form prescribed by the Department and include the following information:

1. the designated school year during which the qualifying education expenses were paid;

2. the name and address of the school;

3. the name and address of the employer;

4. the name and social security number of the qualifying apprentice or apprentices;

5. a list of education expense amounts paid for tuition, book fees and lab fees during the school year; and

6. the total of all such education expenses paid during the school year. All information contained on the written receipt provided by a school is deemed confidential information for use as supporting documentation of the apprenticeship education expense credit claimed and shall not be used for any other purpose.

14 Ill. Adm. Code 522.60 Application Review

a) Applications will be accepted at any time during the year. The Department will provide interested applicants with an application package upon request. Submission of an application does not commit the Department to award a credit. All applications shall be submitted electronically to the Department.

b) The Department shall review the information submitted by the applicant under Section 522.50. The Department shall review all applications to determine that all required information and documentation has been provided. Applicants will be notified, electronically, of any application deficiencies and will be allowed 30 days to correct the deficiencies through submission of additional documentation. The Department has the discretion to extend the cure the period in extenuating circumstances, provided the applicant submits a written request outlining the circumstances for which it needs an extension.

c) In evaluating an application, the Department shall determine if the following are true:

1. The employer enrolled the qualifying apprentices in a school;

2. The school accepted payment and the period of time in which the employer can receive a refund has expired; and

3. The employer is incurring or incurred qualified education expenses on behalf of qualifying apprentices.

d) Upon satisfactory review, the Department shall issue a tax credit certificate to an employer incurring or who has incurred costs on behalf of a qualifying apprentice stating the amount of the tax credit to which the employer is entitled. If the employer is seeking a tax credit for multiple qualifying apprentices, the Department may issue a single tax credit certificate that encompasses the aggregate total of tax credits for qualifying apprentices for a single employer. [P.A. 101-0207; 35 ILCS 5/229(c)]

14 Ill. Adm. Code 522.70 Application Denial/Approval of Certification

Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If approved, the Department will issue a certification to the employer. If the Department denies an application, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation.

14 Ill. Adm. Code 522.80 Determination of Amount of Tax Credit

a) The credit shall be equal to 100% of the qualified education expenses, but in no event may the total credit amount awarded to a single taxpayer in a single taxable year exceed $3,500 per qualifying apprentice. [P.A. 101-0207; 35 ILCS 5/229(b)]

b) Underserved Area Increase. A taxpayer shall be entitled to an additional $1,500 credit (for a total credit up to $5,000 per qualifying apprentice) against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act if (i) the qualifying apprentice resides in an Underserved Area during the school year for which a credit is sought by an employer or (ii) the employer's Principal Place of Business is located in an Underserved Area. [P.A. 101-0207; 35 ILCS 5/229(b)]

c) In no event shall a credit under this Section reduce the taxpayer's liability under this Act to less than zero. If a taxpayer received a grant for qualifying education expenses to be paid by a grantor, only the qualifying education expenses not paid for with grant funds can be claimed. [P.A. 101-0207; 35 ILCS 5/229(b)]

d) For partners, shareholders of Subchapter S corporations, and owners of limited liability companies, if the liability company is treated as a partnership for purposes of federal and State income taxation, there shall be allowed a credit under this Section to be determined in accordance with the determination of income and distributive share of income under Sections 702 and 704 and Subchapter S of the Internal Revenue Code. [P.A. 101-0207; 35 ILCS 5/229(b)]

e) The tax credit for qualified education expenses incurred must be claimed for the tax year in which the qualified education expenses are actually paid by the employer. Any part of the apprenticeship education expense credit not claimed or allowed in a given tax year shall not be carried forward or backward to any other tax year. Likewise, where qualified education expenses are incurred in excess of the allowable education expense credit for any given tax year, the excess of qualified education expenses shall not be used in claiming the education expense credit for any other tax year.

14 Ill. Adm. Code 522.90 Record Retention

An employer filing a return claiming the apprenticeship education expense credit shall maintain records of proof as to the education expenses paid for by the employer. The employer shall maintain the records for a period of not less than 3 years after the date the return on which the employer claimed the apprenticeship education expense credit was filed. Records maintained by the employer shall be subject to inspection by the Department and its duly authorized agents and employees.

14 Ill. Adm. Code 522.100 Noncompliance

a) If the Department determines that a tax credit certificate for credits under the Act is not in compliance with the requirements of the certification or any provisions of this Part or the Act, the Director shall provide notice to the employer of the alleged noncompliance, and allow the employer a hearing under Article 10 of the Illinois Administrative Procedure Act [5 ILCS 100/10]. The notice shall include the reason for noncompliance and the date and location of a hearing to be held (see 56 Ill. Adm. Code 2605 (Administrative Hearing Rules)). If, after notice and any hearing, the Director determines that a noncompliance event exists and determines that the certification shall be revoked, the Director shall issue to the Illinois Department of Revenue notice to that effect, stating the employer name, noncompliance date and the employer credits subject to recapture by the Illinois Department of Revenue. Alleged noncompliance shall include, but is not limited to, the following:

1. a demonstration that the employer failed materially to comply with the terms and conditions of the certification; or

2. a determination upon investigation that the employer provided false or misleading information to the Department.

b) If the Department's determination of noncompliance is confirmed after any hearing described in Section 522.100(a) or remains uncontested, the Department will notify the employer in writing, that its credit certification is revoked, and any credits issued to the employer prior to the revocation are subject to recapture by the Illinois Department of Revenue. The Department shall refer the revocation to the Department of Revenue and request proceedings be initiated to recover wrongfully issued credits.

Part 523 Intermodal Facilities Promotion Program

14 Ill. Adm. Code 523.10 Purpose

Through the Intermodal Facilities Promotion Program, the Department of Commerce and Economic Opportunity will provide grants to the developers of an intermodal terminal facility in the City of Joliet.

14 Ill. Adm. Code 523.20 Definitions

"Act" means the Intermodal Facilities Promotion Act [30 ILCS 743].

"Agreement" means the agreement between an eligible developer and the Department under Section 30 of the Act.

"Application" means a request for program funds, including the required information and attachments.

"Department" means the Department of Commerce and Economic Opportunity.

"Director" means the Director of the Department of Commerce and Economic Opportunity.

"Eligible developer" means an individual, partnership, corporation, or other entity that develops an intermodal terminal facility in the City of Joliet.

"Eligible employer" means an individual, partnership, corporation, or other entity that employs full-time employees at an intermodal terminal facility in the City of Joliet.

"Full-time employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the eligible employer for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment.

"Grant" means funds that require no repayment to be used by an eligible developer.

"Incremental income tax" means the total amount withheld from the compensation of new employees under Article 7 of the Illinois Income Tax Act [35 ILCS 5] arising from employment by an eligible employer.

"Infrastructure" means roads, access roads, streets, bridges, sidewalks, water and sewer line extensions, water distribution and purification facilities, waste disposal systems, sewage treatment facilities, stormwater drainage and retention facilities, gas and electric utility line extensions, or other improvements that are essential to the development of the project that is the subject of an agreement.

"Intermodal terminal facility" means a cohesively planned project consisting of at least 2,000 acres of land, improvements to that land, equipment, and appliances necessary for the receipt and transfer of goods between one mode of transportation and another and for the assembly and storage of those goods.

"New employee" means a full-time employee first employed by an eligible employer in the project that is the subject of an agreement between the Department and an eligible developer and who is hired after the eligible developer enters into the agreement, but does not include:

an employee of the eligible employer who performs a job that existed for at least 6 months before the employee was hired and was previously performed by another employee;

an employee of the eligible employer who was previously employed in Illinois by a related member of the eligible employer and whose employment was shifted to the eligible employer after the eligible employer entered into the agreement;

a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, capital, or value of the eligible employer; or

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, capital, or value of the eligible employer.

Notwithstanding the second indented paragraph of this definition, an employee may be considered a new employee under the agreement if the employee performs a job that was previously performed by an employee who was treated under the agreement as a new employee and promoted by the eligible employer to another job.

Notwithstanding any provision to the contrary, an employee employed in a part of the project that lies within a business district created pursuant to Division 74.3 of Article 11 of the Illinois Municipal Code [65 ILCS 5/11-74.3] or a redevelopment project area created pursuant to the Tax Increment Allocation Redevelopment Act [65 ILCS 5/11-74.4] shall not be considered a new employee.

"Professional Employer Organization" or "PEO" means an employee leasing company, as defined in Section 206.1(A)(2) of the Illinois Unemployment Insurance Act [820 ILCS 405/206.1]. [30 ILCS 743/10]

"Project" means an endeavor undertaken, during a specified time period and at a specified location, by an eligible developer to construct an intermodal terminal facility.

"Project costs" means the cost of the project incurred or to be incurred by the eligible developer, including infrastructure costs, but excludes the value of State or local incentives, including tax increment financing and deductions, credits, or exemptions afforded to an employer located in an enterprise zone. [30 ILCS 743/30(1)]

"Related member" means a person or entity that, with respect to the eligible employer during any portion of the taxable year, is any one of the following:

an individual stockholder, if the stockholder and the members of the stockholder's family (as defined in section 318 of the Internal Revenue Code (26 USC 318)) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the eligible employer's outstanding stock;

a partnership, estate, or trust and any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, or beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the eligible employer;

a corporation and any party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock;

a corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, capital, stock, or value of the eligible employer; or

a person to or from whom there is attribution of stock ownership in accordance with section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a related member under this definition, 20% shall be substituted for 5% wherever 5% appears in section 1563(e) of the Internal Revenue Code. [30 ILCS 743/10]

Chapter I Department of Commerce and Economic Opportunity

Part 523 Intermodal Facilities Promotion Program

14 Ill. Adm. Code 523.30 Application Cycle

The Department will supply interested applicants with an application upon request. Applications under this program will be accepted until June 30, 2010.

14 Ill. Adm. Code 523.40 Eligible Program Costs

The total amount of a grant to an eligible developer shall not exceed the lesser of:

a) $3,000,000 in each State fiscal year; or

b) the total amount of infrastructure costs incurred by the eligible developer with respect to a project that is the subject of an agreement. [30 ILCS 743/25]

14 Ill. Adm. Code 523.50 Grant Application

Applications for grant funds must include the following documentation:

a) Project Summary. A brief statement and description of the project for which Intermodal Facilities Promotion Program funds are being sought.

b) Background of Applicant. A discussion of the applicant's organization, purpose, history and capabilities to carry out the proposed project.

c) Project Description. A description of the proposed project for which the grant would be used, including a project work statement detailing work activities (including all components regardless of funding source); project activity completion deadlines as well as identification of the individuals or groups responsible for carrying out the project; and studies, plans drawings, sketches, and schematics that can be used to determine that the project is an intermodal terminal facility.

d) Project Results. Identification of the anticipated results of the proposed project in terms including potential for creation or retention of jobs, or other public benefits.

e) Project Budget. Identification of the infrastructure costs for which reimbursement is sought, including all supporting documentation requested by the Department. The eligible developer may amend its application for reimbursement from time to time in order to cover additional infrastructure costs incurred after the submission of an application. The Department reserves the right to approve or disapprove specific items and categories of infrastructure costs.

f) Location: Location map, such as an USGS 7½ quad map, identifying the location of the project and a legal description of the project site evidencing that the site is in the City of Joliet.

14 Ill. Adm. Code 523.60 Review of Grant Application

a) Application Screening. The Department shall screen all grant applications to determine that all elements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given the opportunity to correct those deficiencies. Complete applications will be reviewed and evaluated by Department staff in accordance with the criteria listed in subsections (b) through (d). This review and evaluation process will be completed within 30 working days after submission of a complete application.

b) Basic Eligibility Evaluation. Each grant application will be reviewed to assure compliance with the Act and this Part, including that the developer is an eligible developer.

c) Costs. The applicant must demonstrate that the project costs are eligible program costs under the Act and this Part and can be substantiated given the amount of work that has been or will be undertaken.

d) Program Objectives. The applicant must demonstrate that the activities of the project will result in construction of an intermodal terminal facility in the City of Joliet.

14 Ill. Adm. Code 523.70 Agreements with Applicants

The Department shall enter into an agreement with an eligible developer who is entitled to grants under the Act. The agreement must include all of the following:

a) A detailed description of the project that is the subject of the agreement, including the location of the project, the number of jobs created by the project, and project costs.

b) A requirement that the eligible developer shall maintain operations at the project location for 10 years from the start date of the agreement.

c) A specific method for determining the number of new employees attributable to the project.

d) A requirement that the eligible developer shall report on a quarter annual basis to the Department and the Department of Revenue the number of new employees and the incremental income tax withheld in connection with the new employees.

e) A provision authorizing the Department to verify with the Department of Revenue the amounts reported under subsection (d).

f) A provision authorizing the Department of Revenue to audit the information reported under subsection (d). [30 ILCS 743/30]

g) A provision that the Department shall provide reimbursement by means of one or more grants that shall be issued each State fiscal year, subject to sufficient appropriation by the General Assembly and sufficient funds in the Intermodal Facilities Promotion Fund, by the Department through State fiscal year 2016, or until the eligible developer's eligible project costs are reimbursed, whichever occurs first.

Part 524 River Edge Redevelopment Zone Program

14 Ill. Adm. Code 524.10 Purpose

Identify and initiate 3 pilot River Edge Redevelopment Zones to stimulate the safe and cost-effective re-use of environmentally-challenged properties adjacent to or surrounding rivers by means of tax incentives or grants.

14 Ill. Adm. Code 524.20 Definitions

Act – The River Edge Redevelopment Zone Act [65 ILCS 115/Art. 10] that creates the River Edge Redevelopment Program.

Agency – Each officer, board, commission, and agency created by the Constitution, in the executive branch of State government, other than the State Board of Elections; each officer, department, board, commission, agency, institution, authority, university, and body politic and corporate of the State; each administrative unit or corporate outgrowth of the State government that is created by or pursuant to statute, other than units of local government and their officers, school districts, and board of election commissioners; and each administrative unit or corporate outgrowth of these entities and as may be created by executive order of the Governor. No entity is an "agency" for the purposes of the Act unless the entity is authorized by law to make rules or regulations.

Application – A request for program funds, including the required information and attachments.

"Blue Collar Jobs Act" means the Act created by Article 20 of P.A. 101-9 (portions related to this Part codified at 65 ILCS 115/10-3, 10-6, 10-10.3 and 10-10.4) that creates the Enterprise Zone construction jobs credit, the High Impact Business construction jobs credit, the River Edge construction jobs credit, and the New Construction EDGE credit.

Bondable Capital Improvements – As defined in 71 Ill. Adm. Code 50 and undertaken by a business organization, not-for-profit corporation or local government.

Business Organization – Any for-profit business entity, or association of business entities, duly authorized to conduct business in the State of Illinois.

Department − The Illinois Department of Commerce and Economic Opportunity.

Designated Zone Organization − An association or entity:

The members of which are substantially all residents of the River Edge Redevelopment Zone;

The Board of Directors of which is elected by the members of the organization;

That satisfies the criteria set forth in section 501(c)(3) or 501(c)(4) of the Internal Revenue Code (26 USC 501(c)(3) or (4)); and

That exists primarily for the purpose of performing within the area or Zone for the benefit of the residents and businesses in the area or Zone any of the functions set forth in Section 8 of the Act [65 ILCS 115/10-8].

Grant − Funds that require no repayment to be used by a qualified applicant.

Incremental Income Tax – The total amount withheld during the taxable year from the compensation of River Edge Construction Jobs Employees.

Local Government − Any unit of local government as defined in Article VII, Section 1 of the 1970 Illinois Constitution.

Minority Person, Woman, and Person with a Disability – Have the meanings set forth under Section 2 of the Business Enterprise for Minorities, Women and Persons with Disabilities Act [30 ILCS 575/2].

Not-for-Profit Corporation – A corporation incorporated pursuant to the General Not For Profit Corporation Act of 1986 [805 ILCS 105] and in good standing with the Illinois Secretary of State.

Program – River Edge Redevelopment Grant Program.

Qualified Applicants − Local governments, not-for-profit corporations, and business organizations.

Redevelopment Project – An endeavor undertaken, during a specified time period, to improve cleared or undeveloped land, including, but not limited to, erection of buildings and other facilities by public or private entities, and site improvements installed by a local government in order to prepare the land for disposition to developers.

Recipient – Any eligible applicant receiving funds under this program.

River Edge Construction Jobs Credit – An amount equal to 50% of the incremental income tax attributable to River Edge construction employees employed on a River Edge construction jobs project. However, the amount may equal 75% of the incremental income tax attributable to River Edge construction employees employed on a River Edge construction jobs project located in an underserved area. The total aggregate amount of credits awarded under the Blue Collar Jobs Act (Article 20 of P.A. 101-9 (portions related to this Part codified at 65 ILCS 115/10-3, 10-10.3 and 10-10.4)) shall not exceed $20,000,000 in any State fiscal year. [65 ILCS 115/10-3]

River Edge Construction Jobs Employee – A laborer or worker who is employed by an Illinois contractor or subcontractor in the actual construction work on the site of a River Edge construction jobs project. [65 ILCS 115/10-3]

River Edge Construction Jobs Project – Building a structure or building, or making improvements of any kind to real property, in a River Edge Redevelopment Zone that is built or improved in the course of completing a qualified rehabilitation plan. "River Edge construction jobs project" does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property. [65 ILCS 115/10-3]

River Edge Redevelopment Zone or Zone – An area of the State certified by the Department as a River Edge Redevelopment Zone, pursuant to the Act.

Rule − Each agency statement of general applicability that implements, applies, interprets, or prescribes law or policy, but does not include statements concerning only the internal management of an agency and not affecting rights or procedures available to persons or entities outside the agency; intra-agency memoranda; or the prescription of standardized forms.

Veteran – An Illinois resident who is a veteran as defined in 10 USC 1491(h).

History

• Source: Amended at 46 Ill. Reg. 1834, effective January 11, 2022

Chapter I Department of Commerce and Economic Opportunity

Part 524 River Edge Redevelopment Zone Program

14 Ill. Adm. Code 524.110 Eligible Applicants

A municipality that has environmentally challenged land within 1,500 yards of a riverfront in the State of Illinois may apply to the Department of Commerce and Economic Opportunity for certification of as a River Edge Redevelopment Zone, in accordance with the requirements set forth in Section 5 of the Act and this Part.

14 Ill. Adm. Code 524.120 Eligibility Criteria

a) The area is contiguous and either adjacent to or surrounding a river [65 ILCS 115/10-4(1)];

b) For purposes of calculating total area, the minimum is one-half square mile and the maximum is 12 square miles, exclusive of lakes and waterways [65 ILCS 115/10-4(2)];

c) The area is entirely within one of the Cities of Aurora, East St. Louis, Elgin, Peoria, or Rockford and has at least 100 acres of environmentally challenged land within 1,500 yards of the riverfront [65 ILCS 115/10-4(4), 10-4(5) and 10-5.3(d)]; and

d) The area is not located within the boundaries of an existing Illinois Enterprise Zone.

History

• Source: Amended at 38 Ill. Reg. 3350, effective January 15, 2014

14 Ill. Adm. Code 524.130 Form of Application

An application shall be submitted on the standard application form provided by the Department. An application shall include:

a) Eligibility Criteria. Information that the necessary eligibility criteria, as specified in Section 524.120, have been met;

b) Characteristics of the Zone. Information on the following physical,

economic and social characteristics of the zone:

1. Master Plan. A specific plan that sets forth the effect of economic growth and expansion;

2. Map of Zone. A map of the Redevelopment Zone that contains a precise description of the area comprising the zone, either in the form of a legal description or by reference to roadways, lakes and waterways, and municipal boundaries, along with geospatial data in the form of an ESRI ARCGIS Shape file;

3. Qualification Issue. An analysis and appropriate supporting documents demonstrating that the proposed area is qualified under Section 10-4 of the Act;

4. Duration of or Term of the River Edge Redevelopment Zone;

c) Local Revitalization Efforts. A statement setting forth the economic

development and planning objectives of the zone;

d) Local Incentives and Programs. A statement detailing tax, grant, and other

financial incentives or benefits, and any programs to be provided by the municipality to business River Edge Redevelopments or organizations within the zone, other than those provided in the designating ordinance, that are not to be provided throughout the municipality;

e) Transcript of Public Hearings. A transcript of all public hearings;

f) Management Structure of the Zone. A statement describing the functions, program, and services to be performed by the designated zone organizations

within the zone.

History

• Source: Amended at 38 Ill. Reg. 3350, effective January 15, 2014

14 Ill. Adm. Code 524.140 Application Procedures

All applications must be considered and acted upon by the Department no later than 180 days after being received by the Department.

a) Upon receipt of the application, the Department shall review the application to determine whether the designated area qualifies as a River Edge Redevelopment Zone under Section 10-4 of the Act;

b) If an area is found to be qualified, the Department shall:

1. Publish a notice in at least one newspaper of general circulation within the municipality to notify the general public of the application and the opportunity to comment. The notice shall:

A) include a description of the area;

B) include a brief summary of the application, indicating locations where the applicant has copies for public inspection;

C) indicate appropriate procedures for filing with the Department written comments from zone residents, business, civic and other organizations, and property owners;

2. The Department shall either approve or deny an application within 180 days after receiving the application.

A) If approval of an application is not received within 180 days, then the application is considered to be denied.

B) If the application is denied, the Department shall inform the municipality of the specific reasons for denial.

14 Ill. Adm. Code 524.150 Application Evaluation and Ranking

a) Ranking Applications. Consistent with Section 10-4 of the Act regarding

approval and certification of a River Edge Redevelopment Zone, the Department shall give preference to those areas:

1. with high levels of environmentally challenged areas;

2. that have evidenced the widest support from the municipality;

3. for which a specific plan has been submitted to effect economic growth and expansion;

4. for which there is evidence of prior consultation between the municipality and business, labor, and neighborhood organizations within the proposed zone;

5. for which a specific plan has been submitted that will or may be expected to benefit zone residents and workers by increasing their ownership opportunities and participation in River Edge Redevelopment Zone developments.

b) The Department's determination of whether to certify a River Edge Redevelopment Zone shall be based on the purposes of the Act, the criteria set forth in Section 10-4 of the Act and subsection (a) of this Section.

14 Ill. Adm. Code 524.160 Certification

Approval of designated River Edge Redevelopment Zones shall be effectuated by the Department by certification of the designating ordinance.

a) The Department shall promptly issue a certificate for each approved zone. The certificate shall:

1. be signed by the Director of the Department;

2. make specific reference to the designating ordinance, which shall be attached to the certificate;

3. be filed in the Office of the Secretary of State Index Department; and

4. be recorded in the office of the recorder of deeds in the county in which the River Edge Redevelopment Zone lies.

b) A River Edge Redevelopment Zone shall be effective upon its certification. A certified copy of the ordinance and certification shall be filed with the Legal Service Bureau of the Illinois Department of Revenue and with the designating municipality. Upon certification, the terms and provisions of the ordinance shall be in effect and may not be amended or repealed, except in accordance with Section 10-5.4 of the Act.

c) A River Edge Redevelopment Zone shall be in effect for the period stated in the certificate, which shall in no event exceed 30 years. Zones shall terminate at midnight on December 31 of the final calendar year or the certified term, except as provided in Section 10-5.4 of the Act.

d) In calendar years 2006 and 2007, the Department may certify one pilot River Edge Redevelopment Zone in the City of Aurora, one pilot River Edge Redevelopment Zone in the City of East St. Louis, and one pilot River Edge Redevelopment Zone in the City of Rockford. The Department shall not certify any additional River Edge Redevelopment Zones, but may amend or rescind certifications of existing River Edge Redevelopment Zones in accordance with Section 10-5.4 of the Act.

e) A municipality in which a River Edge Redevelopment Zone has been certified must submit to the Department, within 60 days after certification, a plan for encouraging the participation by minority persons, females, persons with disabilities, and veterans in the zone.

f) The Department may assist the municipality in developing and implementing the master plan.

14 Ill. Adm. Code 524.210 Application to Amend an Ordinance

a) Amending an Ordinance. An application for amending an approved ordinance that creates a River Edge Redevelopment Zone shall follow the conditions set forth in Section 10-5.4 of the Act. An amendment to an ordinance is not effective unless and until the Department approves the application and the amending ordinance and files an amended certificate and the designating ordinance with the Secretary of State and the county recorder of deeds, as provided in Section 10-5.3 of the Act.

b) Standardized Application. The Department shall furnish upon request standardized application forms to a municipality that seeks to amend a certified designating ordinance.

c) Including Additional Territory of the Municipality. An application for amending an approved ordinance to include additional territory of the municipality, certified by the chief elected official of the designating municipality, shall contain all other information required under Section 10-5.1 of the Act and Section 524.130 of this Part. The application shall also demonstrate that the proposed additional territory meets the eligibility criteria set forth in Section 524.120(d) of this Part and Section 10-4 of the Act. Applications shall be submitted to the Department, which shall approve or deny the application in writing within 90 days after receipt. The application will be approved if it meets the requirements of this subsection (c) and Section 10-5.4 of the Act.

Chapter I Department of Commerce and Economic Opportunity

Part 524 River Edge Redevelopment Zone Program

14 Ill. Adm. Code 524.220 Application to Change Boundaries

a) Eligibility Criteria for Proposed Additions. The boundaries of an approved River Edge Redevelopment Zone may be amended to add areas on forms provided by the Department. An area is eligible if it meets the qualifications described in Section 10-4 of the Act and the application to amend the River Edge Redevelopment Zone ordinance provides analyses and documentation that the area being added is environmentally challenged.

b) Eligibility Criteria for Proposed Deletions. The boundaries of an approved River Edge Redevelopment Zone may be amended, on forms provided by the Department, to delete areas. An area is eligible if it meets the qualifications described in Section 10-4 of the Act and the application to amend the ordinance provides analyses and documentation that the area is an area in which the local objective for redevelopment of the zone has been accomplished.

14 Ill. Adm. Code 524.230 Application to Change Incentives, Alter Termination Date, and Make Technical Corrections

a) Application to Expand, Limit, or Repeal Incentives

1. Changing Incentives. An applicant shall apply on forms provided by the Department to expand, limit, or repeal the incentives provided in the ordinance and shall comply with the procedures described in Section 10-5.4 of the Act.

2. Continuation of Incentives. Section 10-5.4(e) and (f) of the Act provide that all incentives and benefits previously offered shall continue for the original term of the zone for three groups:

A) Businesses in the River Edge Redevelopment Zone that are receiving benefits or incentives in the zone on the effective date of the amending ordinance;

B) Businesses in the zone or expansions that are proposed or under development on the effective date of the amending ordinance, if the business demonstrates that:

i) The proposed business development or expansion has been committed to locating or expanding in the zone;

ii) Substantial and binding financial obligations have been made towards the development of the River Edge Redevelopment; and

iii) Commitments have been made in reasonable reliance on the benefits and programs that were to have been applicable to the River Edge Redevelopment by reason of the zone, including, in the case of reduction in the term of a zone, the original term of the zone.

3. Local Government Duties. With respect to businesses that are already receiving River Edge Redevelopment Zone benefits, the local government has the responsibility to attempt to inform eligible businesses through public notice or mailings and to take administrative steps necessary to assure compliance.

4. Evidence of Financial Commitment. Evidence of commitment under subsection (a)(2)(B)(ii) shall include, but not be limited to: internal memoranda; purchase orders; construction plans and schematics; evidence of financial commitment from financial institutions and/or State, local or federal governments, and written contracts. Proposed business locations or expansions shall also demonstrate reliance on River Edge Redevelopment Zone benefits by applying for the incentives.

b) Application to Alter Termination Date

1. Altering Termination Date. An applicant shall apply on forms provided by the Department to alter the termination date provided in the ordinance and shall comply with the procedures described in Section 10-5.4 of the Act.

2. Reducing Duration of Zone. If the amendatory ordinance reduces the duration of the River Edge Redevelopment Zone, the "benefit entitlement" described in Section 10-5.4(e) and (f) of the Act and subsections (a)(2)(A) and (B) shall apply.

c) Application to Make Technical Corrections

1. An applicant shall apply to the Department to make a technical correction in the ordinance, on forms provided by the Department, and shall comply with the procedures described in Section 10-5.4 of the Act.

2. A "technical correction" shall mean a non-substantive change that corrects or clarifies the wording, terms, or conditions of a River Edge Redevelopment Zone. A technical correction is not one that affects any rights or privileges accorded to residents of the zone.

14 Ill. Adm. Code 524.240 Decertification

a) In accordance with Section 10-5.4 of the Act, a River Edge Redevelopment Zone may be decertified in two ways:

1. Joint Action. By joint action of the Department and the designating municipality in accordance with Section 10-5.4(c) of the Act; or

2. For Cause. For cause by the Department in accordance with Section 10-5.4(d) of the Act. Cause for decertification shall be defined as the designating unit of government's failure to implement the River Edge Redevelopment Zone program, which can be evidenced by: the lack of an economic development strategy (no clearly defined objectives or course of action for improving zone performance); the failure to implement a business retention and expansion plan (little or no contact with zone businesses, or zone benefits not explained or publicized to businesses); and the failure to implement incentives uniformly throughout the River Edge Redevelopment Zone as described in Section 524.120(d).

b) Notice of Probation. The Department shall notify the designating unit of government of the commencement of probationary status pending action to decertify the River Edge Redevelopment Zone. Notice shall include: the date the probationary term begins; the duration of the probationary term; the deficiencies involved; and the date and location of the public hearing. The probationary status shall commence on the date the notice is postmarked.

1. Work Plan. Within 30 days after the date of the Department notice, the designating unit of government shall submit a work plan that explains corrective actions to be taken and any evidence refuting the deficiencies.

2. Public Hearing. Upon expiration of the 30-day response period, the Department shall conduct a public hearing within the boundaries of the River Edge Redevelopment Zone in order to receive evidence and testimony regarding decertification. Written and oral testimony, including supporting documentation, will be accepted from any affected party, regardless of whether the party resides within the River Edge Redevelopment Zone boundaries. The Department shall place public notice of the public hearing in one newspaper of general circulation within the River Edge Redevelopment Zone, not more than 20 days nor less than 5 days before the public hearing. A tape recording of the public hearing shall be made. Interested persons may access the tape recordings of public hearings in accordance with procedures provided in the Department's Freedom of Information rules titled Access to Information of the Department of Commerce and Community Affairs (2 Ill. Adm. Code 801).

3. Corrective Steps. The Department may enter an agreement with the designating unit of government regarding the specific corrective steps to be taken. Within 15 days after the date of the public hearing, the Department shall issue a letter to the designating unit of government stating the final terms of the plan for corrective action.

4. Progress Reports. The designating unit of government shall submit written monthly progress reports and shall make personnel available for meetings and interviews to ensure compliance with the plan of corrective action.

5. Notice of Decertification. The Department shall notify the designating unit of government, 21 days prior to the end of the probationary period, as to whether decertification will proceed.

14 Ill. Adm. Code 524.250 Adoption of Tax Increment Financing

If a redevelopment project area is, will be, or has been created by a municipality under Division 74.4 of Article 11 of the Illinois Municipal Code [65 ILCS 5], the redevelopment project contains property that is located in a River Edge Redevelopment Zone, the municipality adopts an amendment to the River Edge Redevelopment Zone designating ordinance pursuant to Section 10-5.4 of the Act concerning the abatement of taxes on property located within a redevelopment project area created pursuant to Division 74.4 of Article 11 of the Illinois Municipal Code, and the Department certifies the ordinance amendment, then the property that is located in both the River Edge Redevelopment Zone and redevelopment project area shall not be eligible for the abatement of taxes under Section 18-170 of the Property Tax Code [35 ILCS 200/18-170].

a) No business enterprise or expansion or individual that has constructed a new improvement or renovated or rehabilitated an existing improvement and has received an abatement on the improvement under Section 18-170 of the Property Tax Code shall be denied any benefit previously extended within the zone pursuant to the Act or any other Illinois law providing benefits specifically to or within the River Edge Redevelopment Zone.

b) Procedure

1. Within 30 days after adoption of an amendment to the designating ordinance, a business enterprise or individual may present evidence to the municipality supporting the requirements of subsections (b)(1)(A)-(C). Within 30 days after receipt of the evidence, the municipal authorities shall determine that, before the date of the notice of the public hearing provided by the municipality regarding the amendment to the designating ordinance, the business or individual met the following qualifications:

A) The business enterprise or expansion or individual was committed to locate within the River Edge Redevelopment Zone;

B) Substantial and binding financial obligations were made towards the development of the enterprise; and

C) The commitments in subsections (b)(1)(A) and (B) were made in reasonable reliance on the benefits and programs that were applicable to the enterprise or individual by reason of the River Edge Redevelopment Zone.

2. If the municipality confirms the evidence presented, then the enterprise or expansion or individual shall not be denied any benefits previously extended within the zone pursuant to the Act or pursuant to any other Illinois law providing benefits specifically to or within River Edge Redevelopment Zones. (Section 10-5.4.1 of the Act)

14 Ill. Adm. Code 524.310 Zone Administration

The administration of a River Edge Redevelopment Zone shall be under the jurisdiction of the designating municipality. Each designating municipality shall, by ordinance, designate a Zone Administrator for the certified zone within its jurisdiction. A Zone Administrator must be an officer or employee of the municipality. The Zone Administrator shall be the liaison to the designating municipality, the Department, and any Designated Zone Organizations within zones under his or her jurisdiction.

14 Ill. Adm. Code 524.320 Business Cessation Notification

a) Notification of Business Cessation. Section 10-9 of the Act requires a business located within a River Edge Redevelopment Zone that has received tax credits or exemptions, regulatory relief, or any other benefits under the Act to notify the Department and the officials of the county and municipality in which the business is located within 60 days after cessation of business operations. For purposes of this Section, business cessation shall mean the business has:

1. closed and is not conducting business in any capacity within the boundaries of the River Edge Redevelopment Zone;

2. relocated its operations in whole to another area outside the boundaries of the River Edge Redevelopment Zone; or

3. been acquired or assumed (existing business or assets) by another entity.

b) Notice for Closed or Relocated Businesses. In the case of business cessation under the categories specified under subsections (a)(1) and (a)(2), notification shall consist of a letter from the person in charge of the affected facility identifying the date of business cessation and the number of employees at the time of business cessation.

c) Notice for Acquired Businesses. In the case of a business cessation under the category specified in subsection (a)(3), notification shall consist of a letter from the person in charge of the affected facility identifying the date of purchase and name of the new business.

d) Notification of the business cessation shall be submitted to:

1. DCEO. Office Chief, Office of Economic Development Programs, Department of Commerce and Economic Opportunity, 620 East Adams Street, Springfield, Illinois 62701.

2. Local Government. The chief elected official of the designating unit of government of the River Edge Redevelopment Zone.

14 Ill. Adm. Code 524.410 General

A designating municipality may designate one or more Designated Zone Organizations qualified under Section 10-3(d) of the Act to perform within the area or zone for the benefit of the residents and businesses in the zone. The Department shall furnish a standard application to an entity or association seeking certification as a Designated Zone Organization (DZO). No organization shall be considered a DZO unless and until the Department verifies eligibility in accordance with Section 10-3(d) of the Act, and the organization is authorized by local ordinance to function as a DZO. Once certified, the DZO may provide services or perform functions in coordination with the municipality that is listed in Section 10-8 of the Act.

14 Ill. Adm. Code 520.420 Project Eligibility and Approval

A business entity may receive a deduction against income subject to State taxes for a contribution to a DZO if the project for which the contribution is made has been specifically approved by the designating municipality and by the Department. Any DZO seeking to have a project approved for contribution must submit an application to the Department describing the nature and benefit of the project and its potential contributors.

a) Standard Applications. The Department shall provide a standard application to any DZO seeking to qualify a project for contributions eligible for tax deductions in accordance with Section 10-10 of the Act. Applications shall be processed in accordance with Section 10-10(e) of the Act.

b) Project Approval Period. Applications shall be approved for a period of one project fiscal year. Continuation of project approval and eligibility for contributions in future years shall require a new application and current documentation, including:

1. A project balance sheet showing assets and liabilities, in accordance with the most recent accounting standards of the Financial Standards Board of the American Institute of Certified Public Accountants as contained in the publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, Harborside Financial Center, 201 Plaza 3, Jersey City, New Jersey 07311 (June 2001, no later editions are incorporated);

2. A project budget; and

3. Information regarding the extent to which project objectives have been accomplished.

c) Renewal Applications

1. All renewal applications shall be submitted at least 90 days prior to the start of the budget fiscal year or program year for which approval is requested.

2. Within 15 days after receipt of the application, the Department shall notify the DZO in writing regarding project renewal. In the event the renewal application is determined deficient, the Department will notify the DZO of the deficiencies. The DZO shall have 15 days from the date of the notice of deficiency to submit corrected or additional information.

3. Within 5 days after the start of the budget fiscal year for which the project renewal is requested, the Department shall notify the DZO that the application is accepted and that the project will be renewed or that the application is deficient and the renewal is denied.

d) Written Endorsement Requirement. In no case shall a project be approved by the Department that does not have the written endorsement of the designating units of government.

e) Project Proposal. A proposed project shall enhance the River Edge Redevelopment Zone in accordance with Section 10-10(c) of the Act. In describing how the proposed project will enhance the River Edge Redevelopment Zone, the DZO shall address the following:

1. Assessment of Need. The applicant shall identify the specific need, problem or objective that will be addressed by the proposed project.

2. Project Objectives. The applicant shall identify how the project will offer relief from the identified problems or meet the identified need.

3. Project Criteria. In accordance with Section 10-10(b) of the Act, a DZO must demonstrate that the proposed project meets all of the following criteria:

A) That the project will contribute to the self-help efforts of zone residents. (Self-help means the project can reasonably be expected to improve the ability of participating residents to live and/or work in the River Edge Redevelopment Zone.);

B) That the zone residents will actively participate in the project's planning and implementation;

C) That the project lacks sufficient resources; and

D) That the DZO will be fiscally responsible for the project.

f) Project Modifications. Project modifications, either programmatic or budgetary, require the prior approval of the Department.

g) DZO Project Administrative Responsibility. The DZO shall furnish the Department an annual status report on each project. The report must be submitted no later than 30 calendar days following the anniversary and shall consist of the following information:

1. A financial statement, in accordance with the most recent generally accepted accounting principles of the AICPA; and

2. A statement describing the project's success in achieving the objectives outlined in the approved application.

14 Ill. Adm. Code 524.430 Charitable Contributions

a) Amount of Contributions. The Department is authorized under Section 10-10(d) of the Act to specify the amount of contributions a DZO is eligible to receive for a project. The Department will deny amounts requested if:

1. The amount requested or the items sought are excessive or inappropriate to the project goals and objectives; or

2. Approval of the project would, in total, with all other project amounts approved in any calendar year, exceed the contribution limitation set or established in Section 10-10(g) of the Act.

b) Eligibility of a Contribution for a Tax Deduction. The DZO shall provide to the Department information necessary to determine the eligibility of a contribution for a tax deduction in accordance with Section 203(b)(2)(N) of the Illinois Income Tax Act [35 ILCS 5/203(b)(2)(N)] and section 170(c) of the Internal Revenue Code (26 USC 170(c)).

c) Claim for Tax Deduction. In order to determine and certify the amount of contribution, a taxpayer may file a claim for a tax deduction.

1. Request for Contribution Approval. The taxpayer shall submit to the Department a request for contribution approval that shall include:

A) The name of the taxpayer, the taxpayer's address, and the Federal Employer Identification Number (FEIN);

B) The name of the River Edge Redevelopment Zone, the DZO and the project;

C) The amount of cash or the value of the in-kind contribution as determined in accordance with section 170(c) of the Internal Revenue Code; and

D) In the case of an in-kind contribution, documentation sufficient to support the claim, such as appraisals of fair market value.

2. Receipt to Taxpayer. The DZO shall issue a receipt to the taxpayer when a contribution is made. The receipt shall include:

A) The exact name of the taxpayer, the address, and the FEIN;

B) The date the contribution was made;

C) The name of the DZO and of the project to which the contribution has been made; and

D) The amount and a description of the contribution made to the project.

3. Verification of Contribution Value. The DZO shall forward to the Department a copy of the receipt issued under subsection (c)(2) and verification of the contribution value as determined under section 170(c) of the Internal Revenue Code and the most recent Accounting Standards of the Financial Accounting Standards Board of the AICPA.

Chapter I Department of Commerce and Economic Opportunity

Part 524 River Edge Redevelopment Zone Program

14 Ill. Adm. Code 524.510 List of Available Tax Incentives

Several tax incentives are available to businesses in a River Edge Redevelopment Zone:

a) Investment Tax Credit found in the Illinois Income Tax Act (IITA) [35 ILCS 5/201(e) and (f)];

b) Environmental Remediation Tax Credit found in the Illinois Income Tax Act [35 ILCS 35/201(h)(1)(n)];

c) Dividend Income Deduction found in the Illinois Income Tax Act [35 ILCS 5/203(a)(2)(J), (b)(2)(K), (c)(2)(M) and (d)(2)(K)];

d) Interest Income Deduction found in the IITA [35 ILCS 5/203(b)(2)(M)];

e) Building Material Sales Tax Exemption found in the Retailers' Occupation Tax Act [35 ILCS 120/2-54]; and

f) River Edge construction jobs tax credit found in the Illinois Income Tax Act [35 ILCS 5/221(a-2)].

History

• Source: Amended at 46 Ill. Reg. 1834, effective January 11, 2022

14 Ill. Adm. Code 524.520 Investment Tax Credit

The Investment Tax Credit found in the Illinois Income Tax Act [35 ILCS 5/201(e) and (f)] provides for a 0.5% credit against the State income tax for investment made in qualified property that is placed in service in a River Edge Redevelopment Zone [35 ILCS 5/201(e) and (f)]. The credit shall be 0.5% of the basis for such property. The specific terms and conditions governing this tax credit are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 100.2110 and 100.2130).

14 Ill. Adm. Code 524.530 River Edge Construction Jobs Tax Credit

a) A business entity may receive a tax credit against the tax imposed under IITA Section 201(a) and (b) in an amount equal to 50% (or 75% if the project is located in an underserved area) of the amount of the incremental income tax attributable to River Edge construction jobs employees employed in the course of completing a River Edge construction jobs project. The credit allowed under Section 10-10.3 of the Act shall apply only to taxpayers that make a capital investment of at least $1,000,000 in a qualified rehabilitation plan. [65 ILCS 115/10-10.3(a)] The Department will announce on its website funding availability and any relevant information regarding the application. The amount of funding available will not exceed the total aggregate amount of credits that can be possibly awarded under the Blue Collar Jobs Act, which shall not exceed $20,000,000 in any fiscal year. [65 ILCS 115/10-10.3(g)] The credit may not reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the taxpayer's liability, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. [35 ILCS 5/221(a-2)]

b) To qualify for a tax credit allowed under this Section, an applicant must adhere to the requirements established by the Department in this Part. The Department will provide interested applicants with information upon request. Submittal of a tax credit claimant application does not commit the Department to award a tax credit or to pay any costs incurred by the applicant in the preparation of an application. Applications are valid only for the calendar year quarter in which they are submitted to the Department. An application shall be submitted to the Department on a standard application form provided by the Department. An application shall, at a minimum, include:

1. The name, address, email, and telephone number of applicants; key contact and title; applicant Social Security Number or Federal Employer Identification Number (FEIN);

2. The total amount of investment the applicant has made in the River Edge construction jobs project;

3. The nature and the benefit of the River Edge construction jobs project to the qualified rehabilitation project and the certified River Edge Redevelopment Zone; and

4. Any other information the Department determines necessary to facilitate the Department's evaluation.

c) The applicant is responsible for the accuracy of all data, information and documentation submitted to the Department. The Department will accept applications for River Edge construction jobs credits. Applications will be reviewed in the order received by the Department. Application tracking procedures shall be determined and established at the discretion of the Department.

d) The Department, within 45 days after receiving a River Edge construction jobs credit application, will give notice to the applicant as to whether the application has been approved. If the Department disapproves the application, it will specify the reasons for this decision and allow 60 days for the applicant to amend and resubmit its application. The Department will provide assistance, upon request, to applicants. Resubmitted applications will receive the Department's approval or disapproval within 30 days after the application is resubmitted. Those resubmitted applications satisfying initial Department objectives will be approved unless reasonable circumstances warrant disapproval. [65 ILCS 115/10-10.3(c)] The objectives of the Department shall include selecting applicants that meet the statutory requirements of eligibility and the procedural requirements of an application made available by the Department. The Department will disapprove an application if the applicant is ineligible, if the application is incomplete, or if the Department has reached the maximum amount of credits it can award for the State fiscal year.

e) For a River Edge construction jobs project, the designated zone organization shall annually submit to the Department a statement on the program and financial status of any approved project. The designated zone organization shall also submit to the Department an audited financial statement regarding the project. [65 ILCS 115/10-10.3(d)]

f) The Department will annually report and certify to the Department of Revenue:

1. the identity of taxpayers that are eligible for a River Edge construction jobs credit; and

2. the amount of River Edge construction jobs credits that is claimed pursuant to IITA Section 201. [65 ILCS 115/10-10.3(e)]

g) The Department, in collaboration with the Department of Labor, will require certified payroll reporting be completed in order to verify the wages and any other necessary information the Department may deem necessary to ascertain and certify the total number of River Edge construction jobs employees and determine the amount of a River Edge construction jobs credit. [65 ILCS 115/10-10.3(f)]

h) Each contractor and subcontractor engaged in, and that is executing, a River Edge construction jobs project for an applicant for a River Edge construction jobs tax credit shall complete the following:

1. Make and keep, for a period of 5 years from the date of the last payment made on or after June 5, 2019, [65 ILCS 115/10-10.4] on a contract or subcontract for a River Edge construction jobs project, records for all laborers and other workers employed by the contractor or subcontractor on the project. The records shall include the worker's:

A) Name;

B) Address;

C) Telephone number, if available;

D) Social Security Number;

E) Classification or classifications;

F) Gross and net wages paid in each pay period;

G) Number of hours worked each day;

H) Starting and ending times of work each day;

I) Hourly wage rate; and

J) Hourly overtime wage rate [65 ILCS 115/10-10.4(a)(1)]; and

2. No later than the 15th day of each calendar month, provide a certified payroll for the immediately preceding month to the taxpayer in charge of the River Edge construction jobs project. The taxpayer shall file a copy of the certified payroll with the Department after Labor and the Department of Commerce and Economic Opportunity within 5 business days after receiving the monthly certified payroll from all contractors and subcontractors engaged in and executing a Rivers Edge construction jobs project. A certified payroll shall be filed for only those calendar months during which construction on a River Edge construction jobs project has occurred. The certified payroll shall consist of a complete copy of the records identified in subsection (h)(1), but may exclude the starting and ending times of work each day. The certified payroll shall be accompanied by a statement signed by the contractor or subcontractor, or an officer, employee, or agent of the contractor or subcontractor, stating that:

A) the certified payroll records have been examined and are true and accurate; and

B) the contractor or subcontractor is aware that filing a certified payroll that he or she knows to be false is a Class A misdemeanor. [65 ILCS 115/10-10.4(2)(B)] A general contractor is not prohibited from relying on a certified payroll of a lower-tier subcontractor, if the general contractor does not knowingly rely upon a subcontractor's false certification. [65 ILCS 115/10-10.4]

i) The records submitted in accordance with subsection (h)(1), except an employee's address, telephone number, and Social Security Number, shall be considered public records and shall be made available in accordance with the Freedom of Information Act. A contractor, subcontractor, or public body may retain, in paper or electronic format, records required under this Section. The records submitted under subsection (h)(1) shall be kept and maintained by the taxpayer in charge of the project for 5 years from the date of last payment for work on a contract or subcontract for the project. [65 ILCS 115/10-10.4]

j) Upon written or electronic notice, each contractor and subcontractor, within 7 business days, shall make all documents required by subsection (h)(1) available for inspection and copying, at a location within this State, during its regular business hours, to the following entities:

1. The taxpayer in charge of the River Edge construction jobs project, its officers and agents;

2. The Director of the Department of Labor or the Director's designee; and

3. Federal, State, or local law enforcement agencies and prosecutors. [65 ILCS 115/10-10.4]

History

• Source: Former Section 524.530 repealed at 38 Ill. Reg. 3350, effective January 15, 2014 and new Section added at 46 Ill. Reg. 1834, effective January 11, 2022

14 Ill. Adm. Code 524.540 Environmental Remediation Tax Credit

The River Edge Redevelopment Zone Site Environmental Remediation Tax Credit found in the Illinois Income Tax Act [35 ILCS 5/201(n)] allows a taxpayer a credit against the tax imposed by subsections (a) and (b) for certain amounts paid for unreimbursed eligible remediation costs that were paid in performing remediation at a site within a River Edge Redevelopment Zone for which a No Further Remediation Letter was issued and recorded under Section 58.10 of the Environmental Protection Act [415 ILCS 5/58.10].

14 Ill. Adm. Code 524.550 Dividend Income Deduction

The Dividend Income Deduction found in the Illinois Income Tax Act [35 ILCS 5/20(a)(2)(J), (b)(2)(K), (c)(2)(M) and (d)(2)(k)] provides that taxpayers may deduct from their taxable income an amount equal to those dividends that were paid to them by a corporation that conducts substantially all of its operations in a River Edge Redevelopment Zone. The terms and conditions governing this tax deduction are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 2480).

14 Ill. Adm. Code 524.560 Interest Income Deduction

The Interest Income Deduction for Financial Institutions found in the Illinois Income Tax Act [35 ILCS 5/203(b)(2)(M) and (M-1)] allows any taxpayer that is a financial organization within the meaning of Section 304(c) of the Illinois Income Tax Act to deduct from its Illinois corporate income tax return an amount equal to the interest received from a loan for development in a River Edge Redevelopment Zone (see 35 ILCS 5/203(b)(2)(M)). The specific terms and conditions governing this tax deduction are found in the Illinois Department of Revenue's regulations (86 Ill. Adm. Code 100.2110).

14 Ill. Adm. Code 524.570 Building Materials Sales Tax Exemption

The Building Materials Sales Tax Exemption found in the Retailers' Occupation Tax Act [35 ILCS 120/2-54] allows each retailer in Illinois who makes a sale of building materials to be incorporated into real estate in a River Edge Redevelopment to deduct the receipts from such sales when calculating the tax imposed by the Retailers' Occupation Tax Act.

14 Ill. Adm. Code 524.610 Purpose

Through the River Edge Redevelopment Zone Grant Program, the Department of Commerce and Economic Opportunity will provide grants to business organizations, local governments and not-for-profit agencies for the purpose of redevelopment within designated River Edge Redevelopment Zones.

14 Ill. Adm. Code 524.620 Application Cycle

The Department will supply interested qualified applicants with an application upon request. Applications under this program will be accepted on an ongoing basis until funds are exhausted.

14 Ill. Adm. Code 524.630 Eligible Program Costs

Bondable capital improvements shall be eligible for reimbursement with grant proceeds when the improvements are necessitated by a redevelopment project within the zone.

14 Ill. Adm. Code 524.640 Grant Application

Applications for grants must include the following documentation:

a) Project Summary. A brief statement and description of the project for which funds are being sought.

b) Evidence of Need. A description of the conditions of the zone requiring action, such as absence of necessary infrastructure to support economic growth.

c) Background of Applicant. A brief discussion of the applicant's organization, purpose, history and capabilities to carry out the proposed project.

d) Project Description. A description of the proposed redevelopment project for which the grant would be used, including a project work statement detailing project objectives, work activities and deadlines as well as identification of the individuals or groups responsible for carrying out the project.

e) Project Results. Identification of the anticipated results of the proposed project in terms such as economic diversification, potential for creation or retention of jobs, or other public benefits.

f) Project Management. Identification and information on the staff and/or consultants to be involved in the proposed project, including qualifications and functional responsibilities.

g) Financial Statements. If necessary, financial statements of the applicant.

h) Coordination. Description of any cooperative working relationships that are or will be developed with other organizations involved in similar or related activities, and the relationship of the project to existing local, regional or State economic development plans.

i) Budget. A project budget by cost categories, including monthly projections of fund requirements, as required in the Department's application package.

14 Ill. Adm. Code 524.650 Review of Grant Applications

a) Application Screening. The Department shall screen all grant applications to determine that all elements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given the opportunity to correct those deficiencies. Complete applications will be reviewed and evaluated by Department staff in accordance with the criteria listed in subsections (b) through (f) of this Section. This review and evaluation process will be completed within 45 working days after the due date for applications.

b) Basic Eligibility Evaluation. Each grant application will be reviewed to assure compliance with the Act and this Part.

c) Evidence of Need

1. The applicant must document need for the proposed redevelopment project. For example, the applicant may show need based on absence of infrastructure, potential opportunity for economic benefit, etc.

2. The applicant must provide proof of the project's inability to acquire financing in an amount adequate to complete the project, such as a letter of partial funding or indication that other program funding has been considered.

d) Costs. The applicant must demonstrate that the project costs are eligible program costs under the Act and this Part and can be substantiated given the amount of work to be undertaken and the results expected.

e) Program Objectives and Methodology. The applicant must demonstrate that the activities and outcomes of the project can be accomplished, in that:

1. objectives are measurable and describe benefit to the area being served; and

2. methods and sequence of activities logically address the problems or opportunities identified and achieve the objectives that have been set.

f) Financial Evaluation Component. The Department will conduct a financial analysis of each application received. The financial evaluation will include an analysis of the applicant's financial statements, including the annual balance sheets and profit and loss statements, for the past three years; the most recent 90 days and a three year projected balance sheet and profit and loss statement; and a one year monthly cash flow statement. A comprehensive business plan or company annual reports may be submitted in lieu of these materials. These statements will be reviewed through a standard credit analysis that will determine the: liquidity and debt coverage of the project; ability of the company to manage debt; business trends; and projected earnings. This data will be compared to similar data for companies in the same industry using the 2006-2007 edition of "RMA Annual Statement Studies" published by the Risk Management Association, 1801 Market Street, Suite 300, Philadelphia PA 19103-1628 or by email at customers@rmahq.org, or comparable source that more closely matches the applicant's business operation if the applicant's industry is evaluated by such sources. This standard credit analysis will determine the financial stability of the business organization.

Part 527 Economic Development for a Growing Economy Program (edge)

14 Ill. Adm. Code 527.10 Purpose

The Department shall make Credit awards under the Act to foster job creation and retention in Illinois. [35 ILCS 10/5-15(a)(1)]

14 Ill. Adm. Code 527.20 Definitions

The following definitions are applicable to this Part.

"Accessible and affordable mass transit" means access to transit stops with regular and frequent service within one mile from the project site and pedestrian access to transit stops.

"Act" means the Economic Development for a Growing Economy Tax Credit Act [35 ILCS 10].

"Affordable workforce housing" means owner-occupied or rental housing that costs, based on current census data for the municipality where the project is located or any municipality within 3 miles of the municipality where the project is located, no more than 35% of the median salary at the project site, exclusive of the highest 10% of the site's salaries. If the project is located in an unincorporated area, "affordable workforce housing" means no more than 35% of the median salary at the project site, excluding the highest 10% of the site's salaries, based on the median cost of rental or of owner-occupied housing in the county where the unincorporated area is located.

"Agreement" means the Agreement between a Taxpayer and the Department under the provisions of Section 5-50 of the Act. [35 ILCS 10/5-5]

"Applicant" means a Taxpayer that is operating a business located, or that the Taxpayer plans to locate, within the State of Illinois and that is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, assembling, warehousing, or distributing products, conducting research and development, providing tourism services, or providing services in interstate commerce, office industries, or agricultural processing, but excluding retail, retail food, health, or professional services. "Applicant" does not include a Taxpayer who closes or substantially reduces an operation at one location in the State and relocates substantially the same operation to another location in the State. This does not prohibit a Taxpayer from expanding its operations at another location in the State, provided that existing operations of a similar nature located within the State are not closed or substantially reduced. This also does not prohibit a Taxpayer from moving its operations from one location in the State to another location in the State for the purposes of expanding the operation, provided that the Department determines that expansion cannot reasonably be accommodated within the municipality in which the business is located or, in the case of a business located in an incorporated area of the county, within the county in which the business is located, after conferring with the chief elected official of the municipality or county and taking into consideration any evidence offered by the municipality or county regarding the ability to accommodate expansion within the municipality or county. [35 ILCS 10/5-5]

"Blue Collar Jobs Act" means the Act created by Article 20 of P.A. 101-9 (portions related to this Part codified at 35 ILCS 10/5-5, 5-51 and 5-56) that creates the Enterprise Zone construction jobs credit, the High Impact Business construction jobs credit, the River Edge construction jobs credit, and the New Construction EDGE credit.

"Business Location Efficiency Incentive" means the incentive created by the Business Location Efficiency Incentive Act [35 ILCS 11].

"Capital improvements" shall include the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment and furnishings in an approved project sited in Illinois and in expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. For land, buildings, structures and equipment that are leased, the lease must equal or exceed the term of the Tax Credit Agreement and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments.

"Credit" means the amount agreed to between the Department and Applicant under the Act, but not to exceed the lesser of:

the sum of:

50% of the Incremental Income Tax attributable to New Employees at the Applicant's project; and

10% of the training costs of New Employees; or

100% of the Incremental Income Tax attributable to New Employees at the Applicant's project.

However, if the project is located in an underserved area, then the amount of the Credit may not exceed the lesser of:

the sum of:

75% of the Incremental Income Tax attributable to New Employees at the Applicant's project and

10% of the training costs of New Employees; or

100% of the Incremental Income Tax attributable to New Employees at the Applicant's project.

If an Applicant agrees to hire the required number of New Employees, then the maximum amount of the Credit for that Applicant may be increased by an amount not to exceed 25% of the Incremental Income Tax attributable to Retained Employees at the Applicant's project; provided that, in order to receive the increase for Retained Employees, the Applicant must provide the additional evidence required under Section 5-25(b)(3). [35 ILCS 10/5-5]

"Department" means the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 10/5-5]

"Director" means the Director of the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 10/5-5]

"Employee housing or transportation remediation plan" means a plan to increase affordable housing or transportation options, or both, for employees earning up to the median annual salary of the workforce at the project. The plan may include, but is not limited to, an employer-financed assisted housing program that can be supplemented by State or federal grants or shuttle services between the place of employment and existing transit stops or other reasonably accessible places.

"Existence of infrastructure" means the existence, within 1,500 feet of the proposed site, of roads, sewers, sidewalks, and other utilities and a description of the investments or improvements, if any, that an applicant expects State or local government to make to that infrastructure.

"Full-time Employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. [35 ILCS 10/5-5] Annually scheduled periods for inventory or repairs, vacations, holidays and paid time for sick leave, vacation or other leave shall be included in this computation of full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the Applicant for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment to the Applicant. [35 ILCS 10/5-5] For example, an employee who works 25 hours per week is considered the industry standard for full-time in the package delivery industry and an employee who is employed for a least 35 hours per week during the historical seasonal production is considered the industry standard for full-time in the candy manufacturing industry.

"Incremental Income Tax" means the total amount withheld during the taxable year from the compensation of New Employees and, if applicable, Retained Employees under Article 7 of the Illinois Income Tax Act [35 ILCS 5] arising from employment at a project that is the subject of an Agreement. [35 ILCS 10/5-5]

"Labor Surplus Area" or "LSA" must have an average unemployment rate at least 20% above the average rate for all states (plus the District of Columbia and Puerto Rico) during the previous two calendar years. However, the 20% ratio is disregarded:

when this 2-year average for all states is 8.3% or above, an average unemployment rate of 10% or more will qualify an area; and

when the all-states' average is 5.0% or less, an area will qualify with a 6.0% average.

The U.S. Department of Labor issues the labor surplus area listing on a fiscal year basis. The listing becomes effective each October 1 and remains in effect through the following September 30, but may be updated at any time during the fiscal year based on exceptional circumstance petitions. LSAs are classified on the basis of civil jurisdictions (cities with a population of at least 25,000 and all counties). LSAs are authorized by Public Law 96-302 and 20 CFR 654.

"Local workforce investment area" means a single county or multiple counties designated by the Governor, which allows for the receipt of an allotment of funds under section 127(b) or 132(b) of the Workforce Innovation and Opportunity Act (PL 113 through 128 (2014)) (WIOA), with considerations consisting of the extent to which the areas:

are consistent with labor market areas in the State;

are consistent with regional economic development areas in the State; and

have available the federal and non-federal resources necessary to effectively administer activities under subtitle B and other applicable provisions of WIOA,

including whether the areas have the appropriate education and training providers, such as institutions of higher education and area career and technical education schools.

"Location efficient" means a project that maximizes the use of existing investments in infrastructure; avoids or minimizes additional government expenditures for new infrastructure; and has nearby housing affordable to the permanent workforce of the project, or has accessible and affordable mass transit or its equivalent, or some combination of both.

"Location efficiency report" means a report that is prepared by an applicant for increased State economic development assistance, under Section 10 of the Business Location Efficiency Incentive Act [35 ILCS 11] and follows that Act, and that describes the existence of affordable workforce housing or accessible and affordable mass transit or its equivalent. [35 ILCS 11/5]

"New Construction EDGE Agreement" means the Agreement between a Taxpayer and the Department under Section 5-51 of the Act. [35 ILCS 10/5-5]

"New Construction EDGE Credit" means an amount agreed to between the Department and the Applicant under the Act as part of a New Construction EDGE Agreement that does not exceed 50% of the Incremental Income Tax attributable to New Construction EDGE Employees at the Applicant's project; however, if the New Construction EDGE Project is located in an underserved area, then the amount of the New Construction EDGE Credit may not exceed 75% of the Incremental Income Tax attributable to New Construction EDGE Employees at the Applicant's New Construction EDGE Project. [35 ILCS 10/5-5]

"New Construction EDGE Employee" means a laborer or worker who is employed by an Illinois contractor or subcontractor in the actual construction work on the site of a New Construction EDGE Project, pursuant to a New Construction EDGE Agreement. [35 ILCS 10/5-5]

"New Construction EDGE Incremental Income Tax" means the total amount withheld during the taxable year from the compensation of New Construction EDGE Employees. [35 ILCS 10/5-5]

"New Construction EDGE Project" means the building of a Taxpayer's structure or building, or making improvements of any kind to real property. "New Construction EDGE Project" does not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property. [35 ILCS 10/5-5]

"New Employee" means a full-time employee first employed by a Taxpayer in the project that is the subject of an Agreement and who is hired after the Taxpayer enters into the tax credit Agreement and who continues to be employed by the Taxpayer on the last day of the taxable year for which the Taxpayer seeks a Credit under the Act.

The term "New Employee" does not include:

an employee of the Taxpayer who performs a job that was previously performed by another employee, if that job existed for at least 6 months before hiring the employee;

an employee of the Taxpayer who was previously employed in Illinois by a Related Member of the Taxpayer and whose employment was shifted to the Taxpayer after the Taxpayer entered into the tax credit Agreement;

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the Taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the Taxpayer; or

an employee of the Taxpayer who was previously employed in Illinois by the Taxpayer and whose employment was shifted to the project after the Taxpayer entered into the tax credit Agreement.

Notwithstanding the first indented paragraph under the employees that are not included in the term "New Employees", an employee may be considered a New Employee under the Agreement if the employee performs a job that was previously performed by an employee who was:

treated under the Agreement as a New Employee; and

promoted by the Taxpayer to another job. [35 ILCS 10/5-5]

Notwithstanding the first paragraph of this definition, the Department may award a Credit to an Applicant with respect to an employee hired prior to the date of the Agreement if:

the Applicant is in receipt of a letter from the Department stating an intent to enter into a credit Agreement;

the letter described in the first indented paragraph under the employees that are not included in the term "New Employees" is issued by the Department not later than 15 days after the effective date of the Act; and

the employee was hired after the date the letter described in the first indented paragraph under the employees that are not included in the term "New Employees" was issued.

An employee shall be considered a new employee under the Agreement if the employee fills a job vacancy that had been continuously vacant for the 184 day period immediately preceding the date of the Agreement. A job vacancy whose incumbent is on approved leave, is locked out or is on strike is not a vacancy.

"Noncompliance Date" means, in the case of a Taxpayer that is not complying with the requirements of the Agreement or the provisions of the Act, the day following the last date upon which the Taxpayer was in compliance with the requirements of the Agreement and the provisions of the Act, as determined by the Director, pursuant to Section 5-65 of the Act. [35 ILCS 10/5-5]

"Pass Through Entity" means an entity that is exempt from the tax under Section 205(b) or (c) of the Illinois Income Tax Act. [35 ILCS 10/5-5]

"Placed in service" means the state or condition of readiness and availability for a specifically assigned function.

"Professional Employer Organization" or "PEO" means an employee leasing company that is an individual or entity contracting with a client to supply or assume responsibility for personnel management of one or more workers to perform services for the client on an on-going basis rather than under a temporary help arrangement, as defined in Section 206.1(A)(2) of the Illinois Unemployment Insurance Act [820 ILCS 405]. [35 ILCS 10/5-5]

"Professional services" means a taxpayer engaged in the practice of law or medicine.

"Project" means a for-profit economic development activity or activities at a single site, or of one or more taxpayers at multiple sites if the economic activities are vertically integrated.

"Project costs" includes cost of the project incurred or to be incurred by the taxpayer including: capital investment, including, but not limited to, equipment, buildings, or land; infrastructure development; debt service, except refinancing of current debt; research and development; job training and education; lease costs or relocation costs, but excludes the value of State incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans. [35 ILCS 10/5-30]

"Related Member" means a person that, with respect to the Taxpayer during an portion of the taxable year, is any one of the following:

An individual stockholder, if the stockholder and the members of the stockholder's family (as defined in section 318 of the Internal Revenue Code (26 USC)) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the Taxpayer's outstanding stock.

A partnership, estate, or trust of any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, equity, capital, stock, or value of the Taxpayer.

A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the Taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock.

A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, equity, capital, stock, or value of the Taxpayer.

A person to or from whom there is attribution of stock ownership in accordance with section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a Related Member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in section 1563(e) of the Internal Revenue Code. [30 ILCS 10/5-5]

"Retained Employee" means a Full-Time Employee employed by a Taxpayer during the term of the Agreement whose job duties are directly and substantially-related to the project. For purposes of this definition, "directly and substantially-related to the project" means at least two-thirds of the employee's job duties must be directly related to the project and the employee must devote at least two-thirds of the employee's time to the project. The term "Retained Employee " does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the Taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has direct or indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer.

"Taxpayer" means an individual, corporation, partnership, or other entity that has any Illinois Income Tax liability. [35 ILCS 10/5-5]

"Training costs" means costs incurred to upgrade the technological skills of Full-Time Employees in Illinois and includes: curriculum development; training materials (including scrap product costs); trainee domestic travel expenses; instructor costs (including wages, fringe benefits, tuition and domestic travel expenses); rent, purchase or lease of training equipment; and other usual and customary training costs. "Training costs" do not include costs associated with travel outside the United States (unless the Taxpayer receives prior written approval for the travel by the Director based on a showing of substantial need or other proof the training is not reasonably available within the United States), wages and fringe benefits of employees during periods of training, or administrative cost related to Full-Time Employees of the Taxpayer.

"Underserved area" means a geographic area that meets one or more of the following conditions:

the area has a poverty rate of at least 20% according to the latest federal decennial census, the most recent American Community Survey released by the U.S. Census Bureau, or other appropriate data source produced by the U.S. Census Bureau;

75% or more of the children in the area are eligible to participate in the federal free lunch or reduced-price meals program according to reported statistics from the State Board of Education;

at least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP) according to data from the U.S. Census Bureau; or

the area has an average unemployment rate, as determined by the Illinois Department of Employment Security, that is more than 120% of the national unemployment average, as determining by the U.S. Department of Labor, for a period of at least two consecutive calendar years preceding the date of the application. [35 ILCS 10/5-5]

History

• Source: Amended at 46 Ill. Reg. 1846, effective January 11, 2022

Chapter I Department of Commerce and Economic Opportunity

Part 527 Economic Development for a Growing Economy Program (edge)

14 Ill. Adm. Code 527.30 Eligibility Determination

a) Any Taxpayer that is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, assembling, warehousing, or distributing products, conducting research and development, providing tourism services, or providing services in interstate commerce, office industries, or agricultural processing, but excluding retail, retail food, health, or professional services is an eligible business. [35 ILCS 10/5-5]

b) A Taxpayer who is operating an eligible business that is located, or plans to be located, in the State of Illinois may be an "Applicant". Applicant does not include a Taxpayer who closes or substantially reduces an operation at one location in the State and relocates substantially the same operation to another location in the State.

1. This does not prohibit a Taxpayer from expanding its operations at another location in the State, provided that existing operations of a similar nature located within the State are not closed or substantially reduced within the last two years. For the purpose of this Section, "substantially reduced" means a reduction in employment of 33.33% or more. A Taxpayer may not enter into more than one Agreement with respect to a single address or location for the same period of time. This provision does not preclude the Applicant from entering into an additional Agreement after the expiration of an earlier Agreement to the extent the Taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department.

2. This also does not prohibit a Taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation, provided that the Department determines that the expansion cannot reasonably be accommodated within the municipality in which the business is located, or in the case of a business located in an incorporated area of the county, within the county in which the business is located. A determination under this subsection (b)(2) shall be made by the Department after conferring with the chief elected official of the municipality or county and taking into consideration any evidence offered by the municipality or county regarding the ability to accommodate expansion within the municipality or county. [35 ILCS 10/5-15]

c) In order to qualify for Credits under the Act, an Applicant's Project must:

1. if the Applicant has more than 100 employees, involve an investment of at least $2,500,000 in capital improvements to be placed in service within the State as a direct result of the Project and the Applicant must employ a number of New Employees in the State equal to the lesser of 10% of the number of Full-Time employees employed by the Applicant world-wide on the date the application is filed with the Department or 50 New Employees; or

2. if the Applicant has 100 or fewer employees, there is no capital improvement requirement but the Applicant must employ a number of New Employees in the State equal to the lesser of 5% of the number of Full-Time Employees employed by the Applicant world-wide on the date the application is filed with the Department or 50 New Employees.

d) The Applicant must demonstrate that, if not for the Credit, the Project would not occur in Illinois, which may be demonstrated by evidence that receipt of the Credit is essential to the Applicant's decision to create new jobs in the State, such as the magnitude of the cost differential between Illinois and a competing state. In the event that the Applicant is seeking an increase in the amount of the Credit for Retained Employees, the Applicant must provide documentation:

1. evidencing that the Applicant has multi-state location options and could reasonably and efficiently locate outside of the State; or

2. demonstrating that at least one other state is being considered for the Project. [35 ILCS 10/5-25]

e) Identify a cost differential, using best available data, in the projected costs for the Applicant's Project compared to the costs in the competing state, including the impact of the competing state's incentive programs, for example, by demonstrating:

1. specific costs of labor, utilities, taxes and other costs of an out-of-state site or the industry's cost structure in the competing region; or

2. specific cost differential due to the impact of a competing state's incentive programs.

f) In order to qualify for increased EDGE benefits under the Business Location Efficiency Incentive Act, the applicant must submit a location efficiency report that:

1. describes the existence of infrastructure at the Project site and satisfies Business Location Efficiency Incentive Act's standards for affordable workforce housing or affordable and accessible mass transit; or

2. if the Department determines from the location efficiency report that the applicant is seeking assistance in an area that is not location efficient, the Department may award an increase in State economic development assistance if an applicant submits, and the Department accepts, an employee housing and transportation remediation plan or creates jobs in a labor surplus area as defined by the Department of Employment Security at the end of each calendar year.

g) To qualify for a New Construction EDGE Credit, an eligible applicant must meet the following criteria:

1. the Department has certified that the Applicant meets all requirements of Sections 5-15, 5-20, and 5-25; and

2. the Department has certified that, pursuant to Section 5-20, the Applicant's Agreement includes a capital investment of at least $10,000,000 in a New Construction EDGE Project to be placed in service within the State as a direct result of a New Construction EDGE Agreement. [35 ILCS 10/5-51(a)]

History

• Source: Amended at 46 Ill. Reg. 1846, effective January 11, 2022

14 Ill. Adm. Code 527.40 Form of Application

a) Applications will be accepted at any time during the year. The Department will provide interested Applicants with an application package upon request. Submittal of an application does not commit the Department to award assistance or to pay any costs, including the application fee, incurred by the Applicant in the preparation of an application.

b) Any Taxpayer proposing a Project located or planned to be located in Illinois may request consideration of its Project, by application to the Department, in which the Applicant states its intent to make at least a specified level of investment, if the Applicant has more than 100 employees, and intends to hire or retain a specified number of Full-time Employees at a designated location in Illinois as set forth in Section 5-20 of the Act. [35 ILCS 10/5-20(a)]

c) Written applications will be required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the Department office location identified on the application. The application shall include:

1. Application Cover Page – containing name, address, and telephone number of Applicant; key contact and title; total number of new employees to be hired and, when applicable, the number of Full-time Employees to be retained; company Federal Employer Identification Number (F.E.I.N.); Standard Industrial Code (S.I.C.); if available, Illinois Unemployment Insurance Account Code; State Senate District number; State Representative District number; authorized signatures; and related information.

2. Project Summary – a detailed description of the Project that is to be the subject of the Agreement. [35 ILCS 10/5-50(l)]

3. Site Map – an outline of the general location of the Project on a site map, including the location of any flood plain areas and wetland areas.

4. Jobs Impact – a detailed description of the number of New Employees to be hired and the occupation and payroll of the full-time jobs to be created [35 ILCS 10/5-50(9)] as a result of the Project, and a schedule of anticipated starting dates of the new hires. In addition, the Applicant must provide the total number of Full-time Employees employed by the Applicant and any Related Member, subsidiary, parent, or sister company in the State of Illinois at the time of the application. If the Applicant seeks a Credit with respect to Retained Employees, the application shall include, the occupation and payroll of the Full-time Employees to be retained as a result of the Project.

5. Capital Improvements Planned – a detailed description of the investment the Taxpayer will make in Capital Improvements, and the designated location in Illinois for the investment. [35 ILCS 10/5-50(10)] This shall include but not be limited to a description (or specifications or lists) of the planned Capital Improvements demonstrating the investment is qualified; documentation to substantiate the value of the investment (value of Capital Improvements as provided by appraisers, vendors, contractors and/or architects and engineers); and a schedule regarding when the eligible investment will be placed in service.

6. Total Project Costs – a detailed description of total Project Cost as defined in Section 527.20.

7. Competitive Requirements of the Project – evidence supplied by the Applicant demonstrating that, if not for the Credit, the Project would not occur in Illinois, which may be demonstrated by evidence that receipt of the Credit is essential to the Applicant's decision to create new jobs in the State, such as the magnitude of the cost differential between Illinois and a competing state. In the event that the Applicant is seeking an increase in the amount of the credit for Retained Employees, the Applicant must provide documentation:

A) evidencing that the Applicant has multi-state location options and could reasonably and efficiently locate outside of the State. An example of this evidence includes documentation indicating firm interest in alternative non-Illinois locations, such as a prospective offer or letter; or

B) demonstrating that at least one other state is being considered for the Project, for example, disclosure of sites of out-of-state location options that would receive the proposed investment and job creation in the event the business is not designated, which may include documentation such as incentive letters or prospective offers from other states. [35 ILCS 10/5-25]

8. Cost Differential – documentation of a cost differential of alternative out-of-state sites, such as written information on non-Illinois sites under consideration, comparison of industry costs in other states, cost/benefit analyses of moving or closing the business, financial statements, internal memoranda, or any other financial documentation evidencing cost differential.

9. Financial Statement – a balance sheet and a profit and loss statement of the Taxpayer for the last two years.

10. Other Provisions – any other provisions or information the Department determines is necessary to facilitate the Department's evaluation of the application.

d) The Applicant is responsible for the accuracy of all data, information and documentation included in its application. Once submitted, applications shall become the property of the Department.

e) Applications will not be evaluated unless the application fee has been included.

f) Any documentary materials or data made available or received by any member of a business development or other Committee formed by the Department or any agent or employee of the Department shall be deemed confidential and shall not be deemed public records to the extent that the materials or data consist of trade secrets, commercial or financial information regarding the operation of the business conducted by the Applicant for, or recipient of, any tax credit under the Act, or any information regarding the competitive position of a business in a particular field of endeavor. [35 ILCS 10/5-90(a)]

History

• Source: Amended at 42 Ill. Reg. 6320, effective March 20, 2018

14 Ill. Adm. Code 527.50 Application Review

a) Prior to substantive evaluation of an application, the Department shall screen all applications to determine that all requirements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given an opportunity to correct those deficiencies through submission of additional documentation.

b) The Department shall evaluate applications in accordance with the policies adopted by the Department or its Director. In evaluating applications, the Department shall determine that all of the following conditions exist:

1. the Applicant's Project intends to make the required investment in the State and intends to hire the required number of New Employees and, when applicable, to maintain the required number of Retained Employees in Illinois as a result of that Project.

2. the Applicant's Project is economically sound and will benefit the people of the State of Illinois by increasing opportunities for employment and strengthen the economy of Illinois.

3. that, if not for the Credit, the Project would not occur in Illinois, which may be demonstrated by evidence that receipt of the Credit is essential to the Applicant's decision to create new jobs in the State, such as the magnitude of the cost differential between Illinois and a competing state. In the event that the Applicant is seeking an increase in the amount of the Credit for Retained Employees, the Applicant must provide documentation evidencing that the Applicant has multi-state location options and could reasonably and efficiently locate outside of the State, or demonstrating that at least one other state is being considered for the Project.

4. a cost differential is identified, using best available data, in the projected costs for the Applicant's Project compared to the costs in the competing state, including the impact of the competing state's incentive programs. The competing state's incentive programs shall include state, local, private, and federal funds available.

5. the political subdivisions affected by the Project have committed local incentives with respect to the Project, considering local ability to assist.

6. awarding the Credit will result in an overall positive fiscal impact to the State, as certified by the Committee, using the best available data. [35 ILCS 10/5-25(b)]

7. if appropriate, an Applicant that has moved its operations from one political subdivision in the State to another political subdivision (and that has been determined by the Department to be an eligible Applicant) has demonstrated that it is not claiming a tax credit with respect to any jobs that the Taxpayer relocates from one site in Illinois to another site in Illinois.

c) The Department shall notify each Applicant during the application review process regarding whether its project is also eligible for a New Construction EDGE Credit. [35 ILCS 10/5-51(b)]

d) An Applicant may not enter into more than one Agreement with the Department with respect to the same location or address for the same period of time. This provision does not preclude the Applicant from entering into an additional Agreement after the expiration of an earlier Agreement to the extent the Taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department.

e) The Department reserves the right to request the Committee to convene, make inquiries, and conduct studies in the manner and by the methods it deems desirable, review information with respect to Applicants, and make recommendations on Projects to benefit the State. Recommendations that an Applicant's application for Credit should or should not be accepted shall occur within a reasonable time frame as determined by the nature of the application. [35 ILCS 10/5-25(b)]

History

• Source: Amended at 46 Ill. Reg. 1846, effective January 11, 2022

14 Ill. Adm. Code 527.60 Application Denial/Approval

a) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application for the Credit, it will specify the reasons for the denial in writing and allow the Applicant 30 days to amend and resubmit its application for evaluation. If the Applicant disagrees with the Department's decision it may seek relief through the process afforded in the Department's Administrative Hearing Rules set forth at 56 Ill. Adm. Code 2605.

b) The Department will negotiate a formal Agreement with Applicants determined to be eligible for the award of a Credit. For tax years beginning on or after January 1, 1999, a Taxpayer who has entered an Agreement under the Economic Development for a Growing Economy Tax Credit Act is entitled to a credit against the taxes imposed under Section 201(a) and (b) of the Illinois Income Tax Act in an amount to be determined in the Agreement. [35 ILCS 5/211]

History

• Source: Amended at 42 Ill. Reg. 6320, effective March 20, 2018

14 Ill. Adm. Code 527.70 Determination of Amount and Term of the Credit

a) The Department shall determine the amount and duration of the Credit awarded under the Act. The duration of the Credit may not exceed 10 taxable years. [35 ILCS 10/5-45] In determining the appropriate amount and duration of a Credit to be awarded to a Taxpayer, the Department shall take into consideration the following additional factors:

1. The number and location of jobs created and retained in relation to the economy of the county where the projected investment is to occur.

2. The potential impact of the Project on the economy of Illinois.

3. The magnitude of the cost differential between Illinois and the competing states.

4. The incremental payroll attributable to the Project.

5. The capital investment attributable to the Project.

6. The amount of the average wage and benefits paid by the Applicant in relation to the wage and benefits of the area of the Project.

7. The costs to Illinois and the affected political subdivisions with respect to the Project.

8. The financial assistance that is otherwise provided by Illinois and the affected political subdivisions. [35 ILCS 10/5-40]

b) The Credit may be stated as a percentage of the Incremental Income Tax attributable to the Applicant's Project and may include a fixed dollar limitation. [35 ILCS 10/5-45]

c) The Credit shall not exceed the Incremental Income Tax attributable to the Project that is the subject of an Agreement. [35 ILCS 10/5-15(d)]

d) The total amount of the Credit allowed during all tax years may not exceed the aggregate amount of costs incurred by the Taxpayer during all prior tax years to the extent provided in the Agreement. [35 ILCS 10/5-30]

e) Applicants that qualify for increased EDGE benefits under the Business Location Efficiency Incentive Act may receive:

1. up to 10 percent more than the maximum allowable tax credits for which they are eligible under the Act, but not to exceed 100 percent of the applicant's tax liability; or

2. such other adjustments of those tax credits, including but not limited to authorizing the term of the credit to exceed 10 taxable years, as the Department deems appropriate to foster job creation and retention in Illinois.

f) Nothing in this Section shall prohibit a Tax Credit Award to an Applicant that uses a Professional Employer Organization if all other award criteria are satisfied.

History

• Source: Amended at 42 Ill. Reg. 6320, effective March 20, 2018

14 Ill. Adm. Code 527.80 Tax Credit Agreement

The Department and each Taxpayer whom the Department determines qualifies for a Credit under the Act shall enter into an Agreement that specifies terms and conditions regarding the provision of the Credit and defines the rights and responsibilities of the Taxpayer and the Department. Provisions that the Taxpayer will be contractually bound to comply with include, but are not limited to, the following:

a) A detailed description of the project that is the subject of the Agreement, including the location and amount of the investment and jobs created or retained.

b) The duration of the Credit and the first taxable year for which the Credit may be claimed.

c) The Credit amount that will be allowed for each taxable year.

d) A requirement that the Taxpayer shall maintain operations at the project location that shall be stated as a minimum number of years not to exceed 10.

e) A specific method for determining the number of New Employees and Retained Employees employed during a taxable year.

f) A requirement that the Taxpayer shall annually report to the Department the number of New Employees and Retained Employees, the Incremental Income Tax withheld in connection with the New Employees and Retained Employees, and any other information the Department requires to ensure compliance with the Act, the Agreement, or other applicable law.

g) A requirement that the Director or Department is authorized to verify with the appropriate State agencies information required to be reported by the Taxpayer.

h) A requirement that the Taxpayer shall provide written notification to the Department not more than 30 days after the Taxpayer makes or receives a proposal that would transfer the Taxpayer's State tax liability obligations to a successor Taxpayer.

i) A detailed description of the number of New Employees to be hired and Retained Employees to be maintained, and the occupation and payroll of the full-time jobs to be created or retained as a result of the Project.

j) The Agreement shall include the total number of Full-time Employees employed by the Applicant and any Related Member, subsidiary, parent, sister, and any other related or associated company in the State of Illinois at the time of the Application (the "baseline"), and a provision that allowance of the Credit shall be suspended if the number of Full-time Employees employed by the Taxpayer in Illinois falls below that baseline until the number of Full-time Employees equals or exceeds the baseline amount identified in the Agreement.

k) The minimum investment the business enterprise will make in capital improvements, if applicable, the time period for placing the property in service, and the designated location in Illinois for the investment.

l) A requirement that the Taxpayer shall provide written notification to the Department not more than 30 days after the Taxpayer determines that the minimum job creation or retention, employment payroll, or investment no longer is being or will be achieved or maintained as set forth in the terms and conditions of the Agreement.

m) A provision that, if the total number of New Employees and Retained Employees falls below a specified level, the allowance of Credit shall be suspended until the number of New Employees and Retained Employees equals or exceeds the Agreement amount.

n) A detailed description of the items for which the costs incurred by the Taxpayer will be included in the limitation on the Credit provided in Section 5-30.

o) A provision that, if the Taxpayer never meets either investment or job creation and retention requirements specified in the Agreement during the entire 5-year period beginning on the first day of the first taxable year in which the Agreement is executed and ending on the last day of the fifth taxable year after the Agreement is executed, then the Agreement is automatically terminated on the last day of the fifth taxable year after the Agreement is executed and the Taxpayer is not entitled to the award of any credits for any of that 5-year period.

p) A provision specifying that, if the Taxpayer ceases principal operations with the intent to shut down the Project in the State permanently during the term of the Agreement, then the entire Credit amount awarded to the Taxpayer prior to the date the Taxpayer ceases principal operations shall be returned to the Department and shall be reallocated to the Local Workforce Investment Area in which the Project is located.

q) Any other performance conditions or contract provisions the Department determines are necessary to comply with the Act and other applicable State laws and administrative rules. [35 ILCS 10/5-50]

History

• Source: Amended at 42 Ill. Reg. 6320, effective March 20, 2018

14 Ill. Adm. Code 527.85 New Construction EDGE Credit

a) The Department shall provide an application for eligible applicants interested in applying for a New Construction EDGE credit. The Department will announce on its website funding availability and any relevant information regarding the application. The amount of funding available shall not exceed the total aggregate amount of credits that can be possibly awarded under the Blue Collar Jobs Act, which shall not exceed $20,000,000 in any fiscal year. [35 ILCS 10/5-51(e)] The credit may not reduce the taxpayer's liability to less than zero. If the amount of the credit exceeds the tax liability, any excess may be carried forward and applied against the tax liability of the five (5) taxable years following the excess credit year. [35 ILCS 5/211(4)] The application shall consist of the following:

1. a detailed description of the New Construction EDGE Project that is subject to the New Construction EDGE Agreement, including the location and amount of the investment and jobs created or retained;

2. the duration of the New Construction EDGE Credit and the first taxable year for which the Credit may be claimed;

3. the New Construction EDGE Credit amount that will be allowed for each taxable year;

4. a requirement that the Director is authorized to verify with the appropriate State agencies the amount of the incremental income tax withheld by a Taxpayer, and after doing so, shall issue a certificate to the Taxpayer stating that the amounts have been verified;

5. the amount of the capital investment, which may, at no point, be less than $10,000,000, the time period of placing the New Construction EDGE Project in service, and the designated location in Illinois for the investment;

6. a requirement that the Taxpayer shall provide written notification to the Director not more than 30 days after the Taxpayer determines that the capital investment of at least $10,000,000 is not or will not be achieved or maintained as set forth in the terms and conditions of the Agreement;

7. a detailed provision that the Taxpayer shall be awarded a New Construction EDGE Credit upon the verified completion and occupancy of a New Construction EDGE Project;

8. any other performance conditions, including the ability to verify that a New Construction EDGE Project is built and completed, or that contract provisions, as the Department determines, are appropriate. [35 ILCS 10/5-51(b)]; and

9. a request for any reasonable information pertinent to verify information provided by the taxpayer in compliance with any of the above listed provisions (i.e. documentation to substantiate the value of the investment).

b) The Department shall post on its website the terms of each New Construction EDGE Agreement entered under the Act. The terms shall be posted within 10 days after entering into the Agreement and must include the following:

1. The name of the recipient business;

2. The location of the project;

3. The estimated value of the Credit; and

4. Whether the project is in an underserved area. [35 ILCS 10/5-51(c)]

c) Each contractor and subcontractor engaged in, and that are executing, a New Construction EDGE Project for a taxpayer for a New Construction EDGE Tax Credit shall complete the following:

1. make and keep, for a period of 5 years from the date of the last payment made on or after June 5, 2019, [20 ILCS 655/5.5(j)(1)] on a contract or subcontract for a New Construction EDGE Project, records for all laborers and other workers employed by the contractor or subcontractor on the project. The records shall include the worker's:

A) Name;

B) Address;

C) Telephone number, if available;

D) Social Security Number;

E) Classification or classifications;

F) Gross and net wages paid in each pay period;

G) Number of hours worked each day;

H) Starting and ending times of work each day;

I) Hourly wage rate; and

J) Hourly overtime wage rate [35 ILCS 10/5-56(a)(1)]; and

2. no later than the 15th day of each calendar month, provide a certified payroll for the immediately preceding month to the taxpayer in charge of the New Construction EDGE Project. The taxpayer shall file a copy of the certified payroll with the Department of Labor and the Department of Commerce and Economic Opportunity within 5 business days after receiving the monthly certified payroll from all contractors and subcontractors engaged in and executing a New Construction EDGE Project construction jobs project. A certified payroll shall be filed for only those calendar months during which construction on a New Construction EDGE Project has occurred. The certified payroll shall consist of a complete copy of the records identified in subsection (c)(1), but may exclude the starting and ending times of work each day. The certified payroll shall be accompanied by a statement signed by the contractor or subcontractor, or an officer, employee, or agent of the contractor or subcontractor, stating that:

A) the certified payroll records have been examined and are true and accurate; and

B) the contractor or subcontractor is aware that filing a certified payroll that is known to be false is a Class A misdemeanor.

d) A general contractor is not prohibited from relying on a certified payroll of a lower-tier subcontractor, if the general contractor does not knowingly rely upon a subcontractor's false certification. [35 ILCS 10/5-56(a)]

e) The Taxpayer in charge of the project shall maintain the records described in subsections (c) through (f) for a period of 5 years from the date of the last payment for work on a contract or subcontract for the project. The records submitted in accordance with the certified payroll, except an employee's address, telephone number, and Social Security Number, shall be considered public records, and shall be made available in accordance with the Freedom of Information Act [5 ILCS 140]. The Department will work in tandem with the Department of Labor to ascertain all reasonable submissions by the contractor that meet the requirements for a certified payroll in compliance with the statutory requirements for a New Construction EDGE Credit. A contractor, subcontractor, or public body may retain records in paper or electronic format. [35 ILCS 10/5-56(a)]

f) Upon written or electronic notice, each contractor or subcontractor, within 7 business days, shall make all documents required by subsection (c)(1) available for inspection and copying, at a location within the State, during regular business hours, to the following entities:

1. The taxpayer in charge of the New Construction EDGE Project, its officers and agents;

2. The Director of the Department of Labor or the Director's designee; and

3. Federal, State, or local law enforcement agencies and prosecutors. [35 ILCS 10/5-56(a)]

History

• Source: Added at 46 Ill. Reg. 1846, effective January 11, 2022

Chapter I Department of Commerce and Economic Opportunity

Part 527 Economic Development for a Growing Economy Program (edge)

14 Ill. Adm. Code 527.90 Certificate of Verification

a) The Taxpayer shall notify the Department on forms provided by the Department when the minimum eligible capital improvement investments have been placed in service and the minimum New Employee jobs have been created and that Retained Employees remain employed by the Taxpayer.

b) The Taxpayer shall provide, for land and/or building acquisition, a copy of the purchase agreement; for building construction or renovation, a contractor's or architect's cost certification; for space rental, a rental/lease agreement.

c) For a Taxpayer to be eligible for a certificate of verification, the Taxpayer shall provide proof as required by the Department prior to the end of each calendar year, including, but not limited to, attestation by the Taxpayer that the Project:

1. has achieved the level of Full-time New Employees and Retained Employees specified in the Agreement;

2. has achieved the level of annual payroll in Illinois specified in the Agreement;

3. has achieved the level of capital investment in Illinois specified in the Agreement;

4. has maintained the baseline employment specified in the Agreement; and

5. the Taxpayer has materially complied with the terms of the Agreement and is not otherwise in violation of any provision of the Act.

d) Upon receipt of valid proof from the Taxpayer, the Department shall provide the Taxpayer with a Certificate of Verification.

e) A Taxpayer claiming a Credit under the Act shall submit to the Department of Revenue a copy of the Director's certificate of verification under the Act for the taxable year. However, failure to submit a copy of the certificate with the Taxpayer's tax return shall not invalidate a claim for a Credit. [35 ILCS 10/5-55]

History

• Source: Amended at 42 Ill. Reg. 6320, effective March 20, 2018

14 Ill. Adm. Code 527.100 Noncompliance with the Agreement

a) If the Department determines that a Taxpayer who has received a Credit under the Act is not complying with the requirements of the Agreement or all of the provisions of the Act, the Director shall provide notice to the Taxpayer of the alleged noncompliance, and allow the Taxpayer a hearing under the provisions of the Illinois Administrative Procedure Act [5 ILCS 100]. If, after notice and any hearing, the Director determines that a noncompliance exists, the Director shall issue to the Department of Revenue notice to that effect, stating the Noncompliance Date. [35 ILCS 10/5-65] Alleged noncompliance shall include:

1. a demonstration that the Taxpayer would have placed in service the capital investment and created or retained the requisite number of New Employee jobs without the benefits of certification. Proof of this shall include, but is not limited to, correspondence, financial plans and prospectuses, internal memoranda and other written documentation demonstrating the Taxpayer would have taken the actions without the designation;

2. a demonstration that the Taxpayer failed materially to comply with the terms and conditions of the Agreement;

3. a determination upon investigation that the Taxpayer or any of its agents or representative provided false or misleading information to the Department;

4. a failure to submit the annual report required by Section 5-57 of the Act; or

5. a failure to submit an annual progress report pursuant to an employee housing and transportation plan or a determination by the Department that adequate progress is not being made by the Taxpayer to implement the plan, which will result in the revocation of the increased tax credits, extension of the term of the Credit and/or other adjustments awarded pursuant to the Business Location Efficiency Incentive Act.

b) The Department shall notify a Taxpayer in writing that it is subject to revocation. Such notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

c) Following revocation the Department will contact the Director of the Illinois Department of Revenue who shall begin proceedings to recover wrongfully exempted State taxes.

History

• Source: Amended at 42 Ill. Reg. 6320, effective March 20, 2018

14 Ill. Adm. Code 527.110 Recapture and Reallocation of Recaptured Amounts

a) If, during the term of an Agreement, the Taxpayer ceases principal operations at a Project location that is the subject of that Agreement with the intent to terminate operations in the State, the Department and the Department of Revenue shall recapture from the Taxpayer the entire Credit amount awarded under the Agreement prior to the date the Taxpayer ceases principal operations.

1. If the Department determines that a Taxpayer ceases principal operations at a Project location that is the subject of that Agreement with the intent to terminate operations in the State, the Director shall provide notice to the Taxpayer of that determination and allow the Taxpayer a hearing under the Illinois Administrative Procedure Act [5 ILCS 100]. Example of activities that evidence a cessation of operation at a Project location with an intent to terminate operations in the State include, but are not limited to, WARN notices reflecting layoffs in excess of 65% of the Full-time Employees located at the Project site, public announcements or other media reflecting an intent to relocate operations outside the State, or any other information the Department determines reflects an intent to discontinue operations at the Project site.

2. The Department shall notify a Taxpayer in writing that it is subject to recapture. The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

3. Following a determination that Credits received pursuant to an Agreement are subject to recapture, the Department will contact the Director of the Illinois Department of Revenue who shall begin proceedings to determine the amounts to be reallocated by the Department pursuant to Section 6-65 of the Act.

b) The Department shall, subject to appropriation, reallocate the recaptured amounts to the Local Workforce Investment Area, either by direct use of those or through grants as set forth in this subsection (b), in which the Project was located for the purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce. [35 ILCS 10/5-65]

1. Any county, municipality, or other entity ("Grant Applicant") may apply for a grant from the Department under this Section for the purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce in the Local Workforce Investment Area (a "Grant").

i) An application should be submitted on the standard application form provided by the Department specifically setting forth how grant-related activities would directly support workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce in the Local Workforce Investment Area.

ii) The Department will evaluate applications based on the extent to which the Grant Applicant demonstrates that the proposed grant-related activities will directly support the purposes of this Section.

iii) Grant Applicants shall be notified in writing as to the Department's evaluation of all completed Grant Applications. If the Department denies a Grant Application, it will specify the reasons for the denial in writing and allow the Grant Applicant 30 days to amend and resubmit its application for evaluation.

iv) The Department shall determine the amount of funds awarded to any Grant Applicant under this Section.

v) Upon approval of a Grant Application, the Department shall enter into a Grant Agreement with the Grant Applicant in accordance with the Grant Accountability and Transparency Act (GATA) [30 ILCS 708], containing such terms and conditions as the Department deems necessary and proper to effect the purposes of the Act.

2. Grant funds shall be distributed in accordance with GATA, and any other applicable State laws.

History

• Source: Added at 42 Ill. Reg. 6320, effective March 20, 2018

Part 528 Illinois Film Production Services Tax Credit Program

14 Ill. Adm. Code 528.10 Purpose

The Department shall make film tax credit awards under the Film Production Services Tax Credit Act for the purpose of preserving and expanding the existing human infrastructure for the motion picture industry in Illinois, and to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population through the creation and implementation of training, education and recruitment programs organized in cooperation with Illinois colleges, universities, labor organizations and the motion picture industry. (Section 5 of the Act)

History

• Source: Amended at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.20 Definitions

The following definitions are applicable to this Part:

"Above-the-Line-Spending" means all salary, wages, fees, fringe benefits paid for services performed by personnel of the production that are considered above the line services in the film and television industry including, but not limited to, services performed by a producer, executive producer, co-producer, director, screenwriter, lead cast, supporting cast, or day player. [35 ILCS 16/10]

"Accredited Production" means:

for productions commencing before May 1, 2006, a film, video, commercial, or television production that has been certified by the Department in which the aggregate Illinois labor expenditures included in the cost of the production in the period that ends 12 months after the time principal filming or taping of the production began exceed $100,000 for productions of 30 minutes or longer, or $50,000 for productions of less than 30 minutes;

for productions commencing on or after May 1, 2006, a film, video, commercial, or television production that has been certified by the Department in which the aggregate Illinois production spending included in the cost of the production in the period that ends 12 months after the time principal filming or taping of the production began exceeds $100,000 for productions of 30 minutes or longer, or $50,000 for productions of less than 30 minutes.

"Accredited Production" does not include a production that:

is news, current events, or public programming, or a program that includes weather or market reports;

is a talk show produced for local or regional markets;

is a sports event or live activity;

is a gala presentation or awards show;

is a finished production that solicits funds;

is a production produced by a film production company if records, as required by 18 U.S.C. 2257, are to be maintained by that film production company with respect to any performer portrayed in that single media or multimedia program; or

is a production produced primarily for industrial, corporate, or institutional purposes. [35 ILCS 16/10]

"Accredited Production Certificate" means a certificate issued by the Department certifying that the production is an accredited production that meets the guidelines of the Act. [35 ILCS 16/10]

"Act" means the Film Production Services Tax Credit Act [35 ILCS 16].

"Applicant" means a taxpayer that is a film production company or a taxpayer working in association with a film production company that is operating or has operated an accredited production located within the State of Illinois and that:

owns the copyright in the accredited production throughout the Illinois production period; or

has contracted directly with the owner of the copyright in the accredited production or a person acting on behalf of the owner to provide services for the accredited production, when the owner of the copyright is not an eligible production corporation. [35 ILCS 16/10]

"Below-the-Line-Spending" means salary, wages, fees, and fringe benefits paid for services performed by a person in a position that is off camera and who provides technical services during the physical production of a film. "Below-the-Line-Spending" does not include salary, wages, fees, or fringe benefits paid to a person who is a producer, executive producer, coproducer, director, screenwriter, lead cast, supporting cast, or day player, or who performs other services that are customarily considered as above the line services in the film and television industry. [35 ILCS 16/10]

"Business Owned by a Person with a Disability" means a business concern that is at least 51% owned by one or more persons with a disability and the management and daily business operation of which are controlled by one or more of the persons with disabilities who own it. A not-for-profit agency for persons with disabilities that is exempt from taxation under section 501 of the Internal Revenue Code of 1986 is also considered a "business owned by a person with a disability". [30 ILCS 575/2(A)(4.1)]

"Commencement or Start of Principal Filming or Taping" means the date on which filming, taping, or photographing of principal actors or action of an accredited production commences. In the case of an animated production, the commencement or start of filming or taping is the date on which the creation of artwork to be used in actual frames of the film begins.

"Commercial Domicile" means the principal place from which the trade or business of a person is directed or managed.

"Credit" or "Tax Credit" means,

for an accredited production commencing on or after January 1, 2009 and before July 1, 2025, the amount equal to:

30% of the Illinois production spending for the taxable year; plus

15% of the Illinois labor expenditures generated by the employment of residents of geographic areas of high unemployment determined by census tracts where the unemployment rate is at least 150% of the State's annual average; and

For an accredited production commencing on or after July 1, 2025, the amount equal to:

35% of the Illinois production spending for the use of tangible personal property or the expenses to acquire services from vendors in Illinois and for Illinois labor expenditures generated by the employment of Illinois residents; plus

30% of the wages paid to nonresidents for services performed on an accredited production, subject to the limitations in Section 10; plus

15% of the Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment, as determined by the Department; plus

5% of the Illinois labor expenditures generated by the employment of Illinois residents for services performed for an accredited production in one or more Illinois counties outside of Cook, DuPage, Kane, Lake, McHenry, and Will Counties; plus

5% of the Illinois production spending for television series relocating to Illinois from another jurisdiction. To qualify under this subparagraph, the production must be a television series in which all prior seasons of the series were filmed outside of Illinois; plus

5% of the Illinois production spending for productions certified as green by the Department. [35 ILCS 16/10]

"Department" means the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 16/10]

"Director" means the Director of the Department. [35 ILCS 16/10]

"Diversity Data or Information" means data pertaining to gender, race, ethnicity and of all employees of the applicant.

"Diversity Plan" means a written document through which the applicant assures the Department that minorities and females will have equal opportunities in recruitment, selection, appointment, promotion, training, and related employment areas in the accredited production. The diversity plan must also describe the manner in which the applicant plans on hiring vendors certified by the Business Enterprise Council under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575] with respect to the accredited production. The diversity plan must also detail the manner in which the applicant proposes to achieve its goals to ensure employment of protected classes to achieve a diverse workforce, rather than merely to assure nondiscrimination.

"Economic Impact Data" means data pertaining to the types of jobs (production, talent and vendor) created and retained in Illinois as a result of the production, as well as the total amount an applicant spends in Illinois on the accredited production.

"Employee of the Applicant" or "Employee", for accredited productions commencing on or after May 1, 2006, means only an individual who is an employee of the applicant for purposes of employment taxes imposed under Subtitle C of the Internal Revenue Code (26 U.S.C. §§3101-3512).

"Entry Level Positions" means the lowest level of a hierarchy in a production, including untrained or unskilled labor working on a production, such as a production assistant.

"Fair market value" means:

for unrelated parties, the value established through comparable transactions between unrelated parties for substantially similar goods and services considering the geographic market and other pertinent variables which may include scope and nature of services, experience, reputation and expertise, and timing and demand; and

for related parties, the value established through the related party's historical dealings with unrelated parties or established by comparable transactions between other unrelated parties for substantially similar goods and services considering the geographic market. [35 ILCS 16/10] If this documentation is not available, fair market value for related parties shall be limited to the actual cost incurred by the related party without profit or markup.

"Illinois Labor Expenditure" means salary or wages paid to employees of the applicant for services on the accredited production, subject to the following limitations:

The expenditures must be reasonable in the circumstances;

The expenditure must be included in the federal income tax basis of the property. For purposes of this provision, an expenditure that is immediately expensed as an advertising cost under Treasury Regulations section 1.162-1(a) (26 CFR 1.162-1(a)) or as a qualified film, television or commercial production cost under section 181 of the Internal Revenue Code (26 U.S.C. 181) shall be treated as included in the federal income tax basis of the accredited production if the expenditure would be required to be capitalized under section 263A of the Internal Revenue Code (26 U.S.C. 263A) if that section applied to the accredited production;

The expenditure must be incurred by the applicant for services on or after January 1, 2004;

The expenditure must be incurred for the production stages of the accredited production, from the final script stage to the end of the post-production stage;

The expenditure is limited to the first $25,000 of wages paid or incurred to each employee of an accredited production commencing before May 1, 2006 and the first $100,000 of wages paid or incurred to each employee of an accredited production commencing on or after May 1, 2006 and prior to July 1, 2022. For productions commencing on or after July 1, 2022, the expenditure is limited to the first $500,000 of wages paid or incurred to each nonresident or resident employee of a production company or loan out company that provides in-State services to a production, whether those wages are paid or incurred by the production company, loan out company, or both, subject to withholding payments provided for in Article 7 of the Illinois Income Tax Act, including, for accredited productions commencing on or after December 12, 2025, amounts withheld under subsection (a-10) of Section 701 of the Illinois Income Tax Act. For purposes of calculating Illinois labor expenditures for a television series, the nonresident wage limitations provided under this subparagraph are applied per episode to the entire season;

For an accredited production commencing before May 1, 2006, Illinois labor expenditures are exclusive of Illinois gross wages and benefits paid to or incurred for the 2 highest paid employees of the accredited production;

The expenditure must be directly attributable to the accredited production;

For a production commencing on or after July 1, 2025, subject to the other limitations of this definition, wages paid to no more than 2 executive producers per accredited production may be considered Illinois labor expenditures. Notwithstanding that limitation, if an executive producer receives compensation for another position on the accredited production for services performed, including, but not limited to, writing services, and that compensation is otherwise considered an Illinois labor expenditure under the provisions of this definition, then, subject to the other limitations of this definition, that person's salary or wages may be considered an Illinois labor expenditure, and that person shall not be considered one of the 2 executive producers for the purposes of the limitation under this paragraph. In addition, line producers are not subject to the 2-producer limit of this paragraph. As used in this paragraph, the term "executive producer" means a person who is responsible for overseeing the creative and managerial process of an accredited production. As used in this paragraph, the term "line producer" means a person who is responsible for the day-to-day operational management of the accredited production.

Prior to July 1, 2022, the expenditure must be paid to persons residing in Illinois at the time the payments were made. For a production commencing on or after July 1, 2022, subject to the following limitations, the expenditure may be paid to a person who is a resident in Illinois at the time the payment is made or a person who is a nonresident at the time the payment is made. For purposes of this subparagraph, only wages paid to nonresidents working in the following positions shall be considered Illinois labor expenditures: Writer, Director, Director of Photography, Production Designer, Costume Designer, Production Accountant, VFX Supervisor, Editor, Composer, and Actor, subject to the limitations set forth under this subparagraph. For an accredited Illinois production spending $25,000,000 or less, no more than 2 nonresident actors' wages shall qualify as an Illinois labor expenditure. For an accredited production with Illinois production spending of more than $25,000,000, no more than 4 nonresident actor's wages shall qualify as Illinois labor expenditures;

For productions accredited by the Department on or after February 3, 2023 and before July 1, 2025, wages paid to nonresidents shall qualify as Illinois labor expenditures only under the following conditions:

The nonresident must be employed in one of the following qualified positions: Writer, Director, Director of Photography, Production Designer, Costume Designer, Production Accountant, VFX Supervisor, Editor, Composer, or Actor;

For each of those accredited productions, the wages of not more than 9 nonresidents who are employed in a qualified position other than Actor shall qualify as Illinois labor expenditures;

For an accredited production with Illinois production spending of $25,000,000 or less, no more than 2 nonresident actors' wages shall qualify as Illinois labor expenditures; and

For an accredited production with Illinois production spending of more than $25,000,000, no more than 4 nonresident actors' wages shall qualify as Illinois labor expenditures.

For production that commence on or after July 1, 2025, wages paid to nonresidents shall qualify as Illinois labor expenditures only under the following conditions:

For each of those accredited productions the wages of not more than 13 nonresidents who are selected by the accredited production and employed in a position other than Actor shall qualify as Illinois labor expenditures;

for an accredited production with Illinois production spending of less than $20,000,000, no more than 4 nonresident actors' wages shall qualify as Illinois labor expenditures; and

for an accredited production with Illinois production spending of more than $20,000,000 and less than $40,000,000, no more than 5 nonresident actors' wages shall qualify as Illinois labor expenditures; and

for an accredited production with Illinois production spending of $40,000,000 or more, no more than 6 nonresident actors' wages shall qualify as a Illinois labor expenditures.

paid for services rendered in Illinois;

for accredited productions commencing on or after June 16, 2025, "Illinois labor expenditure" does not include:

above-the-line spending exceeding 40% of the total Illinois production spending for the production, unless the Department determines, through the process described in Section 528.40, that inclusion as an Illinois labor expenditure of above-the-line spending for the production in an amount that exceeds 40% of the productions total Illinois production spending is necessary for the production to meet the conditions set forth in subsection (a) of Section 30 of the Act;

above-the-line spending paid to related parties that exceeds, in the aggregate, 12% of the total Illinois production spending for the production; or

below-the-line spending paid to a related party that exceeds the fair market value of the transaction. [35 ILCS 16/10]

"Illinois Production Spending" means the expenses incurred by the applicant for an accredited production that are reasonable under the circumstances, but does not include any monetary prize of the cost of any non-monetary prize awarded pursuant to a production in respect of a game, questionnaire, or contest without limitation, unless otherwise specified in this definition, all of the following:

expenses to purchase, from vendors within Illinois, tangible personal property that is used in the accredited production in Illinois;

expenses to acquire services, from vendors in Illinois, for film production and post-production (which includes editing and processing) in Illinois;

airfare, if purchased from an airline domiciled in Illinois;

for a production commencing before July 1, 2022, compensation, not to exceed $100,000 for any one employee of the applicant, for contractual or salaried employees who are Illinois residents performing services with respect to the accredited production in Illinois. For a production commencing on or after July 1, 2022, Illinois labor expenditure compensation, not to exceed $500,000 for any one employee, for contractual or salaried employees who are Illinois residents or nonresident employees, subject to the limitations set forth under Section 10 of the Act; and

for a production commencing on or after June 16, 2025, the fair market value of any transaction that (i) is entered into between the taxpayer and a related party or the taxpayer and an unrelated party, (ii) is for the accredited production, and (iii) has terms that reflect the fair market value of the transaction. [35 ILCS 16/10]

"Illinois Resident" means an individual who is domiciled in this State during the accredited production. Except in a case in which the applicant has actual knowledge, as shown in its books and records, that an individual is not an Illinois resident, the possession by an individual of a driver's license or other identification issued by this State prior to the commencement of work by the individual on the accredited production shall be sufficient proof that the individual is an Illinois resident and the address on the license or identification shall be deemed correct.

"Jobs Created and Retained" shall be measured in full-time equivalent jobs. In the case of a person hired as an "extra", each person hired for each day shall be deemed a full-time equivalent job for that day, based on the film industry standard equivalency of a "hire", which is a per day, per person standard. In other words, when the film industry hires an "extra" it considers each "extra" position to be a one day job that was created to fill a particular position for a particular purpose for a particular time.

"Loan Out Company" means a personal service corporation or other entity that is under contract with the taxpayer to provide specified individual personnel, such as artists, crew, actors, producers, or directors for the performance of services used directly in a production, but does not include entities contracted with by the taxpayer to provide goods or ancillary contractor services such as catering, construction, trailers, equipment, or transportation. [35 ILCS 16/10]

"Management Position" means anyone in a supervisory or managerial position who has control over other employees who report to that individual. Management roles include, but are not limited to, coordinators, directors, managers, supervisors, producers, masters and department heads.

"Minority" means a person who is a citizen or lawful permanent resident of the United States and who is:

American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment);

Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian Subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam);

Black or African American (a person having origins in any of the black racial groups of Africa);

Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race); or

Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands). [30 ILCS 575/2(A)(1)].

"Minority Owned Business" means a business concern:

that is at least 51% owned by one or more minority persons; or

in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and

the management and daily business operations of which are controlled by one or more of the minority individuals who own it. [30 ILCS 575/2(A)(3)].

"Personal Service Corporation" means a corporation the principal activity of which is the performance of personal services and such services are substantially performed by employee-owners.

''Production Staff and Crew" means office and production staff, including, but not limited to, accountants, coordinators, secretaries, camera, casting, construction, costume, electric, grip, location, hair, make-up, props, swing gang, set decorating, sound, and transportation.

"Post-Production" means editing or processing of original content employing traditional, emerging or new editing or processing techniques used for picture, sound and music editorial, rerecording and mixing, visual effects, graphic design, original scoring, animation, and musical composition.

"Post-Production Staff and Crew" means post-production staff, including, but not limited to, film editor, post-production supervisor, colorist, visual effects producer, visual effects creative director, visual effects supervisor, visual effects editor, compositor, rotoscope artists, matte painter, sound designer, dialogue editor, sound editor, re-recording mixer, music supervisor, composer, foley artist, mixer, and music editor.

"Related Party" means a party that is deemed to be related to the taxpayer by common ownership or control according to generally accepted accounting principles ("GAAP") [35 ILCS 16/10] as set forth in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 850.

"State" means the State of Illinois.

"Talent Related Positions" means any speaking, background or extra roles that appear in front of the camera. Talent refers to on screen performers holding these positions.

"Tax Credit Certificate" means the tax credit certificate issued by the Department to the applicant certifying that it has complied with all statutory requirements of the Act and this Part and that it is entitled to a credit under the Act.

"Taxpayer" means any person defined by, and subject to, the tax imposed by the Illinois Income Tax Act [35 ILCS 5/1501(a)(18) and (a)(24)].

"Treasury Regulations" means the rules of the U.S. Internal Revenue Service published at Title 26 of the Code of Federal Regulations.

"Unrelated party" means a party that is not a related party with respect to the taxpayer. [35 ILCS 16/10]

"Vendor in Illinois". Expenditures for purchases of tangible personal property or services from a vendor in Illinois shall mean:

Purchases of tangible personal property for use in Illinois on an accredited production from a person who is registered under the Illinois Retailers' Occupation Tax Act (ROTA) [35 ILCS 120]. A copy of the purchase receipt showing that the purchase was made at an Illinois location and that Illinois Retailers' Occupation Tax was paid shall be sufficient proof that the purchase was made from a vendor in Illinois. For tangible personal property ordered by mail, telephone or internet, a copy of the seller's ROTA registration certificate, along with a receipt showing that Illinois Use Tax was collected by the vendor, shall be sufficient proof that the purchase was made from a vendor in Illinois. Documentation that shows that Illinois Use Tax was collected by the vendor, but either does not show an Illinois address for the sale or is not accompanied by a ROTA registration certificate, shall not be sufficient proof that the purchase was made from a vendor in Illinois.

The lease or rental of real property located in Illinois for use in an accredited production, including hotels or other lodging for employees working on the accredited production.

The lease or rental of an automobile (as defined in the Illinois Automobile Renting Occupation and Use Tax Act [35 ILCS 155]) for use in an accredited production on which the rentor collects the Illinois Automobile Renting Occupation and Use Tax from the rentee.

The lease or rental of other tangible personal property for use in an accredited production if the owner of the property has paid Illinois Use Tax on the property. A copy of the invoice or receipt for the lease or rental showing an Illinois address for the lessor, and showing that no other state's sales tax is collected from the lessee, shall be sufficient proof that the transaction was with a vendor in Illinois.

The purchase of financial services (including insurance and the borrowing of funds) from a lender or insurer whose commercial domicile is in this State.

The purchase of other services with respect to an accredited production from an Illinois resident or from a person whose commercial domicile is in this State. For purposes of this provision only, the commercial domicile of a person is their business address (as shown in the records of the applicant) in this State.

A vendor in Illinois that is a corporation, limited partnership, limited liability company, or limited liability partnership must register and remain an entity in good standing with the Illinois Secretary of State, Department of Business Services, throughout the duration of the production.

"Vendor Related Positions" means jobs obtained or created through a subcontractor, which includes but is not limited to security, janitorial, printing, florist, dry cleaners, and limousine services.

"Virtual Production" means a production methodology that combines traditional motion picture production activities with digital technologies to create and integrate real-time computer-generated imagery during pre-production or principal photography. Virtual production includes but is not limited to:

real time rendering software or systems used to generate digital environment;

LED video walls, digital walls, volume stages or similar display technologies;

Camera tracking, motion capture performance capture, or similar technologies;

Augmented reality, mixed reality, virtual reality, extended reality, or similar technologies; and

Virtual art departments or digital previsualization tools.

Virtual production does not include visual effects or computer-generated imagery created exclusively in post-production.

"Wages" means all compensation paid for services rendered by an employee in connection with an accredited production, including health, life, and disability insurance premiums, FICA taxes, pension contributions, expense reimbursement, and accrued vacation and sick pay.

"Woman" means a person who is a citizen or lawful permanent resident of the United States and who is of the female gender. [30 ILCS 575/2(A)(2)]

"Women Owned Business" means a business concern:

that is at least 51% owned by one or more women; or

in the case of a corporation, at least 51% of the stock in which is owned by one or more women; and

the management and daily business operations of which are controlled by one or more of the women who own it. [30 ILCS 575/2(A)(4)]

History

• Source: Amended at 50 Ill. Reg. 6523, effective April 27, 2026

Chapter I Department of Commerce and Economic Opportunity

Part 528 Illinois Film Production Services Tax Credit Program

14 Ill. Adm. Code 528.30 Eligibility Determination

Applicants must satisfy all of the following criteria in order to be eligible for a credit:

a) Ownership of Copyright in Accredited Production

1. The applicant must own the copyright in the accredited production throughout the Illinois production period; or

2. The applicant has contracted directly with the owner of the copyright in the accredited production, or a person acting on behalf of the owner, to provide services for the production, where the owner, of the copyright is not an eligible production corporation. (Section 10 of the Act)

b) Aggregate Illinois Production Spending – Accredited Productions Commencing on or After May 1, 2006

In order to qualify for a credit under the Act, the applicant must incur, in the 12-month period after the commencement of principal filming or taping of the production, Illinois production spending that exceeds the following amounts from pre-production through post-production:

1. $100,000 for productions of 30 minutes or longer;

2. $50,000 for productions of less than 30 minutes.

c) Diversity Plan

The applicant must submit a diversity plan that meets the criteria set forth in Section 528.20 of this Part.

d) Competitive Need for Credit

The applicant must file a written statement or other documentation evidencing that the receipt of the credit is essential to the decision to operate the accredited production in Illinois. The documentation must show that the applicant has multi-state or international location options and could reasonably locate outside the State, or can demonstrate that at least one other state or nation is being considered for the accredited production, or other documentation showing that the receipt of the credit is a major factor in the applicant's decision to locate the accredited production in Illinois.

e) Training Programs

In order to qualify for a credit, the applicant must advise the Department whether it intends to participate in training, education, and recruitment programs, if available, that are organized in cooperation with Illinois colleges and universities, labor organizations, and the motion picture industry and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population. (Section 30(a)(4) of the Act)

History

• Source: Amended at 37 Ill. Reg. 12010, effective July 12, 2013

14 Ill. Adm. Code 528.40 Application Process and Requirements

The Department will accept and evaluate applications from eligible applicants in accordance with the following provisions:

a) An applicant proposing a film, television or commercial production planned to be located in the State shall submit its application at least 24 hours prior to the start of principal filming or taping.

b) Written applications will be required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the Department's office stated on the application. The applicant must provide the following information:

1. Legal name, address, and telephone number of applicant.

2. Name, title, and telephone number of primary contact person.

3. Type of business entity:

A) Individual or Sole Proprietorship

B) Partnership

C) Corporation

D) Subchapter S Corporation

E) Limited Liability Company

F) Other (applicant will provide description).

4. Date of incorporation or formation.

5. Federal Employer Identification Number (FEIN) or Tax Identification Number (TIN).

6. Production title.

7. Type of production – a description stating that the production is one of the following:

A) Feature film

B) Television program

C) Commercial

D) Other (applicant will provide description).

8. Length of production.

9. Date principal filming or taping begins in Illinois.

10. Estimated number of shoot days in Illinois.

11. Estimated total budget of production.

12. Estimated total Illinois labor expenditure.

13. Estimated total budget of post-production.

14. Estimated number of Illinois residents to be hired to work on the production.

15. A diversity plan.

16. Documentation evidencing applicant's intention to participate in training, education and recruitment programs, if available, offered by Illinois colleges, universities, labor organizations and the motion picture industry that are designed to promote training and hiring of Illinois residents who represent the diversity of the Illinois population.

17. A written statement evidencing that the receipt of the credit is essential to the decision to operate the accredited production in Illinois.

18. A story line or log line.

19. Certification that the applicant will provide detailed vendor cost documentation for post-production services, including, but not limited to, a listing of all Illinois resident post-production staff and crew who worked on the production and their respective wages and fringe benefits, and payments made to sub-vendors domiciled in Illinois, if post-production spending represents more than 50% of qualifying Illinois spending. Only Illinois resident wages and fringe benefits (up to $100,000 per resident) and payments made to Illinois domiciled sub-vendors are qualified.

20. Certification that the applicant is and will remain in good standing with applicable State authorities, is not currently operating under or subject to any cease and desist order or subject to any informal or formal regulatory action, and, to the best of the applicant's knowledge, is not currently the subject of any investigation by any State or federal regulatory, law enforcement or legal authority. Should the applicant become the subject of an investigation by any State or federal regulatory, law enforcement or legal authority, the applicant shall promptly notify the Department of that investigation. The applicant acknowledges that, should it become delinquent in its good standing status with any applicable State authority or if it later becomes subject to a cease and desist order or memorandum of understanding, or is found in violation pursuant to any regulatory action or any court action or proceeding before any administrative agency, the Department is authorized to deny the applicant's request for a tax credit certificate.

c) The applicant is responsible for the accuracy of all data, information, and documentation included in the application. Once submitted, applications shall become the property of the Department.

d) Upon written request, the applicants shall issue any necessary authorization to the appropriate federal, State or local authority for the release of information concerning a production being considered under this Part, including but not limited to financial reports, and records relating to the applicant or the accredited production for which the credit is requested.

e) In the case of a television series or any other production intended to be shown in two or more episodes, the applicant may elect to treat each episode as a separate production or to treat two or more episodes as a single production for all purposes of the Act. A single application may be filed for two or more productions, provided that the application clearly describes each separate production. For example, the application may state that each episode shall be treated as a separate production or that all episodes filmed or intended to be shown during a specific period of time will be treated as a single production.

f) Above-the-line (ATL) spending exceeding 40% of the total Illinois production spending is not an Illinois labor expenditure unless the Department determines that inclusion as an Illinois labor expenditure of above-the-line spending for the production in an amount that exceeds 40% of the production's total Illinois production spending is necessary for the production to meet the requirements set forth in subsection (a) of Section 30 of the Act. [35 ILCS 16/30(a)] An applicant may request a waiver of the 40% ATL cap by submitting a written request to the department with their Illinois Film Tax Credit application.

1. The request must include:

A) a narrative explanation demonstrating why the inclusion of the ATL expenditures in excess of 40% is necessary for the production to occur in Illinois;

B) an itemized budget including detailed ATL information identifying the roles compensation and residency status of all above the line personnel;

C) a description of the anticipated economic impact of the production in Illinois including number of local hire vendors and locations used; and

D) an attestation by an authorized officer of the applicant confirming the accuracy and necessity of the request.

2. The Department will evaluate waiver requests on a case-by-case basis. In determining whether to approve a waiver, the Department will consider following factors:

A) whether the inclusion of additional above the line spend is essential to the production achieving the statutory Illinois production spending minimums;

B) whether the key above-the-line personnel are integral to financing distribution or viability of the production;

C) whether above the line expenditures are reasonable under the circumstance and consistent with industry standards;

D) the extent to which the production supports Illinois based talent training programs or underrepresented communities;

E) the overall economic impact of the production in Illinois; and

F) any other relevant information demonstrating alignment with the objectives of the Illinois Film Tax Credit Program.

3. Approval of the waiver does not guarantee final certification of the credit and is subject to compliance with all applicable provisions of the Act.

History

• Source: Amended at 50 Ill. Reg. 6523, effective April 27, 2026

Chapter I Department of Commerce and Economic Opportunity

Part 528 Illinois Film Production Services Tax Credit Program

14 Ill. Adm. Code 528.50 Evaluation of Application

a) Prior to substantive evaluation of an application for a credit, the Department shall review all applications to determine that all required information and documentation has been provided. Applicants will be notified, in writing, of any application deficiencies and will be allowed 30 days to correct the deficiencies through submission of additional documentation. The Department has the discretion to extend the cure period in extenuating circumstances, provided the applicant submits a written request outlining the circumstances for which it needs an extension.

b) In evaluating applications, the Department shall determine a preponderance of the following requirements and conditions:

1. The applicant will meet the requisite aggregate Illinois labor expenditure or Illinois production spending requirement in accordance with the provisions of Section 528.20 of this Part;

2. The extent to which the applicant's diversity plan contains specific goals in meeting the diversity plan requirement to employ Illinois residents representing the diversity of the Illinois population subject to any applicable collective bargaining agreements to which the applicant is a signatory to perform work on the production;

3. The extent to which the applicant intends to participate in training, education and recruitment programs, if available, that are organized in cooperation with Illinois colleges and universities, labor organizations, and the motion picture industry and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population;

4. The applicant's demonstration that the credit is essential to its decision to locate the production in Illinois; and

5. Awarding the credit will result in an overall positive impact to the State.

History

• Source: Amended at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.60 Approval/Denial of Applications

a) The Department reserves the right to make inquiries, to conduct studies in the manner and by the methods it deems necessary, and to review information with respect to the application. The Department also reserves the right to request information from the applicant that is necessary to calculate the amount of the tax credit.

b) The Department reserves the right to reject any application that does not comply with the statutory requirements of the Act and this Part. Upon receipt of an application, the Department shall review the application for completeness and approve or deny it within 60 days after the date of receipt. Applications are subject to final approval by the Director of the Department.

c) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application for the credit, it will specify the reasons for denial in writing and allow the applicant 30 days to amend and re-submit its application for further evaluation.

History

• Source: Amended at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.62 Economic Impact Data

The applicant or its representative shall use its best efforts in submitting its economic information to the Department related to the following:

a) Jobs Created and Retained. This information shall document the number of jobs created and retained for production, talent and vendor type jobs. Additionally, with respect to the production type of jobs, the applicant must use its best efforts to supply information disclosing the number of production type jobs created and/or retained and whether the production type jobs were entry, management or skilled labor.

b) Production Costs. This information shall document the amount of production costs in various industries in Illinois. Industry production costs include, but are not limited to, vendor expenditures for catering, dry cleaning, janitorial services, maid services, security, transportation, etc.

History

• Source: Amended at 37 Ill. Reg. 12010, effective July 12, 2013

14 Ill. Adm. Code 528.63 Diversity Impact Data

The applicant or its representative shall make its best efforts in submitting its diversity information to the Department related to gender and ethnicity of all employees hired and the business ownership status of vendors hired. This information shall include job creation number for:

a) Production and post-production staff and crew;

b) Entry level positions;

c) Management positions;

d) Talent related positions; and

e) Vendors (ownership status, i.e., businesses owned by minorities, females and persons with disabilities).

History

• Source: Amended at 45 Ill. Reg. 5342, effective April 12, 2021

14 Ill. Adm. Code 528.65 Accredited Production Certificate

a) Upon approval of an application, the Department will issue an accredited production certificate certifying that the production is an accredited production that meets the statutory requirements of the Act as well as the corresponding administrative rules within this Part. When the Department issues an accredited production certificate, this certificate does not automatically entitle the applicant to a tax credit. Rather, the tax credit is only awarded after an accredited production has been completed, the applicant submits its request for tax credit certificate, and the applicant successfully demonstrates to the Department that it has complied with its diversity plan or that it has made good-faith efforts to comply with its diversity plan.

b) The accredited production must commence no later than one year following the issuance of the accredited production certificate. The Department has the discretion to extend the one-year period in extenuating circumstances, provided the applicant submits a written request outlining the circumstances for which it needs an extension.

History

• Source: Amended at 47 Ill. Reg. 3693, effective March 1, 2023

14 Ill. Adm. Code 528.70 Request for Tax Credit Certificate

The applicant may request a tax credit certificate from the Department certifying the actual amount of the credit awarded to the applicant at any time following the completion of the accredited production, but in no event later than two years following the completion of the production. In a case in which a single application was filed for two or more productions, a single tax credit certificate may, at the request of the applicant, be issued for more than one production. The tax credit will be issued upon the Department's verification that all costs submitted qualify as the applicant's Illinois production spending and verification that the applicant has met or made good-faith efforts in achieving the goals of the diversity plan (see Section 528.20) included with its application.

a) If an accredited production is not completed prior to the close of the applicant's taxable year, at the election of the applicant, a tax credit certificate dated as of the last day of the taxable year may be used for:

1. Illinois labor expenditures incurred during that taxable year or within 60 days after the close of that taxable year; or

2. Illinois production spending (see Section 10 of the Act) incurred during that taxable year.

b) In the case of an accredited production commencing on or after May 1, 2006 in which some Illinois production spending is incurred in a taxable year of the applicant and some is incurred after the close of that taxable year:

1. The applicant may request a single tax credit certificate for all Illinois production spending incurred; or

2. The applicant may submit a separate request for a tax credit certificate for each taxable year in which Illinois production spending is incurred.

c) With each request for a tax credit certificate filed on or after January 18, 2007, the applicant shall provide:

1. An itemized statement of the Illinois labor expenditures or Illinois production spending for which the credit is claimed and of Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment for which additional credit is claimed;

2. Copies of the books and records of the applicant for the accredited production, showing the Illinois labor expenditures or Illinois production spending for which the credit is claimed, all documentation necessary to support its computation, and detailed vendor cost documentation for post-production and virtual production services, including but not limited to, a listing of all Illinois resident post-production and virtual production staff and crew who worked on the production and their respective wages and fringe benefits, and payments made to sub-vendors domiciled in Illinois, if post-production and virtual production spending represents more than 50% of qualifying Illinois spending. Only Illinois resident wages and fringe benefits (up to $500,000 per resident) and payments made to Illinois domiciled sub-vendors are qualified;

3. An attestation by a licensed certified public accountant (CPA), in the form prescribed by the Department, that the computations are supported by the copies of the applicant's books, records and other documents attached to the request; that the licensed CPA has examined such books, records and other documents in accordance with the Department's Agreed Upon Procedures; and that related party transactions, pursuant to ASC 850, are properly reported and accounted for as required by Section 528.70(d). An examination of the books, records and other documents must be performed by the licensed CPA quarterly or at the conclusion of production if production lasted less than one quarter. The examination and attestation must be performed by a licensed CPA:

A) who is qualified and independent of the applicant under the professional standards established by the American Institute of Certified Public Accountants, specifically the Statements on Standards of Attestation Engagements at AT Sec. 101 (Attest Engagements) and AT Sec. 201 (Agree-Upon Procedures Engagements); and

B) whose engagement to provide the attestation was approved by the Department before work on the engagement was commenced.

d) With each request for a tax credit filed after January 1, 2025, the applicant shall provide all items listed in subsection (c) of this Section, and:

1. Disclosure of all related party transactions including:

A) The name of the related party,

B) The nature of the relationship between the related party and the accredited production,

C) The nature of the transaction, and

D) The amount of the transaction; and

2. A sworn affidavit by the applicant that, to the best of the affiant's knowledge, information, and belief all accounts, documents, records, and other information provided to the CPA and Department were true and correct and that all related party transactions were accurately reported in accordance with this Section.

History

• Source: Amended at 50 Ill. Reg. 6523, effective April 27, 2026

14 Ill. Adm. Code 528.71 Approval/Denial of Tax Credit Certificate Request

a) When the applicant submits its request for a tax credit certificate, the Department will review and verify the applicant's final diversity hiring numbers for crew, vendors and talent to determine whether it met the goals outlined in its diversity plan before issuing the tax credit certificate.

b) In the event the applicant fails to meet the goals of its diversity plan, the applicant must then demonstrate it made good-faith efforts in attempting to achieve its diversity goals in order for the tax credit certificate request to be approved. Good-faith efforts that the Department will consider include, but are not limited to, documentation demonstrating that the applicant communicated (written correspondence, phone call, email, meetings) with minority, woman, and disabled vendors and applicable unions, as well as talent and workforce agencies/entities. The applicant may also submit any other documentation demonstrating its good-faith attempts to the Department for consideration. If appropriate documentation is unavailable, then, within the Department's discretion, the applicant may be permitted to submit an affidavit attesting to its good-faith efforts.

c) Beginning July 1, 2024, taxpayers who have been awarded a tax credit under the Act shall pay to the Department, after determination of the tax credit amount but prior to the issuance of a tax credit certificate, a fee equal to 2.5% of the credit amount awarded to the taxpayer under the Act that is attributable to wages paid to nonresidents, and an additional fee equal to 0.25% of the amount generated by subtracting the credit amount attributable to wages paid to nonresidents from the total credit amount awarded to the taxpayer. [35 ILCS 16/46]

d) No tax credit certificate shall be issued by the Department until the total fees owed according to Section 528.71(c) have been received by the Department. [35 ILCS 16/46]

History

• Source: Amended at 50 Ill. Reg. 6523, effective April 27, 2026

Chapter I Department of Commerce and Economic Opportunity

Part 528 Illinois Film Production Services Tax Credit Program

14 Ill. Adm. Code 528.75 Amount and Duration of Tax Credit

For accredited productions commencing on or after January 1, 2009, eligible applicants will be awarded a credit equal to 30% of the Illinois production spending approved by the Department plus 15% of Illinois labor expenditures approved by the Department for employees who earn more than $1,000 on the production and live in geographic areas of high poverty or high unemployment in Illinois. (Section 10 of the Act)

History

• Source: Amended at 37 Ill. Reg. 12010, effective July 12, 2013

14 Ill. Adm. Code 528.80 Interim and Final Film Tax Credit Certifications (repealed)

History

• Source: Repealed at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.85 Transfer of Tax Credit

a) A transfer of the credit may be made by the applicant earning the credit within one year after the credit is awarded in accordance with rules adopted by the Department of Commerce and Economic Opportunity.

b) For purposes of this provision, a tax credit is earned on the date that the tax credit certificate is issued under Section 528.70.

c) Tax credits earned by an applicant in a taxable year ending prior to July 11, 2005 may not be transferred.

d) For purposes of this Section, a tax credit earned by a partnership or subchapter S corporation shall be treated as having been earned by its partners in the amounts determined under 86 Ill. Adm. Code 100.2185(c).

e) Transfer of a tax credit shall be made as follows:

1. The applicant earning the credit shall request the transfer from the Department, in writing, identifying the transferees (name, tax identification number, mailing address) and the amount to be transferred to each transferee, and the applicant shall return the tax credit certificate to the Department, together with its transfer request. The applicant is allowed to transfer or allocate a single credit to no more than 10 transferees.

2. A request for transfer may be submitted with the applicant's request for the tax credit certificate under Section 528.70. The Department may issue the requested certificates of transfer in lieu of the tax credit certificate.

3. If the transfer request is made within one year of issuance and meets the requirements of this Section, the Department shall issue a certificate of transfer to each transferee, identifying the original tax credit certificate and stating the amount of the credit transferred.

4. If the applicant earning the credit transfers less than the full amount of the credit, the Department shall issue a certificate of transfer to the applicant identifying the original tax credit certificate and stating the amount of tax credit retained by the applicant.

5. If the person transferring the credit is a partner or shareholder in a partnership or subchapter S corporation that earned the credit, that person shall submit to the Department, either the original tax credit certificate or copies of the tax credit certificates and copies of the Schedule K-1-P received by that person from the partnership or subchapter S corporation stating that person's share of the credit.

History

• Source: Amended at 50 Ill. Reg. 6523, effective April 27, 2026

14 Ill. Adm. Code 528.86 Illinois Production Workforce Development Fund

a) The Illinois Production Workforce Development Fund is created as a special fund in the State Treasury. Beginning July 1, 2023, amounts paid to the Department of Commerce and Economic Opportunity pursuant to Section 213 of the Illinois Income Tax Act shall be deposited into the Fund. The Fund shall be used exclusively to provide grants to community-based organizations, labor organizations, private and public universities, community colleges, and other organizations and institutions that may be deemed appropriate by the Department to administer workforce training programs that support efforts to recruit, hire, promote, retain, develop, and train a diverse and inclusive workforce in the film industry.

b) Beginning July 1, 2024, taxpayers who have been awarded a tax credit under the Act shall pay to the Department, after determination of the tax credit amount but prior to the issuance of a tax credit certificate, a fee equal to 2.5% of the credit amount awarded to the taxpayer under the Act that is attributable to wages paid to nonresidents, as described in Section 10 of the Act, and an additional fee equal to 0.25% of the amount generated by subtracting the credit amount awarded to the taxpayer under the Act is attributable to wages paid to nonresidents from the total credit amount awarded to the taxpayer under the Act. All fees collected under this subsection shall be deposited into the Illinois Production Workforce Development Fund. No tax credit certificate shall be issued by the Department of Commerce and Economic Opportunity until the total fees owed according to this subsection have been received by the Department. [35 ILCS 16/46]

c) The Department may request that the State Comptroller and the State Treasurer advance amounts to the Fund on an annual basis not to exceed $1,000,000 in any fiscal year. The Department shall reimburse the fund from which the moneys are advanced in the same fiscal year for any such advance payments via statutory transfer. [35 ILCS 16/46]

d) Of the appropriated funds in a given fiscal year, 50% of the appropriated funds shall be reserved for organizations that meet one of the following criteria. The organization is:

1. a minority-owned business, as defined by the Business Enterprise for Minorities, Women, and Persons with Disabilities Act;

2. located in an underserved area, as defined by the Economic Development for a Growing Economy Tax Credit Act; or

3. on an annual basis, training a cohort of program participants where at least 50% of the program participants are either a minority person, as defined by the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, or reside in an underserved area, as defined by the Economic Development for a Growing Economy Tax Credit Act. [35 ILCS 16/46]

History

• Source: Amended at 50 Ill. Reg. 6523, effective April 27, 2026

Chapter I Department of Commerce and Economic Opportunity

Part 528 Illinois Film Production Services Tax Credit Program

14 Ill. Adm. Code 528.90 Non-Compliance Provisions (repealed)

History

• Source: Repealed at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.100 Books and Records

The applicant must at all times keep proper books of record and accounts in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the accredited production in the custody or control of the taxpayer open for reasonable Department inspection and audits, and including, without limitation, the making of copies of the books, records, or papers, and the inspection or appraisal of any of the assets of the applicant or the accredited production. (Section 15(f) of the Act)

History

• Source: Amended at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.110 Data for Reports to the General Assembly

a) In determining whether the film tax credit program is effective in creating jobs in Illinois, the Department is responsible for determining the overall success of the program. Correspondingly, on a quarterly basis, the Department is required to advise the Illinois General Assembly of the film tax credit program's economic impact with respect to the types of jobs created, the amount and type of expenditures made in Illinois, and whether the human infrastructure of the motion picture industry reflects the diversity of the State. Each report to the General Assembly will provide an overall view of the Illinois film industry with respect to the jobs created and expenditures made for the requisite quarter. In order to satisfy this requirement, each applicant will be required to use its best efforts in submitting information pertaining to the following.

1. Types of jobs created:

A) Number of entry level positions;

B) Number of management related positions;

C) Number of talent positions;

D) Number of production staff and crew; and

E) Number of vendor related positions.

2. Illinois expenditures: The amount of expenditures attributable to:

A) Labor;

B) Vendors; and

C) Other Illinois productions spending.

3. Data or documentation submitted to the Department in connection with the achievement of, or good-faith efforts to achieve, the goals outlined in the diversity plan.

b) At the end of each fiscal year, the Department must submit to the General Assembly a report that includes, without limitation, the following information:

1. an identification of each material vendor that provided goods or services that were included in an accredited production's Illinois production spending;

2. the amount paid to each identified material vendor by the accredited production;

3. for each identified material vendor, a statement as to whether the vendor is a minority owned business or a female owned business, as defined under Section 2 of the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, which the Department will determine by comparing the vendors it has identified as providing goods or services that were included in an accredited production's Illinois production spending with the database of minority owned businesses and female owned businesses maintained by the Department of Central Management Services; and

4. a description of any steps taken by the Department to encourage accredited productions to use vendors who are a minority owned business or a female owned business. (Section 45(c) of the Act)

History

• Source: Added at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.120 Confidentiality of Documents and Data

The Department will not permit public inspection or copying of any material that is or would be confidential under State law, specifically including the exemptions set forth in the Freedom of Information Act [5 ILCS 140]. If an applicant submits information it considers to be of a confidential nature as part of its application or request for a tax credit certificate, such information shall be marked or labeled "CONFIDENTIAL" in capital letters. The applicant shall also submit a statement briefly setting forth the grounds on which the information should be treated as confidential. The Department, based on the propriety nature of the material and privacy of the applicant's confidential information, shall not disclose the materials to the public.

History

• Source: Added at 31 Ill. Reg. 2253, effective January 18, 2007

14 Ill. Adm. Code 528.130 Dispute Process

Applicants may dispute the amount of the tax credit certificate awarded by the Department or the Department's denial of a tax credit certificate. This process shall consist of an informal conference and a formal hearing.

a) The Informal Conference

1. This process consists of an initial informal conference between the applicant and a member or members of the Illinois Film Office.

2. Any applicant may request an informal conference within thirty days after receipt of the tax credit certificate or notification of the Department's denial of a tax credit certificate.

3. The informal conference shall be scheduled within thirty days after receipt of applicant’s request for an informal conference. The informal conference may be held virtually or in person.

4. Prior to the informal conference:

A) The Department shall provide the applicant with a written explanation setting forth the reason for the discrepancy in the tax credit amount requested by the applicant, and the tax credit certificate awarded by the Department; and

B) the applicant shall provide additional documentation supporting the amount of the tax credit requested in the application.

5. Within fourteen days after the informal conference, the Department shall provide the applicant with a written letter stating whether the Department will amend the amount of the tax credit certificate. If the Department agrees to amend the tax credit certificate, the amended tax credit certificate shall be accompanied to the letter. If the request to amend the amount of the tax credit is denied, the letter will include a written explanation.

b) The Formal Hearing. If the applicant is not satisfied with the results of the informal hearing, the applicant may, within thirty days after receipt of the Department's letter documenting the result of the informal conference, request a formal hearing by sending a petition for hearing to the Department as described in 56 Ill. Adm. Code 2605.80. The formal hearing shall be conducted in accordance with the Department's administrative hearing rules found at (56 Ill. Adm. Code 2605).

History

• Source: Added at 50 Ill. Reg. 6523, effective April 27, 2026

Chapter I Department of Commerce and Economic Opportunity

Part 529 Small Business Job Creation Tax Credit Act

14 Ill. Adm. Code 529.10 Purpose

The Department is charged with providing Tax Credit Awards to Illinois small businesses, in order to assist in the reversal of high unemployment and to help spur the economic recovery in Illinois. [35 ILCS 25/5]

14 Ill. Adm. Code 529.20 Definitions

The following definitions are applicable to this Part.

"Act" or "SBJC Act" means the Small Business Job Creation Tax Credit Act [35 ILCS 25/5].

"Applicant" means an person that is operating a business located within the State of Illinois that is engaged in interstate or intrastate commerce and has no more than 50 full-time employees, without regard to the location of employment of those employees at the beginning of the incentive period. In the case of any person that is a member of a unitary business group within the meaning of subdivision (a)(27) of Section 1501 of the Illinois Income Tax Act, "applicant" refers to the unitary business group (see 35 ILCS 5/1501(a)(27)). [35 ILCS 25/10]

"Basic Wage" means compensation for employment that is no less than $13.75 per hour or the equivalent salary for a new employee. [35 ILCS 25/10] Salary shall consist of all basic wage compensation not including overtime pay, bonus pay, stock options, awards or any other equity based incentive, unreimbursed employee expenses or piecemeal rate of pay and any form of deferred compensation.

"Certificate" means the tax credit certificate issued by the Department under Section 35 of the Act. [35 ILCS 25/10]

"Certificate of eligibility" means the certificate issued by the Department under Section 20 of the Act. [35 ILCS 25/10]

"Credit" means the amount awarded by the Department to an applicant by issuance of a certificate under Section 35 of the Act for each new full-time equivalent employee hired or job created. [35 ILCS 25/10]

"Department" means the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 25/10]

"Director" means the Director of the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 25/10]

"Full-time employee" means an individual who is employed for a basic wage for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employee. [35 ILCS 25/10]

"Incentive period" means the period commencing on July 1, 2010 and ending on June 30, 2011. [35 ILCS 25/10]

"New employee" means a full-time employee first employed by an applicant within the incentive period, or any employee that was released from employment prior to January 1, 2010, whose hire results in a net increase in the applicant's full-time Illinois employees and who is receiving a basic wage as compensation. The term "new employee" does not include:

A person who was previously employed in Illinois by the applicant or a related member prior to the onset of the incentive period, except for any employee who was released from employment prior to January 1, 2010;

Any individual who has a direct or indirect ownership interest of at least 5 percent in the profits, capital, or value of the applicant or a related member; [35 ILCS 25/10]

An employee of the applicant who was previously employed in Illinois by the applicant or a related member of the applicant and whose employment was shifted to the taxpayer after the taxpayer applied for the Tax Certificate.

"Noncompliance date" means, in the case of an applicant that is not complying with the requirements of the provisions of the Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the provisions of the Act, as determined by the Director, pursuant to Section 45 of the Act. [35 ILCS 25/10]

"Related member" means a person that, with respect to the applicant during any portion of the incentive period, is any one of the following:

An individual, if the individual and the members of the individual's family (as defined in section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

A partnership, estate, or trust and any partner or beneficiary, if the partnership, estate, or trust and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the applicant and any other related member own, in the aggregate, directly, indirectly, beneficially, or constructively, at least 50% of the value of the corporation's outstanding stock.

A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code, if the corporation and all such related parties own, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the applicant.

A person to or from whom there is attribution of stock ownership in accordance with section 1563(e) of the Internal Revenue Code, except that for purposes of determining whether a person is a related member under this paragraph, "20%" shall be substituted for "5%" whenever "5%" appears in section 1563(e) of the Internal Revenue Code. [35 ILCS 25/10]

14 Ill. Adm. Code 529.30 Maximum Amount of Available Credits

The Department shall limit the monetary amount of credits awarded under the Act to no more than $50,000,000. If applications for a greater amount are received, credits shall be allowed on a first-come, first-served basis, based on the date on which each properly completed application for a certificate of eligibility is received by the Department. If more than one certificate of eligibility is received on the same day, the credits will be awarded based on the time of submission for that particular day. [35 ILCS 25/30]

14 Ill. Adm. Code 529.40 Eligibility Determination

a) In order to qualify for credits under the Act, an applicant must adhere to the requirements established by the Department. The Department shall require that any application must be submitted via the Department's web-based application process.

b) An applicant that has hired a new employee during the incentive period may apply via the Department's web-based application process for the credit with respect to that position on or after the date of hire of the new employee. The date of hire shall be the first day on which the employee begins providing services for basic wage compensation.

c) An applicant may apply for the credit for more than one new employee on or after the date of hire of each qualifying new employee. [35 ILCS 25/20(b)]

d) Although an application for a tax credit certificate may be filed at any time after the conclusion of the 12-month period after a new employee was hired, an application filed more than 90 days after the earliest date on which it could have been filed shall not be awarded any credit if, prior to the date it is filed, the Department has received applications under this Section for credit totaling more than $50,000,000. [35 ILCS 25/35(b)]

14 Ill. Adm. Code 529.50 Application Format

a) The Department will provide interested applicants with information upon request. Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

b) All applications shall be submitted electronically to the Department. The application shall at a minimum include:

1. The name, address, email, and telephone number of applicant; key contact and title; total number of new employees to be hired; company Federal Employer Identification Number (FEIN).

2. The employment start date for the hired new employee and the title for the jobs created.

3. Any other provisions or information the Department determines necessary to facilitate the Department's evaluation.

c) The applicant is responsible for the accuracy of all data, information and documentation submitted to the Department.

d) Any materials or data made available or received by any agent or employee of the Department shall be deemed confidential and shall not be deemed public records to the extent that the materials or data consist of trade secrets or commercial or financial information regarding the operation of the business conducted by the applicant for, or recipient of, any tax credit under the Act.

14 Ill. Adm. Code 529.60 Application Review

a) The Department shall accept applications during the incentive period and via the

procedures established by the Department.

b) After receipt of an application, the Department shall issue a certificate of eligibility to the applicant stating:

1. The date and time on which the application was received by the Department and an identifying number assigned to the applicant.

2. The maximum amount of the credit the applicant could potentially receive under the Act with respect to the new employees listed on the application.

3. The maximum amount of the credit potentially allowable on certificates of eligibility issued for applications received prior to the application for which the certificate of eligibility is issued.

c) The Department is not responsible for any errors or delays in providing an application denial/approval caused by errors in any of the application information provided by the applicant or by any technical problems beyond the Department's control.

Chapter I Department of Commerce and Economic Opportunity

Part 529 Small Business Job Creation Tax Credit Act

14 Ill. Adm. Code 529.70 Application Approval/Denial

a) Applicants shall be notified as to the Department's evaluation of all completed applications. If the Department denies either the application for the certificate of eligibility or the tax credit certificate, it will specify the reasons for the denial.

b) For tax years beginning on or after January 1, 2011, an applicant who has received a certificate of eligibility under the Act and who has sustained the mandatory employment figure is entitled to a tax credit certificate to be used against the taxes imposed under Section 201(a) and (b) of the Illinois Income Tax Act [35 ILCS 5/201(a) and (b)].

14 Ill. Adm. Code 529.80 Determination of Credit Amount

a) The Department shall determine the amount of credit awarded under the Act. Subject to the conditions set forth in the Act, applicant is entitled to a credit against payment of taxes withheld under Section 704A of the Illinois Income Tax Act for calendar years ending on or after the date that is 12 months after the date of hire of a new employee. The credit shall be allowed as a credit to an applicant for each full-time employee hired during the incentive period that results in a net increase in full-time Illinois employees, when the net increase in the employer's full-time Illinois employees is maintained for at least 12 months. [35 ILCS 25/25(a)]

b) The Department shall make credit awards under the Act to further job creation. [35 ILCS 25/25(b)]

c) The credit shall be claimed for the first calendar year ending on or after the date on which the certificate is issued by the Department. [35 ILCS 25/25(c)]

d) The total amount of the credit shall not exceed $2,500 per new employee hired. [35 ILCS 25/25(d)]

e) The net increase in full-time Illinois employees, measured on an annual full-time equivalent basis, shall be the total number of full-time Illinois employees of the applicant on June 30, 2011, minus the number of full-time Illinois employees employed by the employer on July 1, 2010. For purposes of the calculation, an employer that begins doing business in this State during the incentive period, as determined by the Director, shall be treated as having zero Illinois employees on July 1, 2010. [35 ILCS 25/25(e)]

f) The net increase in the number of full-time Illinois employees of the applicant must be sustained continuously for at least 12 months, starting with the date of hire of a new employee during the incentive period. Eligibility for the credit does not depend on the continuous employment of any particular individual. For purposes of this subsection (f), if a new employee ceases to be employed before the completion of the 12-month period for any reason, the net increase in the number of full-time Illinois employees shall be treated as continuous if a different new employee is hired as a replacement within a reasonable time for the same position. [35 ILCS 25/25(f)]

14 Ill. Adm. Code 529.90 Applicant Responsibilities

Each applicant who the Department determines qualifies for a credit agrees to the requisites of the Act. Requirements that the applicant must comply with include, but are not limited to, the following:

a) A requirement that the applicant retain any new employee for the 12-month period after a new employee has been hired. The applicant shall also provide the following:

1. The names, Social Security numbers, job descriptions, salary or wage rates, and dates of hire of the new employees with respect to whom the credit is being requested.

2. Certification that each new employee listed has been retained on the job for one year from the date of hire.

3. The number of new employees hired by the applicant during the incentive period.

4. The net increase in the number of full-time Illinois employees of the applicant (including the new employees listed in the request) between the beginning of the incentive period and the dates on which the new employees listed in the request were hired.

5. An acknowledgement that the Director is authorized to verify with the appropriate State agencies the information contained in the request before issuing a certificate to the applicant. [35 ILCS 25/35]

b) A requirement that the Department is authorized to verify with the appropriate State agencies information required to be reported by the applicant.

c) A requirement that the applicant shall provide notification to the Department not more than 30 days after the job creation is no longer being or will be achieved or maintained as set forth in the terms and conditions of the Act.

d) Any other provisions that the Department determines are necessary to comply with the Act and other applicable State laws and administrative rules.

14 Ill. Adm. Code 529.100 Tax Credit Certificate

a) Upon receipt of applicant verification that compliance was maintained in accordance within Section 529.90, the Department shall provide the applicant with a tax credit certificate. The certificate shall include the following:

1. The name and taxpayer identification number of the applicant.

2. The date on which the certificate is issued.

3. The credit amount.

4. Any other information the Department determines to be appropriate. [35 ILCS 25/35]

b) An applicant claiming a credit under the Act shall submit to the Illinois Department of Revenue a copy of each certificate issued under Section 35 of the Act with the first return for which the credit shown on the certificate is claimed. However, failure to submit a copy of the certificate with the applicant's return shall not invalidate a claim for a credit. [35 ILCS 25/40]

14 Ill. Adm. Code 529.110 Noncompliance

a) If the Department determines that an applicant who has received a credit under the Act is not complying with the requirements or provisions of the Act, the Director shall provide notice to the applicant of the alleged noncompliance, and allow the applicant 35 days to request a hearing under the provisions of the Illinois Administrative Procedure Act [5 ILCS 100]. If, after notice and any hearing, the Director determines that a noncompliance exists, the Director shall issue to the Department of Revenue notice to that effect, stating the noncompliance date for each credit claimed. Alleged noncompliance shall include:

1. Demonstration that the taxpayer failed materially to comply with the Act.

2. Demonstration that the taxpayer failed to retain any new employee hired or claimed to have been hired during the incentive period.

b) The Department shall notify an applicant in writing that it is subject to revocation. The notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 47 Ill. Adm. Code 10 (Review and Appeal Procedures).

c) Following revocation the Department will contact the Director of the Illinois Department of Revenue who shall begin proceedings to recover wrongfully exempted State taxes.

Part 530 Business Exit Survey

14 Ill. Adm. Code 530.10 Purpose

The Department shall conduct a survey and report on business incentives. These rules implement Section 605-456 of the Department of Commerce and Economic Opportunity Law [20 ILCS 605/605-456].

14 Ill. Adm. Code 530.20 Definitions

The following definitions are applicable to this Part.

"Business" means a firm that is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing, assembling, warehousing, or distributing products, conducting research and development, providing tourism services, or providing services in interstate commerce, office industries, or agricultural processing, but excluding retail, retail food, health, or professional services. [20 ILCS 605/605-456(c)]

"Department" means the Department of Commerce and Economic Opportunity.

14 Ill. Adm. Code 530.30 Survey

The Department shall identify and contact businesses that are located in the State or have been identified as having left the State. Participation is voluntary. The Department shall request that the business complete a survey, that includes information regarding:

a) why the business left, if applicable, and the location to which the business relocated; and

b) any incentives that are needed to keep and attract the business. [20 ILCS 605/605-456(a)]

14 Ill. Adm. Code 530.40 Report

The Department shall compile the results of the surveys and any other relevant information provided to the Department. By each July 1, the Department shall report to the General Assembly upon its compilation of the previous year's survey responses and any of the other relevant information. The report will include:

a) the most common responses, categorized by industry and region, regarding why businesses left Illinois;

b) what incentives would have influenced businesses to remain in Illinois; and

c) to which cities and states the businesses have relocated. [20 ILCS 605/605-456(b)]

d) Any other information the Department deems relevant.

Chapter I Department of Commerce and Economic Opportunity

Part 531 Angel Investment Credit Program

14 Ill. Adm. Code 531.10 Purpose

The Department is charged with implementation of the Angel Investment Credit Program in order to provide tax credit awards to claimants to help stimulate job growth and expand capital investment in Illinois.

14 Ill. Adm. Code 531.20 Definitions

The following definitions are applicable to the Angel Investment Credit Program.

"Act" means the Illinois Income Tax Act [35 ILCS 5].

"Applicant" means a corporation, partnership, limited liability company, or a natural person that makes an investment in a qualified new business venture that applies to the Angel Investment Tax Credit. The term "applicant" does not include a corporation, partnership, limited liability company, or a natural person who has a direct or indirect ownership interest of at least 51% in the profits, capital, or value of the qualified new business venture receiving the investment or a related member. [35 ILCS 5/220(a)]

"Claimant" means an applicant certified by the Department who files a claim for a credit under Section 531.50. [35 ILCS 5/220(a)]

"Contingent equity investment" means money (or its equivalent) given to a qualified new business venture in consideration for a future equity interest that matures or converts to equity within three years after the investment. If the agreement governing investment does not provide for mandatory and unconditional conversion within three years after the investment, the investment will not be considered a contingent equity investment. Contingent equity investments that have features of a debt instrument may be ineligible for a tax credit if the agreement contains unreasonable risk mitigation provisions, as determined by the Department.

"Department" means the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 5/220(a)]

"Employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. Annually scheduled periods for inventory or repairs, vacations, holidays and paid time for sick leave, vacation or other leave is included in this computation of full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week or who renders to the applicant any other standard of service generally accepted by industry custom or practice as full-time employment. For example, an employee who works 25 hours per week meets the industry standard for full-time in the package delivery industry, and an employee who is employed for a least 35 hours per week during the historical seasonal production meets the industry standard for full-time in the candy manufacturing industry.

"Full-time equivalent job" means the number of hours worked by multiple employees to equal the number of hours worked by one full-time employee. For purposes of this definition, full-time employee means a person who works a minimum of 35 hours per week for a minimum of 13 consecutive weeks to be counted toward full-time equivalency.

"Investment" means money (or its equivalent) given to a qualified new business venture, at a risk of loss, in consideration for an equity interest of the qualified new business venture. [35 ILCS 5/220(a)] For the purposes of this definition, an investment is at risk of loss if its repayment depends entirely upon the success of the business operations of the qualified new business venture. A contingent equity investment is an investment.

"Liquidity event" means any event that would be considered an exit for an illiquid investment, including any event that allows the equity holders of the business (or any material portion of the business) to cash out some or all of their respective equity interests. [35 ILCS 5/220(i)(3)]

"Minimum employment threshold" means:

at least 51% of the business' employee positions are in Illinois; or

the principal place of business is in Illinois.

"Principal place of business" means the place where the business' high-level officers direct, control, and coordinate the business' activities.

"Qualified new business venture" means a business that is registered with the Department under Section 531.60. [35 ILCS 5/220(a)]

"Qualifying liquidity event" means a liquidity event in which the claimant does not convey an equity interest to the qualified new business venture or a related member of the qualified new business venture.

"Related member" means a person that, with respect to the term "applicant", is any one of the following:

An individual, if the individual and the members of the individual's family (as defined in section 318 of the Internal Revenue Code (26 U.S.C. 318)) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the outstanding profits, capital, stock, or other ownership interest in the recipient of the applicant's investment.

A partnership, estate or trust and any partner or beneficiary, if the partnership, estate or trust and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock or other ownership interest in the recipient of the applicant's investment.

A corporation and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of section 318 of the Internal Revenue Code (26 U.S.C. 318), if the applicant and any other related member own, in the aggregate, directly, indirectly, beneficially, or constructively, at least 50% of the value of the outstanding stock of the recipient of the applicant's investment.

A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code if the corporation and all such related parties own, in the aggregate, at least 50% of the profits, capital, stock, or other ownership interest in the recipient of the applicant's investment.

A person to or from whom there is attribution of ownership of the stock of the recipient of the applicant's investment in accordance with section 1563(e) of the Internal Revenue Code (26 U.S.C. 1563(e)), except that, for purposes of determining whether a person is a related member under this paragraph, "20%" shall be substituted for "5%" whenever "5%" appears in section 1563(e) of the Internal Revenue Code. [35 ILCS 5/220(a)]

"Unreasonable risk mitigation provisions" means investment terms that remove a significant degree of the risk of loss, as determined by the Department, during the three years following the investment. Examples of these provisions include provisions for interest payments, security, and priority in the event of liquidation.

History

• Source: Amended at 48 Ill. Reg. 11949, effective July 29, 2024

14 Ill. Adm. Code 531.30 Tax Credit Directives

a) For taxable years beginning after December 31, 2010 and ending on or before December 31, 2026, subject to the limitations provided in the Act, a claimant may claim, as a credit against the tax imposed under Section 201(a) and (b) of the Act, an amount equal to 25% of the claimant's investment made directly in a qualified new business venture. However, effective January 1, 2024, the amount of the credit is 35% of the claimant's investment made directly in the qualified new business venture if the investment is made in:

1. a qualified new business venture that is:

A) a minority-owned business, defined as, a business which is at least 51% owned by one or more minority persons, or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons or in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and the management and daily business operations of which are controlled by one or more of the minority individuals who own it;

B) a women-owned business, defined as, a business which is at least 51% owned by one or more women, or, in the case of a corporation, at least 51% of the stock in which is owned by one or more women; and the management and daily business operations of which are controlled by one or more of the women who own it; or

C) a business owned by a person with a disability, defined as, a business that is at least 51% owned by one or more persons with a disability and the management and daily business operations of which are controlled by one or more persons with disabilities that is exempt from taxation under Section 501 of the Internal Revenue Code of 1986 is also considered a "business owned by a person with a disability" [30 ILCS 575/2(A)]; or

2. a qualified new business venture in which the principal place of business is located in a county with population of not more than 250,000. [35 ILCS 5/220(b)]

b) The credit under this Section may not exceed the taxpayer's Illinois income tax liability for the taxable year. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 taxable years following the excess credit year. The credit shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset a liability, the earlier credit shall be applied first. In the case of a partnership or subchapter S corporation, the credit is allowed to the partners or shareholders in accordance with the determination of income and distributive share of income under sections 702 and 704 and subchapter S of the Internal Revenue Code (26 U.S.C. 702, 704 and subchapter S). [35 ILCS 5/220(b)]

c) The minimum amount an applicant must invest in any single qualified new business venture in order to be eligible for a credit under the Act is $10,000. The maximum amount of an applicant's total investment in any single qualified new business venture that may be used as the basis for a credit under the Act is $2,000,000. [35 ILCS 5/220(c)]

d) The aggregate amount of the tax credits that may be claimed under the Act for investments made in qualified new business ventures shall be limited to $15,000,000 per calendar year, of which $5,000,000 will be reserved for certain qualified new business ventures as set forth in Section 531.55. [35 ILCS 5/220(f)]

e) A claimant may not sell or otherwise transfer a credit award under the Act to another person or entity. [35 ILCS 5/220(g)]

History

• Source: Amended at 48 Ill. Reg. 11949, effective July 29, 2024

14 Ill. Adm. Code 531.40 Application Requirements

a) In order to qualify for a tax credit certificate under the Act, an applicant must adhere to the requirements established by the Department. The Department will provide interested applicants with information upon request. Submittal of a tax credit claimant application does not commit the Department to award a tax credit or to pay any costs incurred by the applicant in the preparation of an application. Applications are valid only for the calendar year quarter in which they are submitted to the Department.

b) All applications shall be submitted to the Department. The application shall at a minimum include:

1. The name, address, email, and telephone number of applicant; key contact and title; applicant Social Security Number or Federal Employer Identification Number (FEIN);

2. The total amount of investment the claimant has made in the qualified new business venture;

3. A complete copy of the agreement governing the investment;

4. Proof, as determined by the Department, that the investment has been made;

5. Any other provisions or information the Department determines necessary to facilitate the Department's evaluation.

c) The applicant is responsible for the accuracy of all data, information and documentation submitted to the Department.

d) Except for information mandated to be reported to the General Assembly, any materials or data made available or received by any agent or employee of the Department shall be deemed confidential and shall not be deemed public records to the extent that the materials or data consist of trade secrets, commercial or financial information regarding the operation of the business conducted by the applicant for, or recipient of, any tax credit under the Act.

History

• Source: Amended at 42 Ill. Reg. 16493, effective August 21, 2018

14 Ill. Adm. Code 531.50 Application Review and Approval

a) The Department shall accept applications after January 1, 2011 and via the procedures established by the Department. Applications will be reviewed in order received at the Department's Springfield office or electronically at Angelinvestment@illinois.gov. Application tracking procedures shall be determined and established at the discretion of the Department.

b) After receipt of an application and upon satisfactory review, the Department shall issue a tax credit certificate stating the amount of the tax credit. [35 ILCS 5/220(d)]

c) On a form provided by the Department, the claimant must annually report and certify that claimant's investment has been made and remains in the qualified new business venture. Upon satisfactory review, the Department shall annually certify that:

1. each qualified new business venture that receives an investment under this Section has maintained a minimum employment threshold in the State (and continues to maintain a minimum employment threshold in the State for a period of no less than 3 years from the issue date of the last tax credit certificate issued by the Department with respect to that business); and

2. the claimant's investment has been made and remains in the qualified new business venture for no less than 3 years, except in the event of a qualifying liquidity event. [35 ILCS 5/220(d)]

History

• Source: Amended at 42 Ill. Reg. 16493, effective August 21, 2018

14 Ill. Adm. Code 531.55 Allocation of Tax Credits

a) For taxable years beginning before January 1, 2024:

1. The aggregate amount of the tax credits that may be claimed under the Angel Investment Credit Program for investments made in qualified new business ventures shall be limited to $10,000,000 per calendar year. [35 ILCS 5/220(f)]

2. Of the aggregate amount, $500,000 shall be reserved for investments made in qualified new business ventures that are "minority-owned businesses", "women-owned businesses", or "businesses owned by a person with a disability" (as those terms are used and defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575/2]), and an additional $500,000 shall be reserved for investments made in qualified new business ventures with their principal place of business in counties with a population of not more than 250,000. [35 ILCS 5/220(f)]

b) For the taxable years beginning on or after January 1, 2024:

1. The aggregate amount of the tax credits that may be claimed under the Angel Investment Credit Program for investments made in qualified new business ventures shall be limited to $15,000,000 per calendar year.

2. $2,500,000 of such aggregate amount shall be reserved for investments made in qualified new business ventures that are minority-owned businesses, as the term is defined in 30 ILCS 575/2(A)(3).

c) The foregoing annual allowable amounts shall be allocated by the Department, on a per calendar quarter basis and prior to the commencement of each calendar year, in such proportion as determined by the Department, provided that:

1. the amount initially allocated by the Department for any one calendar quarter shall not exceed $3,500,000; and

2. any portion of the allocated allowable amount remaining unused as of the end of any of the first 2 calendar quarters of a given calendar year shall be rolled into, and added to, the total allocated amount for the next available calendar quarter. [35 ILCS 5/220(f)]

d) The Department may roll over any unused credits at the end of the third calendar quarter into the fourth calendar quarter.

History

• Source: Amended at 48 Ill. Reg. 11949, effective July 29, 2024

14 Ill. Adm. Code 531.60 Qualified New Business Registration Guidelines

a) A business desiring registration shall submit an application to the Department in each taxable year for which the business desires registration. [35 ILCS 5/220(e)]

b) The Department may register the business only if the business satisfies all of the following conditions:

1. It has its principal place of business in this State;

2. At least 51% of the employees employed by the business are employed in this State;

3. It has the potential for increasing jobs in this State, increasing capital investment in this State, or both, as determined by the Department, and either of the following apply:

A) It is principally engaged in innovation in any of the following: manufacturing; biotechnology; nanotechnology; communications; agricultural sciences; clean energy creation or storage technology; processing or assembling products, including medical devices, pharmaceuticals, computer software, computer hardware, semiconductors, other innovative technology products, or other products that are produced using manufacturing methods that are enabled by applying proprietary technology; or providing services that are enabled by applying proprietary technology; or

B) It is undertaking pre-commercialization activity related to proprietary technology that includes conducting research, developing a new product or business process, or developing a service that is principally reliant on applying proprietary technology;

4. It is not principally engaged in real estate development; insurance; banking; lending; lobbying; political consulting; professional services provided by attorneys, accountants, business consultants, physicians, or health care consultants; wholesale or retail trade; leisure; hospitality; transportation; or construction, except construction of power production plants that derive energy from a renewable energy resource, as defined in Section 1 of the Illinois Power Agency Act [20 ILCS 3855];

5. It has fewer than 100 employees at initial time of registration;

6. It has been in operation in Illinois for not more than 10 consecutive years prior to beginning of the year of certification;

7. It has received not more than:

A) $10,000,000 in aggregate investments; or

B) $4,000,000 in investments that qualified for tax credits; and

8. It agrees to maintain a minimum employment threshold in the State of Illinois for at least 3 years from the date of issuance of any tax credit certificate issued to a claimant with respect to that business. [35 ILCS 5/220(e)]

c) For purposes of subsection (b), the number of employees of a business shall be determined on a full-time equivalent basis.

History

• Source: Amended at 42 Ill. Reg. 16493, effective August 21, 2018

14 Ill. Adm. Code 531.70 Tax Credit Certificate

a) Per the requirements of the Act and upon satisfactory compliance with registration and reporting guidelines, the Department shall provide the claimant with a tax credit certificate. The certificate shall include the following:

1. The name and Social Security Number or FEIN of the claimant;

2. The date on which the certificate is issued;

3. The tax credit amount; and

4. Any other information the Department determines to be appropriate.

b) Except as provided in Section 531.40(d), information contained in certificates issued under the Act shall be subject to reporting under Section 531.80.

History

• Source: Amended at 42 Ill. Reg. 16493, effective August 21, 2018

Chapter I Department of Commerce and Economic Opportunity

Part 531 Angel Investment Credit Program

14 Ill. Adm. Code 531.80 Reporting and Tracking Procedures

a) On or before March 1 of each year, the Department shall report to the Governor and to the General Assembly on the tax credit certificates awarded under this Section for the prior calendar year. [35 ILCS 5/220(h)]

b) This report must include, for each tax credit certificate awarded:

1. The name of the claimant and the amount of credit awarded or allocated to that claimant;

2. The name and address of the qualified new business venture that received the investment giving rise to the credit and the county in which the qualified new business venture is located;

3. The North American Industry Classification System (NAICS) code applicable to that qualified new business venture;

4. The number of employees of the qualified new business venture, and the locations of their employment; and

5. The date of approval by the Department of the applications for the tax credit certificate. [35 ILCS 5/220(h)(1)]

c) The report must also include:

1. The total number of applicants and the total number of claimants, including the amount awarded to each claimant under the Act in the prior calendar year;

2. The total number of applications from businesses seeking registration under the Act, the total number of first-time qualified new business venture registrants, and the aggregate amount of investment upon which tax credit certificates were issued in the prior calendar year; and

3. The total amount of tax credit certificates sought by applicants, the aggregate amount of all tax credit certificates issued in the prior calendar year, and the aggregate amount of tax credit certificates issued as authorized under the Act for all calendar years. [35 ILCS 5/220(h)(2)]

History

• Source: Amended at 42 Ill. Reg. 16493, effective August 21, 2018

14 Ill. Adm. Code 531.90 Noncompliance

a) If the Department determines that a claimant who has received a credit under the Act or a qualified new business venture that was the recipient of an investment under the Act is not complying with the requirements or provisions of the Act, the claimant shall pay to the Department of Revenue, in the manner prescribed by the Department of Revenue, the amount of the credit that the claimant received related to the investment. [35 ILCS 5/220(d)]

b) A qualified new business venture may be found in noncompliance for:

1. Failing to maintain the minimum employment threshold for at least through the date 3 years from the issue date of the last tax credit certificate issued by the Department with respect to the business;

2. Failing to provide the Department or the Department of Revenue with information and records necessary to verify compliance with the Act;

3. Failing to submit the report required by Section 220(i) of the Act; or

4. Otherwise not being in compliance with the Act.

c) A claimant may be found in noncompliance if:

1. The claimant does not hold the investment for which the claimant is allowed an Angel Investment Credit Program credit for at least 3 years. This 3 year holding requirement does not apply if the investment is sold as part of a qualifying liquidity event or if the qualified new business venture ceases operations and the investment becomes worthless, as determined by the Department;

2. In the case of an investment made in the form of a contingent equity investment, there is no conversion to equity within 3 years after the investment; or

3. The claimant fails to provide the Department or the Department of Revenue with information and records necessary to verify compliance with the Act, including, but not limited to, copies of any investment agreement.

History

• Source: Amended at 42 Ill. Reg. 16493, effective August 21, 2018

Part 532 Illinois Live Theater Production Tax Credit Program

14 Ill. Adm. Code 532.10 Purpose

The Department shall make live theater tax credit awards under the Live Theater Production Tax Credit Act for the purpose of preserving and expanding the existing work force in Illinois, supporting the live theater industry in Illinois, promoting tourism in Illinois and stimulating economic development in Illinois. Moreover, it shall be the policy of this State to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population through the creation and implementation of training, education and recruitment programs organized in cooperation with Illinois colleges and universities, labor organizations and the commercial for‑profit live theater industry. [35 ILCS 17/10‑5]

14 Ill. Adm. Code 532.20 Definitions

The following definitions are applicable to this Part:

"Accredited Theater Production" means a for‑profit live stage presentation in a qualified production facility, as defined in this Section, that is either a pre‑Broadway production or a long‑run production for which the aggregate Illinois labor and marketing expenditures exceed $100,000. For credits awarded under this Act on or after July 1, 2022, "accredited theater production" also includes any commercial Broadway touring show. For credits awarded under this Act on or after July 1, 2024, "accredited theater production" also includes non-profit theater productions. [35 ILCS 17/10-10]

"Accredited Theater Production Certificate" means a certificate issued by the Department certifying that the production is an accredited theater production that meets the guidelines of the Act. [35 ILCS 17/10-10]

"Act" means the Live Theater Production Tax Credit Act [35 ILCS 17].

"Applicant" means:

a theater producer, owner, licensee, operator, or presenter that is presenting or has presented a live stage presentation located within the State of Illinois who:

owns or licenses the theatrical rights of the stage presentation for the Illinois production period; or

has contracted or will contract directly with the owner or licensee of the theatrical rights or a person acting on behalf of the owner or licensee to provide live performances of the production.

an applicant that directly or indirectly owns, controls, or operates multiple qualified production facilities shall be presumed to be and considered for the purposes of the Act to be a single applicant; provided, however, that, as to each of the applicant's qualified production facilities, the applicant shall be eligible to separately and contemporaneously apply for and obtain accredited theater production certificates, stage accredited theater productions, and apply for and receive a tax credit award certificate for each of the applicant's accredited theater productions performed at each of the applicant's qualified production facilities. [35 ILCS 17/10-10]

"Broadway's Theater District" means the theater district located in Midtown Manhattan New York and shall include any theater with more than 500 seats that the American Theater Wing and the Broadway League have deemed eligible for the Tony Awards or any theaters that appear on the Broadway box-office charts.

"Commercial Broadway Touring Show" means a production that:

is performed in a qualified production facility and plays in more than two other markets in North America outside of Illinois within 12 months of its Illinois presentation; and

has Illinois production spending of not less than $100,000, as shown on the applicant's application for the credit. [35 ILCS 17/10-10]

"Department" means the Illinois Department of Commerce and Economic Opportunity. [35 ILCS 17/10-10]

"Director" means the Director of the Department. [35 ILCS 17/10-10]

"Diversity Data or Information" means data pertaining to gender, race, ethnicity and disability of all employees of the applicant.

"Diversity Plan" means a written document through which the applicant assures the Department that minorities, females and persons with disabilities will have equal opportunities in recruitment, selection, appointment, promotion, training and related employment areas in the accredited production. The diversity plan must also describe the manner in which the applicant plans on hiring vendors certified by the Business Enterprise Council under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575] with respect to the accredited production. The diversity plan must also detail the manner in which the applicant proposes to achieve its goals to ensure employment of protected classes (minorities, females and persons with disabilities) to achieve a diverse workforce rather than merely to assure nondiscrimination.

"Economic Impact Data" means data pertaining to the types of jobs (production, talent and vendor) created and retained in Illinois, as well as the total amount an applicant spends in Illinois on the accredited theater production.

"Employee" means any individual who is an employee of the applicant for purposes of employment taxes imposed under subtitle C of the Internal Revenue Code (42 USC subtitle C), any production staff or crew and any individual in a non-talent position.

"Female-Owned Business" means a business concern that is at least 51% owned by one or more females, or, in the case of a corporation, at least 51% of the stock is owned by one or more females, and the management and daily business operations of which are controlled by one or more of the females who own it. [30 ILCS 575/2(A)(4)]

"Illinois Labor Expenditure" means gross salary or wages, including, but not limited to, taxes, benefits and any other consideration incurred or paid to non‑talent employees of the applicant for services rendered to and on behalf of the accredited theater production. To qualify as an Illinois labor expenditure, the expenditure must be:

incurred or paid by the applicant on or after June 1, 2012 for services related to any portion of an accredited theater production from its pre‑production stages, including, but not limited to, the writing of the script, casting, hiring of service providers, purchases from vendors, marketing, advertising, public relations, load in, rehearsals, performances, other accredited theater production related activities, and load out;

directly attributable to the accredited theater production;

limited to the first $100,000 of wages incurred or paid to each employee of an accredited theater production in each tax year;

included in the federal income tax basis of the property;

paid in the tax year for which the applicant is claiming the tax credit award, or no later than 60 days after the end of the tax year;

paid to persons residing in Illinois at the time payments were made; and

reasonable in the circumstances. [35 ILCS 17/10-10]

"Illinois Production Spending" means any and all expenses directly or indirectly incurred relating to an accredited theater production presented in any qualified production facility of the applicant and associated to the performance run in that qualified production facility, including, but not limited to, expenditure for:

national marketing, public relations and the creation and placement of print, electronic, television, billboard and other forms of advertising; and

the construction and fabrication of scenic materials and elements; provided, however, that the maximum amount of expenditures attributable to the construction and fabrication of scenic materials and elements eligible for a tax credit award shall not exceed $500,000 per applicant per production in any single tax year. [35 ILCS 17/10-10]

"Illinois Resident" means an individual who is domiciled in this State during the accredited theater production. Except in a case when the applicant has actual knowledge, as shown in its books and records, that an individual is not an Illinois resident, the possession by an individual of an Illinois driver's license or other identification issued by this State prior to the commencement of the accredited theater production shall be sufficient proof that the individual is an Illinois resident and the address on the license or identification shall be deemed correct.

"Long-Run Production" means a live stage production that is performed in a qualified production facility for longer than 8 weeks, with at least 6 performances per week, and includes a production that spans the end of one tax year and the commencement of a new tax year that, in combination, meets the criteria set forth in this definition making it a long‑run production eligible for a theater tax credit award in each tax year or portion of a tax year. [35 ILCS 17/10-10]

"Minority" means a person who is a citizen or lawful resident of the United States and who is African American (a person having origins in any of the black racial groups in Africa); Hispanic (a person of Spanish or Portuguese culture with origins in Mexico, South or Central America or the Caribbean Islands, regardless of race); Asian American (a person having origins in any of the original peoples of the Far East, Southeast Asia, the Indian Subcontinent); Pacific Islander (Native Hawaiian or Other Pacific Islander – a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands);or Native American or Alaskan Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment). [30 ILCS 575/2(A)(1)]

"Minority-Owned Business" means a business concern that is at least 51% owned by one or more minority persons or, in the case of a corporation, at least 51% of the stock is owned by one or more minority persons, and the management and daily business operations of which are controlled by one or more of the minority individuals who own it. [30 ILCS 575/2(A)(3)]

"Non-Profit Theater Production" means a live stage production that is at least 75 minutes in length with a written script that:

is produced by a 501(c)3 non-profit registered in the State of Illinois for at least five years;

has Illinois production spending of not less than $10,000, as shown on the applicant's application for the credit; and

has a minimum annual operating budget of $25,000 or more, as shown on the applicant's application for the credit. [35 ILCS 17/10-10]

"Non-Talent" means any person who is not a performer. A performer includes, but is not limited to, principal actors, ensemble actors, understudies, swings and members of the orchestra ensemble that are part of the on-stage theatrical performance. Members of an orchestra or band who perform in a pit or other location not visible to the audience shall be considered non-talent.

"Person with a Disability" means a person who is a citizen or lawful resident of the United States and is a person qualifying as being disabled under Section 2(A)(2.1) of the Business Enterprise for Minorities, Females, and Person with Disabilities Act. [30 ILCS 575/2(A)(2.05]

"Pre‑Broadway Production" means a live stage production that:

in its original or adaptive version, is performed in a qualified production facility with the goal of having a presentation scheduled for Broadway's Theater District in New York City after its Illinois presentation; and

has Illinois production spending of not less than $100,000, as shown on the applicant's application for credit. [35 ILCS 17/10-10]

"Qualified Production Facility" means an existing and permanent facility located in the State in which live theatrical productions are, or are intended to be, exclusively presented that contains at least one stage, a seating capacity of 1,200 or more seats or, if the live theater production is a non-profit theater production, a seating capacity of 50 or more seats, and dressing rooms, storage areas and other ancillary amenities necessary for the accredited theater production. [35 ILCS 17/10-10]

"Script" means a written or notated work that guides a live performance, including dialogue, lyrics, narration, musical score, stage directions, or choreography. A script may include:

A play or musical script with dialogue and state directions;

A liberetto or score for opera, ballet, or symphonic works;

Choreographic notation or cue sheets for dance or movement-based performances;

A conductor's score or program notes for concert/theater hybrids; or

A devised or collaboratively created work documented in a reproducible format;

"State" means the State of Illinois.

"Tax year" means a calendar year for the period January 1 to and including December 31. [35 ILCS 17/10-10]

"Theater Tax Credit Award" means the issuance to a taxpayer by the Department of a tax credit award in conformance with Sections 10‑40 and 10‑45 of the Act. [35 ILCS 17/10-10]

"Training Plan" means a written document through which the applicant pledges to provide training, education and recruitment in accordance with the Act.

"Vendor" means an Illinois based supplier of any goods or services. Expenditures for purchases of tangible personal property or services from a vendor shall mean:

Purchases of tangible personal property for use in Illinois on an accredited theater production from a person who is registered under the Illinois Retailers' Occupation Tax Act [35 ILCS 120] (ROTA). A copy of the purchase receipt showing that the purchase was made at an Illinois location and that ROT was paid shall be sufficient proof that the purchase was made from a vendor in Illinois. For tangible personal property ordered by mail, telephone or internet, a copy of the seller's ROTA registration certificate along with a receipt showing that Illinois Use Tax was collected by the vendor shall be sufficient proof that the purchase was made from a vendor in Illinois. Documentation that shows that Illinois Use Tax was collected by the vendor, but either does not show an Illinois address for the sale or is not accompanied by a ROTA registration certificate, shall not be sufficient proof that the purchase was made from a vendor in Illinois.

The lease or rental of real property located in Illinois for use in an accredited theater production, including hotels or other lodging for employees working on the accredited theater production.

The lease or rental of an automobile (as defined in the Illinois Automobile Renting Occupation and Use Tax Act [35 ILCS 155]) for use in an accredited theater production on which the renter collects the Illinois Automobile Renting Occupation and Use Tax from the rentee.

The lease or rental of other tangible personal property for use in an accredited theater production if the owner of the property has paid Illinois Use Tax on the property. A copy of the invoice or receipt for the lease or rental showing an Illinois address for the lessor, and showing that no other state's sales tax is collected from the lessee, shall be sufficient proof that the transaction was with a vendor in Illinois.

The purchase of insurance services from an insurer whose commercial domicile is in this State.

The purchase of other services with respect to an accredited theater production from an Illinois resident or from a person whose commercial domicile is in this State. For purposes of this definition only, the commercial domicile of a person is in this State if the person's business address (as shown in the records of the applicant) is in this State.

"Vendor-Related Positions" means jobs obtained or created through a subcontractor, which includes, but is not limited to, security, janitorial, printing, florist, dry cleaners and limousine services.

History

• Source: Amended at 49 Ill. Reg. 15946, effective December 4, 2025

14 Ill. Adm. Code 532.30 Live Theater Tax Credit Directives

a) For taxable years beginning on and after January 1, 2012, subject to the limitations and requirements provided in the Act, an applicant is entitled to a theater tax credit award as approved by the Department for qualifying Illinois labor expenditures and Illinois production spending for each tax year in which the applicant is awarded an accredited theater production certificate issued by the Department. The amount of tax credits awarded pursuant to this Act shall not exceed $2,000,000 in any State fiscal year ending on or before June 30, 2022. The amount of tax credits awarded pursuant to this Act for the State fiscal year ending on June 30, 2023 or the State fiscal year ending on June 30, 2024 shall not exceed $4,000,000. For the State fiscal year ending on June 30, 2023 and the State fiscal year ending on June 30, 2024, no more than $2,000,000 in credits may be awarded in either of those fiscal years to accredited theater productions that are not commercial Broadway touring shows, and no more than $2,000,000 in credits may be awarded in either of those fiscal years to commercial Broadway touring shows. For State fiscal years ending on or after June 30, 2025, the amount of tax credits awarded under this Act shall not exceed $6,000,000, with no more than $2,000,000 in credits awarded for long-run productions and pre-Broadway productions, no more than $2,000,000 in credits awarded for commercial Broadway touring shows, and no more than $2,000,000 in credits awarded for non-profit theater productions. [35 ILCS 17/10-20]

b) The $2,000,000 in credits that may be awarded for non-profit theater productions under this Act in a State fiscal year shall be allocated as follows:

1. no credits may be awarded for non-profit theater productions that have an annual operating budget of less than $25,000;

2. no more than $225,000 in credits may be awarded, in the aggregate, for non-profit theater productions that have an annual operating budget of $25,000 or more but less than $250,000;

3. no more than $225,000 in credits may be awarded, in the aggregate, for non-profit theater productions that have an annual operating budget of $250,000 or more but less than $1,000,000;

4. no more than $250,000 in credits may be awarded, in the aggregate, for non-profit theater productions that have an annual operating budget of $1,000,000 or more but less than $2,500,000;

5. no more than $300,000 in credits may be awarded, in the aggregate, for non-profit theater productions that have an annual operating budget of $2,500,000 or more but less than $5,000,000;

6. no more than $300,000 in credits may be awarded, in the aggregate, for non-profit theater productions that have an annual operating budget of $5,000,000 or more but less than $10,000,000; and

7. no more than $700,000 in credits may be awarded, in the aggregate, for non-profit theater productions that have an annual operating budget of $10,000,000 or more. [35 ILCS 17/10-20].

c) In accordance with the purpose of the Act, credits shall be awarded on a first-come, first-served basis as described in Section 532.40(c). [35 ILCS 17/10-20]

d) To accomplish the purposes of the Act, the Department may use the training programs provided under Section 605-800 of the Department of Commerce and Economic Opportunity Law of the Civil Administrative Code of Illinois [20 ILCS 605]. [35 ILCS 17/10-35]

History

• Source: Amended at 49 Ill. Reg. 15946, effective December 4, 2025

14 Ill. Adm. Code 532.40 Live Theater Tax Credit Amount

a) The maximum monetary amount of tax credits awarded pursuant to the Act shall not exceed the actual amount as directed in the Act in any State fiscal year. [35 ILCS 17/10-20]

b) Each theater tax credit award shall be limited to $500,000 per accredited theater production per tax year in an effort to provide overall support to the live theater industry in Illinois.

c) If applications for theater tax credits exceed the maximum monetary cap amount, for credits established by the Act, credits shall be awarded on a first-come, first-served basis, based on the date on which each properly completed application for an accredited theater production certificate is received by the Department. If more than one application for an accredited theater production certificate is received on the same day, the credits will be awarded based on the time of submission on that particular day.

d) If the amount of credits applied for in any fiscal year exceeds the amount authorized to be awarded under Section 10-20 of the Act, the excess credit amount shall be awarded in the next fiscal year in which credits remain available for award and shall be treated as having been applied for on the first day of that fiscal year.

14 Ill. Adm. Code 532.50 Application for Accredited Theater Production Certificate

a) In order to obtain a theater tax credit award, an applicant must first receive an accredited theater production certificate establishing that the applicant has satisfied the requirements of the Act and this Part.

b) In order to qualify for a theater tax credit award under the Act, an applicant must file an application, on forms prescribed by the Department, providing information necessary to calculate the tax credit award and any additional information as reasonably required by the Department. [35 ILCS 17/10-40(a)] The Department shall only accept applications that are submitted electronically via the standard application form provided by the Department. The applicant will be required to provide information including, but not limited to, the following:

1. Legal name, address and telephone number of the applicant.

2. Whether the applicant is a:

A) Theater producer;

B) Owner;

C) Licensee;

D) Operator; or

E) Presenter.

3. Name, title and telephone number of the primary contact person.

4. Type of business entity:

A) Individual or sole proprietorship;

B) Partnership;

C) Corporation;

D) Subchapter S corporation;

E) Limited liability company;

F) Not-for-profit; or

G) Other (applicant will provide description).

5. Date of incorporation or formation.

6. Federal Employer Identification Number (FEIN) or Tax Identification Number (TIN).

7. Production title and whether the production is a:

A) Pre‑Broadway production;

B) Long‑run production;

C) Commercial Broadway touring show; or

D) Non-profit theater production.

8. Estimated opening night of the production run and estimated number of performances in Illinois.

9. Estimated total budget of production.

10. Estimated total Illinois labor expenditure.

11. Estimated number of Illinois residents to be hired to work on the production.

12. Commercial Broadway touring show, applicant must provide tangible evidence that the production plays in more than two other markets in Northern America outside of Illinois within 12 months of its Illinois presentation.

13. For a non-profit theater production, applicant must provide a current copy of the Illinois Secretary of State Certificate of Good Standing and copies of IRS form 990 for the previous four years.

14. The applicant must certify that it is and will remain in good standing with applicable state authorities, it is not currently operating under, or subject to, any cease and desist order, or subject to any regulatory action, and, to the best of the applicant's knowledge, that it is not currently the subject of any investigation by any state or federal regulatory, law enforcement or legal authority. Should the applicant become the subject of an investigation by any state or federal regulatory, law enforcement or legal authority, the applicant shall promptly notify the Department of that investigation. The applicant acknowledges that, should it become delinquent in its good standing status with any applicable state authority or if it later becomes subject to a cease and desist order or memorandum of understanding, or is found in violation pursuant to any regulatory action or any court action or proceeding before any administrative agency, the Department is authorized to deny the applicant's request for an accredited theater production certificate.

c) An application must be submitted to the Department no sooner than 180 calendar days prior to the opening day the accredited theater production and no later than the last business day prior to the opening of the accredited theater production.

d) The Department will evaluate applications for accredited theater production certificates from eligible applicants in accordance with the following requirements:

1. The Applicant intends to make the expenditure in the State. [35 ILCS 17/10-30]

2. The applicant's accredited theater production is economically sound and will benefit the people of the State of Illinois by increasing opportunities for employment and will strengthen the economy of Illinois. [35 ILCS 17/10-30]

3. A suitable diversity plan has been created by the applicant and the following requirements related to the implementation of a diversity plan have been met: the applicant has filed with the Department a diversity plan outlining specific goals for hiring Illinois labor expenditure eligible minority persons and females, as defined in the Business Enterprise for Minorities, Females, and Persons with Disabilities Act, and for using vendors receiving certification under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act; the Department has approved the plan as meeting the requirements established by the Department and verified that the applicant has met or made good faith efforts in achieving those goals. [35 ILCS 17/10-30(a)(3)]

4. The applicant's accredited theater production application provides a detailed training plan to participate in training, education and recruitment programs that are organized in cooperation with at least one of the following: Illinois colleges and universities; labor organizations; and the holders of accredited theater production certificates. Training plans are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of Illinois. [35 ILCS 17/10-30(a)(4)]

5. Except for qualifying commercial Broadway touring shows and non-profit theater productions, the applicant illustrates evidence of a competitive need for credit. If not for the theater tax credit award, the applicant's accredited theater production would not occur in Illinois, which may be demonstrated by any means, including, but not limited to, evidence that: the applicant, presenter, owner, or licensee of the production rights has other state or international location options at which to present the production and could reasonably and efficiently locate outside of the State; at least one other state or nation could be considered for the production; the receipt of the theater tax credit award is a major factor in the decision of the applicant, presenter, production owner or licensee as to where the production will be presented and that without the theater tax credit award the applicant likely would not create or retain jobs in Illinois; or receipt of the theater tax credit award is essential to the applicant's decision to create or retain new jobs in the State. [35 ILCS 17/10-30(a)(5)] The Department maintains sole discretion to review any information, materials or evidence to determine whether an applicant has established a competitive need for the credit in accordance with the Act.

6. The theater tax credit award will result in an overall positive impact to the State, as determined by the Department using the best available data. [35 ILCS 17/10-30]

e) The applicant is responsible for the accuracy of all data, information and documentation included in the application. Once submitted, applications shall become the property of the Department.

f) Upon written request, the applicant shall issue any necessary authorization to the appropriate federal, State or local authority for the release of information concerning a production being considered under this Part, including, but not limited to, financial reports and records relating to the applicant or the accredited theater production for which the theater tax credit award is requested.

g) The Department is not responsible for any errors or delays in providing an application denial or approval caused by errors in any of the application information provided by the applicant or by any technical problems beyond the Department's control.

h) Prior to substantive evaluation of an application for an accredited theater production certificate, the Department shall review all applications to determine that all required information and documentation has been provided. Applicants will be notified, in writing, of any application deficiencies and will be allowed 5 business days to correct those deficiencies through submission of additional documentation. If the applicant successfully cures any deficiencies within the 5-day period, the applicant will keep its numeric place in the queue. If an applicant does not correct the application deficiencies within 5 business days, then the Department may treat the application as newly submitted for purposes of determining the priority of applications and the applicant will lose its numeric place in the queue.

i) The Department will provide interested applicants with information upon request and also be available via the Department's website. Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

History

• Source: Amended at 49 Ill. Reg. 15946, effective December 4, 2025

Chapter I Department of Commerce and Economic Opportunity

Part 532 Illinois Live Theater Production Tax Credit Program

14 Ill. Adm. Code 532.60 Approval/Denial of Accredited Theater Production Certificate

a) The Department reserves the right to make inquiries, to conduct studies and to review information with respect to the application. The Department also reserves the right to request information from the applicant that is necessary to calculate the amount of the theater tax credit award.

b) The Department reserves the right to reject any application that does not comply with the statutory requirements of the Act and this Part. Upon receipt of an application, the Department shall review the application for completeness and approve or deny it within 60 days from the date of receipt. Applications are subject to final approval by the Director of the Department.

c) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application for an accredited theater production certificate, it will specify the reasons for denial in writing. All decisions made by the Department are deemed absolute and not subject to an appeal process.

d) Upon approval of an application, the Department will issue an accredited theater production certificate certifying that the production is an accredited theater production that meets the statutory requirements of the Act and this Part. Each accredited theater production certificate will be assigned a number to establish the applicant's place in the queue for the relevant tax year.

e) When the Department issues an accredited theater production certificate, this certificate does not automatically entitle the applicant to a theater tax credit award.

14 Ill. Adm. Code 532.70 Request for Theater Tax Credit Award

a) After an applicant has received an accredited theater production certificate, it can request a theater tax credit award from the Department. In accordance with the Act, the theater tax credit award shall only be awarded to an applicant if:

1. The total amount of theater tax credit awards awarded pursuant to the Act has not exceeded the annual fiscal maximum monetary cap amount.

2. The applicant successfully demonstrates to the Department that it complied with its diversity plan or that it made good-faith efforts to comply with its diversity plan.

3. The applicant successfully demonstrates to the Department that it fulfilled its training plan or that it made good-faith efforts to comply with its training plan.

b) An applicant with an accredited theater production certificate shall provide the following with its request for a theater tax credit award:

1. An itemized statement of the Illinois labor expenditures or Illinois production spending for which the credit is claimed and of Illinois labor expenditures generated by the employment of residents of geographic areas of high poverty or high unemployment for which additional credit is claimed;

2. Copies of the books and records of the applicant for the accredited theater production, showing the Illinois labor expenditures or Illinois production spending for which the credit is claimed, and all documentation necessary to support its computation; and

3. Independent Accountant's Report

A) An independent accountant's report, prepared by a licensed certified public accountant, in the form prescribed by the Department, that is supported by the copies of the books, records and other documents of the applicant that are attached to the request. The licensed certified public accountant must attest that he or she has examined the books, records and other documents according to procedures agreed upon by the Department. The attestation and examination must be performed by a licensed certified public accountant:

i) under the professional standards established by the American Institute of Certified Public Accountants, specifically the Statements on Standards of Attestation Engagements at AT Sec. 101 (Attest Engagements) and AT Sec. 201 (Agreed-Upon Procedures Engagements); and

ii) whose engagement to provide the attestation was approved by the Department before work on the engagement is commenced.

B) An independent accountant's report must be submitted to the Department within 60 calendar days after the end of the Illinois production run. If the independent accountant's report is not received by the Department, the applicant will forfeit its place in the queue.

c) A request for a theater tax credit award must be made to the Department by March 1 in order to claim a theater tax credit for expenditures in the prior tax year.

History

• Source: Amended at 49 Ill. Reg. 15946, effective December 4, 2025

Chapter I Department of Commerce and Economic Opportunity

Part 532 Illinois Live Theater Production Tax Credit Program

14 Ill. Adm. Code 532.80 Approval/Denial of Theater Tax Credit Award

a) When an applicant submits its request for a theater tax credit award, the Department will review and verify the applicant's final diversity hiring numbers for crew, vendors and talent to determine whether it met the goals outlined in its diversity plan before issuing the theater tax credit award.

b) In the event the applicant fails to meet the goals of its diversity plan, the applicant must then demonstrate it made good-faith efforts to achieve its diversity goals in order to receive a theater tax credit award. To be considered, the applicant must submit an affidavit attesting to its good-faith efforts. Good-faith efforts that the Department will consider include, but are not limited to, documentation demonstrating that the applicant communicated (written correspondence, phone call, email, meetings) with minority, female and disabled vendors, applicable unions, and talent and workforce agencies/entities. The applicant may also submit any other documentation to the Department demonstrating its good-faith attempts.

14 Ill. Adm. Code 532.90 Calculation of Theater Tax Credit Award

a) The theater tax credit award shall be calculated each tax year based upon the filing by the applicant on forms prescribed by the Department containing information regarding qualifying and quantified Illinois labor expenditures, as defined in Section 10-10 of the Act, net of the limitation in that Section, and Illinois production spending, as defined in Section 10-10, net of the limitation in that Section. From the amount calculated, the applicant shall be entitled to receive a tax credit award of up to:

1. 20% of the Illinois labor expenditures for each tax year; plus

2. 20% of the Illinois production spending for each tax year; plus

3. 15% of the Illinois labor expenditures generated by the employment of Illinois residents in geographic areas of high poverty or high unemployment in each tax year, as determined by the Department. [35 ILCS 17/10-45]

b) The theater tax credit award shall not exceed $500,000 for any accredited theater production.

c) If an accredited theater production receives only a portion of the theater tax credit award to which the Department has determined it is entitled due to the annual fiscal cap on the amount of credits that can be awarded, the accredited theater production shall be eligible to receive the remainder of its credits in the next tax year. If an accredited theater production does not receive any theater tax credit award due to the annual fiscal cap on the amount of credits that can be awarded, the accredited theater production shall not be entitled to any theater tax credit award in the following tax years.

d) The theater tax credit award shall state the amount of the tax credit award to which the applicant is entitled for that tax year and the Department shall contemporaneously notify the applicant and Illinois Department of Revenue in accordance with Section 222 of the Illinois Income Tax Act [35 ILCS 5/222] or, if the applicant is a non-profit theater production, subsection (k) of Section 704A of the Illinois Income Tax Act, as applicable. (Source: P.A. 97-636, eff. 6-1-12.). [35 ILCS 17/10-40]

History

• Source: Amended at 49 Ill. Reg. 15946, effective December 4, 2025

14 Ill. Adm. Code 532.100 Live Theater Tax Credit Program Evaluation and Report to Illinois General Assembly

a) In determining whether the live theater tax credit program is effective in creating and retaining jobs in Illinois, the Department is responsible for determining the overall success of the program. Correspondingly, on a quarterly basis, the Department is required to advise the Illinois General Assembly of the live theater tax credit program's economic impact. The Department's evaluation shall include:

1. An assessment of the effectiveness of the program in creating and retaining new jobs in Illinois;

2. An assessment of the revenue impact of the program;

3. In the discretion of the Department, a review of the practices and experiences of other states or nations with similar programs; and

4. An assessment of the overall success of the program. The Department may make a recommendation to extend, modify, or not extend the program based on the evaluation. [35 ILCS 17/10-50]

b) At the end of each fiscal quarter, the Department shall submit to the General Assembly a report that includes, without limitation:

1. An assessment of the economic impact of the program, including the number of jobs created and retained, and whether the job positions are entry level, management, vendor, or production related;

2. The amount of accredited theater production spending brought to Illinois, including the amount of spending and type of Illinois vendors hired in connection with an accredited theater production; and

3. A determination of whether those receiving qualifying Illinois labor expenditure salaries or wages reflect the geographical, racial and ethnic, gender, and income level diversity of the State of Illinois. [35 ILCS 17/10-50(b)]

c) At the end of each fiscal year, the Department shall submit to the General Assembly a report that includes, without limitation:

1. The identification of each vendor that provided goods or services that were included in an accredited theater production's Illinois production spending;

2. A statement of the amount paid to each identified vendor by the accredited theater production and whether the vendor is a minority or female owned business as defined in Section 2 of the Business Enterprise for Minorities, Females, and Persons with Disabilities Act; and

3. A description of the steps taken by the Department to encourage accredited theater productions to use vendors who are minority or female owned businesses. [35 ILCS 17/10-50(c)]

Chapter I Department of Commerce and Economic Opportunity

Part 532 Illinois Live Theater Production Tax Credit Program

14 Ill. Adm. Code 532.110 Transfer of Theater Tax Credit Award

a) A sale, assignment, or transfer of the credit may be made by the taxpayer earning the credit within one year after the credit is awarded in accordance with this Part. [35 ILCS 5/222(c)]

b) For purposes of this Section, a tax credit is earned on the date that the theater tax credit award is issued under Section 532.80.

c) For purposes of this Section, a tax credit earned by a partnership, limited liability company or Subchapter S corporation, the tax credit is allowed to the partners, unit holders, or shareholders in accordance with the determination of income and distributive share of income under sections 702 and 704 and subchapter S of the Internal Revenue Code. [35 ILCS 5/222(b)]

d) The tax credit award may not be carried back. If the amount of the credit exceeds the tax liability for the year, the excess may be carried forward and applied to the tax liability of the 5 years following the excess credit year. The tax credit award shall be applied to the earliest year for which there is a tax liability. If there are credits from more than one tax year that are available to offset liability, the earlier credit shall be applied first. In no event may a credit under this Section reduce the taxpayer's liability to less than zero. [35 ILCS 5/222(e)]

e) Transfer of a theater tax credit award shall be made as follows:

1. The applicant earning the credit shall request the transfer from the Department, in writing, identifying the transferees (name, tax identification number, mailing address) and the amount to be transferred, and the applicant shall return the theater tax credit award to the Department, together with its transfer request.

2. A request for transfer may be submitted with the applicant's request for the theater tax credit award under Section 532.80, in which case the Department may issue the requested certificates of transfer in lieu of the tax credit award.

3. If the transfer request is timely and meets the requirements of this Section, the Department shall issue a certificate of transfer, identifying the original theater tax credit award and stating the amount of the credit transferred.

4. If the applicant earning the credit transfers less than the full amount of the credit, the Department shall issue a certificate of transfer to the applicant identifying the original theater tax credit award and stating the amount of tax credit retained by the applicant.

5. If the person transferring the credit is a partner or shareholder in a partnership or Subchapter S corporation that earned the credit, that person shall submit to the Department, in lieu of the original theater tax credit award, copies of the tax credit awards and copies of the Schedule K-1-P received by that person from the partnership or Subchapter S corporation stating that person's share of the credit.

14 Ill. Adm. Code 532.120 Confidentiality of Documents and Record Retention Requirements

a) Any documentary materials or data made available or received from an applicant by any agent or employee of the Department are confidential and are not public records to the extent that the materials or data consist of commercial or financial information regarding the operation of or the production of the applicant or recipient of any tax credit award under the Act. [35 ILCS 17/10-55] The Department will not permit public inspection or copying of any material that is or would be confidential under State law, specifically including the exemptions set forth in the Freedom of Information Act [5 ILCS 140].

b) In accordance with the Act, an applicant is required at all times keep proper books and records of accounts relating to the tax credit award, in accordance with generally accepted accounting principles consistently applied, and make, upon reasonable written request by the Department, those books and records available for reasonable Department inspection and audit during the applicant's normal business hours. Any documents or data made available to or received from the applicant by any agent, employee, officer, or service provider to the Department shall be deemed confidential and shall not constitute public records to the extent that the documents or data consist of commercial or financial information regarding the operation by the applicant of any theater or any accredited theater production, or any recipient of any tax credit award under the Act. [35 ILCS 17/10-15(5)]

c) If an applicant submits information it considers to be of a confidential nature as part of its application or request for a tax credit award, that information shall be marked or labeled "CONFIDENTIAL". The applicant shall also submit a statement briefly setting forth the grounds on which that information should be treated as confidential. The Department, based on the proprietary nature of the material and privacy of the applicant's confidential information, shall not disclose those materials to the public.

14 Ill. Adm. Code 533.10 Purpose

The Department shall make music tax credit awards under the Music and Musicians Tax Credit and Jobs Act for the purpose of preserving and expanding the existing human infrastructure for the music industry in Illinois and to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population through the creation and implementation of training, education, and recruitment programs organized in cooperation with Illinois colleges and universities, labor organizations, and the commercial for-profit music industry. 35 ILCS 19/50-5.

14 Ill. Adm. Code 533.20 Definitions

The following definitions are applicable to this Part.

"12-Month Period" means calendar year (January 1 – December 31).

"Applicant" means a taxpayer that is engaged directly or indirectly in the production, distribution, and promotion of music within the State of Illinois that has submitted an application to the Department under this Part.

"Authorized to Do Business in Illinois" means a qualified music company holds a certificate of good standing with the Secretary of State.

"Base Investment" means the amount of Expenditures in the State.

"Business Owned by a Person with a Disability" means a business concern that is at least 51% owned by one or more persons with a disability and the management and daily business operation of which are controlled by one or more of the persons with disabilities who own it. A not-for-profit agency for persons with disabilities that is exempt from taxation under section 501 of the Internal Revenue Code of 1986 is also considered a "business owned by a person with a disability". [30 ILCS 575/2(A)(4.1)]

"Department" or "DCEO" means the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5]

"Director" means the Director of the Department of Commerce and Economic Opportunity. [20 ILCS 605/605-5]

"Diversity Data or Information" means data pertaining to gender, race, ethnicity of all employees of the applicant or vendor.

"Diversity Plan" means a written document through which the applicant assures the Department that minorities and females will have equal opportunities in recruitment, selection, appointment, promotion, training, and related employment areas in the state-sponsored production. The diversity plan must also describe the manner in which the applicant plans on hiring vendors certified by the Business Enterprise Council under the Business Enterprise for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575] with respect to the state-certified production and goals for developing partnerships with universities with diverse student bodies to build a pipeline of underrepresented talent in music production.

"Economic Impact Data" means data pertaining to the number and types of jobs (entry level, management, vendor, production) created and retained in Illinois, as well as the total amount an applicant spends in Illinois on the State-certified production.

"Economically Sound" means, for a taxpayer, that the taxpayer is not in default on a loan made by the State or a loan guaranteed by the State and has never declared bankruptcy under which an obligation to repay public funds or moneys was discharged.

"Employee of the Applicant" or "Employee", for state-certified productions commencing on or after January 1, 2025, means only an individual who is an employee of the applicant for purposes of employment taxes imposed under subtitle C of the Internal Revenue Code (26 U.S.C. subtitle C). An individual for whom a W-2 is issued by a Professional Employer Organization ("PEO") or a Personal Service Corporation is an employee if employed in the service of the Company and who renders services for the production.

"Entry Level Positions" means the lowest level of a hierarchy in a production, including untrained or unskilled labor working on a production, including, but not limited to, a production assistant.

"Expenditure in the State" means an expenditure:

to acquire, from a source within the State, property that is subject to tax under the Use Tax Act [35 ILCS 105], the Service Use Tax Act [35 ILCS 110], the Service Occupation Tax Act [35 ILCS 115], or the Retailers' Occupation Tax Act [35 ILCS 120], or

for compensation for services performed within the State that is subject to State income tax under the Illinois Income Tax Act [35 ILCS 5].

"High Poverty or High Unemployment" means a geographic area that meets one or more of the following conditions based on the Illinois Underserved Area map as published by the Department (website: https://dceo.illinois.gov/expandrelocate/incentives/underservedareas.html):

Poverty rate of at least 20%; or

35% or more of the families with children in the area are living below 130% of the poverty line, according to the latest American Community Survey; or

At least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program; or

Average unemployment rate that is more than 120% of the national unemployment average, for a period of at least two consecutive calendar years preceding the date of the application.

"Illinois Labor Expenditure" means gross salary or wages, including, but not limited to, taxes, benefits, and any other consideration incurred or paid to employees of the applicant for services rendered to and on behalf of the qualified music company, provided that the expenditure is:

incurred or paid by the applicant on or after the effective date of the Act for services related to any portion of a qualified music company from rehearsals, performances, and any other state-certified production related activities;

limited to the first $100,000 of wages incurred or paid to each employee of a qualified music production in each calendar year;

paid in the calendar year of the State-certified production for which the applicant is seeking the tax credit award;

paid to persons residing in Illinois at the time payments were made; and

reasonable under the circumstances.

"Illinois Resident" means an individual who is domiciled in this State during the State-certified production. Except in a case in which the applicant has actual knowledge, as shown in its books and records, that an individual is not an Illinois resident, the possession by an individual of a driver's license or other identification issued by this State prior to the commencement of work by the individual on the State-certified production shall be sufficient proof that the individual is an Illinois resident and the address on the license or identification shall be deemed correct.

"Jobs Created" means a brand, new job was created by the state-certified production. These should be net new hires and not replacements for existing roles. Can be full-time, part-time, or temporary.

"Jobs Retained" means an existing job on the state-certified production as an employee during the term of the state-certified production whose job duties are directly and substantially related to the Project. Can be full time, part-time or temporary. The term "Retained" does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer, or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has direct or indirect ownership interest of at least 5% of the profits, equity, capital or value of the company.

"Management Position" means anyone in a supervisory or managerial position who has control over other employees who report to that individual. Management roles include, but are not limited to, coordinators, directors, managers, supervisors, producers, masters and department heads.

"Minority" means a person who is a citizen or lawful permanent resident of the United States and who is:

American Indian or Alaska Native (a person having origins in any of the original peoples of North and South America, including Central America, and who maintains tribal affiliation or community attachment);

Asian (a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian Subcontinent, including, but not limited to, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam);

Black or African American (a person having origins in any of the black racial groups of Africa);

Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race); or

Native Hawaiian or Other Pacific Islander (a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands). [30 ILCS 575/2(A)(1)].

"Minority Owned Business" means a business concern:

that is at least 51% owned by one or more minority persons; or

in the case of a corporation, at least 51% of the stock in which is owned by one or more minority persons; and

the management and daily business operations of which are controlled by one or more of the minority individuals who own it. [30 ILCS 575/2(A)(3)].

"Personal Service Corporation" means a corporation the principal activity of which is the performance of personal services and such services are substantially performed by employee-owners.

"Post-Production" means editing or processing of original content employing traditional, emerging or new editing or processing techniques used for sound and music editorial, rerecording and mixing, original scoring and musical composition.

"Post-Production Staff and Crew" means post-production staff, including, but not limited to, music editor, post-production supervisor, music producer, music creative director, music effects supervisor, music effects editor, compositor, sound designer, sound editor, re-recording mixer, music supervisor, composer, foley artist, mixer, and music editor.

"Prevailing Hourly Rate" means the straight-time base hourly wage (excluding overtime premiums, bonuses, per diems, and fringe benefits) that is established by:

A current collective bargaining agreement (CBA) covering the employee's position; or

For positions not covered by a CBA, documented wage surveys or trade association data demonstrating that the employee's hourly wage meets or exceeds the rate customarily paid for similar work in the locality; or

Other applicable collective bargaining agreements customarily used for professional music recording, scoring, and post-production work.

''Production Staff and Crew" means office and production staff, including, but not limited to, accountants, coordinators, secretaries, casting, construction, electric, location, props, set decorating, sound, and transportation.

"Qualified Music Company" or "QMC" means an entity that:

is authorized to do business in Illinois,

is engaged directly or indirectly in the production, distribution, or promotion of music,

is certified by the Department as meeting the eligibility requirements of the Act, and

has executed a Tax Credit Agreement with the Department providing the terms and conditions for its participation.

"Qualified Facility" means the Illinois location or locations where a state-certified production is conducted during the applicable calendar year. Multiple Illinois locations used for a single state-certified production shall be treated as one qualified facility for purposes of this Part.

"Qualified Music Company Payroll" or "QMC Payroll" means wages reported by the qualified music company in box 1 of each W-2 form prepared for an employee of the qualified music company who is an Illinois resident.

"Related Member" means a person that, with respect to the taxpayer during any portion of the taxable year, is any one of the following:

An individual stockholder, if the stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code, 26 U.S.C. 318) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the Taxpayer's outstanding stock;

A partnership, estate, or trust of any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, equity, capital, stock, or value of the taxpayer;

A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, 26 U.S.C. 318, if the Taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock;

A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, 26 U.S.C. 318, if the corporation and all such related parties own in the aggregate at least 50% of the profits, equity, capital, stock, or value of the taxpayer; or

A person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code (26 U.S.C. 1563), except, for purposes of determining whether a person is a Related Member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code.

"Related Party Transaction" means a transaction between parties deemed to be related according to generally accepted accounting standards, ("GAAS") and generally accepted accounting principles ("GAAP").

"Resident Copyright" means the copyright of a musical composition written by an Illinois resident or owned by an Illinois-domiciled music company, as evidenced by documents of ownership, including, but not limited to, registration with the United States Copyright Office.

"Sound Recording" means a recording of music, poetry, or a spoken-word performance made, in whole or in part, in Illinois. "Sound recording" does not include the audio portions of dialogue or words spoken and recorded as part of television news coverage or athletic events. For sounds recordings performed partially in Illinois and partially outside of Illinois, only the Illinois labor expenditures and expenditure in the State are included in the tax credit award amount.

"Sound Recording Production Company" means a company engaged in the business of producing sound recordings. Does not include any person or company, or any company owned, affiliated, or controlled, in whole or in part, by any company or person, that is in default on a loan made by the State or a loan guaranteed by the State, nor which has ever declared bankruptcy under which an obligation of the company or person to pay or repay public funds or moneys was discharged as a part of the bankruptcy.

"State-Certified Production" means

a sound recording production, or a series of productions, including, but not limited to, master and demonstration recordings, occurring over the course of a 12-month period, and

the base production-related investment that is approved by the Department after receipt by the Department of a complete application for initial certification of a production.

"Tax Credit Award" means the issuance to a taxpayer by the Department of a tax credit award against the taxes imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act as provided in the Act.

"Vendor in Illinois" means any business that provides the following:

Purchases of tangible personal property for use in Illinois on a state-certified production from a person who is registered under the Illinois Retailers' Occupation Tax Act (ROTA) [35 ILCS 120]. A copy of the purchase receipt showing that the purchase was made at an Illinois location and that Illinois Retailers' Occupation Tax was paid shall be sufficient proof that the purchase was made from a vendor in Illinois. For tangible personal property ordered by mail, telephone or internet, a copy of the seller's ROTA registration certificate, along with a receipt showing that Illinois Use Tax was collected by the vendor, shall be sufficient proof that the purchase was made from a vendor in Illinois. Documentation that shows that Illinois Use Tax was collected by the vendor, but either does not show an Illinois address for the sale or is not accompanied by a ROTA registration certificate, shall not be sufficient proof that the purchase was made from a vendor in Illinois.

The lease or rental of real property located in Illinois for use in a state-certified production, including hotels or other lodging for employees working on the state-certified production.

The lease or rental of an automobile (as defined in the Illinois Automobile Renting Occupation and Use Tax Act [35 ILCS 155]) for use in a state-certified production on which the renter collects the Illinois Automobile Renting Occupation and Use Tax from the rentee.

The lease or rental of other tangible personal property for use in a state-certified production if the owner of the property has paid Illinois Use Tax on the property. A copy of the invoice or receipt for the lease or rental showing an Illinois address for the lessor, and showing that no other state's sales tax is collected from the lessee, shall be sufficient proof that the transaction was with a vendor in Illinois.

The purchase of financial services (including insurance, accounting, the borrowing of funds) from a lender or insurer whose commercial domicile is in this State.

The purchase of other services with respect to a state-certified production from an Illinois resident or from a person whose commercial domicile is in this State. For purposes of this provision only, the commercial domicile of a person is their business address (as shown in the records of the applicant) in this State.

A vendor in Illinois that is a corporation, limited partnership, limited liability company, or limited liability partnership must register and remain an entity in good standing with the Illinois Secretary of State, Department of Business Services, throughout the duration of the production.

"Vendor Related Positions" means jobs obtained or created through a subcontractor, which includes but is not limited to security, janitorial, printing, florist, dry cleaners, and limousine services.

"Wages" means all compensation paid for services rendered by an employee in connection with a state-certified production, as indicated on including health, life, and disability insurance premiums, FICA taxes, pension contributions, expense reimbursement, and accrued vacation and sick pay.

"Woman" means a person who is a citizen or lawful permanent resident of the United States and who is of the female gender. [30 ILCS 575/2(A)(2)]

"Women Owned Business" means a business concern:

that is at least 51% owned by one or more women; or

in the case of a corporation, at least 51% of the stock in which is owned by one or more women; and the management and daily

business operations of which are controlled by one or more of the women who own it. [30 ILCS 575/2(A)(4)]

14 Ill. Adm. Code 533.30 Eligibility Determination

a) Any applicant who operates or is proposing to operate a business in the State may apply to the Department to have the business certified by the Department as a qualified music company if the business meets the criteria for certification set forth in the Act.

b) A business is eligible for participation in the program if the business meets all of the following criteria:

1. is authorized to do business in Illinois;

2. is engaged directly or indirectly in the production, distribution, and promotion of music;

3. intends to make an expenditure in Illinois as defined in the Act;

4. the applicant's qualified music company is economically sound and will benefit the people of the State of Illinois by increasing opportunities for employment and strengthening the economy of Illinois;

5. submits a diversity plan and reports on its outcomes;

6. advises the Department whether it intends to participate in training, education, and recruitment programs, if available, that are organized in cooperation with Illinois colleges and universities, labor organizations, and the music industry and are designed to promote and encourage the training and hiring of Illinois residents who represent the diversity of the Illinois population (Section 25(a)(4) of the Act);

7. indicates the tax credit award will result in an overall positive impact on the State, as determined by the Department using the best available data, and agrees to report on the data set forth in Section 19/50-45 of the Act;

8. is approved by the Director of Commerce and Economic Opportunity;

9. For recorded productions of resident copyright, owns the copyright in recorded production or has contracted directly with the owner of the copyright in the accredited production or a person acting on behalf of the owner to provide services for the accredited production, when the owner of the copyright is not an eligible qualified music company.

14 Ill. Adm. Code 533.40 Application Process and Requirements

a) The Department will conduct a two-step evaluation process to accept and evaluate applications from eligible applicants.

1. STEP 1: DCEO will certify the applicant as a Qualified Music Company, and;

2. STEP 2: DCEO will certify each production for which an applicant seeks a tax credit as a "State-Certified Production" or series of productions.

b) Applications must be submitted on the standard forms provided by the Department and received by the Department no later than December 1st of the calendar year in which the applicant seeks credit. The Department shall make available an online application for electronic submission, including functionality for electronic application and document uploads. Applications are available on the Department's website (https://dceo.illinois.gov). Submission of an application does not obligate the Department to award a tax credit or reimburse any costs incurred in its preparation. Applications are valid only for the calendar year in which they are submitted to the Department. The application shall, at a minimum, include:

1. Legal name, address, and telephone number of the applicant.

2. Name, title, and telephone number, email of primary contact person, and company officers.

3. Type of business entity (Individual or Sole Proprietorship, Partnership, Corporation, Subchapter S Corporation, Limited Liability Company, Other − provide description).

4. Date and location of incorporation or formation.

5. Federal Employer Identification Number (FEIN) or Tax Identification Number (TIN), Standard Industrial Classification (SIC), North American Industry Classification System (NAICS), as applicable.

6. Description of the applicant.

7. Project description. Related companies, project overview, length of production, location (primary) of production, estimated training.

8. Jobs impact. Employer, address, job classification, number of new and retained Jobs in Illinois

9. Date principal rehearsals or recording begins in Illinois.

10. Estimated number of production days in Illinois.

11. Estimated total budget of production separated into Illinois labor and Expenditures in the State

12. Estimated total Illinois labor expenditure.

13. Estimated total budget of post-production.

14. Estimated number of Illinois residents to be hired to work on the production.

15. A diversity plan.

16. A statement indicating the applicant's intention to participate in training, education and recruitment programs, if available, offered by Illinois colleges, universities, labor organizations and the music industry that are designed to promote training and hiring of Illinois residents who represent the diversity of the Illinois population.

17. Tax clearance for being economically sound and authorized to do business in Illinois as follows:

A) to the Illinois Department of Revenue, a Form ITR-1; and

B) to DCEO, proof of tax clearance from the Illinois Department of Revenue.

C) Certificate of good standing with the Secretary of State.

18. Certification that the applicant will provide detailed vendor cost documentation for production and post-production services for each state-certified music production, net of all related party transactions, net of payment term discounts and net of rebate programs, including, but not limited to, a listing of all Illinois residents who work on production and post-production staff and crew who worked on the production and their respective wages and fringe benefits and payments made to sub-vendors domiciled in Illinois. Only Illinois resident wages and fringe benefits (up to $100,000 per resident) and payments made to Illinois domiciled sub-vendors are qualified.

14 Ill. Adm. Code 533.50 Evaluation of Application

a) Prior to substantive evaluation of an application, the Department shall screen all applications to determine that all requirements of the application package, as described in Sections 533.30 and 533.40 have been addressed. Applicants will be notified of deficiencies in their applications and given an opportunity to correct those deficiencies through the submission of additional documentation. All application deficiencies must be resolved by December 31 for consideration.

b) First, the Department will determine whether the applicant meets the criteria as a Qualified Music Company (QMC) in Section 533.30. Second, if the applicant is a QMC, then the Department will evaluate whether each production is qualified as a state-certified production as described in Section 533.90.

c) For state-certified productions that do not start and conclude in the same calendar year, a QMC must submit a new application for each year in which the QMC makes a request for a tax credit certificate.

d) The Department shall act expeditiously regarding approval of applications for qualified music companies so as to accommodate the operations and needs of those companies.

e) The applicant is responsible for the accuracy of all data, information and documentation required by subsection (a). Once submitted, applications shall become the property of the Department.

f) Whether or not the applicant owns the Resident Copyright, the applicant must submit documentation for all expenditures in the State. The tax credit amount will only be based on Illinois Labor expenditures if the applicant does not own the Resident Copyright.

g) Applicants shall be notified via electronic mail as to the Department's evaluation of all completed applications.

14 Ill. Adm. Code 533.60 Economic Impact Data

a) As part of the application, the applicant or its representative shall use its best efforts in submitting its economic information to the Department related to the following:

1. Jobs Created and Retained. This information shall document the number of jobs created and retained for entry level, management, vendor and production jobs. Additionally, with respect to production type jobs, the applicant must supply information disclosing the number of production type jobs created and/or retained and whether the production type jobs were entry level, management or vendor jobs.

2. Production Costs. This information shall document the amount of production costs in various industries in Illinois. Industry production costs include, but are not limited to, vendor expenditures for catering, dry cleaning, janitorial services, maid services, security, transportation, etc.

b) The applicant must provide a narrative describing the production's economic impact on Illinois vendors, talent, and workforce development efforts.

14 Ill. Adm. Code 533.70 Diversity Impact Data

The applicant or its representative shall submit its diversity information to the Department related to gender, race and ethnicity of all employees hired and of vendors hired. This information shall include job creation number for:

a) Production and post-production staff and crew;

b) Entry level positions;

c) Management positions;

d) Vendors (i.e., businesses owned by minorities, females and persons with disabilities);

e) On a form provided by the Department, the applicant shall submit a Diversity Outcomes Summary which shows the results of its approved diversity plan. The summary must:

1. Compare planned vs. actual hiring outcomes for minorities, women, and persons with disabilities;

2. Describe efforts to contract with BEP-certified vendors and the results of those efforts;

3. Describe efforts to develop partnerships with universities with diverse student bodies to build a pipeline of underrepresented talent in music production and related fields;

4. Include a narrative explanation of good-faith efforts taken to achieve the plan's goals, if outcomes were not fully met.

14 Ill. Adm. Code 533.80 Qualified Music Company Certificate

a) Upon approval of an application by the Director, the Department will issue an electronic Qualified Music Company Certificate ("QMC Certificate") certifying that the applicant is engaged directly or indirectly in a production, that meets the requirements of the Act and this Part.

b) When the Department issues a QMC Certificate, this certificate signifies the applicant's eligibility to participate in this program; it does not automatically entitle the applicant to a tax credit. The tax credit is awarded after the QMC obtains certification for a State Certified Production, fulfills the terms of the Agreement for that State Certified Production, and then submits its request for a tax credit certificate using forms required by the Department (35 ILCS 19/50-15) and is approved by the Department.

14 Ill. Adm. Code 533.90 State-Certified Production

a) Each State-certified production is certified for the calendar year only. The QMC must re-apply in subsequent calendar years.

b) Once the production is complete, a QMC may request its tax-credit certificate at any point during the calendar year, but not later than March 1 of the following year.

c) A QMC must enter into a Tax-Credit Agreement for each state-certified production with the Department.

d) Should the QMC become the subject of an investigation by any State or federal regulatory, law enforcement or legal authority, the QMC shall promptly notify the Department of that investigation. The Department shall not grant a tax credit certificate to a QMC that does not hold a valid Certificate of Good Standing with the Secretary of State at the time of the certificate request.

e) Tax credit agreements under this Part are for Illinois Labor Expenditures for State-Certified productions. Additional tax credits may be awarded for base investments by a qualified music company on the Sound Recording production of a Resident Copyright. However, all qualified music companies must provide details requested by the Department to satisfy the Qualified Music Program evaluation and reports [35 ILCS 19/50-45] relating to all expenditures on the State Certified Production.

14 Ill. Adm. Code 533.100 Tax-Credit Agreement

a) The QMC shall enter into a Tax-Credit Agreement ("Agreement") with DCEO as a requirement of obtaining a QMC certificate. The Agreement specifies the terms and conditions of receiving the tax credit.

b) The Agreement shall include the QMC conditions for receiving a tax credit certificate, including but not limited to:

1. Completing a New Jobs and Retain Jobs worksheet for each state-certified production according to occupation and skill-level.

2. Completing an Illinois Labor Expenditure worksheet, including Diversity Data, for each employee of the applicant for which a tax credit is sought under this Part.

3. Providing a detailed description of the training, education, and recruitment programs that are organized in cooperation with Illinois colleges and universities or labor organizations in which the QMC intends to participate.

4. Any other information that demonstrates compliance with the tax credit agreement, as requested by the Department for each state-certified production for which they are requesting tax credits.

5. Any other performance conditions or contract provisions the Department determines are necessary to comply with the Act and other applicable State laws and administrative rules.

6. Reporting qualified labor and vendor expenses by state-certified production based on the calendar year in which the expense was incurred, regardless of the production timeline.

14 Ill. Adm. Code 533.110 Request for Tax Credit Certificate

a) The QMC may request a tax credit certificate from the Department on the forms provided by the Department at any time following the completion of the State-certified production or at the end of a calendar year for that years portion of the production that will continue on in the next calendar year, but in no event later than 60 days (i.e. March 1) after the close of the calendar year.

b) The QMC shall calculate the tax credit amount request. For each approved State-certified production, the QMC shall engage a licensed, certified public account to perform an agreed upon procedures audit certifying the amount of the of the tax credit request.

c) With each request for a tax credit certificate, the QMC shall provide:

1. An itemized statement of and copies of the books and records of the QMC for the state-certified production, showing the Illinois labor expenditures and expenditures in the State, and any documentation necessary to support the tax credit computation.

2. If requesting tax credits for under Section 533.140(b), an itemized payroll for each employee showing employee names, home address, along with:

A) Whether that employee resides in an area of high unemployment and high poverty for each employee, the QMC is seeking an extra 15% tax credit;

B) The applicants must provide evidence that they have paid the prevailing hourly rate for each employee they wish to receive the additional credit toward Illinois Labor Expenditures. Evidence of each employee, being paid a "Prevailing Hourly Rate" for the QMC to seek an extra 7% tax credit by demonstrating that the employee is paid the prevailing hourly rate for their position. The prevailing hourly rate is established:

i) by a current collective bargaining agreement for which the employees' position is covered, including but not limited to the following American Federation of Musicians (AFM) agreements:

• Sound Recording Labor Agreement – for sound recording production work;

• Basic Theatrical Motion Picture Agreement – for theatrical motion picture soundtrack work;

• Basic Television Motion Picture Agreement – for television motion picture soundtrack work;

• Commercial Announcements Agreement – for commercial recording work;

• Television Videotape Agreement – for television videotape production work; and

• National Public Television Agreement − for public television production work.

ii) For any position not covered under a collective bargaining agreement, the Department may accept documented wage surveys or trade association data that shows the employee is paid a prevailing hourly rate that meets or exceeds paid for similar work in the locality.

iii) For purposes of this Section, the Department may, accept other collective bargaining agreements collective bargaining agreements customarily applicable to professional music recording, scoring, and post-production work.

iv) The burden of proof shall rest with the applicant to demonstrate that each employee's compensation meets or exceeds the applicable prevailing hourly rate.

Applicants shall provide enough documentation to verify the prevailing hourly rate paid to each employee and the relevant wage scale (shown in pay rate per hour) for Illinois Labor Expenditures, for which the applicant seeks credit, including payroll information.

C) A detailed vendor cost documentation for production and post-production services for television or film work completed in Illinois, including, but not limited to, a listing of all Illinois resident production and post-production staff and crew who worked on the production, including their respective QMC payroll and payments made to sub-vendors domiciled in Illinois for Illinois labor expenditures and Expenditures in the State. The vendor cost documentation must also be submitted in a format that indicates whether each vendor is certified as a minority-owned, women-owned, or business owned by persons with disabilities, as defined in Section 2 of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, and indicate which group they are certified under.

3. Disclosure of all related party transactions including:

A) The name of the related party,

B) The nature of the relationship between the related party and the state-sponsored production,

C) The nature of the transaction, and

D) The amount of the transaction; and

4. For QMCs that wish to receive credit for vendor spending on a sound recording production of a resident copyright, the QMC shall provide evidence of copyright ownership by the QMC for its state-certified production or evidence of an Agreement between the QMC and the owner of the copyright for its state-certified production. Within the Department's discretion, the applicant may be permitted to submit an affidavit attesting to its copyright ownership.

5. A sworn affidavit by the QMC that as part of the application for State-Certified Production, the QMC, to the best of the affiant's knowledge, information, and belief all accounts, documents, records, and other information provided to the Department were true and correct, net of rebates or discounts, and that all related party transactions were accurately reported in accordance with this Section, as evidenced by:

A) Submission of the amount of the tax credit request form;

B) An attestation from a licensed certified public accountant that the tax credit amount provided on the tax credit request form was calculated using agreed upon procedures outlined in the Section 533.100 of this Part.

14 Ill. Adm. Code 533.120 Approval or Denial of Tax Credit Certificate Request

a) When the QMC submits its request for a tax credit certificate, the Department will review and verify the applicant's final diversity hiring numbers for each category to determine whether the QMC made a good faith effort to meet the goals outlined in its diversity plan before issuing the tax credit certificate.

b) In the event the applicant fails to meet the goals of its diversity plan, the applicant must then demonstrate it made good-faith efforts in attempting to achieve its diversity goals in order for the tax credit certificate request to be approved. Good-faith efforts that the Department will consider include, but are not limited to, documentation demonstrating that the applicant communicated (written correspondence, phone call, email, meetings) with minority, female, and disabled vendors and applicable unions, as well as talent and workforce agencies/entities. The applicant may also submit any other documentation demonstrating its good-faith attempts to the Department for consideration. If appropriate documentation is unavailable, then, the applicant may be permitted to submit an affidavit attesting to its good-faith efforts.

c) The Department shall also verify that the reported Illinois labor expenditures and Expenditures in the State qualify under this Part, and that the applicant has submitted the economic impact data required under Section 533.60. For Qualified Music Companies with multiple State-certified productions in the same calendar year, the Department shall determine the applicable credit percentage, 10% or 15%, based on the company's total Illinois payroll for that Calendar year, consistent with Section 533.140.

d) Partial tax credits may also be awarded if awarding the full amount would cause the program to exceed its annual $2,000,000 cap allotment. The Department shall issue tax-credits on a first-come, first-serve basis.

14 Ill. Adm. Code 533.130 Credit Award Issuance

a) After calculation of the tax credit award amount, the Department shall issue a tax credit award certificate stating the amount of the tax credit award to which the QMC is entitled for the preceding calendar year. The tax credit award certificate shall be issued by the Department for each calendar year in which it is earned.

b) Upon issuance of the credit certificate, the Department shall inform the Department of Revenue, in the form and manner as agreed between the agencies. (35 ILCS 19/50-35).

c) The credit shall be applied to the first reporting period after the credit certificate is issued and that begin on or after January 1, 2025.

14 Ill. Adm. Code 533.140 Amount of Tax Credit

For tax years beginning on or after January 1, 2025, a taxpayer who has been awarded a tax credit under this Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act.

a) For state-certified productions with payroll up to $150,000 per calendar year, eligible QMCs will be awarded a credit equal to 10% of the Illinois labor expenditures approved by the Department. For state-sponsored productions with payroll over $150,000 per calendar year, eligible applicants will be awarded a credit equal to 15% of the Illinois labor spending approved by the Department.

b) Plus, state-sponsored productions will receive tax credits equal to:

1. 15% of Illinois labor expenditures for employees who live in geographic areas of high poverty or high unemployment in Illinois; and

2. 7% of Illinois labor expenditures for employees are paid a wage of no less than the general prevailing hourly rate as paid for work of a similar character in the locality in which the work is performed; and

3. 7% of the Illinois labor expenditures spent on post-production sound recording for television or film work completed in Illinois; and

c) Plus, 10% of the base investment amount for a sound recording production of a resident copyright.

d) For any calendar year, the aggregate amount of credits certified for all investors under this Act shall not exceed $2,000,000, and shall not exceed $200,000 for any single qualified music company. The tax credit can be applied toward the investor's Illinois income tax liability for the taxable year in which the tax credit award certificate is issued. The credit may be stated as a percentage of the eligible expenditures attributable to the applicant's project and may include a fixed dollar limitation.

e) If any of the provisions in this Section conflict with any existing collective bargaining agreements, the terms and conditions of those collective bargaining agreements shall control.

14 Ill. Adm. Code 533.150 Noncompliance with Certification

a) If the Department determines that a QMC that has received a certificate of verification for credits under the Statute is not complying with the requirements of the certification or all of the provisions of the statute, DCEO shall:

1. Notify a QMC, in writing, that its certification is temporarily revoked, the date of revocation, the reason for the revocation, and the option to cure or seek a hearing contesting the revocation;

2. Notify the Illinois Department of Revenue of the temporary suspension and the starting date.

b) Upon notice of noncompliance, the qualified music company will have 30 calendar days to either:

1. Cure the cause of the noncompliance and provide documentation sufficient to demonstrate the certified local news organization has cured the non-compliance, or

2. Request a hearing under Article 10 of the Illinois Administrative Procedure Act [5 ILCS 100].

c) If within the 30 days after receipt of the notice described in subsection (a)(1), the qualified music company provides documentation sufficient to demonstrate cure of the noncompliance, then DCEO will inform the Illinois Department of Revenue of the date the temporary suspension is lifted.

d) If, after notice and any hearing, DCEO determines that a noncompliance event exists, DCEO shall issue to the Illinois Department of Revenue notice to that effect, stating the noncompliance date and requesting proceedings be initiated to recover wrongfully exempted State taxes or an erroneous refund, within the meaning of the Illinois Income Tax Act.

e) If a QMC neither cures the cause of noncompliance nor requests a hearing within the prescribed period, the temporary suspension shall become permanent and DCEO shall notify the Department of Revenue of the permanent revocation and request proceedings be initiated to recover wrongfully exempted State taxes or an erroneous refund, within the meaning of the Illinois Income Tax Act.

f) Alleged noncompliance shall include, but is not limited to, the following:

1. a demonstration that the QMC failed materially to comply with the terms and conditions of its certification;

2. a determination, upon investigation, that the QMC, or any of their agents or representatives, provided false or misleading information to the Department.

14 Ill. Adm. Code 533.160 Books and Records

The applicant must at all times keep proper books and records of accounts relating to the tax credit award, in accordance with generally accepted accounting principles consistently applied, and make those books and records available for reasonable Department inspection and audit, upon reasonable written request by the Department, during the applicant's normal business hours. Any documents or data made available to the Department or received by the Department from the applicant by any agent, employee, officer, or service provider shall be deemed confidential and shall not constitute public records to the extent that the documents or data consist of commercial or financial information regarding the operation by the applicant of any theater or any state-sponsored theater production or any recipient of any tax credit award under this Act.

14 Ill. Adm. Code 533.170 Confidentiality of Documents and Data

Any documentary materials or data made available or received from an applicant by any agent or employee of the Department are confidential and are not public records to the extent that the materials or data consist of commercial or financial information regarding the operation or the production of the applicant or recipient of any tax credit award under this Act. [35 ILCS 19/50-50]. If an applicant submits information it considers to be of a confidential nature as part of its application or request for a tax credit certificate, such information shall be marked or labeled "CONFIDENTIAL" in capital letters. The applicant shall also submit a statement briefly setting forth the grounds on which the information should be treated as confidential.

Chapter I Department of Commerce and Economic Opportunity

Part 540 Technology Commercialization Grant-in-Aid Programs

14 Ill. Adm. Code 540.10 Purpose of Program (repealed)

History

• Source: Repealed at 9 Ill. Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.20 Definitions

Act – Public Act 83-1349, effective September 8, 1984 (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a), which creates the Technology Innovation and Commercialization Program.

Application – A request for program funds including the required statistical and narrative information and attachments.

Department – The Illinois Department of Commerce and Community Affairs.

Financial Aid – Grant to business wherein the Department requires repayment.

Grant – Funds provided from the Department through this program.

Grant Award – Contractual agreement between the Department and recipient, which includes the scope of work to be provided, the budget, and all terms and conditions of the contact.

Nonexpendable Personal Property – Tangible personal property having a useful life of more than one year and an acquisition cost of $300 or more per unit.

Program – The Technology Commercialization Grant-In-Aid Program.

Program Income – Earnings by the recipient realized from grant supported activities.

Project – An activity or activities funded under this program.

Recipient – Any eligible applicant receiving funds under this program.

History

• Source: Amended at 9 Ill. Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.30 Program Responsibilities

a) Responsibilities of the Department of Commerce and Community Affairs - The Department is to establish a program of grants to universities, community colleges, research institutions, research consortia, other not-for-profit entities, and Illinois Business for the purpose of fostering research and development in High Technology and the service sector leading to the development of new products and services that can be marketed by Illinois Businesses (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)).

b) Responsibilities of the Technology Commercialization Grants-In-Aid Council -

1. There is created an advisory council responsible for:

A) Reviewing and evaluating all applications received by the Department; and

B) Assisting in monitoring the projects and in evaluating the impact of the program on technological innovation and Business Development within the State (Ill. Rev. Stat. 1984, Supp., ch. 127, par. 46.19a(3)).

2. Members of the Council and the Chair of the Council shall be selected in accordance with the Act.

History

• Source: Amended at 9 Ill. Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.40 Application Package

a) Upon request, the Department will supply applicants with an application package. Public notice of the availability of grants and the application due date will be published in the State recognized newspaper. Applications will be due no later than sixty days after the public notice.

b) The Department will not accept an application addressing more than one proposal or category of grant activities as specified in Section 540.60 from any organization or institution. Individual applications must be submitted for each proposal under each category.

c) Applications will address the following items:

1. Activities and Services – Each applicant must identify services and activities to be delivered which are designed to create jobs by fostering development of new products and services and the development of new businesses.

2. Delivery Systems – The applicant must design delivery mechanisms, for example, individual case handling, referral services, seminars and conferences, special reports or periodicals, or group consulting, to carry out its services.

3. Milestones and Program Results – The applicant must identify the anticipated success of each project in terms of economic results such as the number of new jobs created or retained, new business starts, new products commercialized, or number of businesses served.

4. Staffing – Applicants may rely on full time staff, part time employees, on-call contracts, pro bono services, or community volunteers as necessary to conduct program activities, and may utilize graduate assistants or interns, other personnel of the applicant, or private contractors as needed. Salaries paid to staff members of projects should be comparable with salaries established for similar positions within the institution. Applicants shall insure that all paid staff positions are limited to those essential to operate the program and shall not establish administrative or support positions for which the duties and functions are inconsistent with the delivery systems proposed. Each project shall designate one individual, with directly related education and experience, as the project director or chief investigator, responsible for project management, internal quality control, financial and programmatic reports preparation, and other program delivery activities.

5. Coordination – The applicant must describe cooperative working relationships which will be developed with other programs providing similar or related services and include letters of support.

6. Budget – The applicant must submit a project budget by cost categories, as required in the Department's application package.

History

• Source: Amended at 9 Ill. Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.50 Review of Applications

a) The Department staff shall screen all proposals to determine that all minimum requirements to the application package have been addressed. All applications will then be grouped by eligible grant categories and reviewed by Department staff and by members of the Council. In addition, outside consultants selected by the individual applicants from Technology Commercialization Centers will review the technical components of applications under the Business Innovation Research category. This review process will begin after the application due date and take no more than 30 days, with grant awards being announced at the end of that period.

b) The following review criteria will be used in reviewing and selecting applications for funding according to the weights specified. Applications for a particular eligible grant category will be comparatively reviewed with all applications for that category and are ranked from highest to lowest based on total points awarded to each proposal.

1. Proposed Activities – The proposals will be reviewed to assure their consistency with the eligible components and exemplary activities as described in Section 540.60. (30 percent weight)

2. Administrative Capacity – The proposals will be reviewed to determine whether the applicant is capable of completing the proposed project successfully based on past experience or previous performance, and the scope of program coordination. (10 percent weight)

3. Economic Development – The proposals will be reviewed to determine the extent to which the proposed activities are projected to result in measurable economic gains such as new business starts, new products commercialized, new jobs created or jobs retained, private sector funds leveraged, or number of businesses served. (30 percent weight)

4. Costs and Match – The Department will review proposals to determine that the costs charged to the program to carry out proposed activities are consistent with required match provisions and state and department administrative cost limits as specified in Section 540.70 of this Part. (30 percent weight)

c) The Technology Commercialization Grants-In-Aid Council will recommend projects for funding from the highest ranking proposals as determined according to the review process of Section 540.50(b) until all available funds are expended.

d) The Department will select projects for funding from among those recommended by the Technology Commercialization Grants-In-Aid Council. Projects will be selected for funding based on the following criteria:

1. availability of funds for the category;

2. applicant's performance on existing grants;

3. proposed economic development activities; and

4. applicant's willingness to negotiate with the department.

e) At least fifty percent of the funds available will be reserved to fund projects under the Business Innovation Research category.

History

• Source: Amended at 9 Ill. Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.60 Eligible Grant Categories and Activities

a) Technology Commercialization Centers – This category of projects provides for matching grants to universities, research institutions, research consortia, and other not-for-profit entities for the purpose of identifying and supporting Illinois business with services auxiliary to direct production but necessary for success in new product sales. Centers shall engage in intensive service or coordinated sets of activities for Illinois businesses and shall engage in one or more of the following activities:

1. General feasibility studies of new product, service, or venture ideas;

2. Directing Research Assistance for new venture creations;

3. Adaption of technologies, prototype development, and product testing;

4. Developing technical and intellectual skills of business managers;

5. Commercialization of new technology, concepts, services, or products;

6. Aid in securing financing, marketing, and production of new products; or

7. Assisting inventors in finding Illinois manufacturers of their products (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)(b)(i-vii)).

b) Business Innovation Research – This category of projects provides matching financial aid to Illinois businesses to fund research and consultation arrangements between businesses and universities or other not-for-profit research organizations. Such aid to business shall provide funding for up to 50 percent of the allowable cost of the research or consultation; however, such aid from the Department shall not exceed $100,000.

c) Challenge Grants

1. This category of projects provides matching grants to qualified applicants who provide a contributing match for other creative systems that bridge university resources and businesses' technological, production, and development concerns. Such grants to eligible applicants shall provide funding for up to 50 percent of the total allowable costs of the project.

2. The Department shall set aside up to 10 percent of the appropriation to consider meritorious technology transfer or commercialization proposals submitted by federal research laboratories under this category. Proposals will be evaluated in accordance with criteria in Section 540.50(a) through (d). Unused set aside funds are available to other university commercialization activities. The resources dedicated to the commercialization effort will be negotiated by the Department and the recipient.

d) Technology Information Transfer – This category of projects provides matching grants to universities and other not-for-profit research institutions for statewide systems and mechanisms to make information on research, technology, faculty, facilities, and other resources available to Illinois businesses. Examples of possible activities include those which have a statewide impact and which offer information to a large number of businesses, such as:

1. Identify, catalog, and publish listings of commercializable patents;

2. Identify, catalog, and publish new technological applications;

3. Establish computerized inventories of research information sources;

4. Provide businesses "On-Line" access to extended computer networks;

5. Identify new commercialized products developed in Illinois; or

6. Review publications and research and inform businesses of new technologies (Ill. Rev. Stat. 1984, Supp., ch. 127, par. 46.19a(2)(a)).

History

• Source: Amended at 9 Ill. Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.70 Program Administration Requirements

a) Program Targeting – Services provided through grants under Sections 540.60(a) and (d) of this program must benefit Illinois business as that term is defined in Section 46.19a(2)(e) of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)(e)) and as determined by the review process in Section 540.50.

b) Eligible Grant Recipients – Grants may be awarded by the Department to business, universities, research institutions, research consortia, and other not-for-profit entities, consistent with the legislative intent for each particular grant category as specified in Section 540.60 of this Part.

c) Property Records – The recipient agrees to maintain property records and at least annually conduct an inventory of all equipment or nonexpendable personal property purchased with grant funds. Equipment must be used on the original project as long as needed. While being used on the original project, equipment may be made available for "shared use" with other activities provided that use will not interfere with its use for the original project. When no longer needed for the original purpose, equipment may be used for other projects (projects of the Department are to be given first priority, if there is a choice).

d) Record Retention and Review – Recipients and their subcontractors must permit any agent authorized by the Department upon presentation of credentials, in accordance with the constitutional limitations on administrative searches, to have full access to and the right to examine any documents, papers and records of the recipient involving transactions related to a grant under this program. To the extent authorized by the Freedom of Information Act (Supp. to Ill. Rev. Stat. 1983, ch. 116, pars. 201 et seq.), the Department will not make public any information disclosing program supported technical information if the recipient believes such disclosure would affect the commercialization potential of the project. The term "subcontractor" as used in this clause excludes purchase orders not exceeding $2,500.00.

e) Financial Management Standards – A recipient's financial management system shall be structured under the Accounting Standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (June, 1984) in accordance with the reporting requirements specified in Section 540.70(u) of this Part. The recipient is accountable for funds received under this grant and shall maintain effective control and accountability over all funds, equipment, property, and other assets under the grant. The recipient shall keep records which detail the recipient's expenditures of grant funds and accurately document the recipient's Expenditure Summary and Payments Request Form submitted pursuant to Section 540.70(u).

f) Method of Compensation –

1. Payments pursuant to a grant are subject to the availability of funds appropriated by the General Assembly.

2. Payments to the recipient are subject to the initiation of an invoice voucher. The first payment for program initiation may be an advance for the first month's cash needs. Thereafter, the payments are dual purpose in that they will be sufficient to cover the expenditures to date as well as the cash needs of the recipient for the next period.

g) Audits – The recipient will conduct an audit of all program records which reflect the actual activities conducted and the actual costs and expenses incurred by the recipient, using an independent public accountant, certified and licensed by authority of the State of Illinois. The audit must be conducted in accordance with generally accepted auditing standards adopted by the Codification of Statements on Auditing Standards of the AICPA (January, 1983) and must be submitted to the Department within 45 days of the expiration of the grant. If the recipient is routinely audited by the Auditor General of the State of Illinois, the grant need not be audited separately by the recipient. The audit is to include both the state and required matching share of the project. The recipient shall be responsible for taking the necessary steps to correct any deficiencies disclosed by such audit, including such action as the Department, based on its review of the audit report, may direct. Ten copies of each audit report shall be transmitted to the Department. The recipient shall keep a copy of each audit on file for at least three (3) years.

h) Modification and Amendment of the Grant – The Grant Award is subject to revision as follows:

1. Modifications by Operation of Law – The Grant Award is subject to such modifications as may be required by changes in state law or regulations. Any such required modification shall be incorporated into and made a part of the grant within the provisions of the Illinois Grant Recovery Act (Ill. Rev. Stat. 1983, ch. 127, par. 2301 et seq.). The Department shall notify in writing the recipient of any amendment to such regulations.

2. Modifications in Budget – If the recipient has reason to believe that its operation for the grant period will exceed the budgeted amount, it shall request prior approval of the Department, except that upon specific prior approval of the Department the recipient may vary budgeted line items or cost categories. Any changes in cost categories or line items shall not alter the activities or delivery systems for the project. Requests for budget variations shall be in writing and shall give justifications for the requested variations. The Department will approve modification requests if they are necessary to achieve program objectives; required by increases or decreases in program funding; or result in greater cost efficiencies. If the Department approves the modification request, the recipient will be notified in writing of the change and effective date. If the Department rejects the modification, the Department will notify the recipient in writing of the reason(s) for denial.

3. Other Modifications by Department or Recipient – If either the Department or the recipient desires to modify the terms of the Grant Award other than as set forth in subsections (1) and (2) above, written notice of the proposed modification shall be given to the other party. No modification shall take effect unless agreed to in writing by both the Department and the recipient, except that if the Department proposes a modification without prior agreement of the recipient, the recipient will be notified of the modification by registered letter and be notified that failure to respond within 30 days of the date of the letter will be deemed acceptance of the modification, which will become effective as of the specified future date.

i) Suspension and Termination –

1. If the Department believes that a recipient has failed to comply with the terms and conditions of the Grant Award, then the Department shall suspend the grant and withhold further payments until the grant is terminated, or the recipient's failure has been corrected. The Department will determine that a recipient has failed to comply with the terms and conditions of a grant when:

A) The Department has notified the recipient in writing of the existence of circumstances such as, consistent failure to submit required reports, failure to protect inventory, misuse of equipment purchased with grant funds, evidence of fraud and abuse, consistent failure to meet performance standards, or failure to resolve negotiated points of the agreement, and

B) the recipient fails to develop and implement a corrective action plan within 45 days of the Department's notice.

2. A grant shall be terminated in the absence of full state funding; if the Department determines that the recipient has failed to comply with the terms and conditions of the grant in whole or in part; or if the Department and the recipient agree to terminate the grant.

j) Nondiscrimination – The recipient shall refrain from unlawful discrimination in employment and undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act (Ill. Rev. Stat. 1983, ch. 68, pars. 1-101 et seq.).

k) Complaint Process – In the case of a recipient complaint, the Department will follow the procedures outlined in the Administrative Review Law (Ill. Rev. Stat. 1983, ch. 110, pars. 3-101 et seq.).

l) Royalty-Free Use for State Agencies – The Department, or its agents, shall negotiate royalties with recipients on any subject data, copyrights, patents, or technical data to be developed under the recipient's contract as part of the specified work plan if the product or service to be developed by the grantee is subsequently licensed for production (Ill. Rev. Stat. 1984 Supp., ch. 127, par. 46.19a(2)). These royalties shall include negotiated monetary compensation and royalty-free use of the product or service by the Department.

m) Patent and Technical Information – Recipient copyright and patent policies must provide for protection of technical information, identify ownership and control of patents, detail procedures for the sale or licensing of patents and protect government use of patented and copyrighted items.

n) Publication, Promotion, and Marketing – Recipients must inform the Department of the nature and contents of all public information and promotional documents prior to or concurrent with the dissemination of such information and documents (i.e., program reports, annual reports, informational brochures, fact sheets, manuals, or other similar documents). Any failure to submit this information shall not be the sole basis for termination of a Grant Award. In addition, all such documents must include acknowledgement of the support of the Department of Commerce and Community Affairs and must include logo(s) identified by the Department.

o) Program Coordination – The Department will require applicants to arrange for program coordination with existing services of federal or state agencies and with those projects funded under this program.

p) Program Income – Income generated under any program and accrued interest on such program income shall be used to further program objectives when retained by the recipient or may be remitted to the State.

q) Administrative Costs – There is a 15 percent ceiling on the amount of a Department grant which can be used for general indirect costs incurred. Entities which want to recover indirect costs shall do so in accordance with their approved cost plan. An approved cost plan is one which has been approved by the entity's cognizant federal agency or the Department.

r) Program Match – Each recipient must match Department funds. Match can include in-kind or cash contributions as well as indirect cost contributions. Program income generated from project activities can also be counted as match. Grant monies or other funds received from the federal government or from state entities can be counted as match, provided that such funds are reprogrammed to directly relate to the objectives of the project. Matching contributions must:

1. be under the control of the project officer;

2. be identified in the recipient's application as necessary for the proper and efficient administration of the project;

3. be incurred during the Grant Award period;

4. be supported by records of services rendered and/or detailed documentation of costs incurred; and

5. not be a general expense of the recipient which is incurred in carrying out overall responsibilities other than those required under this grant.

s) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1983, ch. 127, par. 2310), all interest earned on funds held by the recipient under this grant shall become part of the grant when earned; however, interest earned on grant funds may be retained by the recipient when the cost of accounting for the interest or allocating the interest to the grant is more than the amount of interest earned. Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

t) Return of Unobligated Funds – In accordance with Section 4(d) of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1983, ch. 127, par. 2304), the recipient shall refund to the Department within 45 days after the expiration of the grant any balance of funds that were unobligated at the end of the grant period.

u) Program Reports – Each recipient is required to report financial and programmatic data to the Department on a regular basis on forms prepared by the Department. Standard reports are as follows:

1. Expenditure Summary – The recipient shall maintain appropriate records of actual grants costs on Expenditure Summaries supplied by the Department. These Expenditure Summaries will identify line item costs charged to the grant and line item matching share supplied by the applicant or third parties. Expenditure Summaries are to be submitted to the Department by the 10th day following the end of each month.

2. Client Status Report – Each recipient shall maintain individual records of each client provided service through the project using the Client Status Report supplied by the Department. These Client Status Reports will identify basic demographic information about the firm being assisted, summarize the work plan designed for this firm, and relate the manner and types of service delivered. One copy of each active Client Status Report shall be delivered to the Department on a monthly basis, due the 10th day following the end of each month.

3. Quarterly Program Report – Each recipient shall prepare a Quarterly Program Report in the form designated by the Department. The Quarterly Program Report shall include an aggregated statistical summary of small businesses and firms served, their demographic composition, and the types of services delivered; and a narrative report on progress towards achieving objectives and activities, economic impact of the program, and a list of business/institutional interactions. Quarterly Program Reports shall be submitted to the Department by the 10th day following the end of each program quarter.

v) Monitoring and Evaluation – The Department will monitor and evaluate the grant made to the recipient under this program. The grant will be monitored for compliance with the Section 540.70 and will be monitored periodically throughout the program year. The grant will be evaluated to gauge its impact upon the business community and for the effective and efficient utilization of funds. Evaluations will occur both during the operation of the program and upon its completion.

w) State Not Liable – The recipient shall save the State of Illinois harmless from any and all claims, demands, and actions based upon or arising out of any services performed by themselves or by their associates and employers under this grant.

History

• Source: Amended at 9 Ill Reg. 15829, effective October 9, 1985

14 Ill. Adm. Code 540.110 Purpose

The Entrepreneurial Investment Initiative Program provides matching grant funds to eligible local economic development agencies so that the local agency can make loans to start-up businesses to encourage new business formation. Under this program, the Department shall issue a request for proposals to economic development agencies, seeking those that wish to operate a Revolving Loan Fund including projects targeted to serving low-income, unemployed individuals. Those agencies selected for participation shall either operate or coordinate with a self-employment training program as defined in 56 Ill. Adm. Code 2650.20. Once approved, the economic development agency would be authorized to submit requests to draw against funding allocated by the Department, up to the amount of commitment made to the local economic development agency subject to appropriation by the General Assembly.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.120 Definitions

"Certified Development Corporations" – Not-for-profit financial intermediaries that are made up of both public and private investment partners who have long-term participation agreements or equity investments with the corporation and can show letters of commitment or letters of credit to that effect as well as articles of incorporation or by-laws providing proof of authority to operate in the State of Illinois.

"Department" – The Illinois Department of Commerce and Community Affairs.

"Designated Zone Organizations" – Those economic development agency organizations located in areas designated as enterprise zones, areas which can provide certain tax credits, worker benefits and other incentives to stimulate economic growth.

"Economic Development Agency" – For the purposes of this Part, includes non-profit regional planning commissions, certified development corporations, non-profit organizations, designated zone organizations, universities, community colleges, community action agencies, and small business development centers.

"Grant Agreement" – The contractual agreement between the Department and recipient, which includes the scope of work to be provided, the time period for performance of the agreement, the budget, and all terms and conditions of the contract.

"Local Revolving Loan Fund (RLF)" – A pool of funds from which loans are made and to which all or a portion of recaptured interest and principle are paid on an ongoing basis, initially capitalized with Department funds and local funds of at least 50 percent of the Department's share.

"Project Operator" – Any economic development agency proposing or managing a local revolving loan fund.

"Recipient" – Any economic development agency receiving grant funds under this program and administering a local Revolving Loan Fund.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.130 Application Availability

a) Grant applications shall be made available on an annual basis if sufficient funds are allocated for the program.

b) Any economic development agency seeking grant monies to set up and operate a Revolving Loan Fund shall submit a grant application on forms provided by the Department. A standard grant application form shall be used statewide. Upon request, the Department shall supply potential applicants with the application package.

c) Public notice of the availability of grant applications and the application due date shall be published in the state recognized newspaper. Applications shall be due on specific dates established by the Department. The due date shall be no less than 45 days after publication of the public notice.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.140 Program Application Contents

Applications must address the following items:

a) Needs Within the Local Capital Market – Provide information on the local financial markets, including banking philosophy in the area, constraints imposed on development by local lending policies of financial institutions and the availability of private capital to invest. Describe how the local revolving loan fund project shall be designed to directly address those constraints that have been identified. Show the extent to which the local demand for public loans justifies the size of the grant being requested.

AGENCY NOTE: The Department will be looking for examples of absence of lending in certain geographical areas, relatively high or floating interest rates for all or certain types of loans because the bank's costs of funds is high or variable, unavailability of loans that are a longer term (greater than five years) because the bank's deposits are also short term, and unavailability of lending capital or limits on the size of available capital. A deposit to investment ratio of less than 20% would indicate a conservative posture of local banks. A weak entrepreneurial environment or low number of new business start ups in an area would indicate problems or weaknesses in the ability of conventional lenders to serve borrowers and business financing needs.

b) Business and Job Development Strategy – Identify the types of eligible borrowers which are to be served and the geographic area to be served such as: supporting entrepreneurial and self-employment opportunities; serving local area low-income and unemployed residents; serving individuals within a county, multi-county area, statewide, etc.; or assisting those who are unable to secure credit from conventional sources. Also list the job development goals of the RLF project, for example, the expected ratio of new full-time or part-time businesses or jobs created by a borrower to the amount of RLF proceeds provided.

c) Staffing and Management Activities – Describe the procedures and demonstrate the capacity to manage and operate the RLF locally. Describe how the project shall carry out loan packaging and processing, servicing, tracking repayments, and collection processes. Provide proof of authority to operate a revolving loan fund, including, as appropriate, articles of incorporation, by-laws, and a resolution of the board of directors of the organization authorizing participation.

d) Individual Loan Standards – Describe the parameters under which RLF loan financing shall be provided to a borrower. Identify the types of loans anticipated (for example deferred loans, debt with equity features or others), the interest rates to be charged, allowable uses of funds, and length of loans expected.

e) Budget and RLF Capital Management Strategy – Identify the amount and from what source(s) the Project Operator shall provide a match for the Department's grant, at least equal to one-half the amount of the grant from the Department, which shall serve as the source(s) of capital to start the RLF. Describe how these other financing sources shall be induced to participate.

f) Financial Evaluation – Describe procedures to assure that eligible borrowers which shall be financed from the local RLF shall undergo an evaluation and state the qualifications, experience, and responsibility of the parties involved in this process.

g) Loan Agreement – Describe elements of the loan agreement, loan security and collateral, and insurance requirements, so as to assure adequate protection of the use of funds. Describe the role the Project Operator shall play in establishing terms for the loans and in monitoring the progress of the loan. Describe procedures for handling defaulted loans.

h) Marketing Activities – Show how the RLF project shall be adequately marketed to eligible start-up businesses. Detail clearly the outreach activities, types of local application materials, direct advertising, community discussions, or linkages with potential referral sources.

i) Business Assistance Strategy – Describe mechanisms to be used to assure that borrowers (start-up business owners receiving financial assistance) have received business training and education, or have completed a Self-Employment Training Course, have a business and finance plan, and have experience in the proposed business area. In addition, identify support service mechanisms to provide ongoing management support, technical assistance, and guidance to the start-up business.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.150 Application Review Process

a) Department staff shall screen applications to determine that all minimum requirements of the application package have been addressed. Applications will be reviewed in accordance with Department review criteria noted in subsection (b) of this Section.

b) A request for a grant to set up and operate a Revolving Loan Fund shall be evaluated in accordance with the requirements of this subsection. The application evaluation process consists of a review by staff selected from various divisions of the Department. This staff reviews the applications using the Likert Ranking System in a competitive individual case by case study. Elements are of general equal weight. (All evaluation personnel then rerank the highest rated applications for a final rank order, with the highest selected for funding.) The review of applications submitted by the due date shall be completed no more than 45 working days after the application due date, with grant awards being announced at the end of that period. Applications will be comparatively evaluated on the basis of:

1. The geographic area to be served, the extent of economic distress and unemployment in the area to be served, and the nature of financial needs of the area. Economic distress and financial needs may be documented by providing data from U.S. Bureau of Labor Statistics or Illinois Department of Employment Security reflecting area specific unemployment rates, hours and earnings of production workers, help wanted indexes, bankruptcy filings, personal income, new business incorporations, interest rates, deposit to loan ratios of lending institutions, etc.;

2. The necessity, sufficiency, and consistency (merits) of the proposed work plan and proposed activities with requirements of Sections 540.140 and 540.160;

3. The demonstrated capability and past experience of the applicant in managing the work activities similar to those proposed;

4. The amount of matching funds, as authorized pursuant to Section 540.180, shall be provided, at a minimum, at an amount of at least 50 percent of the Department's share, and preferably 100 percent of the Department's share;

5. Letters of cooperation between the proposed program and a self-employment training course;

6. The level of economic development results expected including but not limited to new businesses started, jobs created, and private funds leveraged; and

7. The extent to which those organizations have not previously been assisted with a Department grant (which could be or is being used as a Revolving Loan Fund).

c) Applications which best meet the evaluation standards of subsection (b) of this Section will be selected for funding. Priority shall be given to programs which serve high poverty areas, enterprise zones or both.

d) Upon selection, the Department shall notify applicants of the amount of grant, if any, which may be used to set up and operate the local Revolving Loan Fund. The Department shall issue a grant agreement for signature by the local Project Operator.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.160 General Terms for Rlf Loans

a) Business Plans – The RLF Operator shall assure that all loan applications shall contain a certification and assurance that the small business applicants have received business development training or education, have a business and finance plan and have experience in the proposed business area (Section 46.19a(2)(f) of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1989, ch. 127, par. 46.19 a(2)(f)).

b) Loan Approval – The RLF Operator is ultimately responsible for receiving business plans, approving loans for eligible borrowers, arranging for loan closing, securing signed notes and collateral agreements for the loan, filing Commerce Commission notices, securing a first source (employment) agreement if needed, disbursing RLF loan proceeds to the borrower, administration of the loan portfolio, servicing of loan repayments and all other duties and responsibilities for operation of the RLF.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.170 Administrative Standards

a) Grant Agreement – During formal negotiations and discussions held with the Department, the Department and the applicant shall agree to the scope of work of the grant agreement and the period of the grant agreement which shall be no longer than two years.

b) Complaint Process – In the event of a complaint, the Department shall follow the procedures outlined in 47 Ill. Adm. Code 10 (Review and Appeal Procedures).

c) Administrative Costs – The Project Operator may use up to 10 percent of the grant funds for administrative costs as specified in the grant agreement.

d) Conflict of Interest – Each Project Operator shall assure there is no conflict between borrowers and members of the applicant's staff, board or loan review committee to the extent that no staff, board or loan review committee member shall have any financial interest in nor shall the member profit from, any loan to a borrower.

e) Reports – The Department shall require that on a bi-monthly, quarterly, or, at a minimum, a semi-annual basis, reports shall be prepared by the Project Operator pertaining to and describing items such as its progress in lending funds, specific business assisted and jobs created, the amount of funds loaned, repayments received and jobs created or retained. A copy shall be delivered to the Department within 15 calendar days of the end of each designated period. Incomplete reports shall be returned to the Project Operator with deficiencies noted.

f) Record Review and Monitoring – Recipients and their subcontractors, if any, must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine any documents, papers and records of the recipient involving transactions related to a grant under this program, for three (3) years from the date of submission of the final progress report or until audit findings have been resolved, whichever is later.

g) Record Retention Requirements – All recipients must maintain records in accordance with the provisions contained in the Secretary of State's regulations (44 Ill. Adm. Code 4000) and the Records Act (Ill. Rev. Stat. 1989, ch. 116, par. 43.4 et seq.).

h) Historic Preservation – Grantees shall require from third parties receiving financial assistance, certification that the project does not involve the destruction, alteration, renovation, transfer or sale, or utilization of an historic property, structure or structures, or the introduction of visual, audible or atmospheric elements to an historic property, structure or structures, and will, therefore, not result in any changes in the character or use of any historic property.

i) Relocation – Grantees shall require from third parties receiving financial assistance, certification that the project does not involve relocating a facility or workers from any location in Illinois outside of the community in which the business project will be conducted.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.180 Financial Assistance Standards

a) Financial Management System – A recipient's financial management system shall include cash management, signature authority and bonding requirements and shall be structured to meet the accounting standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (September 19, 1987 with no later amendments or editions). The recipient is accountable for funds received under this grant and shall maintain effective control and accountability over all funds and other assets under the grant.

b) Matching Funds – Matching funds for an RLF project shall consist of cash funds and in-kind services made available and used in the project, under the control of the Project Operator. Other contributions which take the form of loans from a financial institution or other lender directly to an eligible business venture are not considered match to the RLF.

c) Audits – The recipient shall be responsible for securing an audit of all loan records and such audit must be performed by an independent public accountant, certified and licensed by authority of the State of Illinois pursuant to the Illinois Accounting Act (Ill. Rev. Stat. 1989, ch. 111, pars. 5-500.01 et seq.). The audit must be conducted in accordance with generally accepted auditing standards adopted by the AICPA (1989 with no later amendments or editions).

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

14 Ill. Adm. Code 540.190 Modification, Suspension and Termination of Grants

a) Modification and Amendment of the Grant – The grant award is subject to revision as follows:

1. Modifications by Operation of Law – The grant award is subject to such modifications as may be required by changes in State law or regulations. Any such required modifications shall be incorporated into and made part of the grant within the provisions of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1989, ch. 127, pars. 2301 et seq.). The Department shall notify in writing the recipient of any amendment to such regulations.

2. Modifications in Budget – A recipient's request for budget variations in the amount or line item costs shall be in writing by registered letter and shall give justifications for the requested variations. The Department may approve modification requests, if, in the Department's sole determination, such is necessary to achieve program objectives of the program application contents set out in Section 540.140. Any changes in cost categories or line items shall not alter the activities or deliverables for the project. If the Department approves the modification request, the recipient will be notified in writing of the change and the effective date of the change.

3. Other Modification by Department or Recipient – If either the Department or the recipient requests to modify the terms of the grant award other than as set forth in subsections (a)(1) and (2) above, written notice of the proposed modification shall be given to the other party. No modifications shall take effect unless agreed to in writing by both the Department and the recipient.

b) Suspension –

1. If the Department believes that a recipient has failed to faithfully perform the terms and conditions of the scope of work of the project, then the Department shall suspend the grant and withhold further payments until the grant is terminated, or the recipient's failure has been corrected. The recipient may appeal such decision as provided in Section 540.170(b) of this Subpart.

2. The Department will determine that a recipient has failed to faithfully perform the terms and conditions of the scope of work of the project when:

A) The Department has notified the recipient in writing of the existence of circumstances such as repeated failure to submit required reports; misapplication of grant funds; evidence of fraud and abuse; repeated failure to meet performance objectives, timelines, or standards; failure to provide or substantiate matching funds; or failure to resolve negotiated points of the agreement; and

B) The recipient fails to develop and implement a corrective action plan satisfactory to the Department within 30 calendar days of the Department's notice.

c) Termination of Financial Assistance – Financial assistance shall be terminated for the following reasons:

1. Termination Due to Loss of Funding – In the absence of State funding for a specific year, all grants that year shall be terminated in full. In the event of a partial loss of State funding, the Department shall make proportionate cuts to all recipients.

2. Termination for Cause – If the Department determines that the recipient has failed to comply with the terms and conditions of the financial assistance; has failed to observe or perform or cause the observance or performance of any covenant contained in the agreement; or any statement, certification, representation or warranty made by or on behalf of the recipient shall prove to have been untrue or incorrect in any material respect when made, the Department shall terminate the grants in whole, or in part, at any time before the date of completion.

3. Termination by Agreement – The Department and the recipient shall terminate the grant in whole, or in part, when the Department and the recipient agree that the continuation of the project would not produce beneficial results commensurate with the future expenditures of funds.

History

• Source: Added at 15 Ill. Reg. 973, effective January 11, 1991

Part 545 Technology Advancement and Development Act Programs

14 Ill. Adm. Code 545.10 General Purpose

The purpose of the Technology Advancement and Development Act is described in Section 1002 of the Act [20 ILCS 700/1002]. The purpose is to assist Illinois firms, in an increasingly global marketplace, to remain competitive by promoting the development and commercialization of new and advanced technologies. This is to be achieved through several strategies including:

a) promoting private sector and nonprofit research institutions that serve as intermediaries operating programs and undertaking activities authorized by the Act;

b) commercializing new technology products, services, and processes; and

c) modernizing the industrial base of small and medium-sized firms.

14 Ill. Adm. Code 545.20 Definitions

a) Definitions in the Act: The following words and phrases, for the purpose of this Part, have the same meaning respectively ascribed to them in Section 1003 of the Act [20 ILCS 700/1003].

"Advanced technology project" means any area of basic or applied research or development which is designed to foster greater knowledge or understanding, or which is designed for the purposes of improving, designing, developing, prototyping, producing or commercializing new products, techniques, processes or technical devices in present or emerging fields of health care and biomedical research, information and communication systems, computing and computer services, electronics, manufacturing, robotics and materials research, transportation and aerospace, agriculture and biotechnology, and finance and services.

"Business expense" includes working capital financing, the purchase or lease of machinery and equipment, or the lease or purchase of real property, including construction, renovation, or leasehold improvements, but does not include refinancing current debt.

"Business project" means any specific economic development activity of a commercial, industrial, manufacturing, agricultural, scientific, financial, service or other not-for-profit nature, which is expected to yield an increase in jobs or to result in the retention of jobs or an improvement in production efficiency.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Director" means the Director of the Illinois Department of Commerce and Economic Opportunity.

"Financial assistance" means a loan, investment, grant or the purchase of qualified securities or other means whereby financial aid is made available to or on behalf of a business project or advanced technology project.

"Intermediary organization" means any participating organization including not-for-profit entities, for-profit entities, State development authorities, institutions of higher education, other public or private corporations, which may include the Illinois Terrorism Task Force, or other governmental or private entities necessary or desirable to further the purpose of this Act engaged by the Department through any contract, agreement, memoranda of understanding, or other cooperative arrangement to deliver programs authorized under the Act.

"Investment loan" means any loan structured so that the applicant repays the principal and interest and provides a qualified security investment to serve both as additional loan security and as an additional source of repayment.

"Loan" means acceptance of any note, bond, debenture, or evidence of indebtedness, whether unsecured or secured by a mortgage, pledge, deed of trust, or other lien on any property, or any certificate of, receipt for, participation in, or an option to any of the foregoing. A loan shall bear such interest rate, with such terms of repayment, secured by such collateral, with other terms and conditions, as the Department shall deem necessary or appropriate.

"Participating lender or investor" means any trust company, bank, savings bank, credit union, merchant bank, investment bank, broker, investment trust, pension fund, building and loan association, savings and loan association, insurance company, venture capital company or other institution, community or State development corporation, development authority authorized to do business by an Act of this State, or other public or private financing intermediary approved by the Department whose purposes include financing, promoting, or encouraging economic development financing.

"Qualified security investments" means any stock, convertible security, treasury stock, limited partnership interest, certificate of interest or participation in any profit sharing agreement, preorganization certificate or subscription, transferable share, investment contract, certificate of interest or participation in a patent or application or, in general, any interest or instrument commonly known as a "security" or any certificate for, receipt for, guarantee of, or option, warrant or right to subscribe to or purchase any of the foregoing, but not including any instrument which contains voting rights or which can be converted to contain voting rights in the possession of the Department.

b) Other Definitions:

"Act" means the Technology Advancement and Development Act [20 ILCS 700].

"Leveraged dollar award" means grant funds awarded to the grant applicant intended to be used as leverage to secure additional funding from other public or philanthropic sources.

"Partnership" or "joint venture" means any organization, formed either through contract or mutual agreement, where two or more persons agree to do business together.

"Product" means a commodity or service with commercial value that is either further developed or brought to market through use of grant funds.

"Recipient" means any entity receiving financial assistance under the Act.

"Service" means any service that would advance the commercialization of a technology with applicability to the homeland security industry. This would include, but is not limited to, the protection of intellectual property rights, business continuity and recovery, research and development, and technology integration.

"Small and medium size business" means any for-profit business with 1,000 or fewer employees assigned to work locations within the State of Illinois.

History

• Source: Amended at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.30 Administrative Requirements

a) Record Retention and Review – An entity receiving financial assistance shall, as deemed necessary by the Department, permit the Department, its representatives, or its designee, to have full access to and the right to examine any pertinent documents, papers, and records of the recipient involving transactions related to financial assistance received under the Act for such a period of time as specified in the agreement between the Department and the recipient.

b) Financial Management Standards – An entity receiving financial assistance shall maintain a financial management system structured to provide for accurate, current, and complete disclosure of the expenditures of such financial assistance. The entity is accountable for financial assistance received under the Act and shall maintain effective control and accountability over all funds, equipment, property, and other assets obtained through such financial assistance. Records shall be sufficient to permit the tracking of funds to a level of expenditure adequate to ensure that funds have not been spent unlawfully.

c) Audits – Audit requirements shall be specified in the agreement (e.g., grant, investment, or loan agreement) between the entity receiving financial assistance and the Department or between the entity receiving financial assistance and an intermediary organization.

d) Complaint Process – In the case of a complaint by an entity receiving financial assistance, the Department shall follow the procedures outlined in the Department's Administrative Hearing Rules (56 Ill. Adm. Code 2605).

e) Patent and Technical Information – Copyright and patent policies of an entity receiving financial assistance must provide for protection of technical information, and identify ownership and control of patents. Except when specified to the contrary in the agreement between the Department and the recipient, the State of Illinois shall be granted a no charge license to use the technology or materials covered by any patent or copyright for which the technology or material was either conceived or reduced to practice with such financial assistance.

f) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act [30 ILCS 705/10], all interest earned on funds held by the recipient of a grant awarded pursuant to the requirements of the Act shall become part of the grant principal when earned unless the grant agreement provides otherwise. However, any interest earned on funds subject to a Department grant after the grant's expiration date shall become part of the grant principal and shall be so treated for all purposes.

g) Reporting – Unless otherwise specified in the agreement between the Department and the recipient, an entity receiving financial assistance shall report financial and programmatic data to the Department on a regular basis using formats provided by the Department. Report formats and content shall be customized to the specific program and form of financial assistance. Generally, the Department requires quarterly reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

1. Expenditures – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall report actual expenditure of financial assistance using expenditure formats supplied by the Department. Expenditure summaries are to be submitted to the Department by the 15th day following the end of each fiscal quarter in which any expenditure of financial assistance is made.

2. Program Report – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall submit a program report in a format provided by the Department. Generally, the program report shall include a narrative describing the entity's progress towards achieving objectives and activities as specified in the agreement with the Department or an intermediary organization. Program reports shall be submitted to the Department by the 15th day following the end of each fiscal quarter.

h) Confidentiality of Trade Secrets and Commercial or Financial Information – Protections relating to the confidentiality of trade secrets, commercial, or financial information regarding the operation of any enterprise are specified at Section 4002 of the Act. The protections apply to any information provided by an entity applying for, or receiving, financial assistance under the Act. To the extent authorized by the Freedom of Information Act [5 ILCS 140], the Department shall not make public any information disclosing program supported technical information if such disclosure would affect the commercialization potential of the project, service, or process being promoted.

i) Suspension and Termination – The Department shall, after notice to the entity, suspend the financial assistance and withhold further payments or prohibit the entity from incurring additional obligations against such financial assistance:

1. if the General Assembly does not appropriate funding at a level sufficient to fund the program or activity;

2. if the Department determines that the entity has failed to comply with the terms and conditions of the agreement in whole or in part;

3. if an entity receiving financial assistance consistently fails to submit required reports, fails to maintain required records, fails to protect inventory, or misuses equipment;

4. if there are findings of fraud and abuse; or

5. if the Department and the entity receiving financial assistance agree that the continuation of the program objectives would not produce beneficial results commensurate with the future expenditures.

j) Right to Verify Information – At the sole discretion of the Department or an intermediary organization acting on behalf of the Department, staff of the Department and/or an intermediary organization may conduct phone interviews or field visitations to evaluate and verify information submitted as part of an application for financial assistance.

k) Access to Project Site – During the application process, or during the conduct of a technology or business project, the sponsoring organization and/or applicants shall provide the Department and/or an intermediary organization access to the place of business and site where the business project will be undertaken. The Department and/or the intermediary organization shall provide notice to the business prior to requesting such access and shall request access only during the business' normal working hours.

l) Director's Waiver of Limitations – The Director may waive the limitations cited at Sections 545.220(c)(2), 545.320(d), and 545.330(d). A waiver may be granted when the Director of the Department determines that a waiver of these limits is required to meet the purposes of the Act [20 ILCS 700/3004(a), 3004(b), 3004(c), and 3515(c)]. In determining whether to grant such a waiver, the Director may consider factors, if applicable, including, but not limited to:

1. the project would not go forward but for the State's participation;

2. the business is located in a distressed community;

3. there is a strong likelihood of generating significant new or increased business or investment within the State; and

4. there are sufficient program funds available, in view of competing requests.

14 Ill. Adm. Code 545.110 Purpose

The purposes of the Technology Challenge Grant Program are specified at Section 2001 of the Act [20 ILCS 700/2001]. First, the Department is authorized to make grants that provide initial funding for projects that, in turn, help secure federal research and development projects for the State. Second, the Department is authorized to provide initial grant funding for projects that identify and develop technologies capable of commercialization. Third, the Department is authorized to fund programs and activities that provide a catalyst for and strengthen the State's capacity to commercialize new technologies.

14 Ill. Adm. Code 545.120 Authorized Programs and Activities

a) Grants may be awarded for the activities specified at Section 2002 of the Act, including:

1. Advanced Technology Projects – The Department may award initial grant funds for applied innovation research projects that respond to unique, advanced technology projects and which foster the development of Illinois' economy through the advancement of the State's economic, scientific, and technological assets.

2. Leveraged Technology Projects – The Department may award initial grant funds for applied innovation research projects to assist eligible applicants in the State to apply for, or qualify for and leverage, federal funds awarded for advanced technology projects concerning research and development, business innovation research or technical development, or transfer of useful technology to the private sector.

3. University-Industry Partnerships – The Department may grant funds for joint university and industry initiatives that create high-skill employment opportunities and internship activities that enable graduates and faculty to stay and work in Illinois. The Department may also grant funds for joint university and industry initiatives designed to strengthen the relationship between industry and academia, so that applied university research is responsive to the needs of Illinois' industries.

4. Technology Commercialization Centers – The Department may award grant funds to create and operate centers of excellence in technology commercialization, innovation evaluation, and intellectual property management that encourages the growth of new enterprises based on technologies developed at Illinois research centers, including technology partnerships, technology consortiums or research centers, and industry technology associations that are, or will be, established to perform research and development in present and emerging technologies that can be developed for use by commerce and industry.

5. Technology Transfer Projects – The Department may award grant funds for technology transfer projects involving promotion of new or innovative technologies among small and medium-sized Illinois manufacturers where the technologies have immediate commercial application.

6. Continuous Improvement Projects – The Department may award grant funds to provide for planning and operational support for statewide support that improves practices in technology commercialization, including needs assessment and evaluation of the status of technology implementation throughout the State. [20 ILCS 700/2002]

7. Capacity and Program Development Projects – The Department may award grant funds to qualified not-for-profit organizations or educational institutions in order to support service delivery improvement projects, in order to extend Department capacity in relation to implementation of homeland security market development programs, or for the operation of legislatively directed councils or coordinating bodies.

8. Product and Service Development Projects – The Department may award grant funds to individual companies or partnerships with operations in Illinois for products or professional services that address unique or emerging national needs in homeland security, safety or defense, or support the development of solutions to these needs.

b) Allowable Costs – Allowable costs are specified in Section 2002(b) of the Act, including costs for capital improvements, equipment, contractual services, commodities, personnel, support costs, including telecommunications, electronic data and commodities, or other costs. All costs are subject to the approval of the Department. Indirect costs shall be limited to no more than 15% of direct grant costs. [20 ILCS 700/2002(b)]

c) Combination with Technology Enterprise Development Centers – As a means of increasing cost efficiency of program delivery, the Department may combine program responsibilities for activities authorized under subsection (a)(4), Technology Commercialization Centers, with activities authorized under Technology Enterprise Development Centers, as described in Section 545.240 of this Part. As authorized by the Department through an agreement, Technology Enterprise Development Centers may serve as Technology Commercialization Centers.

History

• Source: Amended at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.130 Eligible Applicants

Section 2001 of the Act specifies entities eligible to apply for funding under the Technology Challenge Grant Program. Eligible applicants include:

a) Institutions – Eligible institutions include universities, colleges, community colleges, nonprofit research foundations or laboratories, State research institutions, and industry technology associations.

b) Technology Partnerships – Technology Partnerships include any partnership or consortium established by a formal project agreement between:

1. two or more private industries, or

2. any combination of one or more private industries with one or more universities, colleges, community colleges, nonprofit research laboratories, nonprofit research foundations, or State research institutions.

c) Private Enterprise – This category includes any private sector enterprise developing or commercializing technology or leveraging federal technology development financing, including but not limited to the small business innovation research program. [20 ILCS 700/2001]

14 Ill. Adm. Code 545.210 Purpose

The purposes of the Enterprise Development and Investment Program are defined at Section 3001 of the Act. The program primarily targets new and growing Illinois firms. The goals of the program are as follows:

a) provide investments, loans, or qualified security investments to or on behalf of young or growing businesses or, on behalf of new or emerging business through financial intermediaries as they commercialize advanced technology projects; and

b) fund regional technology enterprise development centers that make available resources and expertise in furthering the technical or managerial skills of owners; aid the ventures in locating financing; and help new companies with product development and marketing.

14 Ill. Adm. Code 545.220 Direct Investment Strategy

As authorized by Section 3001 of the Act [20 ILCS 700/3001], the Department may directly provide investments, loans, or qualified security investments to promote the commercialization of advanced technology. Generally, investments may be made to finance any new process, technique, product, service, or device that is now, or that may become, commercially exploitable.

a) Eligible Applicants – Direct investments may be made in young, growing businesses, and businesses who have qualified for Federal Small Business Innovation Research funds. [20 ILCS 700/3004(a)]

b) Allowable Activities – Direct investments may be made for the purposes specified in Section 3004 of the Act. Financial assistance proceeds may be used for expenses that include, but are not limited to:

1. costs incurred for research and development;

2. amortizable organizational costs;

3. working capital financing;

4. the purchase or lease of machinery and equipment; and

5. acquisition, improvement, or rehabilitation of land and buildings. [20 ILCS 700/3004(a)]

c) Limitations – Investments are subject to the following limitations:

1. The Department may make direct investments and loans based on the Department's current investment strategy in cooperation with private sector investment companies, private investors, or conventional lending institutions which also assume a portion of the investment loan or financing for the business project [20 ILCS 700/3001]. The Department may decline to make any direct investment that does not meet the Department's current investment strategy. The Department shall require applicants to show the source of new, unexpended, actual or anticipated matching funds covering a minimum of 50% of total advanced technology or business project costs. Matching funds covering a minimum of 25% of total advanced technology or business project costs shall be from sources independent of the applicants.

2. Direct qualified security investments or investment loans shall not be made for more than $500,000 and shall not be made for more than 50% of the business project costs unless the Director determines that a waiver of these limits is required to meet the purpose of the Act [20 ILCS 700/3004(a)].

14 Ill. Adm. Code 545.230 Portfolio Investment Strategy

As authorized by Section 3001 of the Act, the Department may indirectly provide investments, loans, or qualified security investments through financial intermediaries to young or growing businesses for a business project, or as they commercialize advanced technology projects.

a) Eligible Applicants – The Department may provide investments in revolving fund portfolios with intermediary organizations or participating lenders or investors. The financial assistance may be made available to qualified intermediaries that assume a responsibility for the administration of the projects funded through the investment. Qualified intermediaries, at a minimum, shall:

1. have a successful seed/early stage investment track record; and

2. be capable of effectively evaluating the commercialization feasibility of advanced technology or business projects.

b) Selection of Portfolio Funds – In making a determination to participate in an investment or loan portfolio, the Department shall find that the applicant will, at a minimum:

1. commit to a three to one, private (or federal) dollar, leverage for each dollar invested in the portfolio by the Department;

2. commit to making best efforts to invest the monies from the fund in Illinois companies, or companies willing to relocate to Illinois, at a disproportionate rate; and

3. the business or industry sector targeted by the fund is likely to expand as a result of investment and increase job creation within Illinois.

c) Allowable Activities – Intermediary organizations may use the Department's funds to provide investments, loans, or qualified security investments to young or growing businesses for business projects, or for commercialization of advanced technology.

d) Limitations – The amount of money that shall be invested in an intermediary shall be determined, in part, based on the Department's current investment strategy. The Department may decline to invest in any intermediary or portfolio that does not meet the Department's current investment strategy. In determining the amount to invest, the Department may also consider the total amount of State funds available for investment, the amount of private or federal funds available to leverage the State's investment, the proposed types of investments, the geographic locations that will benefit from the proposed investments, and market factors relevant to the appropriateness of the proposed investment activities, as determined by the Department. The Department may invest up to, but shall not exceed, $2,000,000 in an authorized intermediary's investment portfolio.

14 Ill. Adm. Code 545.240 Illinois Technology Enterprise Development Centers

a) Purpose – The purpose of Illinois Technology Enterprise Development Centers is provided in Section 3004.5 of the Act. The Department may, subject to available appropriated funds, working with the Illinois Coalition, establish one or more regional technology enterprise development centers whose mission is to assist entrepreneurs, innovators, and start-up firms in high-growth, high technology sectors in furthering the technical or managerial skills of owners; aid the ventures in locating financing; and help new companies with product development and marketing in support of new venture formation within the State [20 ILCS 3004.5(a)].

b) Allowable Costs – Allowable costs are defined at Section 3004.5(b) of the Act. Grant funds may be used to support the operation of technology enterprise development centers. Grant funds may be used to help subsidize expenses, as approved by the Department, for:

1. personnel;

2. fringe benefits;

3. travel;

4. equipment;

5. supplies;

6. commodities, including telecommunication or other costs;

7. contractual services;

8. other support costs;

9. capital improvements; and

10. revolving funds.

c) Technical Assistance and Support Services – Per Section 3004.5(c) of the Act, technology enterprise development centers may provide crucial business information at affordable prices for firms that are developing early-stage, technology-oriented manufacturing projects including:

1. general or short-term assistance, general outreach, feasibility studies for new venture formation, and research assistance for new venture creation;

2. innovation evaluation and market research to evaluate the viability of technology, product, or service or the market potential of technology, product, or service;

3. technical assistance related to management and operations and strategic partnering and assistance in the implementation of strategic manufacturing and marketing alliances; and

4. service in locating new technologies or technological solutions.

d) Financial Services – Per Section 3004.5(d) and (e) of the Act, technology enterprise development centers may provide financial services that include:

1. financial packaging to enhance proposals and make companies more competitive for federal or private funding;

2. access to private investor capital through venture capital events and regional venture capital networking programs;

3. management of local for-profit or limited profit seed capital funds; and

4. pre-seed financing to start-up technology-based businesses to commercialize new technology. Financing options may include:

A) micro-loans;

B) small grants; and

C) equity investment capital for seed funding, product commercialization and prototype development, and commercial introduction and marketing.

e) Professional Development of ITECs – As provided in Section 3004.5(f) of the Act, the Department may provide grant funds to support professional development and capacity building of the technology enterprise development centers within the State, as may be required for the administration, operations, research, analysis, or training of the centers.

f) Procedures for Establishment of Centers

1. Identification of Service Regions – The Department shall designate locations in the State to be targeted for the creation of technology enterprise development centers. When making regional designations, the Department shall solicit recommendations from stakeholder groups, including the Illinois Coalition and the Illinois Technology Office, and shall consider factors, including but not limited to:

A) concentrations of high technology business establishments;

B) concentrations of entrepreneurs and innovators;

C) access to capital markets;

D) access to technical support and related service providers; and

E) proximity to universities, research facilities, and laboratories.

2. Identification of Recipients of Financial Assistance – The Department, in selecting an intermediary organization to operate a center, shall first solicit the advice of stakeholders, including the Illinois Coalition and the Illinois Technology Office. Subsequently, the Department may negotiate with an intermediary organization to receive financial assistance for the purpose of operating a technology enterprise development center. In addition to the advice of stakeholders, in determining which applicants shall be awarded a grant, the Department shall examine:

A) prior compliance with loan or grant awards;

B) the relationship of a proposed project to the State's future economic growth;

C) the qualifications and expertise of organizations undertaking the effort;

D) the applicant's understanding of the requirements and needs of entrepreneurs, innovators, and start-up firms in high-growth, high technology sectors;

E) the potential of the applicant's project to provide an economic benefit of the State;

F) the likelihood that the project has a potential for creating new ventures in the State; and

G) the potential of the applicant and/or its consortium to finance the regional center. [20 ILCS 700/3004.5(g)]

3. Application for Financial Assistance – The Department shall issue instructions and formats to selected applicants for the submittal of applications for financial assistance to support technology enterprise development centers. Applications shall include information such as:

A) a description of the related experience of the applicant agency;

B) a discussion of market niches served;

C) measurable objectives;

D) a description of the available services, including:

i) marketing plan to attract entrepreneurs;

ii) networking with and access to related services and providers;

iii) management consulting assistance and coaching;

iv) technology transfer services; and

v) access to venture capital;

E) an implementation schedule;

F) a description of center staffing and expertise;

G) a line item budget proposal;

H) a description of matching funds by source and amount; and

I) a description of service fee and investment policies.

4. Renewal of Awards – The Department may renew a grant award for a subsequent year for any technology enterprise development center judged to be meeting performance objectives, as evaluated by the Department under this subsection (f)(4), during the current grant period. In making determinations regarding the renewal of grant awards, the Department shall consider evaluative criteria, including but not limited to:

A) success of public relations events;

B) success in providing technical information;

C) the number of prototype project evaluations completed;

D) the number of market research assessments completed;

E) the success of management consulting assistance provided;

F) the number of projects enrolled for ongoing services;

G) the total amount of venture capital accessed for projects; and

H) the number of new ventures established and jobs created.

14 Ill. Adm. Code 545.310 Purpose

Per Section 3501 of the Act, the Department may create one or more programs to assist the State's existing mature business and industry base to adopt and use appropriate technologies. The programs may vary in breadth of activities, services, and projects in accordance with the level or complexity of the manufacturers' needs or problems.

14 Ill. Adm. Code 545.320 Modernization Retooling Loan Program

a) Purpose – The purpose of the Modernization Retooling Loan Program is defined in Section 3505 of the Act. The Department may, subject to appropriated funds, establish a loan program to improve business production systems and work processes. Such improvements shall result in the preservation and/or creation of private sector jobs by increasing the firms' long-term competitive viability.

b) Eligible Applicants – Any small, medium-sized or mature Illinois business may make an application for financial assistance under this program. An eligible business includes any for-profit business located in Illinois organized as a sole proprietorship, corporation, joint venture, partnership, association, or cooperative. For the purpose of this program, a mature business is one (including predecessor companies) that has been in continuous profitable operation for at least two years or has a meaningful operating history.

c) Allowable Activities – Per Section 3505(a) and (b) of the Act, loans may be provided to, or on behalf of, the State's mature, small, or medium-sized businesses for the modernization and installation of advanced technologies or processes. A loan made for company modernization or retooling may be for any purpose consistent with the objectives of the Act, including but not limited to:

1. purchases of advanced machinery;

2. equipment and tooling;

3. organizational expenses for services;

4. personnel training;

5. corporate restructuring;

6. working capital;

7. acquisition, improvement, or rehabilitation of land and buildings; or

8. any other business expense reasonably related to the project.

d) Limitations – Per Section 3505(b) and (c) of the Act, the following limitations apply to this program:

1. No loan made by the Department, or by an intermediary organization making a loan on behalf of the Department, shall be used to pay for the retirement of previous debt unless the debt is a part of the purchase or lease of machinery or equipment that is being upgraded.

2. A loan under this program shall not be made for more than $500,000 or for more than 25% of the business project costs unless the Director determines that a waiver of these limits is required to meet the purposes of the Act.

14 Ill. Adm. Code 545.330 Modernization Grants Program

a) Purpose – The purpose of the Modernization Grants Program is defined at Section 3515 of the Act. Subject to appropriated funds, modernization grants may be made for the purpose of financing, competitive assessments, or productivity improvement services that the Department determines may result in technology enhancement, retooling, restructuring, or other competitiveness improvements.

b) Eligible Applicants – Grants may be made to, or on behalf of, Illinois' mature, small, or medium-sized businesses.

c) Authorized Activities – Per Section 3515(a) of the Act, grants may be awarded for:

1. undertaking feasibility studies, competitiveness assessments, and productivity audits to restore their businesses' competitiveness; or

2. the modernization and installation of advanced manufacturing systems or processes that will improve the businesses' production systems and work organization, or will preserve and create private sector jobs by increasing the firms' long-term competitive viability.

d) Limitations – Per Section 3515(c) of the Act, modernization grants to eligible applicants shall not exceed $100,000 or 50% of the project costs, unless the Director determines that a waiver of these limits is required to meet the purposes of the Act.

e) Role of Intermediary Organizations – Per Section 3515(b), assistance authorized under this Section may be in the form of direct grant agreements, agreements with private sector consultants on behalf of a firm, or agreements with participating intermediary organizations.

14 Ill. Adm. Code 545.340 Development Corporations

a) Purpose – Per Section 3510(a) of the Act, the Department may provide, subject to available appropriated funds, financial assistance to the State's mature, small, or medium-sized businesses through development corporations that assume a responsibility for the administration of the loan projects for the modernization and installation of advanced technologies.

b) Eligible Applicants – As specified in Section 3510(b) of the Act, development credit corporations, financial intermediaries, or other entities whose purpose includes financing, promoting, or encouraging commercialization, adoption, or implementation of advanced technologies, processes, or products, as determined by the Department, may participate in this program.

c) Responsibilities of Development Corporations – Per Section 3510(d) of the Act, the Department is authorized to rely upon, and may provide for in the execution of an agreement, the participating lender's or investor's review on behalf of the State and approval of the credit, collateral security, and documentation; determination of eligibility, economic results expected, and the prospects for viability and repayment; the collection and use of fees, premiums, or charges; the organization, servicing, and disbursement of financial assistance; and such other purposes and activities as the Department, in its sole discretion, shall determine to be reasonable, appropriate, and consistent with the purposes of the Act.

d) Forms of Financial Assistance – Development corporation financial assistance may be in the form of direct loans, grants, or purchases of qualified security investments or financial assistance [20 ILCS 700/3510(b)].

e) Limitations – Financial assistance authorized under this Section shall not exceed 25% of the amount of new, unexpended, actual or anticipated capitalization (i.e., grants or investments, not loans) to be used by the development corporation for:

1. loans or investments to firms to improve the businesses' production systems and work organization that will preserve and create private sector jobs by increasing the firms' long-term competitive viability; and

2. the planning and operation of the development corporation as approved by the Department through its agreement with the development corporation. Funds for planning and operation shall not exceed 10% of the financial assistance provided by the Department or the amount of new, actual, or anticipated capitalization. [20 ILCS 700/3510(c)]

14 Ill. Adm. Code 545.350 Manufacturing Extension Program

a) Purpose – The Purpose of the Manufacturing Extension Program is defined at Section 3520(a) of the Act. The Department may establish, subject to available appropriated funds, a program of statewide manufacturing extension centers serving the geographic needs of the State's manufacturers, whose mission is to assist small or medium-sized manufacturers with technological advancement, for continuous improvement of business practices for these firms to be better positioned to succeed against global competition.

b) Allowable Costs – Per Section 3520(b) of the Act, the Department may provide grants or may provide cost share or reimbursements under this Section to support the operation of manufacturing extension deliverers.

c) Eligible Applicants – Per Section 3520(b), manufacturing extension deliverers can include universities and colleges, regional or sectorial based organizations, technical societies, or other similar groups, including organizations financed through a federal manufacturing extension partnership program.

d) Procedures for establishment of regionally based or functionally based Manufacturing Extension Centers

1. Service Regions: Regionally based Manufacturing Extension Centers (MECs) must serve a specific geographic region of the State. Two regions are defined as follows:

A) Chicago Metropolitan Area:

i) Cook County;

ii) DuPage and Kane Counties;

iii) Kendall and Will Counties; and

iv) Lake and McHenry Counties.

B) Remainder of Illinois.

2. Service Specialties – Functionally based Manufacturing Extension Centers must serve a single industry, a limited number of related industries, or a specific manufacturing function.

3. Application for Financial Assistance – The Department shall issue instructions and formats for the submittal of applications for financial assistance to support MECs. Such applications shall be solicited on a competitive basis within each service specialty or specific region of the State targeted for the creation of a center. Applications shall include information such as:

A) a description of the related experience of the applicant agency, including a discussion of performance against goals for projects funded by the Department in the past;

B) a description of the qualifications of MEC staff, consultants, firms, and other organizations delivering MEC services;

C) a discussion of the market niches and customers to be targeted, including technological opportunities and the specific needs of the region's industries;

D) a description of MEC services to be provided, including:

i) marketing activities;

ii) educational events;

iii) enrollment of firms for modernization services;

iv) informal and structured assessments;

v) technical services to improve productivity; and

vi) specialized services;

E) a listing of performance objectives, including the number or amount of:

i) companies served;

ii) companies served for the first time;

iii) events;

iv) event attendees;

v) informal assistance;

vi) formal assistance;

vii) categories of formal and informal assistance;

viii) group projects; and

ix) evaluations;

F) an implementation schedule;

G) a proposed line item budget, including a description of matching funds by source and amount; and

H) for federally designated MECs, a copy of the federal operating plan.

3. Application Review Criteria – As required by Section 3520(d) of the Act, in determining which applicants shall be awarded a grant, the Department shall examine:

A) prior compliance with awards programs;

B) the relationship of a proposed project to the State's future economic growth;

C) the qualifications and expertise of organizations undertaking the effort;

D) the applicant's understanding of the requirements and needs of the target groups served;

E) the potential of the applicant's project to provide an economic benefit to the State;

F) the methods engaged to measure and track performance; and

G) the likelihood that the project has a potential for improving the competitiveness of small and mid-sized manufacturers.

4. Renewal of Awards – The Department may renew a grant award for a subsequent year for any MEC judged to be meeting performance objectives during the current grant performance period. In making determinations regarding the renewal of grant awards, the Department shall consider evaluative criteria, including but not limited to the number or amount of:

A) companies served;

B) companies served for the first time;

C) events;

D) event attendees;

E) informal assistance;

F) formal assistance;

G) categories of formal and informal assistance;

H) group projects; and

I) evaluations.

e) Professional Development – Per Section 3520(c) of the Act, the Department may provide grant funds made available under the Act to support professional development and capacity building of the manufacturing extension system within the State as may be required for the administration, operations, research, analysis, promotion, or training of geographic based manufacturing extension centers.

14 Ill. Adm. Code 545.360 Manufacturing and Export Base Services Program

a) Purpose – Per Section 3525(a) of the Act, the Department may, subject to available appropriated funds, establish a program of statewide assistance to the manufacturing and services export base of the State serving the sector-wide needs of small and medium-sized companies.

b) Allowable Activities – Per Section 3525(b) of the Act, the Department may provide grants, cost share funds, or reimbursements:

1. to State or substate programs providing better access to information;

2. to reduce the impediments to the flow of technical information; and

3. to provide Illinois manufacturers, producer firms, and export services firms with better or more timely access to the State's and the nation's technology base, including industrial and engineering consulting practices, university and research laboratory based engineers, private commercial product vendors, and other sources of technology or non-technology services.

c) Eligible Applicants – Per Section 3525(d) of the Act, the Department may seek out applicants that may be considered for a grant, and may provide an award based on the qualifications and expertise of organizations undertaking the effort, the applicants understanding of the requirements and needs of the target groups served, and the likelihood that the proposed project will improve the State's future economic potential.

d) Role of Intermediaries – Per Section 3525(c), the Department may provide grants to those private, public, and non-profit research institutions and organizations that agree to serve as an intermediary to achieve the purpose set forth in this Section that continues to ensure Illinois' economic vitality and competitiveness.

14 Ill. Adm. Code 545.410 Methods of Direct Grant, Investment, and Loan Application Submittal

This Subpart describes procedures used by the Department and/or by intermediary organizations making direct grants, loans, or investments in support of advanced technology or business projects. This Subpart does not pertain to portfolio investments. For a discussion of procedures relating to portfolio investments by the Department, see Section 545.230 of this Part. When making direct grants, loans, or investments in support of advanced technology or business projects, the Department and/or intermediary organizations shall supply potential applicants with applications upon request, provided that funds are available for the program. Representatives of the Department and/or intermediary organizations may provide assistance to businesses in completing applications when requested. The Department may solicit or accept applications for grants, investments, and/or loans authorized under this Part through one of the following means.

a) Competitive Request for Applications – The Department may periodically issue competitive requests for applications from eligible applicants.

b) Unsolicited Applications – The Department may accept applications for grants, investments, and/or loans from eligible applicants on an ongoing basis, provided that funds are available for the program.

c) Applications Submitted by Intermediaries – The Department may accept an application, submitted on behalf of an eligible applicant, from an intermediary organization. At the same time such an application is submitted to the Department, the intermediary organization shall also submit its evaluation of the application, completed pursuant to the requirements of Sections 545.440 and 545.450 of this Part. The Department shall subsequently complete its review independently, taking into account the recommendations and findings of the intermediary organization. The final decision to award financial assistance in response to such applications shall be made by the Director.

d) Delegation to Intermediaries – The Department may, pursuant to an agreement between the Department and the intermediary organization, delegate responsibility to the intermediary organization to accept and evaluate applications from Illinois companies for grants, investments, and/or loans authorized under this Part and make such grants, investments, and/or loans on behalf of the Department.

e) Coordinated Economic Development Applications – The Department may solicit an application from an eligible applicant as part of a package of economic development services and/or incentives for the purpose of soliciting a business project to retain or expand employment within Illinois. Such solicitation may be made if the resultant project is consistent with the purpose of the Act and will have a significant positive effect on Illinois' competitive economic position.

14 Ill. Adm. Code 545.420 Application Content

The Department shall issue instructions and formats for the submittal of applications for financial assistance, customized to the requirements of the various programs described in this Part. Applications shall include the following information.

a) Applicant Information – The application shall include sufficient information to demonstrate that the applicant is eligible to apply for financial assistance pursuant to the requirements of the Act and this Part.

b) Project Information – The application shall contain sufficient information to clearly explain the nature and potential benefits of the proposed project. The application will generally follow a business plan format and, as applicable to the type of program, include sections such as:

1. executive summary;

2. description of the applicant (e.g., company or sponsoring organization);

3. description of the technologies, innovations, products, processes, systems, or devices to be developed or improved;

4. marketing information relevant to the proposed project;

5. description of the expected benefits to the company;

6. description of the expected public benefits to Illinois;

7. line item budget for use of the requested financial assistance;

8. description of the operating structure of the project, including a description of company ownership, management, and the qualifications of key project personnel;

9. actual and pro forma financial statements;

10. schedule of project activities and key milestones;

11. justification of need for a State funded grant, investment, or loan; and

12. description of leveraged funding, including letters of commitment from other investors.

14 Ill. Adm. Code 545.430 Screening of Applications

The Department and/or an intermediary organization and/or a designee shall screen applications to determine that all application requirements have been addressed. Except in the case of applications submitted in accordance with Section 545.410(a), Competitive Requests for Applications, applicants will be notified of deficiencies in applications and given a minimum of one opportunity to correct such deficiencies through resubmission.

14 Ill. Adm. Code 545.440 General Review Criteria

Complete applications shall be reviewed and evaluated by the Department or a designee and, if submitted by an intermediary organization on behalf of an eligible applicant, by the intermediary organization. To make this determination, the Department and/or an intermediary organization shall conduct an evaluation of each application, including the following components:

a) Consistency with Statutory Intent – The applicant shall demonstrate that the proposed project is consistent with a purpose for which financial assistance may be provided pursuant to the requirements of this Part.

b) Ability to Implement the Project – The applicant shall demonstrate the ability to implement the proposed project, including, if appropriate:

1. identification of loans, investments, or grant share from all lenders and investors on letterhead, signed and dated;

2. presentation of a project implementation schedule that demonstrates the applicant's readiness for immediate project initiation; and

3. provision of written cost estimates from contractors, suppliers, and architects that support project costs.

c) Financial Feasibility – The Department, its designee, and/or an intermediary organization shall review the applicant's financial statements, including projected statements, and related information to determine the financial viability of the project.

d) Market Feasibility – The applicant must demonstrate the market feasibility of the project, including, if applicable, a description of the potential users of the products or service; an analysis of the size of the potential market; the anticipated market share; and the competitive advantage the project has over existing similar products or services currently competing in the target market.

e) Technical Feasibility – The Department and/or an intermediary organization may require applicants to undergo a technical feasibility analysis conducted by individuals or organizations that possess the expertise to evaluate selected technological aspects of an application. Such individuals shall have the requisite expertise to conduct such analyses, as evidenced by academic and professional credentials in the subject matter of the proposed project.

f) Competence of Personnel – The applicant must demonstrate that key managers and project staff have appropriate knowledge and experience in related fields.

g) Private Investment and Owner Equity – The applicant shall demonstrate that other financing with respect to the project is provided. The owner's equity to be contributed, which shall be a significant part of the business project funding, shall be verified as available and/or committed to the project.

h) Past Performance – The Department, its designee, and/or an intermediary organization shall evaluate the performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous agreements).

14 Ill. Adm. Code 545.450 Program Specific Criteria

a) Technology Challenge Grant Program – Pursuant to the requirements of Section 2003 of the Act, applications determined by the Department to be complete shall be forwarded to the Illinois Coalition for their review and evaluation.

1. The Illinois Coalition shall consider the following criteria in determining recommendations to the Department:

A) the relationship of a proposed advanced technology project to the State's future economic growth;

B) the potential for adapting, commercializing or adopting the results of the applicant's project for the economic benefit of the State; and

C) the likelihood that the project has a potential for creating new jobs or retaining current jobs in the State. [20 ILCS 700/2003(a)]

2. The Department shall consider the recommendations of the Illinois Coalition and the following criteria in determining grant awards:

A) the qualifications and expertise of consultants, firms or organizations undertaking the effort;

B) the potential for leveraging federal or private research dollars, or both, for the initiative; and

C) the extent of the capacity of the applicant or the applicant partnership or consortium to finance the initiative. [20 ILCS 700/2003(a)]

b) Illinois Technology Enterprise Development and Investment Program – The Department shall determine the viability of matching funds. Per Section 3004(a) of the Act, in determining if direct qualified security investments or loans are to be made, the Department shall find that:

1. there is a likelihood of commercial feasibility given the state of development of the proposed product, process, service, or technical device; and

2. that there is a likelihood of increased job opportunities in the near term as a result of the security investment.

c) Modernization Retooling Loan Program – Per Section 3004(b) of the Act, in determining if a loan is to be provided, the Department shall determine whether there will be an expected improvement in production levels, quality of output, or timeliness of delivery and that the number of jobs to be created or retained is reasonable in relation to the loan funds requested. The applicant shall also demonstrate that the project will involve the purchase of advanced technology and other expenditures integral to technological improvement. The applicant shall demonstrate that the project will have a public benefit of providing a net increase or net retention of jobs for Illinois citizens and the project will have a private benefit of improving productivity, effectiveness, or efficiency of the firm's production activities or will increase revenues or reduce expenses.

d) Modernization Grants Program – Per Section 3515(c) of the Act, the applicant shall demonstrate the level of expertise of the consultant or firm undertaking the competitiveness assessment or productivity improvement services. The applicant shall further demonstrate that the project will result in a substantial improvement in the applicant's operations and will result in the creation or retention of jobs.

14 Ill. Adm. Code 545.510 Purpose

In accordance with the general intent of Section 2001 of the Act [20 ILCS 700/2001] the Homeland Security Market Development Program is intended to support the development and/or application of homeland security-related products or services, conditioned upon these products or services addressing demonstrated needs in homeland security and/or defense.

History

• Source: Added at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.520 Authorized Programs and Activities

The Homeland Security Market Development Program may be used for activities generally consistent with the intent of Section 2002 of the Act, such as providing investments, loans, or grants to individual businesses, partnerships or joint ventures that provide or commercialize products or services that meet homeland security or defense needs. Further, financial assistance may be used to fund not-for-profit or educational institutions that make available resources and expertise that further homeland security preparedness, recovery, planning, or service delivery; support development of the technical or managerial skills for business owners and entrepreneurs; aid commercial ventures in locating financing product or service development; and help new companies or partnerships with product development.

History

• Source: Added at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.530 Eligible Applicants

The Department may provide an award of grant funds, make a loan to, or provide an investment in any entity, partnership, or joint venture located, or with substantial operations, in the State of Illinois. Financial assistance will be awarded based on the qualifications and expertise of the entity and the ability of the entity to demonstrate a sufficient need for its proposed project.

History

• Source: Added at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.540 Eligible Costs

Grant, loan or investment funds may be used toward the development, production, or commercialization of any product or service with application in both homeland security and another commercial sector. Financial assistance may be used to hire technical staff, to engage third-party consultants and professional service providers, or for other uses as the Department deems appropriate in order to assist with homeland security product or service development, the support of programs that contribute to product or service development, or activities that accelerate commercial application of the product or service.

History

• Source: Added at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.550 Ineligible Costs

Grant, loan or investment funds are not intended to finance long-term research projects. They are intended to accelerate the development and production of homeland security products. Funds may not be used for general or routine administrative purposes.

History

• Source: Added at 30 Ill. Reg. 8450, effective April 19, 2006

14 Ill. Adm. Code 545.560 Reporting Requirements

Unless otherwise specified in the agreement between the Department and the recipient, an entity receiving financial assistance shall report financial and programmatic data to the Department on a regular basis using formats provided by the Department. Report formats and content shall be customized to the specific program and form of financial assistance. The Department requires quarterly reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

a) Expenditures – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall report actual expenditure of financial assistance using expenditure formats supplied by the Department. Expenditure summaries are to be submitted to the Department by the 15th day following the end of each fiscal quarter in which any expenditure of financial assistance is made. All award dollars must be expended within 24-months after receipt. Failure to do so may trigger the Department to initiate fund recovery activities.

b) Program Report – Unless otherwise specified in the agreement with the Department or an intermediary organization, an entity receiving financial assistance shall submit a program report in a format provided by the Department. The program report shall include a narrative describing the entity's progress toward achievement of objectives and activities as specified in the agreement with the Department or an intermediary organization. Program reports shall be submitted to the Department by the 15th day following the end of each fiscal quarter.

History

• Source: Added at 30 Ill. Reg. 8450, effective April 19, 2006

Part 546 Eliminate the Digital Divide Program

14 Ill. Adm. Code 546.10 General Purposes

The purpose of the Eliminate the Digital Divide Program is to expand access to information technology and educational opportunities through Community Technology Centers (CTCs) located in low income communities and to assist public hospitals, libraries, and park districts in eliminating the digital divide [30 ILCS 780/5-30(a)]. Grants may be awarded to plan, establish, administer and expand such CTCs.

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.20 Definitions

"Act" means Article 5 of the FY 2000 Budget Implementation Act, also cited as the Eliminate the Digital Divide Law.

The following words or phrases, for the purpose of this rule, have the same meaning respectively ascribed to them in Section 5-5 of the Act:

"Community-based organization" means a private not-for-profit organization that is located in an Illinois community and that provides services to citizens within that community and surrounding area.

"Community Technology Centers" provide computer access and educational services using information technology. Community technology centers are diverse in the populations they serve and programs they offer, but similar in that they provide technology access to individuals and communities, and use computer and telecommunication technologies.

"Department" means the Department of Commerce and Community Affairs.

"National School Lunch Program" means a program administered by the U.S. Department of Agriculture and state agencies that provides free or reduced price lunches to economically disadvantaged children. A child whose family income is between 130% and 185% of applicable family size income levels contained in the nonfarm poverty guidelines prescribed by the Office of Management and Budget is eligible for a reduced price lunch. A child whose family income is 130% or less of the applicable family size income levels contained in the non-farm poverty guidelines prescribed by the Office of Management and Budget is eligible for a free lunch.

"Telecommunications services" provided by telecommunications carriers include all commercially available telecommunication services in addition to all reasonable charges that are included by taking such services, such as State and federal taxes.

"Other special services" provided by telecommunications carriers include Internet access and installation and maintenance of internal connections in addition to all reasonable charges that are incurred by taking such services, such as State and federal taxes.

14 Ill. Adm. Code 546.30 Legal Requirements

Any entity awarded a Community Technology Center Grant shall be required to execute a grant agreement that sets forth the rights and responsibilities of the grantee and the Department. The Grant Agreement shall reflect all applicable State and federal statutory and administrative requirements, including but not limited to provisions covering expenditure of grant funds and utilization of property purchased with grant funds.

14 Ill. Adm. Code 546.110 Purpose

Subject to appropriation, the Department shall make grants to plan, establish, administer, and expand Community Technology Centers and to assist public hospitals, libraries, and park districts in eliminating the digital divide. The purposes of such grants shall include, but shall not be limited to, underwriting expenses relating to volunteer recruitment and management, training and instruction, infrastructure, and related goods and services for Community Technology Centers. [30 ILCS 780/5-30(a)]

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.120 Determination of Eligible Communities

To be eligible to apply for a grant, a Community Technology Center, public hospital, library, or park district must serve a community in which not less than 40% of the students are eligible for a free or reduced price lunch under the national school lunch program or in which not less than 30% of the students are eligible for a free lunch under the national school lunch program.

a) The Department shall annually obtain a list of schools and districts meeting these criteria from the Illinois State Board of Education (ISBE). The Department shall supplement this administrative data from ISBE with public use quality poverty data from the U.S. Department of Commerce, Bureau of the Census. Poverty data and the administrative data from the ISBE will be used to determine eligible communities.

b) If funding is insufficient to approve all grant applications for a particular fiscal year, the Department may impose a higher minimum percentage threshold for that fiscal year [30 ILCS 780/5-30(b)]. The Department shall make such a determination after applications are received and the need is determined, as evidenced by the total amount of funding requested.

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.130 Eligible Applicants and Limitations on Certain Educational Entities

To be eligible, all applicants shall assure that services will be accessible to the general public and access will not be restricted on the basis of age, race, gender, minority status, religion, disability, or national origin.

a) Eligible Applicants: The following entities are eligible applicants for grants under the Community Technology Center Grant Program:

1. public hospitals,

2. libraries,

3. park districts,

4. State educational agencies,

5. local educational agencies,

6. institutions of higher education,

7. other public and private nonprofit or for-profit agencies and organizations,

8. a group of eligible entities if the group follows the procedures for group applications in 34 CFR 75.127-129 of the federal Education Department General Administrative Regulations, and

9. any entities that have received a Community Technology Center grant under the federal Community Technology Centers. [30 ILCS 780/5-30(b)]

b) Limitations on Certain Educational Entities: To be eligible to apply for a grant under the Community Technology Center program, a local educational agency or public or private educational agency or organization must provide to the public computer access and educational services using information technology at one or more of its educational buildings or facilities at least 12 hours each week. Information technology means computer-assisted instruction using skill training and/or educational software and/or distance learning using telecommunications technology.

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.140 Authorized Activities

In general, authorized activities shall include, but not be limited to, volunteer recruitment and management, training and instruction, infrastructure, and related goods and services for the Community Technology Center Grant Program [30 ILCS 780/5-30(a)]. Grant recipients typically provide a variety of services and programs, such as:

a) Training to familiarize youth and adults with basic skills needed to access and utilize computers, common computer applications programs (e.g., word processing) and the Internet;

b) vocational skills training relating to information technology occupations;

c) access to career related information, employment opportunities, and related search capabilities available through the Internet;

d) computerized instruction in:

1. basic literacy skill;

2. GED preparation; and

3. English as a second language instruction;

e) before and after school programs for youth for academic enrichment and reinforcement;

f) computer skills training and support for entrepreneurs and small businesses;

g) distance learning and video conferencing;

h) access to assistive technology for disabled populations;

i) professional development for teachers; and

j) promotion of home access to computers.

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.150 Allowable Costs

Allowable costs shall include reasonable and necessary expenses associated with the planning and operation of a Community Technology Center, as agreed to by the Department and as specified in an agreement between the Department and the grant recipient. Such costs may include reimbursement for expenses for:

a) personal services;

b) fringe benefits;

c) travel;

d) equipment;

e) supplies;

f) rent/facilities costs;

g) contractual services; and

h) other costs that are consistent with statute, agreed upon by the Department, and as specified in an agreement between the Department and the grant recipient.

14 Ill. Adm. Code 546.160 Proposal Content

Subject to appropriations, the Department shall issue instructions and formats to eligible applicants for the submittal of grant proposals in advance of each funding cycle. The proposal shall contain sufficient information to clearly explain the nature and potential benefits of the proposed project. The proposal will generally include the following sections:

a) an executive summary;

b) a description of the applicant demonstrating that the applicant is located within an eligible community, as required by Section 546.120 of this Part and that the applicant is eligible to apply for a grant pursuant to the requirements of Section 546.130 of this Part;

c) a description of the applicant including:

1. a description of the organization and location of the applicant agency;

2. a description of the services typically provided;

3. a description of the technological infrastructure already in place;

4. a description of the populations typically served;

5. a description of actual related performance of the applicant, as compared to outcome objectives specified in past State or federal grants for related purposes; and

6. a description of the level of community support for the applicant;

d) a description of the technology-related needs of the targeted community, including:

1. a description of what the needs are;

2. a description of how needs were determined, including methods used to collect community input; and

3. a description of existing community resources addressing those needs;

e) a description of the activities proposed by the applicant to be undertaken during the period of performance of the grant to address the needs;

f) a schedule for the implementation of proposed activities;

g) measurable outcome objectives to be achieved during the period of performance for the grant;

h) a budget requesting grant funds for allowable costs and a justification for all costs requested;

i) a description of the education and related experience of key project personnel; and

j) a description of the applicant's participation in related programs.

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.170 Review Criteria and Negotiation Procedures

Grant proposals shall be reviewed on a competitive basis. Based on the competitive review, applicants shall be selected to enter into negotiations with the Department for a grant. The purpose of negotiations shall be to arrive at mutually acceptable grant provisions, including general, budgetary, and scope-of-work provisions. The final decision to make a grant award will be made by the Director of the Department. The Department shall use the following criteria when reviewing grant proposals and making awards:

a) Need of the Eligible Community: In determining relative need, the Department shall consider the following factors:

1. economic need in each target community, as evidenced by the proportion of local youth eligible for reduced cost, or free lunches under the National School Lunch Program; and

2. the level of access to technology of the populations to be served by the applicant.

b) Quality of the Proposal: The Department shall examine the overall quality of the activities and programs provided by the applicant. In making this judgment the Department shall consider:

1. the range, nature, and volume of activities to be undertaken, or proposed to be undertaken;

2. the measurable performance outcomes proposed by the applicant;

3. the past success of the applicant; and

4. the qualifications of staff assigned to deliver project activities.

c) Community Support: The Department shall consider overall level of community support for the applicant's proposal. In making this judgment the Department shall consider:

1. the amount of local community input received by the applicant in the design and operation of the proposed services; and

2. the level of financial support received by the applicant from private/non-governmental sources.

d) Cost: The Department shall examine the reasonableness of costs relative to the type of expenses being proposed.

e) Geographic Distribution of Awards: Along with the other criteria listed in this Section, the Director of the Department shall consider the geographic distribution of awards throughout the State when making final decisions regarding grant awards.

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.180 Limitations

Grants are subject to the following limitations:

a) The total amount of grants under the Community Technology Center Grant Program in fiscal year 2001 shall not exceed $2,000,000. [30 ILCS 780/5-30(a)]

b) No Community Technology Center may receive a grant of more than $50,000 under this program in a particular fiscal year. [30 ILCS 780/5-30(a)]

History

• Source: Amended at 26 Ill. Reg. 3026, effective February 15, 2002

14 Ill. Adm. Code 546.190 Reporting

Unless otherwise specified in the agreement between the Department and the recipient, an entity receiving a grant shall report financial and programmatic data to the Department on a regular basis using formats provided by the Department. The Department shall require quarterly reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

a) Expenditures: Unless otherwise specified in the agreement with the Department, an entity receiving a grant shall report actual expenditures using expenditure formats supplied by the Department. Expenditure summaries are to be submitted to the Department by the 15th day following the end of each fiscal quarter in which any expenditure of grant funds is made.

b) Program Report: Unless otherwise specified in the agreement with the Department, an entity receiving a grant shall submit a program report in a format provided by the Department. The program report shall include a narrative describing the entity's progress towards achieving objectives and activities as specified in the agreement with the Department. Program reports shall be submitted to the Department by the 15th day following the end of each fiscal quarter.

Part 547 High Speed Internet Services and Information Technology Program

14 Ill. Adm. Code 547.10 General Purpose

The deployment and adoption of high speed Internet services and information technology has resulted in enhanced economic development and public safety for the State's communities, improved health care and educational opportunities, and a better quality of life for the State's residents. Continued progress in the deployment and adoption of high speed Internet services and information technology is vital to ensuring that Illinois remains competitive and continues to create business and job growth. The purpose of the High Speed Internet Services and Information Technology Program is to encourage and support the partnership of the public and private sectors in the continued growth of high speed Internet and information technology for the State's residents and businesses. [20 ILCS 661/5]

14 Ill. Adm. Code 547.20 Definitions

The following words and phrases, for the purposes of this Part, have the same meaning respectively ascribed to them in Section 10 of the High Speed Internet Services and Information Technology Act.

"Act" means the High Speed Internet Services and Technology Act [20 ILCS 661].

"Department" means the Department of Commerce and Economic Opportunity. [20 ILCS 661/10]

"Director" means the Director of the Department of Commerce and Economic Opportunity.

"Grant Agreement" means a written and signed contractual document between the Grantee and the Department that includes a description of the activities to be performed, budget, and all terms and conditions of the contract.

"High speed Internet services", "advanced telecommunications services", "advanced services", or "broadband" means services capable of supporting, in at least one direction, a speed in excess of 200 kilobits per second (kbps) to the network demarcation point at the subscriber's premises. [220 ILCS 5/13-517]

"Local technology planning team" means entities representing a cross section of the community, including, but not limited to, representatives of business, K-12 education, health care, libraries, higher education, community-based organizations, local government, tourism, parks and recreation, and agriculture. [20 ILCS 661/20]

"Nonprofit organization" means an organization that is described in section 501(c)(3) of the federal Internal Revenue Code of 1986 and exempt from tax under section 501(a) of that Code and is organized under, subject to, and has all the powers and duties of a not-for-profit corporation under the General Not For Profit Corporation Act of 1986 [805 ILCS 105]. [20 ILCS 661/10]

"Program" means the High Speed Internet Services and Information Technology Program.

14 Ill. Adm. Code 547.30 Legal Requirements

a) Any entity awarded funds under the Program shall be required to execute a grant agreement that sets forth the rights and responsibilities of the Grantee and the Department. The Grant Agreement shall reflect all applicable State and federal statutory and administrative requirements, including but not limited to provisions covering the expenditure of grant funds and utilization of property purchased with grant funds.

b) The Grant Agreement shall contain substantive provisions including, but not limited to, the following:

1. A recitation of legal authority under which the Grant Agreement is made;

2. An identification of the scope of work and schedule, or services to be performed or conducted by the Grantee;

3. An identification of the grant amount;

4. The conditions by and manner in which the Department shall pay the grant amount subject at all times to annual appropriation by the General Assembly;

5. A promise by the Grantee not to assign or transfer any of the rights, duties or obligations of the Grantee without the written consent of the Department;

6. A promise by the Grantee not to amend the Grant Agreement without the written consent of the Department. Failure to do so will result in a cost disallowance. The project must be completed by the completion date on the notice of grant award unless a written request for an extension is submitted no later than 15 days prior to the award completion date;

7. A covenant that the Grantee shall expend the grant amount and any accrued interest only for the purposes of the scope of work as stated in the Grant Agreement and approved by the Department; and

8. A covenant that the Grantee shall refrain from entering into any written or oral agreement or understanding with any party that might be construed as an obligation of the State of Illinois or the Department for the payment of any funds under the Program.

14 Ill. Adm. Code 547.110 Purpose

Subject to appropriation, the Department shall make grants to a nonprofit organization to implement a comprehensive, statewide high speed Internet deployment strategy and demand creation initiative with the purpose of:

a) ensuring that all State residents and businesses have access to affordable and reliable high speed Internet service;

b) achieving improved technology literacy, increased computer ownership, and home high speed Internet use among State residents and businesses;

c) establishing and empowering local technology planning teams in each county to plan for improved technology use across multiple community sectors; and

d) establishing and sustaining an environment ripe for high speed Internet access and technology investment statewide. [20 ILCS 661/15]

14 Ill. Adm. Code 547.120 Coordination with Economic Development Activities

The Department must coordinate the administration of the Program with the Department's technology related planning and economic development initiatives.

14 Ill. Adm. Code 547.130 Eligible Applicants

Non-profit organizations are eligible applicants for grants under the Program. Eligible non-profit organizations are subject to the following conditions:

a) The nonprofit organization shall have a board of directors that is not composed of a majority of individuals who are also employed by, or otherwise associated with, any federal, State, or local government or agency. No part of the net earnings of the nonprofit organization may inure to the benefit of any member, founder, contributor, or individual. [20 ILCS 661/10]

b) The nonprofit organization and its Board of Directors shall exist separately and independently from the Department and any other governmental entity, but shall cooperate with other public or private entities it deems appropriate in carrying out its duties. [20 ILCS 661/20]

c) The nonprofit organization shall have an established competency and proven record of working with public and private sectors to accomplish wide-scale deployment and adoption of broadband and information technology in Illinois. [20 ILCS 661/15]

d) The nonprofit organization shall include the representation of constituencies throughout the State of Illinois. [20 ILCS 661/10]

14 Ill. Adm. Code 547.140 Authorized Activities

In general, authorized activities shall include, but not be limited to, developing and implementing a high speed Internet deployment strategy and demand creation initiative. The activities of the nonprofit organization shall include:

a) Creating a geographic statewide inventory of high speed Internet service and other relevant broadband and information technology services. The inventory shall:

1. Identify geographic gaps in high speed Internet service through a method of GIS mapping of service availability and GIS analysis at the census block level; and

2. Provide a baseline assessment of statewide high speed Internet deployment in terms of percentage of Illinois households with high speed Internet availability.

b) Tracking and identifying, through customer interviews and surveys and other publicly available sources, statewide residential and business adoption of high speed Internet, computers, and related information technology and any barriers to adoption.

c) Building and facilitating in each county or designated region a local technology planning team. Each team shall benchmark technology use across relevant community sectors, set goals for improved technology use within each sector, and develop a plan for achieving its goals, with specific recommendations for online application development and demand creation.

d) Collaborating with high speed Internet providers and technology companies to encourage deployment and use, especially in underserved areas, by aggregating local demand, mapping analysis, and creating market intelligence to improve the business case for providers to deploy.

e) Collaborating with the Department in developing a program to increase computer ownership and broadband access for disenfranchised populations across the State. The program may include grants to local community technology centers that provide technology training, promote computer ownership, and increase broadband access.

f) Applying and implementing federal grants consistent with the objectives of the Act.

g) Obtaining or raising funds other than the grants received from the Department to implement the objectives consistent with the Act. [20 ILCS 661/20]

14 Ill. Adm. Code 547.150 Allowable Costs

The grant funds shall be used for any reasonable and necessary expenses associated with the planning and implementation of the Program, as agreed to by the Department and as specified in a Grant Agreement between the Department and the grant recipient. Such costs may include expenses for:

a) Personal services;

b) Fringe benefits;

c) Travel;

d) Facilities costs;

e) Consultant services;

f) Sub-contractual costs; and

g) Other costs, as agreed upon by the Department and as specified in a Grant Agreement between the Department and the grant recipient.

14 Ill. Adm. Code 547.160 Proposal Content

Subject to appropriations, the Department shall issue instructions and formats to eligible applicants for the submittal of grant proposals. The proposal shall contain sufficient information to clearly explain the nature and potential benefits of the proposed project. The proposal will generally include the following sections:

a) An executive summary;

b) Assurances that the applicant is eligible to apply for a grant pursuant to the requirements of Section 547.130 of this Part;

c) A description of the applicant, including:

1. A description of the organization and the location of the applicant agency;

2. A description of the organization's current financial information;

3. A listing of the organization's Board of Directors;

4. A description of the services typically provided; and

5. A description of the applicant's participation in related programs and initiatives;

d) A description of the activities proposed by the applicant to be undertaken during the period of performance of the grant;

e) A description of the measurable outcomes and objectives to be achieved during the period of performance for the grant;

f) A description of the qualifications and related experience of key project staff;

g) A budget requesting grant funds for allowable costs and a justification for all costs requested; and

h) A schedule for the implementation of proposed activities.

14 Ill. Adm. Code 547.170 Review Criteria and Negotiation Procedures

Grant proposals shall be reviewed on a competitive basis. Based on the competitive review, applicants shall be selected to enter into negotiations with the Department for a grant. The purpose of negotiations shall be to arrive at mutually acceptable grant provisions, which will be reflected in the Grant Agreement, including general, budgetary, and scope of work provisions. The final decision to make a grant award will be made by the Director of the Department. The Department shall use the following criteria when reviewing grant proposals and making awards:

a) the experience of the nonprofit organization;

b) the related experience and qualification of the project staff;

c) the quality of the project work plan;

d) the proposed project costs in relationship to planned outcomes;

e) the relations of the project to the Department's economic development plans and initiatives; and

f) the quality of presentations made to the Department, if the Department requests information.

14 Ill. Adm. Code 547.180 Limitations

a) Nothing in the Program shall be construed as giving the Department, the nonprofit organization, or other entities associated with the program initiatives any additional authority, regulatory or otherwise, over providers of telecommunications, broadband, and information technology. [20 ILCS 661/25]

b) Any information that is designated confidential or proprietary by an entity providing the information to the nonprofit organization or any other entity to accomplish the objectives of the Program shall be deemed confidential, proprietary, and a trade secret and treated by the nonprofit organization or anyone else possessing the information as such and shall not be disclosed. [20 ILCS 661/20].

14 Ill. Adm. Code 547.190 Reporting

a) A nonprofit organization receiving grant funds under the Act shall provide a report to the Commission on Government Forecasting and Accountability on an annual basis for the first three complete State fiscal years following the execution of the Grant Agreement. [20 ILCS 661/20]

b) Unless otherwise specified in the Grant Agreement between the Department and the recipient, an entity receiving a grant shall report financial and programmatic data to the Department on a regular basis using the format provided by the Department. The Department shall require semiannual reporting of expenditures and program achievements at a level of detail sufficient to provide for program accountability.

1. Expenditures: Unless otherwise specified in the Grant Agreement with the Department, an entity receiving a grant shall report actual expenditures using an expenditure report format supplied by the Department. Expenditure summaries are to be submitted to the Department by the 15th day following the end of the period in which any expenditure of grant funds is made (January 15 and July 15).

2. Program Report: Unless otherwise specified in the Grant Agreement with the Department, an entity receiving a grant shall submit a program report in a format provided by the Department. The program report shall include a narrative describing the entity's progress towards achieving objectives and activities as specified in the Grant Agreement with the Department. Program reports shall be submitted to the Department by the 15th day following the reporting period (January 15 and July 15).

Part 548 Broadband Grant Programs

14 Ill. Adm. Code 548.10 Purpose

This part implements the Broadband Infrastructure Advancement Act. Investments in the State's bridges, roads, rail system, high-speed internet, and electricity are essential to the public safety, economic viability, and equity of all citizens in every part of Illinois. The persistent digital divide in Illinois is a barrier to the economic competitiveness in the economic distribution of essential public services, including health care and education. This digital divide disproportionately affects communities of color, lower-income areas, and rural areas. The purpose of the Broadband Infrastructure Advancement Act is to establish in administrative rule the Broadband Grant Programs, creating added certainty in advance of federal funding available to the State through the American Rescue Plan Act of 2021 and Infrastructure Investment and Jobs Act of 2021 (P.L. 117-58).

History

• Source: Amended at 48 Ill. Reg. 7690, effective May 8, 2024

14 Ill. Adm. Code 548.20 Definitions

"ARPA" means the American Rescue Plan Act of 2021, Section 9901, P.L. 117-2, 42 U.S.C. 802.

"Broadband" or "Broadband Service" means a mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up internet access service. (See 47 CFR 8.1(b).) This term also encompasses any service that the Federal Communications Commission finds to be providing a functional equivalent of the service described in the previous sentence or that is used to evade the protections set forth in 47 CFR 8.1.

"Build Illinois" means the Build Illinois Bond Fund [30 ILCS 105/5.160].

"DCEO" means the Department of Commerce and Economic Opportunity.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means the administrative rules of the Governor's Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Grantee" means any applicant for a grant award under this program whose proposal is funded by the Department.

"IIJA" means the Infrastructure Investment and Jobs Act, P.L. 117-58.

"Last Mile Infrastructure" means broadband installation that serves as the final leg connecting the broadband service provider's network to the end-user customer's on-premises telecommunications equipment.

"State" means the State of Illinois.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR 200.

History

• Source: Amended at 48 Ill. Reg. 17501, effective November 20, 2024

14 Ill. Adm. Code 548.30 Funding Sources

a) American Rescue Plan Act of 2021 ("ARPA") Capital Projects Fund (P.L. 117-2).

b) Build Illinois Bond Act [30 ILCS 425/4 (b)].

c) The Infrastructure Investment and Jobs Act ("IIJA") Broadband Equity, Access, and Deployment (BEAD) Program (P.L. 117-58).

d) Funding for grants may be provided by any source of funding as permitted by the State and the American Rescue Plan Act of 2021.

History

• Source: Amended at 48 Ill. Reg. 7690, effective May 8, 2024

14 Ill. Adm. Code 548.35 Program Specific Definitions

"Capital Improvement" means a project with a purpose to physically expand or physically improve upon infrastructure necessary for internet service delivery.

"Economically Distressed Area" means a census tract which meets one of the following four tests:

Poverty rate of at least 20%; or

75% or more of the children in the area are eligible to participate in the federal free lunch or reduced-price meals program; or

At least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP); or

Average unemployment rate that is more than 120% of the national unemployment average, for a period of at least two consecutive calendar years preceding the date of the application.

The Department maintains a map of areas that meet these qualifications on its website.

"Eligible Entities" means an incorporated business or partnership; a political subdivision; a nonprofit organization; a cooperative association; or a limited liability corporation organized for the purpose of expanding broadband access. Illinois public school districts are eligible to apply but may be encouraged to leverage other available federal or education-specific funding prior to an award.

"Middle Mile Infrastructure" means broadband construction that links a broadband service provider's core network infrastructure to last mile infrastructure.

"Program" means the Connect Illinois Broadband Grant Program.

"Rebuild Illinois" means the Rebuild Illinois Projects Fund.

"Underserved Area" means an applicant designated project area of Illinois in which households, businesses, or community anchor institutions have wireline broadband access of at least 25/3 Mbps but less than 100/20 Mbps, reflected in broadband mapping utilized by DCEO for the Connect Illinois program.

"Unserved Area" means an applicant designated project area of Illinois in which households, businesses, or community anchor institutions lack access to wireline broadband service of at least 25/3 Mbps, reflected in broadband mapping utilized by the DCEO for the Connect Illinois program.

History

• Source: Added at 48 Ill. Reg. 7690, effective May 8, 2024

Chapter I Department of Commerce and Economic Opportunity

Part 548 Broadband Grant Programs

14 Ill. Adm. Code 548.40 Program Description

The Connect Illinois Broadband Grant Program represents an integral and strategic component of both the comprehensive 2019 Rebuild Illinois infrastructure program and the State’s five-year economic plan to expand economic opportunity and reduce socioeconomic gaps through equity investment. The purpose of the Connect Illinois Broadband Grant Program is to make capital improvement grants to eligible entities to achieve universal broadband access for homes, businesses, and community anchor institutions. At the same time, Connect Illinois seeks progress in digital equity and inclusion while leveraging investment in new broadband infrastructure to spur advances in use and innovation for such areas as agriculture, economic development, education, and telehealth.

14 Ill. Adm. Code 548.50 Eligible Project Activities

a) The Department shall make grant awards to eligible entities as described in this Part, contingent on available funds. The grants shall be made to support one or more of the following activities as permitted by the applicable Notice of Funding Opportunity:

1. Broadband Access for Illinois homes, businesses, and community anchor institutions in unserved or underserved areas.

2. Broadband Innovation for economic development and related activities.

3. Urban Broadband for expanded access and/or innovation in qualified Illinois cities of 75,000 residents or more.

b) Allowable activities are limited to capital improvement expenses. All Connect Illinois projects must include infrastructure expansion scalable to speeds of at least 100 Mbps download and 100 Mbps upload upon deployment.

14 Ill. Adm. Code 548.60 Grantee Eligibility Requirements

An eligible applicant for a grant award under the Connect Illinois Grant Program shall meet the definition of an eligible entity under Section 20. To be eligible for a grant award, an applicant shall have an active GATA registration and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted.

14 Ill. Adm. Code 548.70 Administrative Requirements

Grant opportunities and awards will be administered in a manner that complies with all State and federal requirements applicable to each funding opportunity, including, but not limited to GATA, the Uniform Guidance and all applicable State or federal laws or guidance (e.g., U.S. Department of the Treasury guidance at https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-and-local-fiscal-recovery-funds). Grant applicants and grantees shall review all application materials and grant award documents, and shall follow the requirements listed in this Section.

a) Application Process

1. The Department will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible entities contingent upon available funds. Funding is available for one or more of the eligible project activities listed in Section 548.50. A single NOFO may seek applications for more than one type of project. Applicants shall submit their application materials by the deadlines set by the Department in the NOFO, which will be at least 30 days after the NOFO posting.

2. As part of the application, applicants shall provide the following information about the proposed project:

A) a description of the purpose of the grant project;

B) a project dashboard summarizing key activities including a description of activities, eligible costs, communities served, technology and infrastructure metrics;

C) a description of the overall project;

D) a description of the broadband related problems and challenges facing the targeted communities and customers, needs and gaps, the shortcomings of existing solutions, challenges with prior attempts to solve the problem and how the project significantly solves the problem;

E) a description of the project's solution to the broadband related problem including the network technology, internet services and business strategy to drive adoption;

F) a description of the targeted beneficiaries of the project that addresses the location of the communities, market size, economic conditions of the service areas, and targeted customer segments, including providing information on the unserved and/or underserved areas (if applicable) that will be included within the scope of the project;

G) a description of anticipated social and economic benefits that will be realized by the distinct customer segments;

H) a narrative description of the organization's mission and operating history;

I) a description of the capabilities, experiences, and track record of the organization and its partners to successfully implement, operate and sustain the project;

J) a description of the projects service area including a map of the proposed project area;

K) project impact statement including, but not limited to, the number of serviceable user segments, list of premises served, and list of interconnection points;

L) a narrative description of the specific social and economic benefits of connecting the following user segments – residents, businesses, community institutions, and other internet service providers;

M) whether the project is providing broadband improvements to an economically distressed area;

N) if applicable, the non-state matching funds and demonstration of financial need;

O) the specific activities and costs proposed for the grant;

P) a requested budget and supporting justification of the costs requested;

Q) evidence of community support for the project;

R) a detailed narrative regarding the project readiness;

S) a description of the project viability and sustainability including network capacity and scalability, and financial sustainability; and

T) pricing strategy, affordability and adoption assistance.

3. Applications will be accepted on an ongoing basis until the funds for the program are depleted or the application period closes, whichever comes first.

b) Grant Award Selection

1. Grants will be awarded to eligible entities following a merit review of the applications as required by GATA (44 Ill. Adm. 7000.350) and the applicable funding source. In evaluating applications, the Department will consider the following criteria:

A) The application indicates the overall project impact including the degree to which the project will improve broadband access to premises in unserved or underserved areas;

B) The applicant's demonstration of need and detailed, cost-effective budget;

C) The amount of non-state matching funds;

D) The level of community support for the project, including but not limited to local non-state matching funds and letters of support;

E) The overall project readiness;

F) The project's viability and sustainability;

G) The affordability and adoption assistance provided by the project;

H) The quality of the project including open access, shared use and business strategy; and

I) Any additional information to demonstrate or support the information submitted by the applicant for the proposed project.

2. The Department shall give a priority to projects that include a cash match of nonstate funding – from private, federal, and/or local sources. There is no requirement for a nonstate match, however, projects will be awarded a scoring preference on a tiered basis for applications providing for a nonstate match.

3. The Department will also consider the relevant geographic balance; project focus; and nonstate match.

c) Grant Agreements

Any entity awarded a grant shall execute a grant agreement that sets forth the rights and responsibilities of the grantee and DCEO. The Grant Agreement shall reflect all applicable State and federal statutory and administrative requirements, including but not limited to provisions covering expenditure of grant funds and utilization of property purchased with grant funds. The Department reserves the right to suspend or terminate a grant agreement, recover grant funds received under this Part or withhold any future funding for non-compliance with the grant agreement provisions and applicable State and federal law and regulations.

d) Grant Disbursements

Disbursement of grant funds from the Department will be made in accordance with a schedule included in the grant agreement. The Department will disburse funds based on the grantee making satisfactory progress to implement grant activities.

e) Grant Performance, Monitoring and Reporting Requirements

Grantees shall comply with all State laws, as well as all GATA and Department requirements, that are set forth in the grant agreement for grant performance, administration, monitoring and reporting, including monitoring any subrecipients.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly, or as required by the applicable funding source, and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement.

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Grantees must monitor their grant activities, and those of any subrecipients, to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. The Department will monitor the activities of grantees to assure compliance with all requirements and performance expectations of the award. Grantees shall timely submit all financial and performance reports, and shall supply, upon the Department's request, documents and information relevant to the award. The Department may monitor activities through site visits.

4. Grantees shall comply with all applicable State and federal laws, including, but not limited to, the Prevailing Wage Act [820 ILCS 130], the Illinois Works Jobs Program Act [30 ILCS 559/20], the Business Enterprise Program for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575], the Employment of Illinois Workers on Public Works Act [30 ILCS 570], the Environmental Protection Act [415 ILCS 5], the Illinois Endangered Species Protection Act [520 ILCS 10], the Illinois Natural Areas Preservation Act [525 ILCS 30], the Interagency Wetland Policy Act of 1989 [20 ILCS 830], and the Illinois State Agency Historic Resources Preservation Act [20 ILCS 3420].

f) Grant Extensions

Contingent upon the availability of funds and consistent with GATA as applicable, the Department may negotiate grant extensions and add funds for grant projects that were originally competitively procured and performed successfully.

g) Records Retention

Grantees shall maintain, for the period of years set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a), (b)) and grant agreement, adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the Connect Illinois Broadband Grant Program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. The applicable retention period will be dependent on the source of funding for the grant award. Grantees shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

14 Ill. Adm. Code 548.80 Allowable Costs

Grant expenditures must comply with GATA, the Uniform Guidance and any applicable funding source, be reasonable and necessary and support one of the eligible project activities set forth in Section 548.50. Specific allowable grant costs associated with the acquisition and installation of middle mile and/or last mile infrastructure will be set forth in the applicable NOFO, based on the types of projects which are available for funding per the funding source, and will include one or more of the following:

a) expenses for network design;

b) expenses for project planning;

c) expenses for obtaining the required construction permits;

d) expenses for the facility construction including deployment of middle mile and/or last mile infrastructure;

e) expenses for durable equipment; and

f) expenses for installation and testing of broadband service.

14 Ill. Adm. Code 548.90 Program Specific Definitions

"Assistant Secretary" means the Assistant Secretary of Commerce for Communications and Information or the individual who holds any successor position.

"BEAD NOFO" means the Broadband Equity, Access, and Deployment ("BEAD") Program Notice of Funding Opportunity posted by the National Telecommunications and Information Administration to describe the requirements under which it will award grants for the BEAD Program.

"Community Anchor Institution" means an entity such as a school, library, health clinic, health center, hospital or other medical provider, public safety entity, institution of higher education, public housing organization, or community support organization that facilitates greater use of broadband service by vulnerable populations, including, low-income individuals, unemployed individuals, and aged individuals.

"Digital Equity" means the condition in which individuals and communities have the information technology capacity that is needed for full participation in the society and economy of the United States.

"Eligible Community Anchor Institution" means a community anchor institution that lacks access to Gigabit-level broadband service.

"Eligible Subgrantee" means an incorporated business or partnership; a political subdivision; a nonprofit organization; a cooperative association; or a limited liability corporation organized for the purpose of expanding broadband access. Illinois public school districts are eligible to apply but may be encouraged to leverage other available federal or education-specific funding prior to an award.

"Extremely High Cost Per Location Threshold" means cost per location above which the DCEO may decline to select a proposal if use of an alternative technology meeting the BEAD Program's technical requirements would be less expensive.

"Location" and "Broadband Serviceable Location" mean a business or residential location in the United States at which fixed broadband internet access service is, or can be, installed.

"Middle Mile Infrastructure" means:

any broadband infrastructure that does not connect directly to an end-user location, including a community anchor institution; and includes:

leased dark fiber, interoffice transport, backhaul, carrier-neutral internet exchange facilities, carrier-neutral submarine cable landing stations, undersea cables, transport connectivity to data centers, special access transport, and other similar services; and

wired or private wireless broadband infrastructure, including microwave capacity, radio tower access, and other services or infrastructure for a private wireless broadband network, such as towers, fiber, and microwave links.

"NTIA-Approved Challenge Process Dataset" means the complete list of locations and community anchor institutions within Illinois that are eligible for BEAD grant funds, indicating whether a particular location is an Unserved or Underserved Location.

"Open Access" refers to an arrangement in which the subgrantee offers nondiscriminatory access to and use of its network on a wholesale basis to other providers seeking to provide broadband service to end-user locations, at just and reasonable wholesale rates for the useful life of the subsidized network assets. For this purpose, "just and reasonable wholesale rates" means rates that include a discount from the provider's retail rates reflecting the costs that the subgrantee avoids by virtue of not providing retail service to the end user location (including, for example, marketing, billing, and collection-related costs).

"Priority Broadband Project" means a project that provides broadband service at speeds of no less than 100 megabits per second for download and 20 megabits per second for uploads, has latency less than or equal to 100 milliseconds, and can easily scale speeds over time to meet the evolving connectivity needs of households and businesses and support the deployment of 5G, successor wireless technologies, and other advanced services.

"Project" means an undertaking by a subgrantee to construct and deploy infrastructure for the provision of broadband service. A "project" may constitute a single unserved or underserved broadband-serviceable location, or a grouping of broadband-serviceable locations in which not less than 80% of broadband-serviceable locations served by the project are unserved locations or underserved locations.

"Program" means the portion of the Connect Illinois Broadband Grant Program applying federal Broadband Equity, Access, and Deployment (BEAD) dollars as a funding source.

"Underserved Location" means a broadband-serviceable location that is:

not an unserved location; and

that the NTIA-approved challenge process dataset shows as lacking access to broadband service offered with:

a speed of not less than 100 Mbps for downloads;

a speed of not less than 20 Mbps for uploads; and

latency less than or equal to 100 milliseconds.

"Underserved Service Project" means a project in which not less than 80% of broadband-serviceable locations served by the project are unserved locations or underserved locations. An "Underserved Service Project" may be as small as a single underserved broadband-serviceable location.

"Unserved Location" means a broadband-serviceable location that the NTIA-approved challenge process dataset shows as:

having no access to broadband service; or

lacking access to broadband service offered with:

a speed of not less than 25 Mbps for downloads;

a speed of not less than 3 Mbps for uploads; and

latency less than or equal to 100 milliseconds.

"Unserved Service Project" means a project in which not less than 80% of broadband-serviceable locations served by the project are unserved locations. An "Unserved Service Project" may be as small as a single unserved broadband serviceable location.

History

• Source: Amended at 49 Ill. Reg. 15599, effective November 24, 2025

14 Ill. Adm. Code 548.100 Program Description

The BEAD funded Connect Illinois Broadband Grant Program focuses on deploying broadband service to unserved locations and underserved locations. The following documents are incorporated by reference in this Subpart and do not include any later amendments or editions:

a) The Broadband Equity, Access, and Deployment Program Notice of Funding Opportunity (BEAD NOFO), published by the National Telecommunications and Information Administration on May 13, 2022, which may be obtained from DCEO at 500 E Monroe St, Springfield IL 62704, or online at https://broadbandusa.ntia.doc.gov/sites/default/files/2022-05/BEAD%20NOFO.pdf

b) Broadband Equity, Access and Deployment (BEAD) Program: BEAD Restructuring Policy Notice, Published by the National Telecommunications and Information Administration on June 6, 2025, which may be obtained from DCEO at 500 E Monroe St, Springfield IL 62704, or online at https://www.ntia.gov/sites/default/files/2025-06/bead-restructuring-policy-notice.pdf

History

• Source: Amended at 49 Ill. Reg. 15599, effective November 24, 2025

14 Ill. Adm. Code 548.110 Eligible Project Activities

The Department shall make grant awards to eligible subgrantees as described in this Part, contingent on available funds. The grants shall be made to support one or more of the following activities as permitted by the applicable Notice of Funding Opportunity and consistent with the priorities established for the BEAD Program and guidance from the National Telecommunications and Information Administration:

a) Last mile deployment projects to unserved locations;

b) Last mile deployment projects to underserved locations; or

c) Deployment of gigabit connections to community anchor institutions.

History

• Source: Amended at 49 Ill. Reg. 15599, effective November 24, 2025

Chapter I Department of Commerce and Economic Opportunity

Part 548 Broadband Grant Programs

14 Ill. Adm. Code 548.120 Grantee Eligibility Requirements

An eligible applicant for a grant award under Subpart C shall meet the definition of an eligible subgrantee under Section 548.90 and shall meet the subgrantee qualification criteria listed in the BEAD NOFO. To be eligible for a grant award, an applicant shall have an active GATA registration and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted.

History

• Source: Added at 48 Ill. Reg. 7690, effective May 8, 2024

14 Ill. Adm. Code 548.130 Administrative Requirements

Grant opportunities and awards will be administered in a manner that complies with all State and federal requirements applicable to each funding opportunity, including, but not limited to, GATA, the Uniform Guidance and all applicable State or federal laws or guidance (e.g., Broadband Equity, Access, and Deployment Program Notice of Funding Opportunity at https://broadbandusa.ntia.doc.gov/sites/default/files/2022-05/BEAD%20NOFO.pdf). Grant applicants and grantees shall review all application materials and grant award documents, and shall follow the requirements listed in this Section.

a) Application Process

1. The Department will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible subgrantees contingent upon available funds. Funding is available for one or more of the eligible project activities listed in Section 548.120. A single NOFO may seek applications for more than one type of project. Applicants shall submit their application materials by the deadlines set by the Department in the NOFO, which will be at least 30 days after the NOFO posting.

2. As part of the application, applicants shall provide the following information about the proposed project:

A) a description of the purpose of the grant project;

B) a summary of key activities including a description of activities, eligible costs, communities served, technology and infrastructure metrics;

C) a description of the overall project including network design, diagram, project costs, build-out timeline and milestones for project implementation, and a capital investment schedule evidencing complete build-out and initiation of service within four years of receipt of the grant;

D) a description of the project's solution to the broadband related problem including the network technology, internet services and business strategy to drive adoption;

E) a description of the targeted beneficiaries of the project that addresses the location of the communities, market size, economic conditions of the service areas, and targeted customer segments, including providing information on the unserved and/or underserved areas (if applicable) that will be included within the scope of the project;

F) a narrative description of the organization's mission and operating history;

G) a description of the capabilities, experiences, and track record of the organization and its partners to successfully implement, operate and sustain the project including resumes for all key management personnel;

H) a description of the projects service area including a map of the proposed project area;

I) project impact statement including, but not limited to, the number of serviceable user segments, list of premises served, and list of interconnection points;

J) if applicable, the matching funds;

K) evidence the organization has the financial capabilities to meet the obligations associated with a projection including certification of available funds for all project costs that exceed the amount of the grant, letters of credit, audited financial statements, and financial sustainability/pro forma analyses of the proposed project;

L) the specific activities and costs proposed for the grant;

M) a requested budget and supporting justification of the costs requested;

N) a detailed narrative regarding the project readiness;

O) a description of the project viability and sustainability including network capacity and scalability; and

P) pricing strategy, affordability and adoption assistance.

Q) evidence that the applicant has the competence, managerial, financial, technical, and operational capacity to carry out activities funded by the subgrant in a competent manner and in compliance with all State, territorial, and local laws.

3. Applications will be accepted on an ongoing basis until the funds for the program are depleted or the application period closes, whichever comes first.

b) Grant Award Selection

1. Grants will be awarded to eligible subgrantees following a merit review of the applications as required by GATA (44 Ill. Adm. Code 7000.350) and the applicable funding source. In evaluating applications, the Department will consider the following criteria for both priority and non-priority broadband projects:

A) Total Cost. The total BEAD funding required to complete the project, accounting for both total projected cost and the applicant's proposed match;

B) The Speed to Deployment. The Department may consider the prospective subgrantee's binding commitment to provision service by a date certain that is earlier than four years from the date on which the subgrantee will receive the subgrant from the Department subject to contractual penalties to the Department. Greater consideration can be awarded to prospective subgrantees promising an earlier service provision date;

C) Speed of Network and Other Technical Capabilities. The Department may weigh the speed, latency, and other technical capabilities of the technologies proposed by prospective subgrantees;

D) Preliminary/Provisional Subgrantees. For locations where the Department has already identified preliminary or provisionally selected subgrantees, the Department may give additional weight to those applications.

2. The Department shall award funding in a manner that ensures that all unserved locations will be covered and that as many underserved locations as possible will be covered.

3. Applicants must include a match totaling 25% or more of total project costs, unless NTIA issues a waiver.

c) Grant Agreements

Any entity awarded a grant shall execute a grant agreement that sets forth the rights and responsibilities of the grantee and DCEO. The grant agreement shall reflect all applicable State and federal statutory and administrative requirements, including, but not limited to, provisions covering expenditure of grant funds and utilization of property purchased with grant funds. The Department reserves the right to suspend or terminate a grant agreement, recover grant funds received under this Part or withhold any future funding for non-compliance with the grant agreement provisions and applicable State and federal law and regulations.

d) Grant Disbursements

Disbursement of grant funds from the Department will be made in accordance with a schedule included in the grant agreement. The Department will disburse funds based on the grantee making satisfactory progress to implement grant activities.

e) Grant Performance, Monitoring and Reporting Requirements

Grantees shall comply with all State laws, as well as all GATA and Department requirements, that are set forth in the grant agreement for grant performance, administration, monitoring and reporting, including monitoring any subgrantees.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly, or as required by the applicable funding source, and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement.

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Grantees must monitor their grant activities, and those of any subgrantees, to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. The Department will monitor the activities of grantees to assure compliance with all requirements and performance expectations of the award. Grantees shall timely submit all financial and performance reports, and shall supply, upon the Department's request, documents and information relevant to the award. The Department may monitor activities through site visits.

4. Grantees shall comply with all applicable State and federal laws, including, but not limited to, the Prevailing Wage Act [820 ILCS 130], the Illinois Works Jobs Program Act [30 ILCS 559/20], the Business Enterprise Program for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575], the Employment of Illinois Workers on Public Works Act [30 ILCS 570], the Environmental Protection Act [415 ILCS 5], the Illinois Endangered Species Protection Act [520 ILCS 10], the Illinois Natural Areas Preservation Act [525 ILCS 30], the Interagency Wetland Policy Act of 1989 [20 ILCS 830], and the Illinois State Agency Historic Resources Preservation Act [20 ILCS 3420].

f) Grant Extensions

Contingent upon the availability of funds and consistent with GATA as applicable, the Department may negotiate grant extensions and add funds for grant projects that were originally competitively procured and performed successfully.

g) Records Retention

Grantees shall maintain, for the period of years set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) and grant agreement, adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the Connect Illinois Broadband Grant Program BEAD Funded. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. The applicable retention period will be dependent on the source of funding for the grant award. Grantees shall be responsible for ensuring that contractors and subgrantees comply with the retention requirements.

h) Consistency with Federal Program Specifications

DCEO will perform subgrantee selection in a manner consistent with the BEAD NOFO (incorporated by reference) and the BEAD Restructuring Policy Notice (incorporated by reference).

History

• Source: Amended at 49 Ill. Reg. 15599, effective November 24, 2025

14 Ill. Adm. Code 548.140 Specific Allowable Grant Costs

Grant expenditures must comply with GATA, the Uniform Guidance and any applicable funding source, be reasonable and necessary, and support one of the eligible project activities set forth in Section 548.110. Specific allowable grant costs, as described in this Section, will be set forth in the applicable NOFO, based on the types of projects that are available for funding per the funding source.

a) Eligible deployment uses of funding for unserved, underserved, and community anchor institution locations include the following:

1. Construction, improvement, and/or acquisition of facilities and telecommunications equipment required to provide qualifying broadband service, including infrastructure for backhaul, middle- and last-mile networks, and multi-tenant buildings;

2. Long-term leases (for terms greater than one year) of facilities required to provide qualifying broadband service, including indefeasible right-of-use (IRU) agreements;

3. Deployment of internet and wi-fi infrastructure within an eligible multi-family residential building containing confirmed unserved and/or underserved locations;

4. Engineering design, permitting, and work related to environmental, historical and cultural reviews;

5. Personnel costs, including salaries and fringe benefits for staff and consultants providing services directly connected to the implementation of the BEAD Program (such as project managers, program directors, and subject matter experts);

6. Network software upgrades, including, but not limited to, cybersecurity solutions;

7. Training for cybersecurity professionals who will be working on BEAD-funded networks;

8. Workforce development, including registered apprenticeships and pre-apprenticeships, and community college and/or vocational training for broadband-related occupations to support deployment, maintenance, and upgrades.

b) Ineligible costs include those costs that are unallowable under the applicable federal cost principles. Please note that costs ineligible for the BEAD Program may not be paid for with matching funds committed to an award. If a grantee is found to have used grant or matching funds on a prohibited cost, DCEO may take remedial action, including but not limited to deobligation or claw back of funding. The following costs are specifically identified as prohibited under the BEAD Program:

1. Prohibition On Use of Grant Funds for Covered Communications Equipment or Services under the Secure and Trusted Communications Networks Act. A grantee may not use grant funds received under the BEAD Program to purchase or support any covered communications equipment or service (as defined in Section 9 of the Secure and Trusted Communications Networks Act of 2019 (47 U.S.C. 1608)).

2. Prohibition on Profit and Fees. A profit, fee, or other incremental charge above actual cost incurred by the grantee is not an allowable cost under this Program.

3. Prohibition on Use of Grant Funds to Support or Oppose Collective Bargaining. Grantees may not use grant funds, whether directly or indirectly, to support or oppose collective bargaining.

History

• Source: Amended at 49 Ill. Reg. 15599, effective November 24, 2025

14 Ill. Adm. Code 549.10 Purpose

The Illinois Department of Transportation, the Illinois State Toll Highway Authority, the Illinois Commerce Commission, and the Illinois Department of Commerce and Economic Opportunity shall consult with the State-Wide One-Call Notice System to jointly develop rules for the design and construction of road, highway, tollway, and expressway projects to reduce the need for the relocation of public water and wastewater infrastructure and to promote the deployment of broadband infrastructure and underground utility facilities in an efficient and competitively neutral process for all road, highway, tollway, and expressway projects. [605 ILCS 145/15]

Dig Once is intended to increase efficiency by minimizing traffic interruptions caused by repeated excavation and alleviating the cost of broadband deployment through greater coordination between the State, units of local government, Broadband Providers, cooperatives, and utilities. By enabling greater and more efficient broadband deployment, the Dig Once Act furthers progress in digital equity and inclusion, supporting advances in agriculture, economic development, education, and telehealth.

14 Ill. Adm. Code 549.20 Definitions

The following definitions are applicable to this Part:

"811 Chicago" means the agency that provides a free One Call service to private contractors and homeowners within the City of Chicago's Corporate Limits. This system notifies all utilities of impending excavations.

"Broadband" or "Broadband Service" means a mass-market retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up internet access service. (See 47 CFR 8.1(b).) This term also encompasses any service that the Federal Communications Commission finds to be providing a functional equivalent of the service described in the previous sentence or that is used to evade the protections set forth in 47 CFR 8.1.

"Broadband Infrastructure" means wires, cables, fiber optic lines, conduit, pipe, innerduct, or microduct for fiber optic or other cables that accommodate current or future broadband and wireless facilities for broadband service. [605 ILCS 145/10]

"Broadband Provider" means an entity that facilitates middle or last mile broadband access through retail service.

"Community Anchor Institution" means an entity such as a school, library, health clinic, health center, hospital or other medical provider, public safety entity, institution of higher education, public housing organization, or community support organization that facilitates greater use of broadband service by vulnerable populations, including, low-income individuals, unemployed individuals, and aged individuals. [div. F, tit. I, Section 60102, P.L. 117‑58, 47 U.S.C. 1702]

"Dark Fiber" means fiber that is deployed but not actively being used or subscribed to.

"DCEO" means the Department of Commerce and Economic Opportunity.

"ICC" means Illinois Commerce Commission.

"IDOT" means Illinois Department of Transportation.

"ISTHA" means Illinois State Tollway Authority.

"JULIE" or "Joint Utility Locating Information for Excavators" means the not-for-profit organization that acts as the communication source to notify utility companies that someone is planning a project that requires digging.

"Last Mile Infrastructure" means broadband installation that serves as the final leg connecting the broadband service provider's network to the end-user customer's on-premises telecommunications equipment.

"Middle Mile Infrastructure" means broadband construction that links a broadband service provider's core network infrastructure to last mile infrastructure.

"State" means the State of Illinois.

"Underground Project" Any work done that requires excavation and installation of infrastructure underground.

"Underground Utility Facilities" has the meaning given to that term in Section 2.2 of the Illinois Underground Utility Facilities Damage Prevention Act. [605 ILCS 145/10]

14 Ill. Adm. Code 549.30 Scope

The Dig Once Act shall be carried out through a Dig Once Committee, led by the Dig Once Coordinator, where participating Committee members will gain access to information that supports effective project coordination. Regular Committee meetings will offer Committee members the opportunity to learn about upcoming road, bridge, and transit projects where joint build and proactive installation opportunities may exist. Committee members may then submit formal coordination requests through a centralized portal, where they can document terms and conditions for collaboration. This portal provides regularly updated plans for future infrastructure builds, regular status updates, and detailed information on known and likely fiber deployments, including the integration of existing dark and lit fiber routes.

14 Ill. Adm. Code 549.40 Program Description

The Dig Once Coordinator will manage and facilitate Committee meetings where IDOT and ISTHA will share capital build projects along with other voluntary Committee members who may then choose to share information about their upcoming projects. The Dig Once Coordinator will also organize coordination for underground projects. The objective of the Committee meetings is to facilitate Committee Outcomes including joint build and proactive installation.

14 Ill. Adm. Code 549.50 Dig Once Coordinator

The Dig Once Coordinator, housed within the DCEO’s Illinois Office of Broadband, is responsible for facilitating communication and collaboration among Committee members through the Dig Once Committee to achieve the Dig Once Outcomes. This position serves as the primary point of contact for the following activities:

a) Managing and facilitating the Dig Once Committee, recurring Committee meetings, and related processes;

b) Managing and overseeing a portal where Committee members can gain access to capital build projects, initiate formal agreement processes, view timelines, and receive status updates for current underground projects;

c) Identifying and engaging relevant stakeholders, promoting Committee participation, and expanding Committee membership through outreach efforts;

d) Acting as a liaison between current and prospective Committee members and state agencies including ICC, IDOT, and ISTHA and other agencies, as appropriate to further broadband deployment;

e) Maintaining documentation of state agency capital build projects and schedules and making that information available to Committee members;

f) Ensuring timely notification regarding available excess conduit or fiber to optimize resource sharing and broadband expansion efforts;

g) Identifying and recommending best practices for formal agreements and assisting in the coordination of communications between entities;

h) Overseeing the membership application process, managing daily member operations and membership list;

i) Keeping non-public data and information, including but not limited to project maps and formal requests for information, confidential through Non-Disclosure Agreements (NDAs), as needed. Additionally, DCEO will use its best efforts in protecting information designated as confidential, proprietary, or containing trade secrets to the fullest extent permitted under the Freedom of Information Act. DCEO will consider all confidential information so designated presumptively exempt from disclosure pursuant to 7(1)(g) of the Freedom of Information Act. If any party seeks to require DCEO, pursuant to any law, regulation, or legal process to disclose confidential information, DECO will provide prompt notice to the submitting entity so that the entity may seek a protective order or pursue other appropriate relief;

j) Reporting on metrics such as the number of joint build and proactive installation agreements, miles of coordinated fiber deployed, and total excavation costs saved.

14 Ill. Adm. Code 549.60 Dig Once Committee

DCEO Office of Broadband will establish a Dig Once Committee comprised of the ICC, IDOT, and ISTHA, and DCEO as original members. ISTHA and IDOT will be required to share and provide notice for their capital build projects. Additional voluntary Committee membership will be opened for entities who seek to participate in joint builds and proactive installation. Such entities may include Broadband Providers, utilities, units of local government, community anchor institutions, and other entities, as applicable. All Committee activities, including coordination among Committee members or with entities appearing before the Committee, shall be strictly voluntary for additional Committee members beyond the original governmental agency representatives. The Committee will:

a) Serve as a body where the Committee members can discuss coordination of future projects;

b) Provide a clear communication channel for Committee members;

c) Hold Committee meetings on a regular basis, no less than quarterly. Committee meetings may be held via teleconferencing platform and/or in-person and will comply with the Open Meetings Act;

d) Maintain a database and maps of publicly owned broadband infrastructure, such as fiber and conduit, for Committee planning purposes;

e) Facilitate planning discussions to identify opportunities for and to carry out joint builds and proactive installation including designing and managing an expression of interest process from members;

f) Facilitate sufficient advance notice to Committee members of state agency relocation needs and support associated relocations through the joint build process, if applicable;

g) Provide template guidance and parameters for joint build agreements for use by state agencies and providers participating in joint builds. Parameters will include construction specifications and timelines, roles and responsibilities, cost sharing approach and framework, safety considerations, and other construction standards and commitments. These parameters will be informed by Committee members' expertise and input, but agreements are subject to negotiation between the parties participating in the joint build;

h) Facilitate on-going education and best practices around existing JULIE, 811, and other excavation safety requirements.

14 Ill. Adm. Code 549.70 Committee Structure

a) The Committee shall initially consist of representatives of the Illinois Department of Transportation, the Illinois Tollway Authority, the Illinois Commerce Commission, and the Illinois Department of Commerce and Economic Opportunity.

b) The initial Committee members above are required to submit capital build projects (as applicable) and provide notification of opportunities to coordinate with voluntary members of the Committee.

c) The Dig Once Coordinator shall manage and facilitate the Committee.

d) The Committee shall develop processes for the inclusion of new members, including but not limited to broadband providers, utilities, and units of local government.

e) The Committee exists to facilitate communication and coordination. All Committee activities related to joint build and proactive installation for new members are voluntary. The Committee shall take no legally binding actions, but may facilitate two entities before the Committee, whether members or non-members, entering into voluntary, legally binding agreements.

14 Ill. Adm. Code 549.80 Committee Outcomes

The Committee will facilitate two kinds of voluntary, legally binding agreements between entities and other outcomes as applicable. Committee members can choose to participate in one or more Committee outcomes on any underground project. The Committee member who initiates a Committee outcome opportunity will have the authority to decide who to coordinate with on that outcome, rather than the Committee as a whole.

a) Joint Build

1. Committee members with overlapping project timelines and locations may voluntarily coordinate shared excavation efforts to reduce underground infrastructure deployment costs.

2. Joint Build coordination should include a mutually agreed upon plan detailing roles, responsibilities, project timelines, deployment sequence, damage and liability policies, and cost sharing terms, formalized in a written agreement.

3. All joint build excavation activities should follow established best practices and comply with all applicable regulations to ensure safe and efficient trench sharing.

4. The Dig Once Coordinator is limited to identifying and recommending best practices, providing guidance, and facilitating communication between parties related to the formal agreements.

b) Proactive Installation

1. To support and facilitate broadband deployment, IDOT, and ISTHA may make dark fiber, excess conduit, and other broadband infrastructure available on an equal and non-discriminatory basis to entities for middle mile or last mile access. Broadband Providers may make dark fiber, excess conduit, and other broadband infrastructure available on an equal and non-discriminatory basis for other entities to use to facilitate middle mile or last mile access where applicable. Excess conduit or dark fiber may be reserved for future use by the state agency or broadband provider as leased, licensed, or subject to a similar agreement.

2. The promotion of leasing opportunities and processes for excess conduit, dark fiber, and other broadband infrastructure shall follow fair and transparent procedures to ensure equitable access for both public and private entities supporting middle or last mile broadband deployment. This includes the following requirements:

A) All Committee members will be notified of leasing opportunities during regular Committee meetings and via electronic means, such as recurring emails or an online portal. Notifications must occur no less than 4 weeks after the relevant infrastructure is available.

B) Entities interested in accessing dark fiber or excess conduit may submit applications through a centralized portal. The submission window will remain open for at least two-weeks following the public posting of the initial opportunity. After this window closes, the infrastructure owner may begin reviewing applications on a rolling basis using their own consistent and objective evaluation criteria. Based on the availability of infrastructure and alignment of proposed uses with program goals, one or more applicants may be selected by the owner of the infrastructure to enter into a lease, licensing agreement, or similar agreement.

C) Leases, licensing agreements, and similar agreements should include a mutually agreed upon plan, maintenance responsibilities, damage and liability policies, and other relevant terms formalized in a written agreement.

Chapter 1 Department of Commerce and Economic Opportunity

Part 550 Local Tourism and Convention Bureau Program

14 Ill. Adm. Code 550.10 Purpose

Section 605-705(a) of the Civil Administrative Code of Illinois [20 ILCS 605/605-705(a) authorizes a program for the establishment of grants with local tourism and convention bureaus from the Convention and Local Tourism Account in the Tourism Fund. The intent of the program is to generate increased hotel/motel occupancy and travel into and throughout the State of Illinois impacting the economic growth of the tourism industry. This Part establishes rules for the implementation and administration of the Local Tourism and Convention Bureau Program.

14 Ill. Adm. Code 550.20 Definitions

"Act" − means Section 605-705(a) of the Civil Administrative Code of Illinois [20 ILCS 605/605-705(a)] that establishes a grant program to be referred to as the Local Tourism and Convention Bureau Program.

"Applicant" − means a not-for-profit organization or unit of local government that meets the eligibility requirements.

"Application" − means the completed standardized "Grant Application Form", plus the program specific addendum.

"Bureau" − means a certified local tourism and convention bureau.

"Certification/Re-certification" − means the written request submitted by an applicant requesting to be a certified local tourism and convention bureau and requesting grant funds authorized by the Act.

"Chief Executive Officer" − means a full-time (at least 35 hours per week), paid professional of a bureau authorized and qualified to manage and implement a bureau's marketing plan and fulfill all requirements under an LTCB grant whose sole function shall be to promote tourism development within the bureau's designated service area.

"Commodities" − means supplies and materials, including premiums, office products, equipment and printing.

"Department" − means the Department of Commerce and Economic Opportunity.

"Department Logo" − means a form of recognition as stipulated and supplied by the Department to identify a promotional project/product as being produced in whole or in part through grant funds from the Department.

"Director" − means the Director of the Department of Commerce and Economic Opportunity.

"Feasibility Study" − means a study to determine if a tourism promotional project will result in an increase in overnight stays and visitor travel and if the promotional project is capable of being successfully completed.

"Fiscal Year" − means each period of July 1 through June 30, the fiscal year of the State of Illinois.

"Fiscal Year Marketing Plan" − means the planned program of tourism promotional activities for the fiscal year, including goals, objectives, strategies, anticipated results, and performance measures.

"Grant Agreement" − means the executed agreement between the grantee and the Department defining their respective rights and obligations with regard to the awarding of grant funds.

"Grantee" − means a bureau receiving LTCB Program funds from the Department for purposes of promoting tourism in a designated geographic area of the State.

"Illinois Bureau of Tourism" or "IBOT" − means the division of the Department that has statutory authority to establish, develop, and implement a grant program for local tourism and convention bureaus.

"In-Kind Contributions" − means donated services, donated space, donated equipment, services of volunteers, services in lieu of cash or any non-monetary item.

"Market Research" − means to research potential economic impact on the grantee's service area, including but not limited to researching recruitment of present and future target markets, such as leisure and business travelers and visitor distribution.

"Matching Funds" − means that portion of the Project Budget Plan that is required to be provided by the grantee.

"Municipality" − means "municipality" as defined in Section 1-1-2(1) of the Illinois Municipal Code [65 ILCS 5/1-1-2(1)].

"Pass-Through Funds" − means funds received by a bureau from a local entity within its designated geographic service area that are designated for payment of any expenses incurred without proportionate value, either programmatically or financially, being added by the bureau.

"Population Served" − means the population of the bureau's designated service area according to the latest certified census figures.

"Premium Items" − means tourism promotional items purchased with grant funds and distributed or disseminated at no cost for tourism promotional purposes, including but not limited to tee-shirts, pins, hats, travel packages, and award plaques.

"Program" − means the Local Tourism and Convention Bureau (LTCB) Program.

"Project Budget Plan" − means an itemized budget category breakdown of planned grant and match expenditures associated with the activities described in the Fiscal Year Marketing Plan.

"Promotional Projects" − means Department approved tourism promotional activities that are designed to encourage tourism as described in the Fiscal Year Marketing Plan.

"Service Area" − means a designated geographic area for which the bureau is certified to provide tourism promotional services.

"Services" − means the furnishing of labor by a vendor not involving the delivery of a tangible product other than accompanying reports, designs, logos, or similar artistic services.

"Sponsorship" − means a financial contribution made by a bureau to another entity for the purpose of attracting or retaining an event that will generate tourism in the designated service area.

"Tourism" − means travel by either State residents or out-of-state visitors traveling away from home overnight in paid accommodations or on day trips to places 50 miles or more from the visitor's home.

"Travel/Trade Show" − means an exhibit/marketplace of travel-related products and/or services.

"Unit of Local Government" − means a county, municipality, or township having authority to enact laws and ordinances, administer laws and ordinances, and raise taxes or spend public funds.

History

• Source: Amended at 38 Ill. Reg. 3359, effective January 15, 2014

14 Ill. Adm. Code 550.30 Allocation of Appropriations to Grantees

a) In accordance with the Act, annual appropriations made by the General Assembly to the Department for the purpose of this program are allocated as follows:

1. 18% of the annual appropriation shall be used for grants to convention and tourism bureaus located within Chicago; and

2 82% of the annual appropriation shall be used for grants to convention and tourism bureaus in the remainder of the State, in accordance with the formula in subsection (b). [20 ILCS 605/605-705(b)]

b) Subject to the maximum grant amount set forth in subsection (c), the funds to be distributed under subsection (a)(2) will be distributed based on a formula that will be applied to the available appropriations. The formula will contain the following weighted factors, as they apply to the prior calendar year: 5% population of the bureau service area; 30% food/beverage tax collected in the bureau service area; and 65% of the State's hotel/motel tax collected in the bureau service area.

c) With the exception of bureaus located in Chicago, no bureau shall receive a grant in excess of $720,000 in State fiscal year 2005. Each fiscal year thereafter, the cap shall be raised or lowered by the same percentage change that is made to the Department's appropriation to the Program, using State fiscal year 2005 as the base year.

History

• Source: Amended at 45 Ill. Reg. 602, effective December 23, 2020

14 Ill. Adm. Code 550.40 Certification Process

a) Notification. Each year, on or about January 1, the Department will publish three times within a 10-day period, in the official State newspaper, a notification that includes the following:

1. Availability of funds under the LTCB program as of July 1;

2. A statement directing applicants to contact the Department to obtain certification criteria and forms; and

3. Instructions directing applicants to submit their request for certification by March 31. The Director shall not waive this submittal deadline unless the Director finds that to do so would:

A) Allow the Department to further the purposes of the Program;

B) Allow the Department to consider funding of an applicant that is otherwise eligible under the Program; and

C) Prevent loss of representation and promotional services to a designated geographic area of the State. The Director's waiver must be in writing to be effective.

b) Eligibility Criteria for Previously Certified Applicants. Previously certified applicants must meet all of the following criteria to be re-certified as eligible to receive LTCB funds:

1. Be either a unit of local government or incorporated as a not-for-profit organization in good standing with applicable State authorities, including, but not limited to, the Illinois Secretary of State, Illinois Department of Revenue, Illinois Department of Labor, and the Office of the Illinois Attorney General;

2. Employ a full-time (minimum of 35 hours per week) paid professional Chief Executive Officer; and

3. Have been in legal existence for a minimum of two years, representing one county or contiguous counties or one or more municipalities, and receive hotel-motel tax receipts from one or more municipalities or counties in the applicant's proposed service area.

c) Eligibility Criteria for New Applicants. Applicants requesting certification for the first time must satisfy the criteria described in subsections (b)(1) and (b)(2), as well as the following criteria:

1. Have been in legal existence for a minimum of two years with paid full-time tourism staff whose sole purpose is to promote tourism in the designated service area;

2. Receive local hotel/motel tax receipts from multiple municipalities in the applicant's proposed service area; and

3. Represent more than one municipality or contiguous counties in the applicant's proposed service area.

d) Service Area for New Applicants. A new applicant will be certified to represent an area that is encompassed in an existing grantee's designated service area if:

1. Documentation has been provided showing that the proposed area has provided substantial financial support to the existing grantee and received unsatisfactory representation; or

2. The new applicant and the existing grantee provide a copy of a written mutual agreement supporting the new applicant's proposed service area and demonstrate support from the governing bodies of municipalities or counties in the proposed service area that it is in the best interest of the Program to create a new local tourism and convention bureau.

e) Required Documentation

1. Previously Certified Applicants. Previously certified applicants must submit the following materials to be re-certified:

A) A request for certification;

B) A copy of current by-laws and a listing of names of the members of the board of directors or other governing board;

C) A summary of tourism related experience and duties of the chief executive officer;

D) A statement listing the municipalities or counties included in the applicant's proposed service area, including a current letter from the governing bodies of each of these entities indicating that the applicant is recognized as their tourism promotion organization;

E) A statement by the applicant's fiscal officer, accountant, or treasurer of local funds specifying the local hotel/motel tax revenues and/or other funding received/projected by the bureau that can be used for matching funds.

2. New Applicants. Applicants that have not been previously certified must submit the following to be considered for certification:

A) A request for certification;

B) Documentation verifying the applicant is an Illinois not-for-profit entity and has been in good standing on the date of application with either the Illinois Secretary of State or the Office of the Illinois Attorney General for a minimum of two years, under the applicable incorporation laws, or if a unit of local government, a statement/resolution signed by the head of the unit of local government the applicant represents;

C) A copy of current by-laws and a list of board members or governing board representative of the applicant's proposed service area;

D) A description of efforts to further the growth of the State's travel industry as evidenced by previous promotional and marketing activities (e.g., copies of published advertisements, brochures or pamphlets used to promote tourism) used by the convention and visitors bureau during the two years prior to the request for certification;

E) A statement that it has demonstrated its commitment to tourism by operating a convention and visitors bureau with paid full-time staff dedicated solely to promoting tourism within the designated service area for a minimum of two years prior to requesting certification;

F) A statement that it employs a full-time professional paid chief executive officer;

G) A statement listing the municipalities or counties in its service area;

H) A complete listing of hotels/motels collecting the State's hotel/motel tax (including addresses and telephone numbers) within its service area and the number of rooms/units in each;

I) A statement certified by the applicant's fiscal officer, accountant, or treasurer specifying the local hotel/motel tax revenues and/or other government funding received/projected and/or expended by the bureau in the fiscal year prior to certification that can be used for match for the State grant; and

J) If the proposed area is currently served all or in part by a grantee, documentation must be provided demonstrating that the area has provided financial support to the grantee but received unsatisfactory representation, or the new applicant and grantee must provide a copy of a written agreement stating that it is in the best interest of tourism to create a new convention and visitors bureau.

f) Certification Determinations/Denials. Prior to May 31, the Department shall send notice to each applicant informing the applicant of its certification status.

1. When a single applicant seeks certification for a designated service area and has submitted all required documentation, and the documentation meets the approval of the Department, the applicant shall be certified by the Department. The Department shall send notification of certification that includes the amount of funds available and a request for application (RFA) for grant funds.

2. When more than one applicant seeks certification for an identical service area, with the exception of the City of Chicago, the Department shall send each applicant a request for proposal (RFP), which must be returned to the Department within 30 days and shall provide the following information:

A) Applicant's background, organization, experience and staff qualifications;

B) A detailed marketing plan that includes a description of activities contemplated by the applicant, objectives (long and short-term), methodology used to measure program effectiveness, intended audience, distribution targets for promotional materials, and a projected economic impact and benefit to tourism; and

C) Any marketing or feasibility studies in support of the plan.

3. Within 15 days after receipt of the RFPs, the Department shall notify in writing each applicant as follows:

A) The Department shall send written notification of certification, amount of funds available, and an RFA for grant funds to the certified bureau, and notify all other applicants that their applications have been denied.

B) Denied applicants shall have the right to appeal the Department's certification decision to the Director within 10 calendar days after the date of the denial notice. The request for review shall be submitted in writing to the Department and shall set forth the reasons for appeal and any additional tourism-related information the applicant chooses to submit in support of its appeal. The Director shall render a decision within 15 days after receipt.

4. A previously certified applicant found to be in substantial noncompliance with the terms and conditions of the grant agreements issued in the prior two years may be considered for certification only if the applicant has submitted a plan for corrective action, satisfactory to the Department, by the earlier of 45 days from notification by the Department of material noncompliance or March 31 (certification request deadline).

g) Denial of New Applicants. The Department shall reserve the right to deny certification to a new applicant if the Department determines that certification is not in the best interest of the Program. In making this determination, the Department shall consider: the size of the proposed service area and whether any portion of the proposed service area is currently serviced by another tourism entity.

h) Denial of Previously Certified Applicants.

1. The Department may deny certification to a previously certified applicant with a new service area if the Department determines that to certify the new service area is not in the best interest of the Program. In making this determination, the Department shall consider such factors as:

A) the size of the proposed service area;

B) the historic tourism promotional relationship between the applicant's previous service area and the new service area; and

C) whether any portion of the new service area is currently serviced by another bureau.

2. The Department may recertify an applicant's previous service area if the Department determines that the tourism objectives of the new service area are not consistent with the tourism objectives of the applicant's previous service area.

History

• Source: Amended at 45 Ill. Reg. 602, effective December 23, 2020

Chapter 1 Department of Commerce and Economic Opportunity

Part 550 Local Tourism and Convention Bureau Program

14 Ill. Adm. Code 550.50 Grant Application Process

Application by Bureaus for Funds Under the Act

a) All bureaus shall complete an application and any additional Department required forms or assessments for funding. The bureau shall retain one copy and submit one original of the application to the Department's Springfield address. Failure to provide any information requested in the application will result in the application not being processed. A bureau's application for funding under the Local Tourism and Convention Bureau Program shall include, but not be limited to, the following information:

1. Standardized application form;

2. Name and signature of the bureau's chief executive officer, salary, and length of employment with the bureau;

3. A Marketing Plan detailing all activities to be initiated through the LTCB grant during the fiscal year;

4. Area to be served, such as municipalities, counties, etc.;

5. Project Budget Plan itemizing budget expenditure activities proposed for LTCB grant and eligible match monies;

6. Line-item breakout of source of local match funds;

7. A certified statement, from the authorized official of the municipalities or counties that support the bureau with local hotel/motel taxes, specifying the amount of local hotel/motel tax that will be provided to the bureau during the fiscal year for the bureau's use and expenditure on eligible program activities and for match for the State grant;

8. Name of the financial institution that will serve as the depository for LTCB grant and match funds;

9. Fund account number for LTCB grant and match funds; and

10. Names, titles, and sample signatures for those persons who will be required to authorize all account transactions, with a minimum of two signatures required.

b) Upon receipt of applications from bureaus, the Department shall review the applications and:

1. Grant the full amount requested; or

2. Take the following action:

A) Ask for additional information to clarify or document the information contained in the application; and/or

B) Reduce the amount of grant funds requested if there are insufficient match funds, or the projects presented in the Marketing Plan do not focus on important tourism promotional activities and have little substance, i.e., no media promotions planned, no promotional materials being developed, the projects are not reasonable and are not consistent and workable, and the bureau cannot effectively carry out the projects. In the event that funding of a grant request is reduced, the bureau may appeal to the Director of the Department within 10 days after notification. The request for review shall be submitted in writing to the Director and shall contain the reasons for appeal and any additional tourism related information the bureau chooses to submit in support of its appeal. The Department shall notify the bureau in writing of the Director's decision within 15 days after receipt of the appeal.

History

• Source: Amended at 45 Ill. Reg. 602, effective December 23, 2020

14 Ill. Adm. Code 550.60 Program Requirements

a) Fiscal Year Marketing Plan and Project Budget Plan Approval

1. A Fiscal Year Marketing Plan and detailed Project Budget Plan identifying proposed tourism promotional activities and associated administrative expenditures utilizing LTCB grant and match funds shall be submitted by the applicant as a part of the application.

2. Salaries and related payroll expenses for the program year paid with LTCB grant funds shall not exceed 50% of the total grant funds awarded, except that, in fiscal years 2021, 2022, and 2023, these expenses may represent up to 60% of the total grant funds awarded.

A) 100% of tourism sales/promotion staff persons' salary may be applied toward the 50% cap and 60% cap in fiscal years 2021, 2022, and 2023 only.

B) 50% of the Chief Executive Officer's salary may be applied toward the 50% cap, except that in fiscal years 2021, 2022, and 2023 the allotment for this salary may be up to 100% of the 60% cap.

3. Grantees are prohibited from hiring any immediate family member of staff or of a board member who is involved in the hiring decision of staff if grant or match funds are utilized to pay the family member's salary. Immediate family members include the spouse, mother, father, daughter, son, or siblings and their children.

b) Promotional Projects Paid from LTCB Grant Funds

1. Promotional Costs. Promotional costs shall total at least 90% of the grant funds awarded.

2. Bids/Proposals. When the amount paid to any one vendor for a project totals $10,000 or more for commodities, or $20,000 or more for services, a minimum of two bids using identical specifications shall be obtained and the grantee shall select the lowest qualified bidder for commodities and the most qualified proposer for services. Evidence of compliance with this subsection (i.e., copies of at least two bid proposals) shall be retained by the grantee for review by the Department.

3. All promotional products produced with grant funds shall incorporate the current Department logo, which identifies the Department's participation in the tourism promotional activity. A grantee that fails to include the Department logo shall reimburse the Department for grant funds used in support of the project unless the Department finds that the omission of the logo was beyond the grantee's control.

4. The print date and quantity printed shall appear on all brochures.

5. The grantee shall be responsible for the accuracy of information contained within material produced with grant funds.

6. All printed promotional materials and premium items that are produced with grant funds shall be available free of charge.

7. Within 30 days after completion of a printing project, but only upon the Department's request, up to 10% of the materials printed must be sent to the Department's tourist information centers.

8. Costs identified under this Program shall not be claimed for any other project funded by the Department.

9. Examples of eligible promotional activities include, but are not limited to:

A) Production of printed materials, e.g., brochures, visitor guides, rack cards, and/or maps that promote:

i) the entire destination;

ii) multiple attractions within a destination; or

iii) a festival or event that will attract a minimum of 25% of its visitors from outside a 50-mile radius and that has been advertised, with at least 75% of promotion outside a 50-mile radius. This third provision may be waived at the Department's discretion if documentation is submitted to show that the destination or event attracts more than 50 percent of its overnight stays from within a 50-mile radius;

B) Travel/trade show booth space rental, purchase of booth, registration fees, and/or associated travel expenses (transportation, lodging, per diem at State rate) for a maximum of two bureau staff. Justification is required for additional people to attend;

C) Hosting of familiarization tours;

D) Placement and production costs of Internet, newspaper, magazine, radio, or television advertising to promote travel to the area. Advertising shall be distributed outside a 50-mile radius of the promoted destination or event. Bureaus that provide documentation to the Department that at least 25% of their overnight visitors are from within a 50-mile radius may place that documented percentage of their advertising dollars for distribution within the 50-mile radius of the destination or event. Advertising placed in the cities of Chicago or St. Louis that is circulated to the entire distribution area does not require the above documentation;

E) Membership dues for travel/tourism related associations or organizations;

F) Billboards utilized for tourism promotion, including design/installation of advertising and rental of space;

G) Premiums for tourism promotional purposes bearing the Department logo;

H) Production of tourism promotional videos;

I) Salaries;

J) Postage used in fulfillment and direct mail promotions;

K) Marketing research studies;

L) Telephone charges related to provision of tourism products/services information;

M) Internet sites that are linked to enjoyillinois.com; and

N) Sponsorships that are evidenced by a prior written agreement between the grantee and the recipient entity describing the activities to be undertaken with the sponsorship.

i) Sponsorship funds may be used for reasonably necessary event expenses, provided, however, that:

• No more than 50% of the sponsorship amount comes from grant funds, the balance being paid from matching funds; and

• Sponsorship funds are expended on eligible promotional activities.

ii) A sponsorship may be disallowed in whole or in part as an eligible grant promotional or match expenditure if it is determined by the Department that the purpose of entering into the sponsorship was to circumvent the prohibition against "pass-through funds".

10. Bureaus must retain documentation regarding all revenue sources and expenditures from grant or match funds claimed in conjunction with the Program. This documentation shall include, but is not limited to, original invoices, original cancelled checks, proof of performance, bids, schedules of travel expenses, and any other information needed to clarify Program reports. With regard to proof of performance, examples include brochures, the full tear sheet for advertisements (the name and date of the publication appearing on the advertisement or a copy of the publication), samples of promotional items, and photos of billboards and street banners. The Department logo on each proof of performance must be easily readable.

11. Examples of activities ineligible for payment from grant promotional funds include, but are not limited to:

A) Any administrative/operational expenses (copying, insurance, audits, accounting services, rent, office supplies, equipment, normal office postage, and non-promotional telephone expenses);

B) Purchase of any alcoholic beverage;

C) Feasibility studies; and

D) Salaries of administrative or clerical support staff.

12. Grant funds cannot be used by a bureau to complete a promotional project if those funds will allow the bureau to realize a profit on that promotional project (e.g., revenues from all sources exceed the cost of the promotional project). Bureaus must keep records documenting all costs incurred and revenue generated from any promotional project containing paid advertising.

c) Administrative Activities/Expenditures

1. Administrative costs shall be limited to 10% of the grant funds awarded. Examples of projects eligible for payment from grant administrative funding include, but are not limited to:

A) Administrative expenses (copying, normal office postage, insurance, audits, accounting services, phone, rent, office supplies, or equipment lease/rental) associated with tourism promotional activities of the bureau; and

B) Salaries of bureau administrative or clerical support staff.

2. Examples of activities/expenditures ineligible for payment from the grant administrative funds include, but are not limited to:

A) Lease/purchase agreements for any items;

B) Purchase of equipment;

C) Purchase of any alcoholic beverage;

D) Feasibility studies; and

E) Penalties, fines, fees or interest charges assessed as a result of late payment.

d) All project activities shall be subject to prior approval as stated under subsection (a).

History

• Source: Amended at 46 Ill. Reg. 3113, effective February 10, 2022

Chapter 1 Department of Commerce and Economic Opportunity

Part 550 Local Tourism and Convention Bureau Program

14 Ill. Adm. Code 550.70 Administrative Match Requirements

Matching Funds. Each grantee must provide match for grant funds received under the Program. Match expenditures must be no less than 50% of the grant funds expended, as well as any interest earned on grant funds that is also expended, except that, during fiscal years 2021 and 2022, the Department shall require that any grantee shall provide matching funds equal to no less than 25% of the grant amount. [20 ILCS 605/605-705(b)] If a grantee fails to match any portion of the grant award in a given fiscal year, that portion of the grant shall be refunded to the Department in accordance with the terms of the Grant Agreement. In-kind contributions shall not be used to satisfy match requirements.

a) Eligible matching funds must satisfy all of the following criteria:

1. Be provided to the grantee for general tourism promotional purposes in the designated service area;

2. Be identified in the grantee's Project Budget Plan for the applicable fiscal year;

3. Be available for expenditure during the applicable grant term;

4. Be supported by grantee's records of deposit;

5. Be expended by the grantee solely for eligible tourism promotional activities and associated administrative costs; and

6. Not be refunded to the provider of the match.

b) Eligible Sources of Matching Funds. The following sources may be used as match for grant funds:

1. Local hotel/motel tax receipts;

2. Membership dues;

3. Interest on local monies available for expenditure on tourism promotional activities;

4. Cash contributions meeting all requirements of subsection (a); and

5. Federal funds provided directly to the grantee for tourism promotional purposes that do not require match.

c) Ineligible Sources and/or Expenditures of Matching Funds. These include, but are not limited to:

1. In-kind contributions;

2. State or federal funds other than those allowed in subsection (b)(5);

3. Monies used as match for other State or federal grants;

4. Penalties, fines, fees, or interest charges assessed as a result of late payment;

5. Pass-through funds; and

6. Any purchase of alcoholic beverages.

History

• Source: Amended at 46 Ill. Reg. 3113, effective February 10, 2022

14 Ill. Adm. Code 550.80 Contractual Requirements

a) Method of Compensation. Payments pursuant to a grant shall be subject to the availability of funds appropriated by the General Assembly.

1. The grantee shall receive grant funds, as stipulated in the Grant Agreement, upon approval of its application by the Department and execution of the Grant Agreement by the Chief Executive Officer (CEO) and by the Department.

2. Prior to funds being awarded, a grantee shall employ a full-time, paid, professional CEO. In the event of the resignation of a bureau's CEO, an interim CEO must be named within 30 days. When a new CEO is hired, the bureau must provide the Department with the individual's tourism related experience and qualifications for the position. The interim CEO shall fulfill all duties of the position.

b) Reporting Requirements: The grantee shall submit, within the timeframes specified in the Grant Agreement, reports on the financial status of its Fiscal Year Marketing Plan/Project Budget Plan and reports on the outcomes and results of its grant-related activity. Failure to comply with the timely submission of financial and programmatic reports may result in withholding of subsequent monthly grant checks. The Department reserves the right to request additional information to clarify or document information contained in the reports.

c) Financial Management Standards. A grantee's financial management systems shall be structured under generally accepted accounting standards, which include maintaining effective control and accountability over all funds, property, and other assets acquired with grant and match funds.

d) Travel Expenses. Travel expenses that are paid with grant funds must be in compliance with the latest State of Illinois Department of Central Management Services Travel Regulations (80 Ill. Adm. Code 2800) and shall be allowable for expenses of transportation, lodging, per diem, and related items incurred by bureau employees who are on travel status for allowable tourism promotional purposes outside the grantee's service area. The grantee shall retain receipts to document travel expenses.

e) Monitoring. The Department shall periodically conduct on-site monitoring of each grantee funded under this Program. The Department will use its best efforts to notify the grantee at least two working days in advance of monitoring visits unless the Department has reason to believe that a monitoring visit must be conducted immediately. The grantee's internal procedures, financial reporting, and performance shall be evaluated for compliance with terms and conditions of the Grant Agreement. The Department reserves the right to request additional information prior to, during, or subsequent to monitoring visits.

f) Interest on Grant Funds. All interest earned on grant funds shall be accounted for by the grantee and shall be expended on eligible tourism promotional activities or returned to the Department.

g) Obligation of Grant and Match Funds. All grant and match funds shall be legally obligated for expenditure no later than June 30 of the fiscal year and must be paid out no later than the date stated in the Grant Agreement. Any unexpended grant funds, including accrued interest, shall be returned to the Department. In addition, the grantee shall return any funds that are determined by the Department to have been spent in violation of this Part or the Grant Agreement.

h) Audits. The grantee shall be responsible for securing a compliance audit pursuant to 44 Ill. Adm. Code 7000.90 (GATA Auditing Standards). In addition to having to return grant funds spent in violation of this Part or the Grant Agreement, the grantee may be deemed ineligible to apply for and receive funds under this Program for a maximum of two years. The Department shall reserve the right to perform special audits of these funds during normal working hours.

i) Nondiscrimination. Grantees shall refrain from unlawful discrimination in employment and will undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act [775 ILCS 5]; section 504, and the equal opportunity clause promulgated thereto, of the Rehabilitation Act of 1973, as amended (29 USC 794); the Age Discrimination Act of 1975 (42 USC 6101 et seq.); and Title VI of the Civil Rights Act of 1964, as amended (42 USC 1981 et seq.).

j) Complaint Process. In the case of a grantee complaint, the Department shall follow the procedures outlined in 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

k) When expending LTCB grant and match funds, two authorizing signatures shall be required on all checks over the amount of $500.

l) Suspension and Termination

1. If a grantee fails to comply with this Part or the Grant Agreement, the Department may suspend the grant until the grantee has cured the deficiency. Failure to cure the deficiency within the time frame established by the Department may result in termination of the Grant Agreement and recovery of grant funds in accordance with the Illinois Grant Funds Recovery Act [30 ILCS 705]. The Department will find that a grantee has failed to comply with the Grant Agreement if the grantee has been notified in writing of a deficiency and fails to submit a corrective plan for Department approval within 30 days after the deficiency notice.

2. A Grant Agreement may be terminated for cause notwithstanding availability of appropriated funds and sufficient revenues for the grant.

m) Reallocation of Funds. On or before May 1 of the fiscal year, the grantee shall be required to identify grant funds that will not be fully expended or legally obligated by June 30, including any grant funds for which there will be insufficient match. The Grant Agreement shall be modified to decrease the grant award accordingly and the funds may be reallocated by the Department.

n) Conflict of Interest. The grantee shall comply with all provisions of the Grant Agreement with respect to hiring or awarding contracts to family members of bureau officers, principals and board members.

History

• Source: Amended at 45 Ill. Reg. 602, effective December 23, 2020

Chapter I Department of Commerce and Economic Opportunity

Part 555 International Tourism Grant Program

14 Ill. Adm. Code 555.10 Purpose

Section 605-707 of the Civil Administrative Code of Illinois (International Tourism Program) [20 ILCS 605/605-707] authorizes the Department of Commerce and Economic Opportunity to award grants to and work in cooperation with certified local tourism and convention bureaus and regional tourism development organizations to develop, coordinate and promote international tourism efforts.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.20 Definitions

The following definitions are applicable to this Part:

"Applicant": means a certified local tourism and convention bureau or a certified regional tourism development organization submitting an Application for Program Grant Funds as provided for under the Statute.

"Application": means a written request for Program Grant Funds, containing and including the required information and/or attachments.

"Approved Expenditures": means costs approved to be expended for the completion of the Project.

"Department": means the Department of Commerce and Economic Opportunity.

"Director": means the Director of the Department of Commerce and Economic Opportunity.

"Eligible Expenditure": means costs that are considered appropriate and, if a grant is awarded, are costs approved by the Department for funding. Examples of Eligible Expenditures are set forth in Section 555.40(a).

"Fiscal Year": means the period from July 1 of any given year through June 30 of the subsequent year.

"Grant Agreement": means a written document executed between the Grantee and the Department setting forth the obligations and rights of the parties, describing the purpose of the grant, identifying the manner in which Grant Funds will be disbursed, specifying the grant term during which Grant Funds shall be expended, and requiring unobligated and/or unspent Grant Funds to be returned to the Department.

"Grant Amount" or "Grant Funds": means a monetary amount that the Department awarded to a Grantee to be expended on Approved Expenditures.

"Grantee" means an Applicant that has been awarded a grant under the Program based on submission of its Application.

"Ineligible Expenditures": means costs that are not eligible for consideration for funding and cannot be paid for with Grant Funds and Matching Funds. Examples of Ineligible Expenditures are set forth in Section 555.40(b).

"In-kind Contribution" means noncash contributions necessary to complete the Project for which the cash value is easily documented (i.e., donated labor, equipment, supplies and materials) and are otherwise eligible grant and match expenditures as set forth in Sections 555.40 and 555.70.

"Illinois Office of Tourism": means the division of the Department that has the delegated authority to perform all administrative functions related to the Statute.

"International": means any country other than the United States.

"Local Convention and Tourism Bureau": means a not-for-profit entity or unit of local government that meets the certification requirements as set forth in 14 Ill. Adm. Code 550.40 and is certified by the Department.

"Matching Funds": means the portion of the Total Project Cost that is required to be provided by the Grantee through cash expenditures and/or In-kind Contributions.

"Program": means the International Tourism Grant Program.

"Project": means the activities that were described by the Applicant in its Application and approved by the Department for funding.

"Regional Tourism Development Organization": means a not-for-profit entity that meets the certification requirements set forth in the Regional Tourism Development Organization Program rules (14 Ill. Adm. Code 515.60) and is certified by the Department.

"Statute": means Section 605-707 of the Civil Administrative Code of Illinois, which is the statutory authority for the Program [20 ILCS 605/605-707].

"Total Project Cost": means all necessary and reasonable Eligible Expenditures required to complete the Project as identified in the budget of the Grant Agreement.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.30 Eligible Applicants

Certified Local Tourism and Convention Bureaus or Regional Tourism Development Organizations certified by the Department may apply for Program funding.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.40 Eligible Use of Funds

Expenditures and activities for which grant funds can be utilized by Grantees located outside Chicago include, but are not limited to, the following:

a) Eligible Expenditures, including, but not limited to, brochures that target international markets, advertising, web site development and maintenance, in-country trade representations, familiarization tours, trade shows, sales missions, translation services, research, promotional items, technical assistance, training, association fees, travel expenses, and salaries for international program staff performing duties set forth in the Grant Agreement's scope of work.

b) Ineligible Expenditures include, but are not limited to, the purchase of equipment, administrative expenses, salaries not associated with international activities and the purchase of alcoholic beverages.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.50 Form of Application

a) All communications relating to the Application procedures defined in Section 555.60 shall be addressed to the International Tourism Grant Program Manager and sent to: Illinois Department of Commerce and Economic Opportunity, Illinois Office of Tourism, 100 W. Randolph Street, Suite 3-400, Chicago, Illinois 60601.

b) An Application shall be typed in the current approved format provided by the Department, which shall be sent to an eligible Applicant upon request.

c) An Application shall contain one original and 6 copies.

d) An Application shall include supporting documents and attachments under a single cover.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.60 Application Procedure

a) Applications for funding under this Program must be received no less than 60 days prior to the beginning of the Department's Fiscal Year or as otherwise determined by the Department.

b) An Application will be considered delivered and submitted on the date it is postmarked or hand delivered to the Illinois Office of Tourism's Chicago office (see Section 555.50) .

c) Within 30 business days after the Department receives the Application, the International Tourism Program Manager shall notify the Applicant whether, after a brief initial review, the Application and attachments, if any, are complete. This notice is not in any way an acknowledgment by the Department as to the adequacy of the substance of the Application. If the Application and attachments are incomplete, the Applicant shall be notified of the deficiencies. The Applicant will then have 20 business days to cure any deficiencies. In the event the Applicant fails to cure all deficiencies within the 20 business days, the Application shall be considered null and void and returned to the Applicant.

d) Within 90 days from the date an Application is determined to be complete, the International Tourism Grant Program Manager shall notify the Applicant whether the Application has been approved or rejected. If the Application has been rejected, the program manager shall state the reasons for the determination.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.70 Matching Funds

a) The Grantee shall provide Matching Funds to be expended towards the Total Project Cost that are:

1. Under the control of the Grantee. For purposes of the Grant, control shall mean that the Grantee can successfully demonstrate the following control and accountability requirements:

A) The Grantee's chief executive officer maintains responsibility for establishing review and approval policies and procedures with respect to the Grantee's daily operations; and

B) The Grantee's chief executive officer has approval authority for expenses charged to the Grantee's operating budget and approval over the Grantee expenses attributable to the Grant. Within this requirement, the Grantee's chief executive officer must be the person that reviews and approves the payment of invoices related to the grant and match expenditures.

2. Identified in the Applicant's grant application for the applicable Fiscal Year.

3. Expended during the applicable grant award period.

4. Supported by records of deposit and documentation of Eligible Expenditures.

5. Necessary and irrevocably obligated and used towards completion of the Project.

b) Each Grantee shall provide matching funds equal to no less than 50% of the Grant Amount. If Grantee fails to match any portion of the grant award in a given Fiscal Year, that portion of the grant shall be refunded to the Department in accordance with the terms of the Grant Agreement. In-kind contributions shall not exceed 25% of Matching Funds.

c) Allowable Matching Funds include:

1. Local hotel/motel taxes;

2. Membership dues;

3. Interest earned on local monies and Grant Funds;

4. Cash contributions;

5. Federal dollars deposited directly to the Grantee for tourism promotion purposes that do not require a match; and

6. In-kind Contributions necessary to complete the Project. In-kind Contributions shall not exceed 25% of the match requirement.

d) Ineligible Match: The following monies shall not be considered Matching Funds and may not be used as a match for Grant Funds:

1. Costs incurred or funds expended outside the grant term identified in the Grant Agreement unless those costs are approved by the Director as otherwise being compliant with this Part and consistent with the purposes of the Statute;

2. Funds from any other Department funded grant program, regardless of whether the other grant funds were awarded and expended to further the Project;

3. Funds used to match any other State and/or federal grants;

4. Penalties, fines, late payment fees or interest charges; and

5. Purchase of alcohol beverages.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.80 Computation of Time

Computation of any period of time prescribed by this Part shall begin with the first business day following the day on which the act, event or development initiating that period of time occurs, and shall run until the end of the last day or the next business day if the last day is a Saturday, Sunday, federal or State holiday. Timeliness shall be deemed the date of postmark or the date of hand delivery.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.90 Evaluation and Selection Process

a) The Department's internal review committee shall evaluate each Application. The criteria used in determining whether an Application will be considered for a grant award includes, but is not limited to, the potential to increase overnight stays in Illinois and/or demonstrate the potential to develop international marketing materials or efforts as described in Section 555.40. Each question will be scored using a rating system of 1 through 10, with 10 being the highest possible score per question, with a maximum possible score of 100. The criteria used in determining whether an Application will be considered for funding include the following:

1. To what extent does the Project support and augment the international tourism efforts of the Illinois Bureau of Tourism?

2. To what extent is the Project part of a marketing plan based upon research to increase international visitors to the area?

3. To what extent does the Project have potential interest, or show existing interest, for the chosen international market?

4. To what extent does the Project include repeat marketing efforts and to what extent do the results from those efforts justify repeat funding?

5. To what extent does the Project include adequate tracking and evaluation measures?

6. To what extent are there measurable ways to evaluate the Project's effectiveness and return on investment?

7. To what extent will the Project have a significant impact on the area's overall tourism efforts?

8. To what extent will the Project have a significant impact on the State's overall tourism efforts?

9. To what extent is the destination visitor-ready for international visitors?

10. The effectiveness of the applicant's overall efforts.

b) The Department's internal review committee's scores are averaged to obtain the Application's final score. An Application's final score must be at least 50 of 100 possible points to be considered eligible for funding. The internal review committee shall forward all eligible Applications, together with its recommendations, to the Director for final review and determination. During the final review process, the Director will determine whether an eligible Application is awarded a grant.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.100 Allocation of Appropriations

Annual appropriations made by the General Assembly to the Department for the purpose of awarding grants under this Program may be used by the Department in any county in the State of Illinois.

a) All of the amounts deposited into the Fund in Fiscal Year 2012 and thereafter shall be used for administrative expenses and grants authorized under the Statute and development of international tourism in areas outside of Chicago, of which not less than $1,000,000 shall be used annually to make grants to convention and tourism bureaus in cities other than Chicago that demonstrate their international tourism appeal and request to develop or expand their international tourism marketing program, and may also be used to provide grants for the development of or the enhancement of international tourism attractions. [20 ILCS 605/605-707].

b) If sufficient local funds cannot be raised to match any grant issued under this Part, the appropriation may be allocated in whole or in part to any Applicants able to qualify for a grant or may be used by the Department to promote international tourism to the State of Illinois.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.110 Funding Limitation

The Department shall provide Grant Funds not to exceed 50% of the Total Project Cost. Except that, during Fiscal Year 2013, the Department shall provide Grant Funds not to exceed two-thirds of the Total Project Cost.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.120 Grant Agreement

a) When an Application has been approved for funding, a grant award shall be made and the Grantee and the Department shall execute a Grant Agreement. If the Project is initiated and costs are incurred before the Department approves the Application, the Department bears no responsibility for those costs in the event the Application is denied or the grant is funded at less than the amount requested.

b) The Agreement shall contain substantive provisions including, but not limited to, the following:

1. A recitation of legal authority pursuant to which the agreement is made;

2. An identification of the Project scope and schedule, and the work or services to be performed or conducted by the Grantee;

3. An identification of the Grant Amount or grant award;

4. The condition and manner by which the Department shall pay/distribute the grant award, which is at all times subject to sufficient annual appropriations by the Illinois General Assembly;

5. The irrevocable promise of the Grantee to pay the local match of the Total Project Cost;

6. A promise by the Grantee not to assign or transfer any of its rights, duties or obligations without the Department's writtenacknowledgment;

7. A promise by the Grantee not to amend the Grant Agreement without the written consent of the Department. Failure to do so will result in a cost disallowance. The Project must be completed by the completion date on the notice of grant award, unless a written request for an extension is submitted no later than 30 days prior to the award completion date and thereafter approved by the Department;

8. A covenant that the Grantee shall expend the grant award and any accrued interest only for the purposes of the project as stated in the Application and approved by the Department;

9. A covenant that the Grantee shall refrain from entering into any written or oral agreement or understanding with any party that might be construed as an obligation of the State of Illinois or the Department for the payment of any funds under the Program; and

10. A covenant that the Grantee agrees to acknowledge the Department's participation in the Project by displaying the Department's current logo and/or providing a statement that identifies the Project as being developed and/or funded in cooperation with the Illinois Office of Tourism. Grantee's failure to properly use the Department's current logo (e.g., size, placement, etc.) or failure to include the acknowledgment/recognition statement will result in a 10% deduction of the Total Project Cost. Failure to include the logo or acknowledgment/recognition statement will result in the entire Project being disallowed.

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

14 Ill. Adm. Code 555.130 Grant Administrative Requirements

a) Grant Termination

1. Termination Due to Loss of Funding. In the absence of State funding for a Fiscal Year, all grants for that year will be terminated in full. In the event of a partial loss of State funding, the Department will make proportionate cuts to all Grants. In the event the Department suffers such a loss of funding in full or in part, the Department will give the Grantee written notice setting forth the effective date of full or partial termination or, if a change in funding is required, setting forth the change in funding and changes in the approved budget.

2. Termination for Cause

A) If the Department determines that the Grantee failed to comply with the terms and conditions of the Grant Agreement or this Part, the Department may terminate the grant in whole or in part at any time before the date of completion. Circumstances that will result in the termination of a grant include, but are not limited to: consistent failure to submit required reports; failure to maintain required books and records; evidence of fraud and/or abuse; and consistent failure to meet performance standards. These circumstances are further explained in the Grant Agreement.

B) The Department shall notify the Grantee in writing, within 10 working days after the determination to terminate is made, of the reasons for termination and the effective termination date. Distribution of Grant Funds or recovery of Grant Funds shall be made in accordance with the legal rights and liabilities in the Grant Agreement and the Illinois Grant Funds Recovery Act [30 ILCS 705].

3. Termination by Agreement. The Department and the Grantee may terminate the grant in whole or in part if the Department and the Grantee agree that continuation of the Program objectives would not produce beneficial results commensurate with the future expenditure of Grant Funds. The Department and the Grantee shall agree upon termination conditions, including the effective date and, in case of partial termination, the portion of funding to be terminated. The Grantee shall not incur new obligations for the terminated portion of the grant after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the Grantee for the Department's share of the noncancelable obligations properly incurred by the Grantee prior to termination.

b) Interest on Grant Funds. In accordance with Section 10 of the Illinois Grant Funds Recovery Act, all interest earned on Grant Funds held by the Grantee under the grant shall become part of the grant when earned. Any interest earned under the grant and not expended as grant principal during the term of the grant shall be returned to the Department as directed by the grant close-out process described in subsection (c).

c) Grant Close-out. In accordance with Section 5 of the Illinois Grant Funds Recovery Act, Grant Funds not expended or legally obligated, including any interest, remaining at the end of the grant term or upon termination of the grant shall be returned to the Department within 45 days after the end of the grant term or termination.

d) Audits. A Grantee shall be responsible for securing an audit for any grant award exceeding $500,000. Additionally, an audit may be required when certain risk conditions exist, including, but not limited to, a negative compliance history and previous material audit findings. The audit shall be performed by an independent certified public accountant, licensed by the authority of the State of Illinois pursuant to the Illinois Public Accounting Act [225 ILCS 450]. The audit shall be conducted in accordance with current generally accepted auditing standards as contained in the most current publication entitled AICPA Professional Standards, American Institute of Certified Public Accountants, 1211 Avenue of the Americas, New York NY 10036.

e) Special Audits. The Department reserves the right to conduct special audits, including but not limited to an agency wide audit of grant funds expended under any of the Department's grant programs. A special audit shall be conducted during normal working hours (8:30 a.m. to 5:00 p.m.) with at least 24 hours notice.

f) Monitoring and Evaluation. Grantee shall permit any agency authorized by the Department, the Office of Inspector General, the Auditor General of the State of Illinois, the Illinois Attorney General, or any of their duly authorized representatives, upon presentation of credentials, in accordance with the constitutional limitation on administrative searches, to have full access to and the right to examine any of the Grantee's documents, papers and records involving transactions related to a grant awarded by the Department. Once the Department concludes its monitoring activities, the Department will notify the Grantee of the Department's determination and findings, if any. If a determination contains a finding of noncompliance, the Grantee will be allowed an opportunity to cure any and all noncompliance issues. If any noncompliance issues cannot be resolved, the Department will issue a final determination requesting the Grantee to repay any funds that the Department determined to have been spent in violation of the Grant Agreement. In the event the noncompliance issue pertains to a grant covenant that does not have a corresponding expenditure amount, the Department has the discretion to disallow all Grant Funds for the noncompliance. If the Grantee fails to comply with the Department's final determination, the Department shall issue a final notice to the Grantee providing it the opportunity to invoke its rights under the Illinois Grant Funds Recovery Act.

g) Complaint Process. An administrative hearing may be initiated by an Applicant or Grantee by serving a petition for hearing on the Department. The Department may initiate the administrative hearing process by serving a notice of charges on the Grantee. In any case, the Applicant, Grantee or Department shall follow the Department's administrative hearing rules set forth in 56 Ill. Adm. Code 2605.

h) Certifications. The Grantee shall certify that it has not been barred from contracting with a unit of local government or with any agency of the State of Illinois as a result of a violation of Sections 33E-3 or 33E-4 of the Criminal Code of 1961 (Bid-rigging or bid rotating) [720 ILCS 5/33E-3 or 33E-4].

i) Reports. The Grantee shall submit reports on the Project's financial status and outcome/results, as required by the Department in the Grant Agreement. The Grantee's failure to comply with any reporting requirements will be considered a violation of the Grant Agreement and the Department may seek recovery of all Grant Funds as described in subsection (f).

History

• Source: Amended at 38 Ill. Reg. 3577, effective January 23, 2014

Part 560 Illinois Small Business Incubator Program

14 Ill. Adm. Code 560.10 Purpose of Program

The purpose of the Illinois Small Business Incubator Program (Program) is to encourage entrepreneurship and economic development through the creation and support of small business incubators, facilities where start-up and young businesses can operate and prosper. Under this program, the Department of Commerce and Community Affairs (Department) may designate and help fund the development and operation of unoccupied and nearly unoccupied properties for use as small business incubators.

14 Ill. Adm. Code 560.15 Eligible Applicants

Local governmental units (counties and cities), not-for-profit economic developmental organizations, educational agencies (public and private), or a combination thereof may apply to the Department for financial assistance under the Program. Where applicable, eligible applicants may subcontract the actual operation of the incubator to a public organization or private firm.

14 Ill. Adm. Code 560.20 Pre-Application Process and Analysis

A potential small business incubator must first complete a Community Advisory Board Analysis to determine if the community is capable of supporting an incubator. This analysis will serve as a pre-application for funds and will address the issues identified in Section 11-5(a) of P.A. 84-109, effective July 25, 1985.

a) Pre-application Cycle – Pre-applications under this Program will be accepted on an annual basis. The Department will supply interested applicants with a pre-application package upon request. Notification of intent to participate (pursuant to Section 11-5(b) of P.A. 84-109) must be submitted to the Department for the initial program year by October 15, 1985.

b) The pre-application will provide the following information:

1. Incubator Support and Services – a description of the commitments of community organizations, educational institutions, businesses, labor, etc. to the proposed small business incubator and a description of the business and management assistance (i.e., direct counseling services for incubator business tenants in such areas as strategic planning, marketing, financing, management, and operations provided by either the incubator management or other qualified sources) and facility services (i.e., general "front office" services for the small business tenants such as typing, reception services, cleaning, building security, conference rooms, central shipping and receiving, duplicating equipment, etc.) to be provided to incubator tenants.

2. Community Advisory Board – a description of the Community Advisory Board and its membership. The Community Advisory Board should have no more than 15 members and be representative of the Community. At least 51 percent of the members should represent private for-profit businesses or business organizations.

3. Incubator Site – an identification of the property under consideration for designation as a small business incubator (i.e., an improved building and site suitable for immediate occupancy by light manufacturing, research and development, commercial, or professional services firms), including the general building conditions, existing amenities, past history of structure, zoning classification, etc.

4. Community Economy – a description of the economy of the geographic area the proposed incubator would serve, including the characteristics of existing firms and the supply and demand for commercial and industrial space; a description of how the proposed incubator would complement the area's existing economy.

5. Potential Tenants – a description of the types of small

c) Analysis Process – The Department shall review all pre-applications to determine that all requirements of the pre-application package have been addressed. This review process will be completed within 30 days. As a result of the review, the Department will provide written comments identifying strengths and weaknesses of the pre-application to the applicant.

14 Ill. Adm. Code 560.30 Formal Application Process

a) Invitation to Apply – Those applications that best demonstrate the potential for meeting the requirements of the Act (Article II of P.A. 84-109, effective July 25, 1985), in accordance with the evaluation criteria specified in Section 560.40, will be approved. Formal funding applications must be submitted to the Department within 180 days of the notification of intent to participate. All applications will be competitively reviewed and ranked on a state wide basis.

b) Staff Review – A staff review by the Department will be conducted to determine whether all the required information is contained therein.

c) Length of review – Provided that all the required contents of the application are complete and adequate, the Department will notify the applicant within 30 days of the receipt of the complete application of its funding decision.

d) Awards – The Department will award loans up to the limit of its annual appropriation. Once that limit is reached, the Department will consider further applications but will not make awards until additional funds are available.

14 Ill. Adm. Code 560.35 Content of Application

The following identified information to be included in the application:

a) Need and Impact of the Project

1. Feasibility Study/Needs Analysis – a summary of the results of the Community Advisory Board Analysis and information which demonstrates adequate local interest to generate tenants.

2. Potential Tenants – identification of the number and type of firms expected to become tenants within the incubator (light manufacturing, professional services, research and development, etc.) and listing of at least five firms which have been interviewed and are potentially prepared to become tenants.

3. Projected Employment – given the program's purpose of creating permanent jobs for the Illinois economy, an estimate of the number and types of jobs to be created by the incubator in 12 months, in 24 months and the hourly wage.

b) Proposed Site and Building

1. Location and Building information – a discussion of the general building conditions, existing amenities, zoning classifications, leases/purchase arrangements, past history of the structure, etc.

2. Description of Equipment and Furnishings (If Applicable) – an identification of major classes of equipment and furnishings to be acquired with proceeds of the Department's loan or grant. For each equipment item, whether it is new (N) or used (U); the useful life of the equipment, and the lower of actual cost of fair market value must be indicated.

3. Documentation – copies of appraisals, deeds, leases, floor plans, photographs, and a site map, as exhibits. The site map should illustrate the location of any floodplain areas. For all purchases of equipment and furnishings, the contractor, engineer, or architect's cost estimates must be provided.

c) Incubator Management Information

1. Implementation Schedule – a listing of the primary project activities and an outline of the implementation schedule of the project.

2. Organizational History – a short organizational history of the incubator sponsor which demonstrates the capability to successfully manage the facility.

3. Incubator Management – a detailed resume for the individual responsible for day-to-day management of the incubator facility which includes past employment, educational background, and general accomplishments.

4. Marketing Plan – information on the marketing plan for the incubator and the methods to be used to recruit businesses.

5. Information Exchange – description of the process to facilitate the exchange of information/resources among tenants.

6. Tenant Entry/Exit Procedures – a description of procedures that will be followed when considering tenant selection. As a supplement, the actual tenant application form and tenant selection procedures must be submitted.

7. Reporting Requirements – a description of applicants understanding of periodic progress reports required to be submitted to the Department.

8. Business Management and Professional Services – a listing, as appropriate, of the types of assistance to be provided to the small business tenants, the amount of the fee collected, and the organization providing services.

9. Facility Services – an identification of all facility services to be offered to incubator tenants (e.g., duplicating services, conference rooms, clerical services, etc.).

d) Budget

1. Source and Use of Funds – an identification of financing resources available and how they will be used, and a brief description of the type of collateral and guarantee to be offered for the Department's loan. The Department will pay up to 50% of the cost of a local incubator project. The remaining cost must be met by local revenues.

A) Acquisition costs include land/site costs and building acquisition costs. Renovation costs include plumbing, heating/cooling, plastering/painting, electrical, water/septic, fire protection, architectural engineering, insulation/weatherization, legal, appraisal, and construction interest costs.

B) Equipment and furnishings include those items of equipment required to provide facility services such as typing, reception, shipping and receiving, etc., for incubator tenants.

C) Operational costs include utilities, telephone, repair and maintenance, taxes, if any, insurance, equipment and rental and accounting, legal and advertising expenses.

D) Incubator management costs include salaries, fringe benefits, payroll taxes, supplies and travel costs.

E) Business management assistance costs include costs of counseling and training necessary to provide business and management assistance and professional services to incubator tenants.

2. Collateral and Guarantees

3. Requests for Loan Deferral or Waiver

4. Incubator Facility Expenses and Earnings for Three Years – statement which includes total income (rental income, other income, grants (list)) less total expenses (acct/legal/adv., utilities, telephone, repair/maintenance, taxes, insurance, equipment rental, salaries, fringes, payroll taxes, office supplies, travel, other (specify)) which equals net profit.

5. Tenant Financing Pool – a description of arrangements made to provide a source of financing for the incubator tenants and, where possible, a listing of sources and dollar amounts.

6. Letters of Commitment – as an exhibit, any firm letters of commitment, grant award notices, etc. for financial commitment to the incubator project.

7. Cash Needs Plan – a list of estimated dates and fund amounts needed to meet the cash needs of proposed project; State funds used to fund this incubator program will be distributed by the Department in monthly allotments.

e) Application Certifications

1. Farmland Preservation – certification that the incubator project is compatible with established state policy regarding farmland preservation pursuant to the Farmland Preservation Act (Ill. Rev. Stat. 1983, ch. 5, pars. 1301 et seq.).

2. Floodplain – certification that the project will comply with the Flood Disaster Protection Act of 1973 (42 U.SC. 4001 et seq. (1984)) and Executive Order 79-4, effective June 1, 1979 which requires special environmental procedures if any activities will be carried out in a flood hazard area.

3. Prevailing Wage – certification that the provisions of the wages of Employees on Public Works (Ill. Rev. Stat. 1979, ch. 48, Sec. 39s-1 et seq.) and the Preference to Citizens in Public Works Project (Ill. Rev. Stat. 1979, Ch. 48, Sec. 269 et seq.) will apply to the proposed project and that construction cost estimates have taken into account the effect of those Acts.

4. Non-Discrimination – certification that the applicant shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin.

14 Ill. Adm. Code 560.40 Formal Application Review Criteria

The Department will accept and review formal applications based on the following criteria:

a) Economic Impact

1. The actual need for the type of incubator given the community's economy and services offered by the facility.

2. The number of businesses that could be housed in the proposed facility, and the expected number of new business starts.

3. The job creation potential of the incubator and the job creation in relation to Department funds requested.

4. The extent to which the incubator services an economically depressed area.

5. The location of the incubator, in order to encourage geographic distribution.

b) Incubator Management

1. The past experience or previous performance of the applicant (e.g. success in previous projects and the level of compliance with previous grant agreements) and demonstrations of management capability to deliver the incubator benefits pursuant to Section 11-3 of P.A. 84-109.

2. Evidence of experience of the individual selected to manage day-to-day incubator operations.

3. The scope of coordination with local areawide economic development programs.

4. Demonstration by letters of support that the incubator project is supported by local representative of business, labor and education.

c) Proposed Activities

1. The type and condition of the building being proposed for use as an incubator.

2. A reasonable time schedule for the initiation and completion of the project.

3. The quality and depth of management assistance mechanisms and services offered to incubator clients.

4. The ability of the local sponsor to obtain funding commitments to assist the financing of start-up firms.

5. The incubator's marketing effort.

6. The thoroughness of the incubator's proposed entry and exit procedures and documentation.

7. The costs and types of faculty services to be provided.

d) Financial

1. The identification of sources and use of funds.

2. The degree to which the local sponsor contributes monetarily or in-kind.

3. Whether the local sponsor has a financial commitment of at least fifty percent of the projected costs of establishing and administering the incubator facility.

4. The degree to which the local sponsor has a financial commitment for the projected reimbursed costs of maintenance of the incubator.

5. The projected income and expenses of the incubator and cash flow in relation to debt services.

6. Justification for any waivers or deferrals of loan repayment.

7. Firm written cost estimates from contractors, suppliers, etc. to indicate cost feasibility.

14 Ill. Adm. Code 560.50 Application Ranking

a) Applications will receive a maximum, moderate, or minimum rating. (the Likert Scale) for criteria provided in Section 560.40.

b) Department staff will conduct site visits of highly rated projects (i.e., maximum and moderate ratings per subsection (a)) and analyze project characteristics, (e.g., a verification of application information).

c) The Department will fund those applications which received the highest comparative rankings (see subsection (a)) and result in a satisfactory site visit (see subsection (b)).

d) The Department will provide written notification to the applicant indicating either approval for funding or denial of funding requests and reasons for such denial.

14 Ill. Adm. Code 560.60 Administrative Requirements

a) Loan Terms – Monthly installments shall be due and payable to the Department at a time specified in the loan agreement. All payments shall be applied first to interest and then to principal.

b) Reporting – The Recipient (applicant receiving grant/loan) will provide, at least annually, information and reports required by the Department (e.g. reports on job creation/retention; client status report, and expenditure summary).

c) Termination of Grants/Loans – Grants/loans shall be terminated for the following reasons:

1. Termination Due to Loss of Funding – In the absence of state funding for a grant year, all grants/loans for that year will be terminated in full. In the event of a partial loss of state funding, the Department will make proportionate cuts to all Recipients. In the event the Department suffers such a loss of funding in full or part, the Department will give the Recipient written notice setting forth the effective date of full or partial termination, or if a change in funding is required setting forth the change in funding and changes in the approved budget.

2. Termination for Cause

A) If the Department determines that the Recipient has failed to comply with the terms and conditions of the grant/loan, the Department shall terminate the grant/loan in whole, or in part, at any time before the date of completion. Circumstances which will result in the termination of a grant/loan include, but are not necessarily limited to the following: consistent failure to submit required reports; failure to maintain required records; failure to protect inventory; misuse of equipment purchased with grant/loan funds; evidence of fraud and abuse; consistent failure to meet performance standards and failure to resolve points of the agreement (i.e., narrative, number to be served). These circumstances are explained in the grant/loan agreement.

B) The Department shall promptly notify the Recipient in writing of the determination to terminate, the reasons for such termination, and the effective date of the termination. Payments made to the Recipient or recoveries by the Department shall be made in accordance with legal rights and liabilities explained in the grant/loan agreement.

3. Termination by Agreement – The Department and the Recipient shall terminate the grant/loan in whole, or in part, when the Department and the Recipient agree that the continuation of the program objectives would not produce beneficial results commensurate with the future expenditures of funds. The Department and the Recipient shall agree upon termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. Recipient shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the Recipient for the Department's share of the noncancellable obligations, properly incurred by the Recipient prior to termination.

d) Events of Default – The entire unpaid principal of the loan, and the interest then accrued thereon, shall become and be immediately due and payable upon the written demand of the Department, without any other notice or demand of any kind or any presentment of protest, if any one of the following events (hereafter an "event of default") shall occur and be continuing at the time of such demand, whether voluntarily or involuntarily, or without limitation, occurring or brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulations of any administrative or governmental body, provided, however that such sum shall not be then payable if Recipient's payments have been deferred. The Department will make deferrals based upon case by case review of the Recipient's financial statements and projections (see Section 560.35(d) to determine if the Recipient will be able to make payments at a future date.

1. Non-Payment of Loan – If the Recipient shall fail to make payment when due of any installment of principal on the loan, or interest accrued thereon and if the failure to make payment shall remain unremedied for fifteen (15) days.

2. Incorrect Representation or Warranty – If any representation or warranty contained in, or made in connection with the execution and delivery of, the loan agreement, or in any certificate furnished pursuant hereto, shall prove to have been incorrect.

3. Default in Covenants – If the Recipient shall default in the performance of any other term, covenant or agreement contained in the loan agreement, and such default shall continue unremedied for thirty (30) days after either:

A) it becomes known to an executive officer of the Recipient; or

B) written notice thereof shall have been given to the Recipient by the Department.

4. Voluntary Insolvency – If the Recipient shall cease to pay its debts as they mature or shall voluntarily file a petition seeking reorganization of, or the appointment of a receiver, trustee, or liquidation of its assets or to effect a repayment plan with creditors, or shall be adjudicated bankrupt, or shall make a voluntary assignment for the benefit of creditors.

5. Involuntary Insolvency – If an involuntary petition shall be filed against the Recipient under any bankruptcy or insolvency law or seeking the reorganization of or the appointment of any receiver, trustee or liquidator for the Recipient, or the property of the Recipient, or a writ or warrant of attachment shall be issued against the property of the Recipient and such petition shall not be dismissed, or such writ or warrant of attachment shall not be released or bonded within thirty (30) days after filing or levy.

6. Judgments – If any final judgment for the payment of money that is not fully covered by liability insurance shall be rendered against the Recipient, and within thirty (30) days, shall not be discharged, or an appeal therefrom taken and execution thereon effectively stayed pending such appeal, and, if such judgment be affirmed on such appeal, the same shall not be discharged within thirty (30) days.

e) Notice of Default – The Recipient agrees to give written notice to the Department of any event, within 15 days of the event, which constitutes an event of default as specified in Section 560.60(d).

f) Monitoring and Evaluation – Recipients must permit any agent authorized by the Department, upon presentation of credentials to, in accordance with the constitutional limitation on administrative searches, have full access to and the right to examine any documents, papers, and records of the Recipient involving transactions related to a grant/loan from the Department.

g) Audits

1. The Recipient shall be responsible for having an audit of all grant/loan records and such audit must be performed by an independent public accountant, certified and licensed by authority of the State of Illinois. The audit must be conducted in accordance with generally accepted government auditing standards adopted by the AICPA (1981).

2. The Recipient may secure an independent audit of its grant/loan in the same manner as it secures its regular audits, provided it provides for maximum open and free competition. The audit should be conducted as part of the Recipient's normal annual audit or, when the ending period of the audit covers the expenditure of all grant/loan funds, bi-annual audit.

3. The Recipient shall work cooperatively with the audit firm selected; actively work with both the audit firm and the Department to resolve any and all audit findings; and work cooperatively with the Department's staff in preparing for, conducting, and resolving audits.

4. Any Recipient receiving a grant will provide the Department with 6 copies of its annual audit which addresses Department grant(s). In instances where the grant period or term does not coincide with the Recipient's fiscal year, two fiscal audit reports shall be forwarded to the Department. Any Recipient receiving a loan will provide the Department with 3 copies of its audit which addresses funds expended under the Department's loan, within thirty days of its publication.

5. The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours of funds expended under Department grant/loans.

6. Any independent public accounting firm that provides consultant services to a Recipient is prohibited from conducting an audit of that Recipient for the period during which services were rendered.

h) Complaint Process – In the event of a Recipient complaint, the Department will follow the procedures outlined in the Administrative Review Law (Ill. Rev. Stat. 1985, ch. 110, pars. 3-101 et seq.).

i) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1985, ch. 127, par. 2310), all interest earned on funds held by the Recipient under the grant shall become part of the grant when earned. Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

j) Nondiscrimination – The Recipient shall refrain from unlawful discrimination in employment and undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act (Ill. Rev. Stat. 1985, ch. 68, pars. 1-101 et seq.).

k) Financial Management Standards – The Recipient's financial management system shall be structured under the Accounting Standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (June, 1984) to maintain control and accountability over grant/loan funds.

l) Maintenance and Insurance of Property

1. The Recipient shall at all times maintain the property provided as security for the loan in such condition and repair that the Department's security will be adequately protected.

2. The Recipient shall maintain, during the term of the loan, adequate (at least covering the amount of the loan) hazard (e.g., tornado, hail, acts of God) insurance policies, covering fire and extended coverage for all such other hazards and issued by an insurance company authorized to do business in the State of Illinois with loss payee clauses in favor of the Department.

3. The Recipient shall, if at any time during the life of the loan the Recipient's property is declared to be within a flood hazard area, purchase federal flood insurance if available. Such insurance shall be equal to the amount of the loan.

4. The Recipient shall maintain liability and worker's compensation insurance. The Recipient shall provide written notice to the Department of any public hearing or meeting before any administrative or other public agency which may, in any manner, affect the chattel, personal property or real estate securing the loan.

History

• Source: Added at 10 Ill. Rev. 19733, effective November 5, 1986

14 Ill. Adm. Code 565.10 Purpose

The General Assembly intends that Illinois should lead the nation in manufacturing domestically and internationally demanded goods. Through the support of manufacturers existing within Illinois and those seeking to relocate to Illinois, this Act is intended to spur innovation in growth industries and fast-growing sectors, including: automotive manufacturing; aerospace manufacturing; energy and life sciences; machine manufacturing; fabricated metal manufacturing; chemical manufacturing; robotics; and the production of advanced materials. The Act is intended to create good paying jobs, generate long-term economic investment in the Illinois business economy, and ensure that vital products are made in the United States. [35 ILCS 65/77-5]

14 Ill. Adm. Code 565.20 Definitions

The following definitions are applicable to this Part.

"Act" means the Advancing Innovative Manufacturing for Illinois Tax Credit Act. [35 ILCS 65/77]

"Advanced Manufacturing" means the practice of using innovative technologies and methods to improve a company's ability to be competitive in the manufacturing sector by optimizing all aspects of the value chain, from concept to end-of-life considerations. "Advanced Manufacturing" includes, but is not limited to, advanced manufacturing practices adopted by the following industries: clean energy ecosystem businesses; life sciences businesses; food manufacturing; automotive and aerospace manufacturing; machinery manufacturing; fabricated metal manufacturing; chemical manufacturing; robotics; and advanced materials manufacturing, including nanomaterial manufacturing.

"Advanced Innovative Manufacturing for Illinois Tax Credit" or "Credit" means a credit agreed to between the Department and the applicant under the Act that is based on capital improvements made to a new existing facility for the purpose of modernizing, upgrading, automating, or streamlining a manufacturing or production process.

"Agreement" means the agreement between a taxpayer and the Department under the provisions of the Act.

"Applicant" means a taxpayer that:

operates a business in Illinois as a manufacturer of critically needed goods;

operates a business in Illinois that primarily engages in research and development that will result in the manufacturing of critically needed goods; or

is planning to locate a business within the State of Illinois as a manufacturer of critically needed goods or a business in Illinois that primarily engages in research and development that will result in the manufacturing of critically needed goods.

For the purposes of this definition, a business primarily engages in research and development if at least 50% of its business activities involve research and development in the manufacturing of critically needed goods.

"Applicant" does not include a taxpayer that closes or substantially reduces, by more than 50%, operations at one location in the State and relocates substantially the same operation to another location in the State. This exclusion does not prohibit a taxpayer from expanding its operations at another location in the State. This exclusion also does not prohibit a taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation of the business if the Department determines that expansion cannot reasonably be accommodated within the municipality or county in which the business is located, or, in the case of a business located in an incorporated area of the county, within the county in which the business is located.

"Capital Improvement" means:

the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment, and furnishings at an approved project site in Illinois; and

expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois.

For land, buildings, structures, and equipment that are leased, the term of the lease must equal or exceed the term of the agreement, and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments. [35 ILCS 65/77-10]

"Critically Needed Goods" means products or materials produced through advanced manufacturing and that are essential for maintaining public health, public safety, economic security, or vital infrastructure, and for which there is a risk of a supply chain disruption. Examples include: semiconductors; critical materials and minerals; energy materials and essential consumer goods; automotive manufacturing goods; aerospace manufacturing goods; energy and life sciences materials; machine manufacturing goods; fabricated metal commodities; chemical manufacturing goods; robotics supplies; and the production of other advanced materials, products, and machines.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Director" means the Director of the Illinois Department of Commerce and Economic Opportunity.

"Full-time employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week.

"Incremental Income Tax" means the total amount withheld during the taxable year from the compensation of new employees and, if applicable, retained employees under Article 7 of the Illinois Income Tax Act arising from employment at a project that is the subject of an agreement. [35 ILCS 65/77-10]

"Local Workforce Investment Area" means a single county or multiple counties designated by the Governor, which allows for the receipt of an allotment of funds under Section 127(b) or 132(b) of the Workforce Innovation and Opportunity Act (PL 113 through 128 (2014)) (WIOA).

"New Employee" means a newly-hired full-time employee employed to work at the project site and whose work is directly related to the project.

"Noncompliance Date" means, in the case of a taxpayer that is not complying with the requirements of the agreement or the provisions of the Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the agreement and the provisions of the Act, as determined by the Director.

"Placed in Service" means that the facility is in a state or condition of readiness, is available for a specifically assigned function, and is constructed and ready to conduct manufacturing operations.

"Professional Employer Organization" or "PEO" means an employee leasing company, as defined in Section 206.1(A)(2) of the Unemployment Insurance Act [820 ILCS 405].

"Program" means the Advancing Innovative Manufacturing for an Illinois Tax Credit program established in the Act.

"Project" means a for-profit economic development activity advancing manufacturing.

"Related Member" means a person that, with respect to the taxpayer during any portion of the taxable year, is any one of the following:

An individual stockholder, if the stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the taxpayer's outstanding stock.

A partnership, estate, or trust of any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the taxpayer.

A corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock.

A corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, equity, capital, stock, or value of the taxpayer.

A person to or from whom there is attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a related member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code.

"Retained employee" means a full-time employee who is employed by the taxpayer before the first day of the term of the agreement, who continues to be employed by the taxpayer during the term of the agreement, and whose job duties are directly and substantially related to the project. For purposes of this definition, "directly and substantially related to the project" means that at least two-thirds of the employee's job duties must be directly related to the project and the employee must devote at least two-thirds of his or her time to the project. The term "retained employee" does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership of at least 5% in the profits, equity, capital, or value of the taxpayer.

"Statewide baseline" means the total number of full-time employees of the applicant and any related member employed by such entities in Illinois at the time of application for incentives under the Act.

"Taxpayer" means an individual, corporation, partnership, or other entity that has a legal obligation to pay Illinois income taxes and file an Illinois income tax return. [35 ILCS 65/77-10]

"Underserved Area" means a geographic area that meets one or more of the following conditions:

the area has a poverty rate of at least 20% according to the latest American Community Survey;

35% or more of the families with children in the area are living below 130% of the poverty line, according to the latest American Community Survey;

at least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program (SNAP); or

the area has an average unemployment rate, as determined by the Illinois Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the U.S. Department of Labor, for a period of at least two consecutive calendar years preceding the date of the application.

14 Ill. Adm. Code 565.30 Eligibility Determination

a) Any taxpayer that operates a business in Illinois as a manufacturer of critically needed goods, is primarily engaged in research and development that will result in the manufacturing of critically needed goods, or is planning to locate a business within the State of Illinois as a manufacturer of critically needed goods or a business in Illinois that primarily engages in research and development that will result in the manufacturing of critically needed goods is an eligible business.

b) For the purposes of eligibility, a business primarily engages in research and development if at least 50% of its business activities involve research and development in the manufacturing of critically needed goods.

c) Any proposed project must include a capital improvement investment of at least $10,000,000.

d) A taxpayer may not enter into more than one agreement under the Act with respect to a single address or location for the same period. A taxpayer may not enter into an agreement under the Act with respect to a single address or location if the taxpayer also holds an active agreement under the Economic Development for a Growing Economy Tax Credit Act, Reimagining Electric Vehicles in Illinois Tax Credit Act, Manufacturing Illinois Chips for Real Opportunity Act, or Data Center Investment Tax Exemptions and Credits for the same period. This provision does not preclude the applicant from entering into an additional agreement after the expiration or voluntary termination of an earlier agreement under the Act or under the Economic Development for a Growing Economy Tax Credit Act, Reimagining Electric Vehicles in Illinois Tax Credit Act, Manufacturing Illinois Chips for Real Opportunity Act, or Data Center Investment Tax Exemptions and Credits to the extent that the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department. An applicant with an existing agreement under the Economic Development for a Growing Economy Tax Credit Act, Reimagining Electric Vehicles in Illinois Tax Credit Act, Manufacturing Illinois Chips for Real Opportunity Act, or Data Center Investment Tax Exemptions and Credits may submit an application for an agreement under the Act after it terminates any existing agreement under the Economic Development for a Growing Economy Tax Credit Act, Reimagining Electric Vehicles in Illinois Tax Credit Act, Manufacturing Illinois Chips for Real Opportunity Act, or Data Center Investment Tax Exemptions and Credits with respect to the same address or location. [35 ILCS 65/77-20(d)]

14 Ill. Adm. Code 565.40 Form of Application

a) Applications will be accepted at any time during the year. The Department will provide interested applicants with an application package upon request. Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

b) Written applications will be required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the Department office location identified on the application. The application shall include:

1. Application Cover Page – containing name, address, and telephone number of applicant; key contact and title; total number of new employees to be hired and, when applicable, the number of full-time employees to be retained; company Federal Employer Identification Number (F.E.I.N.); Standard Industrial Code (S.I.C.); if available, Illinois Unemployment Insurance Account Code; State Senate District number; State Representative District number; authorized signatures; and related information.

2. Project Summary – a detailed description of the project that is to be the subject of the agreement.

3. Site Map – an outline of the general location of the project on a site map, including the location of any flood plain areas and wetland areas.

4. Jobs Impact – a detailed description of the number of new employees to be hired and the occupation and payroll of the full-time jobs to be created as a result of the project, and a schedule of anticipated starting dates of the new hires. In addition, the applicant must provide the total number of full-time employees employed by the applicant and any related member, subsidiary, parent, or sister company in the State of Illinois at the time of the application. Applicant must also provide the number of retained employees at the project, the statewide baseline, and detail any potential decline in jobs at the project location.

5. Capital Improvements Planned – a detailed description of the investment the taxpayer will make in capital improvements, and the designated location in Illinois for the investment. This shall include, but not be limited to, a description (or specifications or lists) of the planned capital improvements demonstrating the investment is qualified; documentation to substantiate the value of the investment (value of capital improvements as provided by appraisers, vendors, contractors, architects and engineers); and a schedule regarding when the eligible investment will be placed in service.

6. Any other provisions or information the Department determines is necessary to facilitate the Department's evaluation of the application.

c) The applicant is responsible for the accuracy of all data, information and documentation included in its application. Once submitted, applications shall become the property of the Department.

d) The Department will not permit public inspection or copying of any material that is or would be confidential under State Law, specifically including the exemptions set forth in the Freedom of Information Act [5 ILCS 140]. If an applicant submits information it considers to be of a confidential nature as part of its application or request for a tax credit certificate, such information shall be marked or labeled "CONFIDENTIAL" in capital letters. The applicant shall also submit a statement briefly setting forth the grounds on which the information should be treated as confidential. The Department, based on proprietary nature of the material and privacy of the applicant's confidential information, shall not disclose the materials to the public.

14 Ill. Adm. Code 565.50 Application Review

a) Prior to substantive evaluation of an application, the Department shall screen all applications to determine that all requirements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given an opportunity to correct those deficiencies through submission of additional documentation.

b) In evaluating applications, the Department shall determine whether all of the following conditions exist:

1. The applicant intends to make the required investment in the project.

2. The applicant has documented the total jobs impact (new employees, retained employees, or both) associated with the project.

3. The applicant's project is economically sound and will benefit the people of the State of Illinois by expanding the market for critically needed goods and strengthening the economy of Illinois.

4. Awarding the credit will result in an overall positive fiscal impact to the State, according to the best available data.

5. The applicant is committed to expanding manufacturing in Illinois.

c) When necessary to fulfill the purpose of the Act, the Department may make inquiries, and conduct studies in the manner and by the methods it deems desirable, review information with respect to applicants, and make recommendations on projects to benefit the State.

14 Ill. Adm. Code 565.60 Application Approval and Denial

a) Applicants shall be notified in writing as to the Department's evaluation of the application. If the Department denies an application, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation. If the applicant disagrees with the Department's decision it may seek relief through the process set forth at 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

b) The Department will negotiate a formal agreement with applicants determined to be eligible for the award of a credit.

14 Ill. Adm. Code 565.70 Determination of Amount and Term of the Credit

a) A taxpayer is entitled to a credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act for taxable years beginning on or after January 1, 2026. The Department may award credits under the Act on and after January 1, 2027. [35 ILCS 65/77-25(a)]

b) The credit amount shall be determined based on the total amount of the capital improvement investment made by the taxpayer:

1. A capital improvement investment of $10,000,000 or more but less than $50,000,000 shall result in a maximum credit of 3% of the capital improvement amount;

2. A capital improvement investment of $50,000,000 or more but less than $100,000,000 shall result in a maximum credit of 5% of the capital improvement amount;

3. A capital improvement investment of $100,000,000 or more shall result in a maximum credit of 7% of the capital improvement amount.

c) Projects may be granted tax credit awards that reflect investments made within a maximum 5-year period. [35 ILCS 65/77-25(e)]

d) Credits awarded under the Act shall not reduce a taxpayer's liability for the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act to less than zero. [35 ILCS 65/77-25(b)]

e) Unused credit may be carried forward for a maximum of 10 years for use in future taxable years. [35 ILCS 65/77-25(b)]

f) Any taxpayer qualifying for credits under the Act shall not be eligible for the credits under subsections (e), (f), or (h) of Section 201 of the Illinois Income Tax Act for the same expenditures for the same taxable period. [35 ILCS 65/77-25(b)]

g) The Department shall certify to the Department of Revenue:

1. the identity of taxpayers that are eligible to receive tax credits under the Act; and

2. the amount of the credits awarded in each calendar year.

h) Credits so earned and certified by the Department may be applied against the tax imposed by subsections (a) and (b) of Section 201 of the Illinois Income Tax Act for taxable years beginning on or after January 1, 2026. [35 ILCS 65/77-25(c)]

14 Ill. Adm. Code 565.80 Tax Credit Agreement

a) Each taxpayer for whom the Department determines qualifies for a credit under the Act may enter into an agreement with the Department that specifies terms and conditions regarding the provision of the credit and defines the rights and responsibilities of the taxpayer and the Department. The agreement shall include all of the following:

1. a detailed description of the project that is the subject of the agreement, including the location and amount of the investment and jobs created or retained;

2. the duration of the credit, the first taxable year for which the credit may be awarded, and the first taxable year in which the credit may be used by the taxpayer;

3. the maximum allowable credit as a percentage of the project's total capital improvement investment;

4. a requirement that the taxpayer shall maintain operations at the project location for a minimum of 15 years;

5. a requirement that the taxpayer shall, at the time that the project is placed in service, report to the Department the number of new employees, the number of retained employees, and the total capital improvement investment of the project, and any other information the Department deems necessary and appropriate to perform its duties under the Act;

6. a requirement authorizing the Director to verify with the appropriate State agencies the amounts reported under subsection (a)(5), and, after doing so, to issue a certificate to the taxpayer stating that the amounts have been verified;

7. a requirement that the taxpayer shall provide written notification to the Director not more than 30 days after the taxpayer makes or receives a proposal that would transfer the taxpayer's State tax liability obligations to a successor taxpayer;

8. a detailed description of the number of new employees to be hired, and the occupation and payroll of full-time jobs to be created or retained because of the project;

9. the minimum investment the taxpayer will make in capital improvements, the time period for which the project may claim credit, and the designated location in Illinois for the investment;

10. a requirement that the taxpayer shall provide written notification to the Director and the Director's designee not more than 30 days after the taxpayer determines that the minimum job creation or retention, employment payroll, or investment no longer is or will be achieved or maintained as set forth in the terms and conditions of the agreement. Additionally, the notification should outline to the Department the number of layoffs, date of the layoffs, and detail taxpayer's efforts to provide career and training counseling for the impacted workers with industry-related certifications and trainings;

11. a provision that, if the total number of new employees falls below a specified level, the allowance of credit shall be suspended until the number of new employees equals or exceeds the agreement amount;

12. a detailed description of the items for which the costs incurred by the taxpayer will be included in the limitation on the credit;

13. a provision stating that if the taxpayer ceases principal operations with the intent to permanently shut down the project in the State during the term of the agreement, then the entire credit amount awarded to the taxpayer prior to the date the taxpayer ceases principal operations shall be returned to the Department and shall be reallocated to the local workforce investment area in which the project was located; and

14. any other performance conditions or contract provisions the Department determines are necessary or appropriate. [35 ILCS 65/77-30]

b) The Department shall post on its website the terms of each agreement entered into under the Act. The information shall be posted within 10 days after entering into the agreement and must include the following:

1. the name of the taxpayer;

2. the location of the project;

3. the estimated value of the credit;

4. the number of new employee jobs and, if applicable, number of retained employee jobs at the project; and

5. whether or not the project is in an underserved area or energy transition area. [35 ILCS 65/77-30]

14 Ill. Adm. Code 565.90 Certificate of Verification

a) The taxpayer shall notify the Department on forms provided by the Department when the minimum eligible capital improvement investments have been placed in service, the minimum new employee jobs have been created (if applicable), and that retained employees remain employed by the taxpayer (if applicable).

b) The taxpayer shall provide: for land acquisition, building acquisition, or both, a copy of the purchase agreement; for building construction or renovation, a contractor's or architect's cost certification; for space rental, a rental or lease agreement.

c) For a taxpayer to be eligible for a certificate of verification, the taxpayer shall provide proof as required by the Department prior to the end of each calendar year, including, but not limited to, attestation by the taxpayer that:

1. the project has achieved the level of capital improvement investment in Illinois specified in the agreement. [35 ILCS 65/77-35(b)]

2. the project has achieved the level of full-time new employees and retained employees specified in the agreement (if applicable).

3. the project has maintained the statewide baseline set forth in the agreement.

4. the taxpayer has materially complied with the terms of the agreement and is not otherwise in violation of any provision of the Act.

d) Upon receipt of valid proof from the taxpayer, the Department shall provide the taxpayer with a certificate of verification.

e) A taxpayer claiming a credit under this Act shall submit to the Department of Revenue a copy of the Director's certificate of verification under this Act for the taxable year. However, failure to submit a copy of the certificate with the taxpayer's tax return shall not invalidate a claim for a credit. [35 ILCS 65/77-35(a)]

14 Ill. Adm. Code 565.100 Noncompliance with the Agreement

If the Director determines that a taxpayer who has received a credit under the Act is not complying with the requirements of the agreement or all the provisions of the Act, the Director shall provide notice to the taxpayer of the alleged noncompliance and allow the taxpayer a hearing under the provisions of 56 Ill. Adm. Code 2605. If, after such notice and any hearing, the Director determines that noncompliance exists, the Director shall issue to the Department of Revenue a notice to that effect, stating the noncompliance date. [35 ILCS 65/77-40]

14 Ill. Adm. Code 565.110 Recapture and Reallocation of Recaptured Amounts

a) If, during the term of an agreement, the taxpayer ceases operations at a project location that is the subject of the agreement with the intent to terminate operations in the State, the Department and the Department of Revenue shall recapture from the taxpayer the entire credit amount awarded under that agreement prior to the date the taxpayer ceases operations.

[35 ILCS 65/77- 40]

1. If the Department determines that a taxpayer ceases operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Director shall provide notice to the taxpayer of that determination and allow the taxpayer a hearing under the Illinois Administrative Procedure Act [5 ILCS 100]. Example of activities that evidence a cessation of operation at a project location with an intent to terminate operations in the State include, but are not limited to, Illinois Worker Adjustment and Retraining Notification Act (WARN) [820 ILCS 65] notices reflecting layoffs in excess of 65% of the full-time employees located at the project site, public announcements or other media reflecting an intent to relocate operations outside the State, or any other information the Department determines reflects an intent to discontinue operations at the project site.

2. The Department shall notify a taxpayer in writing that it is subject to recapture. The notice shall include the reason for revocation and if requested, the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

3. Following a final determination following an administrative hearing, or the Director's determination if a hearing is not requested, that credits received pursuant to an agreement are subject to recapture, the Department will contact the Director of the Illinois Department of Revenue who may initiate proceedings to determine the amounts to be reallocated by the Department pursuant to Section 77-40 of the Act.

b) The Department shall, subject to appropriation, reallocate the recaptured amounts within 6 months of the appropriation to the local workforce investment area in which the project was located for purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minority persons in the workforce in accordance with the Grant Accountability and Transparency Act (30 ILCS 708). [35 ILCS 65/77-40]

1. Any county, municipality, or other entity may apply for a grant from the Department under this Section for the purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce in the local workforce investment area.

2. An application must be submitted on the standard application form provided by the Department specifically setting forth how grant-related activities would directly support workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce in the local workforce investment area.

3. The Department will evaluate applications based on the extent to which the grant applicant demonstrates that the proposed grant-related activities will directly support the purposes of this Section.

4. Grant applicants shall be notified in writing as to the Department's evaluation of all completed grant applications. If the Department denies a grant application, it will specify the reasons for the denial in writing and allow the grant applicant 30 days to amend and resubmit its application for evaluation.

5. The Department shall determine the amount of funds awarded to any grant applicant under this Section, based on the recapture amount, the number of other eligible applications, and factors including but not limited to:

A) The applicant's documentation of need for the project;

B) The applicant's capacity and qualifications to execute the project;

C) The quality of the applicant's proposed project design and implementation; and

D) The cost effectiveness of the applicant's proposed project.

6. Upon approval of a grant application, the Department shall enter into a grant agreement with the grant applicant in accordance with the Grant Accountability and Transparency Act (GATA) [30 ILCS 708], containing such terms and conditions as the Department deems necessary and proper to effect the purposes of the Act.

c) The taxpayer will be ineligible for future funding under other State tax credit or exemption programs for a 36-month period. Noncompliance with the agreement will result in a default of other agreements for State tax credits and exemption programs for the project. [35 ILCS 65/77-40]

Chapter I Department of Commerce and Economic Opportunity

Part 570 Illinois Small Business Development Program

14 Ill. Adm. Code 570.10 Purpose

a) Direct Funding

1. Through the Illinois Small Business Development Program (Program), the Department of Commerce and Economic Opportunity (Department) will provide term loans on a generally fixed-rate, low-interest basis (see Section 570.70(a)(1)) to small businesses in Illinois in cooperation with participating lenders or other investors. The ultimate purpose of the Program is to provide economic development assistance to Illinois businesses who will provide employment opportunities for Illinois citizens, either through job creation/retention or those that modernize or improve the competitiveness of the firm.

2. Any small business operating or to be located in Illinois may make an application for financial assistance under this program. A small business includes, but is not limited to, any for-profit business organized as a sole proprietorship, partnership, corporation, joint venture, association, or cooperative. For the purposes of this program, a small business is one that has, including its affiliates, fewer than 500 full-time employees, or is determined by the Department not to be dominant in its field.

3. Minority, Veteran, Women and Disability Business Loans

A) For purposes of this Part, a women owned business shall have the same definition as a female owned business under Section 2 of the Minority and Female Business Enterprise Act [30 ILCS 575/2] and a minority owned business shall have the same definition as that contained in that Act. Included for purposes of this Part, Disadvantaged Business Enterprise (DBE) and Women's Business Enterprise (WBE) shall have the same definitions as those established under Section 5 of the Illinois Purchasing Act [30 ILCS 505/5] and Sections 3-101, 3-103, and 4-201.1 of the Illinois Highway Code [605 ILCS 5/3-101, 3-103 and 4-201.1].

B) For purposes of this Part, disability shall have the same definition as that used in Section 3 of the Americans With Disabilities Act of 1990 (42 USC 12102) and businesses owned by persons with disabilities shall mean businesses that are at least 51% owned by one or more persons with disabilities and whose management and daily business operations are controlled by one of the disabled owners.

C) For purposes of this Part, veteran will have the same definition as that used in Section 9-2(o) of the Small Business Development Act (Act) [30 ILCS 750/9-2] and businesses owned by veterans will mean businesses that are at least 51% owned by veterans and whose management and daily business operations are controlled by veterans.

4. Technical Assistance Grants – Provides the Department with the ability to make a grant to a not-for-profit organization, which also provides a portion of the financing with respect to the technical assistance project. The purpose of the grant is to cause the technical assistance project to be undertaken to have the potential to improve the capital marketplace structure or to reduce information barriers that are impediments to the flow of capital.

5. Development Corporation Grant Program – The purpose of the Development Corporation Grant Program is to provide grants to or through financial intermediaries whose purpose includes financing, promoting or encouraging economic development in their geographic areas.

b) Indirect Funding

1. Participation Loan Program – Provides the Department with the ability to purchase an interest in a standard financial intermediary loan. This purchase provides a collateral cushion similar to companion loans. The purpose of these agreements is to help reduce the time needed to analyze applications due to the reliance upon the financial intermediaries' due diligence by tapping into the existing infrastructure of private sector financing expertise. The ultimate purpose of the program is to provide economic development assistance to Illinois businesses that will provide employment opportunities for Illinois citizens. For purposes of this Part, financial intermediary shall have the same definition as those established under Section 9-2 of the Act.

2. Loan Loss Reserve Program – The financial intermediaries that participate in the program make all of the credit decisions about whether to fund or reject a loan to a potential borrower. The financial intermediary also decides whether to make conventional loans to the borrower or whether to require the borrower to participate in the Loan Loss Reserve Program as a condition of the loan. The purpose of the program is to help borrowers that are borrowing up to $100,000 get access to capital, especially in urban areas; however, even though the program provides access to capital, it will not necessarily be low-cost capital.

3. Development Corporation Participation Loan Program – The purpose of the Development Corporation Participation Loan Program is to provide loans, which may be done through the purchase of participations, to or through financial intermediaries whose purposes include financing, promoting or encouraging economic development in their geographic areas.

4. Minority, Veteran, Women, and Disability Participation Loans – Businesses meeting the definitions of Section 570.10(a)(3) may be funded in accordance with Section 9-4.3 of the Act through Participation Loans and Development Corporation Participation Loans as described in subsections (b)(1) and (3).

5. Rural Micro-business Loan Program

A) Authorizes the Department to provide loans to small rural businesses. Eligible participants include small rural businesses that:

i) employ 5 or fewer full-time employees, including the owner if the owner is an employee; and

ii) are based on the production, processing, or marketing of agricultural products, forest products, cottage and craft products, or tourism.

B) Eligible rural micro-businesses may be funded in accordance with Section 9-4.2a of the Act through Participation Loans and Development Corporation Participation Loans as described in subsections (b)(1) and (3).

History

• Source: Amended at 42 Ill. Reg. 4821, effective March 2, 2018

14 Ill. Adm. Code 570.15 Loan Terms (renumbered)

History

• Source: Section 570.15 renumbered to Section 570.70(a) at 10 Ill. Reg. 19724, effective November 6, 1986

14 Ill. Adm. Code 570.20 Application Cycle

a) Direct Funding

1. Applications under the Program other than the Technical Assistance Program and the Development Corporation Program will be accepted throughout the year until program funds are exhausted. The Department or its designee (e.g., Small Business Development Center (SBDC) staff, Illinois Department of Transportation) will supply interested businesses with an application package upon request.

2. Public notice of the availability of Technical Assistance Grant Program Applications and the application due date will be published in the State recognized newspaper. Grant funds will be made available on an annual basis, if sufficient monies are allocated for the program. Application will be due on the deadline determined by the Department.

3. Public notice of the availability of Development Corporation Grant Applications and the application due date will be published in the State recognized newspaper. Grant funds will be made available on an annual basis, if sufficient monies are allocated for the program. Applications will be due on the deadline determined by the Department.

b) Indirect Funding

1. Applications under the Participation Loan Program and the Loan Loss Reserve Program will be accepted throughout the year until program funds are exhausted. The Department or a financial intermediary will supply interested businesses with an application package upon request.

2. Application for Development Corporation Participation loans to or through financial intermediaries will be accepted throughout the year until program funds are exhausted. The Department will supply interested financial intermediaries with an application package upon request.

3. Applications under the Rural Micro-business Participation Loan Program will be accepted throughout the year until appropriated or allocated program funds are exhausted The Department or a financial intermediary will supply interested businesses with an application package upon request.

History

• Source: Amended at 30 Ill. Reg. 8461, effective April 19, 2006

14 Ill. Adm. Code 570.25 Application Documentation

a) Direct Funding

1. The application for a loan shall include documentation of the following:

A) History of the Company (if applicable) – a brief history of the business and past employment growth.

B) Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

C) Historic Financial Statements (if applicable) – historic financial statements for the past three years, if the business is not a new plant start-up or new business opportunity and interim statements dated no more than ninety days prior to application including:

i) Profit and Loss (Income) Statements;

ii) Balance Sheets; and

iii) Disclosure of Contingent Liabilities (if applicable).

D) Two Year Projections – two year projections of the Profit and Loss Statement and a one year Monthly Cash Flow Projection. Except that proposed projects of less than two years in duration shall only be required to submit projections appropriate for the projects (e.g., projects of less than one year shall only need to submit cash flow projections).

E) Site Map (if applicable) – an outline of the general location of the project on a site map, including the location of any floodplain areas.

F) Land and Building Information ( if applicable) – for land and/or building acquisition, appraisal by a credentialed appraiser (e.g., Member American Institute (MAI) of the American Institute of Real Estate Appraisers, Senior Realty Appraiser (SRA)) acceptable to the Department and a copy of the purchase option or agreement; for building construction or renovation, a contractor or architect's cost estimates; for space rental, a draft rental/lease agreement; if real property and fixtures will be offered as collateral for funding, an appraisal by a credentialed appraiser acceptable to the Department.

G) Description of Machinery and Equipment (if applicable) – major equipment or classes of equipment to be acquired with the Department's program funds identified; for acquisition of new machinery and equipment, attachments of reliable vendor cost estimates; for moving and installation costs, attachments of written estimates; for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price and a specific description of the equipment including serial numbers, if available.

H) Description of Working Capital (if applicable) – a detailed explanation of the need for the use of the funds.

I) Company Management – a listing of those individuals who are responsible for the management of the company, their positions and responsibilities, and resumes of key senior individuals (e.g., Owner, Partner, President, Vice President, Treasurer) at the company location.

J) Ownership – the company will provide a detailed statement of ownership which shall include a percentage of ownership. Such statements shall clearly identify any ownership interest which amounts to 20% or more, or any lower amount as determined by the Department, any ownership entity (e.g., individual, partnership, corporation) which is considered to be controlling the business, and/or any entity which is guaranteeing any financial or contractual activities of the company. For all such entities which meet any conditions of this subsection, a financial statement shall be provided. The financial statements shall include full name, home/corporate address and social security number/federal employer identification number (FEIN).

K) Letters of Commitment – commitment letters documenting all sources of leveraging; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved; any commitment to purchase a revenue bond must have an executed inducement resolution and the rates, terms, and conditions of approval by the buyer.

2. The application for the Technical Assistance Grant shall include documentation of the following:

A) Proposed Work Plans – Provide a detailed description of how the project will be administered to meet the project goals;

B) Timelines – Provide a detailed list of dates, to include a starting and completion date, in order to show the orderly progression of the project;

C) Objective and results of the project – Describe the economic development purpose being served or to be served by the Technical Assistance Grant. Also, describe the anticipated economic development benefits, in quantifiable terms, resulting from the Technical Assistance Grant;

D) Persons responsible for administering the effort – Provide a resume for each individual who will be involved in the project. Resumes should contain present and past work experience along with educational information;

E) Cost of completing the proposed effort – Provide a detailed list of all costs which will be incurred in order to complete the project; and

F) Other documentation that may be necessary.

3. Grant application documentation for Development Corporation shall contain the following:

A) History of Applicant – Provide a brief history of the Development Corporation, legal status (e.g., stock corporation, not-for-profit, general unit of government, etc.), board structure, etc., as a separate attachment. Provide proof of authority to operate, including, as appropriate, articles of incorporation, bylaws, and a resolution of the Board to participate.

B) Mission and Goals – Fully describe the economic development purpose being served or to be served by the Development Corporation and the major objectives of the Development Corporation and how it will meet these objectives.

C) Local Market Needs – Identify the geographic area to be served by the Development Corporation and the typical borrowers to be served (third party beneficiaries of the Development Corporation's lending), and the primary business financing needs that shall be addressed. Include a profile of the Development Corporation's target area. Outside the boundaries of Cook County, the Development Corporation must service a substantial geographic area containing a significant population base (e.g., county, multi-county, statewide, etc.).

D) Financial Products and Services – Describe the financial products and financial services to be offered. This should include the type of lending and equity to be offered, term of lending to be provided, minimum and maximum amounts, if any, on loans outstanding to individual firms, etc. If the Development Corporation is recently formed, include the timetable for implementation.

E) Results Expected – Describe anticipated economic development benefits resulting from the Department's financial assistance.

F) Staffing and Management – Provide a description of how and by whom the Development Corporation will be managed and staffed, including specific information on Board membership.

G) Operating Procedures – Describe how the Development Corporation will be operated, proposed location of officers and/or facilities, marketing of corporate services, etc. Describe the corporate decision making process for making business loans and other types of investments, due diligence process and credit analysis procedures to be used, and application procedures to assure prudent operation of the lending and investment activity.

H) Coordination and Community Involvement – Provide a description of the primary working relationships with public and private entities, such as local, state and federal financial institutions, venture capital partnerships, public or non-profit development agencies, etc. Describe community involvement in the Development Corporation referral process (if applicable).

I) Capitalization – Provide a summary of financial projections, anticipated/actual sources of operating income, the amount of Development Corporation capitalization and expected funding needs of the Development Corporation. Specifically, include the nature and amount of bank and other corporate investments, and major stockholders or shareholders and percent of ownership. For new Development Corporation, include a detailed timetable for securing all initial corporate financing.

J) Budget Request – Identify the amount of funds requested from the Department. The request should also detail the type of funding needed (loan, grant or investment), how it will be secured and repaid, and how it will be used (organizational costs, direct lending to third party beneficiary projects) and the anticipated schedule (timing) for using Department funds.

K) Letters of Commitment – Applications must include documentation of all sources of Development Corporation matching funds in the form of specific commitment letters. Commitment letters must have language indicating the terms and conditions attendant to the contribution, including the amount, when the contribution will be made, and any conditions which must be met before the contribution is made.

b) Indirect Funding

1. Participation Loan Program and Development Corporation Participation Loan Program – Documentation from the financial intermediaries shall contain the information which is required by the financial intermediary as part of its loan application and such additional information as the Department may deem necessary. Before participations are made to the financial intermediary, the following documentation shall be required by the Department, except that a financial intermediary regularly examined by a financial institution regulator (e.g., Commissioner of Banks and Trusts, Office of the Comptroller of the Currency, etc.) may substitute documentation of good standing.

A) History – A brief history of the financial intermediary, legal status (e.g., stock corporation, not-for-profit, general unit of government, etc.), board structure, etc., as a separate attachment. Provide proof of authority to operate, including, as appropriate, articles of incorporation, bylaws, and a resolution of the Board to participate.

B) Local Market Needs – Identify the geographic area served by the financial intermediary and the typical borrowers served and the major objectives of the financial intermediary.

C) Historic Financial Statements -Provide historic financial statements for the past three years, if the financial intermediary is not a new start-up, including:

i) Profit and Loss (Income) Statements;

ii) Balance Sheets; and

iii) Disclosure of Contingent Liabilities.

D) Staffing and Management – Provide a description of how and by whom the financial intermediary is managed and staffed, including specific information on Board membership.

E) Other Documentation – Other documentation determined by the Department to be necessary.

History

• Source: Amended at 18 Ill. Reg. 6119, effective April 11, 1994

14 Ill. Adm. Code 570.30 Application Evaluation

a) Direct Funding

1. Criteria for evaluating loan applications.

The Department shall screen all applications to determine that all requirements of the application package have been addressed. Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through submission of additional documentation (see Section 570.25(a)(1)). This review and evaluation process will be completed within 45 days of the Department's receipt of a complete application. Department staff will conduct a technical and financial evaluation of each application.

A) Technical Evaluation Component – Each application will be reviewed to assure compliance with technical program requirements as specified in Sections 9-2, 9-4, 9-4.2, and 9-6 of the Small Business Development Act [30 ILCS 750/9-2, 9-4, 9-4.2, and 9-6]. The technical evaluation will address the following criteria:

i) Evidence of Need for Program Funding – The company must demonstrate the need for program funds in accordance with requirements of Section 9-4(c) of the Act, including evidence that the project's financing cannot be obtained without Department participation at an interest rate and term that makes the project viable; and the leverage of other funds in accordance with Sections 9-4(a) and (b) and 9-6(a) and (b) of the Act.

ii) Project Implementation Readiness – The company must demonstrate project readiness, including identifying loans and investments from all lenders and investors on letterhead, signed and dated; time schedule for project initiation; and written cost estimates from contractors, suppliers, and/or architects that support project costs.

iii) Employment Impact –

• The application shall provide evidence of: employment impact/opportunity (e.g., job creation/retention), including written assurance from the company which identifies a description of the type and the number of any jobs to be created/retained; and any evidence that such jobs will generate additional wealth for the community (e.g., final goods or services produced are sold in markets outside Illinois or final goods or services produced and sold locally substitute for those imported from outside the state). Special consideration will be given to a Minority, Women and Disability Business Project or to a project which demonstrates additional need (e.g.: Distressed community or county with an unemployment rate which is 25% higher than the State average, or a per capita income that is less than the State average, or area with limited economic development as evidenced by absence of development activities within the last two years or as evidenced by new job growth rate less than the State or national average, or

• Funding would support business which has provided assurance that the project will generate business growth and make an employment impact/opportunity in the community as a result of spinoff businesses, and thus evidence that the additional jobs will be created or retained, or

• Funding is needed to avert loss of a major employment source (more than 100 jobs or 2% of the local base) in the community, or

• Jobs to be created or retained offer wages substantially higher than the prevailing wage in the industry as determined by the Illinois Department of Labor pursuant to the Prevailing Wage Act [820 ILCS 130], or an annual wage higher than the State's median income as computed by the Department's Division of Research and Analysis, 620 E. Adams Street, Springfield, Illinois 62701, (217) 785-6117).

iv) Evidence of how the Company will modernize or improve their competitiveness. The Company must demonstrate how they will accomplish the following:

• improve productivity;

• reverse an actual or expected decline in production; or

• improve the Company's competitive advantage.

B) Financial Evaluation Component – The applicant's financial statements, including the items in Section 570.25(a)(1)(C), (D), (G), (H), and (K), as applicable, will be reviewed through a standard credit analysis which will determine the: liquidity and debt coverage for the project; ability of the company to manage debt; business trends, and projected earnings. This data will be compared to similar data for companies in the same industry using the "RMA Annual Statement Studies" (published by Robert Morris Associates, P.O. Box 8500, S-1140 Philadelphia, PA. 19178), or a comparable source (1990 with no later amendments or editions) if such industry is evaluated by this source. This standard credit analysis will determine the financial stability of the company in accordance with Section 9-4(f) of the Act.

2. The criteria for evaluating the Technical Assistance Grant Program shall be the following:

A) Evidence of Rationale for Program Funding – The company shall demonstrate, in accordance with Section 9-6(b) of the Act, that the project would not be undertaken unless the grant is provided along with the leverage of other funds in accordance with Section 9-6 of the Act and Section 570.60(a)(2).

B) Project Implementation Readiness – The company must demonstrate project readiness, including identifying sources of cash and in-kind matching funds and time schedule for project initiation.

C) Program Purpose – The degree to which the proposed project fulfills the program purpose.

D) Management – The management capacity of the applicant and its potential for completing the project.

E) Cost for Expected Results – The appropriateness of the project costs in terms of the project objectives, the work to be undertaken and the results expected.

3. The Criteria for Evaluating Development Corporation Grant Applications are the following:

A) Department staff will screen all applications to determine that all minimum requirements of the application package have been addressed. Application will be reviewed in accordance with Department review criteria listed in subsection (a)(1)(B).

B) A request for financial assistance to set up and operate a Development Corporation will be evaluated in accordance with the requirements of this Part. The review of applications will begin after the application due date and take no more than 75 working days, with financial assistance awards being announced at the end of that period. Applications will be evaluated on the basis of:

i) The extent of economic distress and unemployment in the area to be served; the nature of financial needs of the area and the geographic diversity of the applicants;

ii) The capability of the applicant and its staff as demonstrated by existing or past experience in managing work activities similar to those proposed to be undertaken;

iii) Time schedule for project initiation, etc., indicating the level of project readiness;

iv) Actual or anticipated amount of capitalization, extent of leveraging of other financial resource and consistency of proposed items of expenditure with the requirements of the Act;

v) The merits of the proposed work plan and consistency of proposed activities with the program purpose;

vi) The level of economic development results expected in terms of development financing, retooling or modernization, jobs created or retained, private funds leveraged, etc. and level of other significant benefits or impacts;

vii) Evidence of direct linkages or coordination between the proposed program and private financial institutions and public investment/loan/guarantee programs; and

viii) The anticipated financial feasibility of the project and its ability to maintain continuous operation beneficial to the public as determined by anticipated operational costs of less than or equal to anticipated income or the availability of equity to cover any shortfalls based on the company's historical and projected financial statements.

b) Indirect Funding

The criteria for evaluating the Participation Loan Program, the Loan Loss Reserve Program and the Development Corporation Participation Loan Program shall be the following:

1. Technical Evaluation Component – Each application will be reviewed to assure compliance with technical program requirements as specified in Sections 9-2, 9-4, 9-4.2, 9-4.2a, and 9-6 of the Act [30 ILCS 750/9-2, 9-4, 9-4.2, 9-4.2a, and 9-6]. The technical evaluation will address the following criteria:

A) Evidence of Need for Program Funding – The company must demonstrate the need for program funds in accordance with requirements of Section 9-4(c) of the Act, including evidence that the project's financing cannot be obtained without Department participation at an interest rate and term which makes the project viable; and the leverage of other funds in accordance with Sections 9-4(a) and (b) and 9-6(a) and (b) of the Act.

B) Project Implementation Readiness – The company must demonstrate to the financial intermediary according to procedures and tests developed by the financial intermediary that it is ready to implement the project.

C) Employment Impact – The application shall provide evidence of: employment impact/opportunity (e.g., job creation/retention), a description of the type and number of any jobs to be created/retained and any evidence that such jobs will generate additional wealth for the community (e.g., final goods or services proposed are sold in markets outside Illinois or final goods or services produced and sold locally substitute for those imported from outside the State). Special consideration will be given to a Minority, Women and Disability Business Project, a Rural Micro-business Project or to a project which demonstrates additional needs; for example:

i) Distressed community or county with an unemployment rate which is 25% higher than the State average, or a per capita income which is less than the State average, or

ii) Area with limited economic development as evidenced by absence of development activities within the last two years or as evidenced by new job growth rate less than the State or national average, or

iii) Funding would support business which has provided assurance that the project will generate business growth and make an employment impact/opportunity in the community as a result of spinoff businesses, and thus evidence that additional jobs will be created or retained, or

iv) Funding is needed to avert loss of a major employment source (more than 100 jobs or 2% of the local base) in the community, or

v) Jobs to be created or retained offer wages substantially higher than the prevailing wage in the industry as determined by the Illinois Department of Labor pursuant to the Prevailing Wage Act [820 ILCS 130] and Section 6-3 of the Illinois Purchasing Act [30 ILCS 505/6-3], or an annual wage higher than the State's median income as computed by the Department's Division of Research and Analysis, 620 E. Adams Street, Springfield, Illinois 62701, (217) 785-6117).

D) Evidence of how the company will modernize or improve their competitiveness – The company must demonstrate how they will accomplish the following:

i) improve productivity;

ii) reverse an actual or expected decline in production; or

iii) improve the company's competitive advantage.

2. Financial Evaluation Component – The financial intermediary will perform a credit analysis of the company using procedures and tests developed by the financial intermediary to determine the ability of the company to carry out the project.

History

• Source: Amended at 30 Ill. Reg. 8461, effective April 19, 2006

Chapter I Department of Commerce and Economic Opportunity

Part 570 Illinois Small Business Development Program

14 Ill. Adm. Code 570.40 Selection for Funding

a) Direct Funding

1. For any Direct Loan application which meets the criteria of Section 570.30(a)(1), Department staff or designee will then conduct field visit evaluations to verify information in the application, leading to the final funding decision. The field visit will analyze the following:

A) an assessment of the project in terms of the employment impact/opportunity involved, in relation to the value of the funds requested and types of jobs preferred as described in Section 570.30(a)(1)(A)(iii);

B) an assessment of the project in terms of the modernization and improvement of competitiveness of the company, in relation to the value of the funds requested as described in Section 570.30(a)(1)(A)(iv);

C) a verification of submitted application information; and

D) past performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous agreements).

2. Applications that best meet the objectives of the programs and demonstrate the greatest potential for job creation/retention or those which modernize or improve the competitiveness of the firm will receive loan or grant funds, until all available funds are expended.

3. For any Technical Assistance Grant application which meets the criteria of Section 570.30(a)(2), Department staff will verify information in the application, leading to the final funding decision. The evaluation will analyze the following:

A) a verification of submitted application information; and

B) past performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous agreements).

4. A request for financial assistance to organize a Development Corporation will be evaluated in accordance with the requirement of Section 570.30(a)(3). The review of applications will begin after the application due date and take no more than 75 working days, with financial assistance awards being announced at the end of that period.

b) Indirect Funding

1. For the Participation Loan Program Application, the financial intermediary staff will be responsible for the verification of the information in the application. The Department staff will evaluate the information submitted by the financial intermediary in order to determine that all requirements of the application package have been addressed.

2. For the Loan Loss Reserve Program Application, the financial intermediary staff will be responsible for the verification of the information in the application.

3. For the Development Corporation Participation Program, the financial intermediary staff will be responsible for the verification of the information in the application. The Department staff will evaluate the information submitted by the financial intermediary in order to determine that all requirements of the application package have been addressed.

4. For the Rural Micro-businesses Participation Loan Program, in addition to the requirements of subsection (b)(1) or (3), the Department:

A) will determine the amount, term, interest rate, and allowable uses of each loan participation awarded; and

B) will allocate no less than 80% of the amount available for this program for loans to businesses that are located in counties with a population of 100,000 or less.

History

• Source: Amended at 30 Ill. Reg. 8461, effective April 19, 2006

14 Ill. Adm. Code 570.50 Funding Limitations

a) Direct Funding

1. In accordance with Sections 9-4(b) and 9-4.3(b) of the Act, the Department shall finance no more than the lesser of 25% of the total project or $750,000 (50% of the project or $100,000 for Minority, Women and Disability Business Loans) unless the Director waives limitations governing the amount of the loan/grant and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with Sections 570.30(a) and 570.40(a), and the subsequent employment impact/opportunity, from occurring.

2. For the Technical Assistance Grant Program, the funding limitation will not exceed $25,000 unless a Director waiver is granted. The recipient of grant funds shall be required to provide a portion of the financing with respect to the project. The recipients' financing may be in the form of cash, in-kind services or any other form approved by the Department.

3. Department Financial Assistance to a Development Corporation in the form of a grant shall be limited to not more than $10,000, unless a Director waiver is granted.

b) Indirect Funding

1. For each loan in which the Department buys a participation under the Participation Loan Program, the financial intermediary will be required to retain at least 50% of the amount of its loan. The Department's participation will not exceed 25% of the total amount of the project or $2,000,000. In accordance with subsection (a)(1), the Director may waive limitation governing the amount of the loan and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project.

2. As to the amounts received by the ultimate recipients of funds, the Loan Loss Reserve Program funding limitations will be established by the financial intermediary staff involved.

3. Department Financial Assistance to or through a Development Corporation in the form of a participation shall not be made for more than 50% of the Development Corporation's loan and the Department's participation will not exceed 25% of the total amount of the project or $2,000,000, unless the Director waives limitations governing the amount of the loan and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with subsection (a)(1).

4. Notwithstanding the provisions of subsections (b)(1) and (3), Minority, Veteran, Women and Disability Participation Loans, in accordance with Section 9-4.3 of the Act, shall not exceed the lesser of $400,000 or 50% of the total amount of the project unless a Director waiver is granted.

5. Rural Micro-business Participation Loans, in accordance with Section 9-4.2a of the Act, shall not exceed the lesser of $25,000 or 50% of the total amount of the project, unless the Director determines that a waiver of these limits is required to meet the purposes of the Act and is in accordance with subsections (b)(1) and (3).

History

• Source: Amended at 42 Ill. Reg. 4821, effective March 2, 2018

14 Ill. Adm. Code 570.60 Allowable Leverage

a) Direct Funding

1. In addition to the forms of allowable leverage defined in Sections 9-4(a) and 9-6(a) of the Act, allowable leverage will include such tangible assets as:

A) under-utilized land and/or buildings which are a part of the project;

B) machinery and equipment brought into the state from another state;

C) cash equity provided by the principals, stockholders, or other investors; and

D) funds expended by the business prior to the date of a loan or grant award; existing in-state equipment, land, buildings, furnishings, inventory (already owned and being utilized); lines of credit; post-project costs; and debt refinancing will not be considered as leverage.

2. For the Technical Assistance Grant Program, forms of allowable leverage are cash and in-kind services. In-kind services may include the following:

A) real or personal property;

B) services; or

C) any other form as designated by the Department.

3. For the Development Corporation Grant Program, the recipient of the grant funds shall be required to provide a portion of the financing with respect to the project. The recipient's financing shall be in the form of cash. Department funds must be matched 1:1 by cash from private sources. None of the matching funds shall have originated as a loan or a grant or other investment of local, State or federal government funding. Gifts, grants, loans, revolving loan funds, or stock purchases by local, State, or federal governments are encouraged but will not be considered in calculating Development Corporation match.

b) Indirect Funding

1. For the Participation Loan Program, the allowable leverage shall be in the form of a loan, letter of credit, guarantee, purchase or any other form approved by the Department, along with Section 570.60(a)(1).

2. For the Loan Reserve Program, the allowable leverage will be established by the financial intermediary staff involved.

3. For Development Corporation Participations, the allowable leverage shall be in the form of a loan, letter of credit, guarantee, bond purchase or any other form approved by the Department, along with Section 570.60(a)(1).

4. For the Rural Micro-business Participation Loan Program, the borrower shall provide equity capital in an amount equal to 10% of the first $10,000 of the required funds and equity capital, other loans, or leveraged capital, or any combination thereof, in an amount equal to 50% of any additional required funds.

History

• Source: Amended at 30 Ill. Reg. 8461, effective April 19, 2006

14 Ill. Adm. Code 570.70 Administrative Requirements

a) Direct Funding

1. Loan Recipients

A) Loan Terms – Loans for real estate normally will be repaid over a period of up to 10 to 25 years; loans primarily utilized for machinery and equipment will generally vary from 5 to 10 years. Loans not secured by a lien on tangible assets generally require personal guarantees. Loans primarily intended for short term working capital needs will normally be repaid over a period of 3 months to 5 years. These loans will generally require personal guarantees from all individuals/entities owning or controlling 20 percent or more of the applicant company, or any lower amount as determined by the Department. For small companies without major identifiable principals (e.g., no one owns 20% or more of the company), the amount of the loan may be limited to 80% of the value of the fixed asset securing the loan. Periodic installments shall be due and payable to the Department in the method and time(s) specified in the loan agreement. All payments shall be applied first to interest and then to principal on all simple interest loans. All payments on amortized loans will be applied to the amortization schedule as stated.

B) Reporting – The Recipient (applicant receiving loan funds) will provide, at least annually, information and reports required by the Department (e.g., reports on job creation/retention; financial statement of assets, liabilities, and net worth).

C) Monitoring and Evaluation – Recipients must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine any documents, papers, and records of the Recipient involving transactions related to a loan from the Department.

D) Recipients shall keep detailed records of the project and the use of loan proceeds. Recipients of loans of more than $100,000 shall furnish to the Department, with the submission of financial statements (see Section 570.70(a)(1)(E)) following the expenditure of project funds, a written audit of the project and the use of loan proceeds. The audit shall be conducted by certified public accountants licensed by the State of Illinois in accordance with the Illinois Public Accounting Act (Ill. Rev. Stat. 1991, ch. 111, pars. 5500-5536) [225 ILCS 450] unless for good cause, the Department allows the audit to be conducted by an accountant certified by the proper authorities of another state and shall be in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants (AICPA) (1991, with no later amendments or editions). The address of the AICPA is: 1211 Avenue of the Americas, New York NY 10036-8775. For Recipients of loans equal to or less than $100,000 the Department or its designee will conduct one or more inspections of the project and the use of loan proceeds records to verify the use of project funds.

E) Financial Statements – The Recipient shall provide as often as requested by the Department, an unaudited financial statement of the Recipient as at the end of the quarter of the Recipient's fiscal year then elapsed, certified by the Recipient's principal financial officer (e.g., controller, treasurer, chief financial officer) and prepared in accordance with generally accepted accounting principles (issued by the Financial Accounting Standards Board (FASB) (1991, no later amendments or editions) located at 401 Merritt Seven, P.O. Box 5116, Norwalk CT 06856) and fairly presenting the financial position and results of all operations of the Recipient for such quarter. The Recipient shall furnish to the Department:

i) if the original amount of the loan is less than or equal to $100,000, as soon as available, but not later than 120 days after the end of each fiscal year of the Recipient, a true and correct copy of the Recipient's federal income tax return for such year just ended; provided, however, that if the Recipient provides the Department with a copy of a request for automatic extension filed by the Recipient with the Internal Revenue Service, the required date of delivery shall automatically be extended for four months if the Recipient is an individual and six months if the Recipient is a corporation;

ii) if the original amount of the loan is greater than $100,000 but less than or equal to $250,000, as soon as available, but not later than 120 days after the end of each fiscal year of the Recipient, financial statements of the Recipient as at the end of such year (reviewed by certified public accountants, licensed by the State of Illinois or any other state and satisfactory to the Department) containing a certificate of the aforesaid public accountants certifying to the Department that they are not aware of the occurrence or existence of any condition or event which constitutes a default; or

iii) if the original amount of the loan is greater than $250,000, as soon as available, but not later than 120 days after the end of each fiscal year of the Recipient, financial statements of the Recipient as at the end of such year examined by certified public accountants (licensed by the State of Illinois or any other state and satisfactory to the Department) containing the unqualified opinion of such public accountants with respect to the financial statements and a certificate of the aforesaid public accountants certifying to the Department that they are not aware of the occurrence or existence of any condition or event which constitutes a default.

iv) if a Recipient has complied with Section 570.70(a)(1)(D) and has submitted financial statements in accordance with Section 570(a)(1)(E)(ii) or (iii) covering the fiscal year ending after the date of funding, the Department may, for good cause (i.e., financial hardship, merger, change of fiscal year end, etc.), accept:

for a loan with an original amount of at least $100,000, but less than $250,000, a copy of the Recipient's federal tax return and compiled financial statements, or

for a loan with an original amount of $250,00, or more, reviewed financial statements.

2. Development Corporation Grant Recipients

A) Financial Assistance Agreement – During formal negotiations and discussions held with the Department, the Department and the applicant will agree to the scope of work of the agreement and the period of the agreement.

B) Financial Statements – The Development Corporation will provide, at least annually, information and reports required by the Department, including the Corporation's balance sheet, profit and loss statement, and other financial reports due within 45 calendar days after the end of the State fiscal year.

C) Progress Reports – Progress reports, pertaining to and describing the progress toward the project goals, shall be submitted to the Department by the recipient as specified in the grant agreement.

D) Method of Compensation – Payments pursuant to Financial Assistance Award are subject to the availability of funds appropriated to the Department by the Illinois General Assembly. Payments to the Development Corporation are subject to the initiation of an invoice voucher. Financial assistance must be obligated, vouchered and liquidated within the period of the agreement or some period of time as determined by the Department.

E) Record Review and Monitoring – Development Corporations and their subcontractors, if any, must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine, any documents, papers and records of the Development Corporation involving transactions related to a Financial Assistance Award under this program, for three (3) years from the date of submission of the final progress report or until audit findings have been resolved, whichever is later.

F) Audits

i) The Development Corporation shall be responsible for securing an audit of all loan records and such audit must be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act [225 ILCS 450]. The audit must be conducted in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accounting (AICPA).

ii) The Development Corporation shall work cooperatively with the audit firm selected; actively work with both the audit firm and the Department to resolve any and all audit findings; and work cooperatively with the Department's staff in preparing for, conducting, and resolving audits.

iii) The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours, of funds expended under Department grants.

iv) Any independent public accounting firm that provides consultant services to a Development Corporation is prohibited from conducting an audit of that Development Corporation for the period during which services were rendered.

3. Technical Assistance Grant Recipients

A) Financial Assistance Agreement – During formal negotiation and discussions, the Department and the applicant will agree to the scope of work and the period of the grant agreement.

B) Expenditure Summary – The recipient shall maintain appropriate records of actual grant related costs and leverage expended by the recipient. These grant related costs and leverage expenditures shall be reported to the Department as specified in the grant agreement.

C) Progress Reports – Progress reports, pertaining to and describing the progress toward the project goals, shall be submitted to the Department by the recipient as specified in the grant agreement.

D) Department Monitoring and Evaluation – A recipient must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine any document, papers and records of the recipient involving transactions related to financial assistance from the Department.

E) Method of Compensation – Payments under this program shall be reimbursements of eligible costs. Payments pursuant to a grant are subject to the availability of funds appropriated to the Department by the Illinois General Assembly. Payments to the recipient are subject to receipt of invoice vouchers and conformance with the terms of the approved grant agreement.

b) Indirect Funding

1. For the Participation Loan Program, financial statements of the recipients required by the financial intermediary shall be submitted to the Department by the financial intermediary, in accordance with and as stated in the Agreements established and approved by the Department and executed by the recipient and the financial intermediary. Other reporting (e.g., employment impact, modernization effectiveness or competitive improvement), as deemed necessary by the Department, shall be obtained from the recipient.

2. For the Loan Reserve Program, the administrative requirements will be established by the financial intermediary.

3. For the Development Corporation Participation Loan Program, financial statements of the recipients required by the financial intermediary shall be submitted to the Department by the financial intermediary, in accordance with and as stated in the Agreements established and approved by the Department and executed by the recipient and the financial intermediary. Other reporting (e.g., employment impact, modernization effectiveness or competitive improvement), as deemed necessary by the Department, shall be obtained from the recipient.

History

• Source: Amended at 18 Ill. Reg. 6119, effective April 11, 1994

Part 580 Reimagining Energy and Vehicles in Illinois Program

14 Ill. Adm. Code 580.10 Purpose

It is the intent of the General Assembly that Illinois should lead the nation in the production of electric vehicles and other products essential to the growth of the renewable energy sector. The General Assembly finds that, through investments in electric vehicle and clean energy manufacturing, Illinois will be on the forefront of emerging technologies that are currently transforming those industries. [20 ILCS 686/5]

14 Ill. Adm. Code 580.20 Definitions

The following definitions are applicable to this Part.

"Act" means the Reimagining Energy and Vehicles in Illinois Act. [20 ILCS 686]

“Advanced battery” means a battery that consists of a battery cell that can be integrated into a module, pack or system to be used in energy storage applications, including a battery used in an electric vehicle or the electric grid.

“Advanced battery component” means a component of an advanced battery, including materials, enhancements, enclosures, anodes, cathodes, electrolytes, cells, and other associated technologies that comprise an advanced battery.

"Agreement" means the agreement between a taxpayer and the Department under the provisions of Section 45 of this Act.

"Applicant" means a taxpayer that:

operates a business in Illinois or is planning to locate a business within the State of Illinois and

is engaged in interstate or intrastate commerce as an electric vehicle manufacturer, an electric vehicle component parts manufacturer, an electric vehicle power supply equipment manufacturer, or a renewable energy manufacturer.

"Applicant" does not include a taxpayer who closes or substantially reduces by more than 50% operations at one location in the State and relocates substantially the same operation to another location in the State. This does not prohibit a Taxpayer from expanding its operations at another location in the State. This also does not prohibit a Taxpayer from moving its operations from one location in the State to another location in the State for the purpose of expanding the operation, provided that the Department determines that expansion cannot reasonably be accommodated within the municipality or county in which the business is located, or, in the case of a business located in an incorporated area of the county, within the county in which the business is located, after conferring with the chief elected official of the municipality or county and taking into consideration any evidence offered by the municipality or county regarding the ability to accommodate expansion within municipality or county.

"Battery raw materials" means the raw and processed form of a mineral, metal, chemical, or other material used in an advanced battery component.

"Battery raw materials refining service provider" means a business that operates a facility that filters, sifts, and treats battery raw materials for use in an advanced battery.

"Battery recycling and reuse manufacturer" means a manufacturer that is primarily engaged in the recovery, retrieval, processing, recycling, or recirculating of battery raw materials for new use in electric vehicle batteries.

"Capital improvements" means the purchase, renovation, rehabilitation, or construction of permanent tangible land, buildings, structures, equipment, and furnishings in an approved project sited in Illinois and expenditures for goods or services that are normally capitalized, including organizational costs and research and development costs incurred in Illinois. For land, buildings, structures, and equipment that are leased, the lease must equal or exceed the term of the agreement, and the cost of the property shall be determined from the present value, using the corporate interest rate prevailing at the time of the application, of the lease payments.

"Compensation" means compensation as defined in Section 1501(a)(3) of the Income Tax Act. [35 ILCS 5/1501(a)(3)]

"Credit" means either a "REV Illinois Credit" or a "REV Construction Jobs Credit" agreed to between the Department and applicant under this Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Director" means the Director of Commerce and Economic Opportunity.

"Electric vehicle" means a vehicle that is exclusively powered by and refueled by electricity, including electricity generated through a hydrogen fuel cells or solar technology. "Electric vehicle" does not include hybrid electric vehicles, electric bicycles, or extended-range electric vehicles that are also equipped with conventional fueled propulsion or auxiliary engines.

"Electric vehicle manufacturer" means a new or existing manufacturer that is primarily focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces electric vehicles as defined in this Section.

"Electric vehicle component parts manufacturer" means a new or existing manufacturer that is focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces parts or accessories used in electric vehicles, as defined in this Section, including advanced battery component parts.

"Electric vehicle power supply equipment" means the equipment used specifically for the purpose of delivering electricity to an electric vehicle including hydrogen fuel cells or solar refueling infrastructure.

"Electric vehicle power supply manufacturer" means a new or existing manufacturer that is focused on reequipping, expanding, or establishing a manufacturing facility in Illinois that produces electric vehicle power supply equipment used for the purpose of delivering electricity to an electric vehicle, including hydrogen fuel cells or solar refueling infrastructure.

"Energy Transition Area" means a county with less than 100,000 people or a municipality that contains one or more of the following:

a fossil fuel plant that was retired from service or has significant reduced service within 6 years before the time of the application or will be retired or have service significantly reduced within 6 years following the time of the application; or

a coal mine that was closed or had operations significantly reduced within 6 years before the time of the application or is anticipated to be closed or have operations significantly reduced within 6 years following the time of the application.

"Full-time employee" means an individual who is employed for consideration for at least 35 hours each week or who renders any other standard of service generally accepted by industry custom or practice as full-time employment. Annually scheduled periods for inventory or repairs, vacations, holidays and paid time for sick leave, vacation or other leave shall be included in this computation of full-time employment. An individual for whom a W-2 is issued by a Professional Employer Organization (PEO) is a full-time employee if employed in the service of the applicant for consideration for at least 35 hours each week.

"Incremental income tax" means the total amount withheld during the taxable year from the compensation of new employees and, if applicable, retained employees under Article 7 of the Illinois Income Tax Act arising from employment at a project that is the subject of an agreement.

"Institution of higher education" or "institution" means any accredited public or private university, college, community college, business, technical, or vocational school, or other accredited educational institution offering degrees and instruction beyond the secondary school level.

"Local workforce investment area" means a single county or multiple counties designated by the Governor, which allows for the receipt of an allotment of funds under Sections 127(b) or 132(b) of the Workforce Innovation and Opportunity Act, (PL 113 through 128 (2014)) (WIOA), with considerations consisting of the extent to which the areas:

are consistent with labor market areas in the State;

are consistent with regional economic development areas in the State; and

have available the federal and non-federal resources necessary to effectively administer activities under subtitle B and other applicable provisions of WIOA,

including whether the areas have the appropriate education and training providers, such as institutions of higher education and area career and technical education schools.

"Minority person" means a minority person as defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act [30 ILCS 575].

"New employee" means a newly-hired full-time employee employed to work at the project site and whose work is directly related to the project.

The term "New Employee" does not include:

an employee of the taxpayer who performs a job that was previously performed by another employee, if that job existed for at least 6 months before hiring the employee;

an employee of the taxpayer who was previously employed in Illinois by a related member of the taxpayer and whose employment was shifted to the taxpayer after the taxpayer entered into the tax credit agreement;

any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer.

"Noncompliance date" means, in the case of a taxpayer that is not complying with the requirements of the agreement or the provisions of this Act, the day following the last date upon which the taxpayer was in compliance with the requirements of the agreement and the provisions of this Act, as determined by the Director, pursuant to Section 70.

"Pass-through entity" means an entity that is exempt from the tax under subsection (b) or (c) of Section 205 of the Illinois Income Tax Act [35 ILCS 5].

"Placed in service" means the state or condition of readiness, availability for a specifically assigned function, and the facility is constructed and ready to conduct its facility operations to manufacture goods.

"Professional employer organization" or "PEO" means an employee leasing company that is an individual or entity contracting with a client to supply or assume responsibility for personnel management of one or more workers to perform services for the client on an on-going basis rather than under a temporary help arrangement, as defined in Section 206.1 of the Illinois Unemployment Insurance Act [820 ILCS 405].

"Program" means the Reimagining Energy and Vehicles in Illinois Program (the REV Illinois Program) established in this Act.

"Project" or "REV Illinois Project" means a for-profit economic development activity for the manufacture of electric vehicles, electric vehicle component parts, electric vehicle power supply equipment or renewable energy products which is designated by the Department as a REV Illinois Project and is the subject of an agreement.

"Project costs" includes cost of the project incurred or to be incurred by the taxpayer including: capital investment, including, but not limited to, equipment, buildings, or land; infrastructure development; debt service, except refinancing of current debt; research and development; job training and education; lease costs or relocation costs, but excludes the value of State incentives, including discretionary tax credits, discretionary job training grants, or the interest savings of below market rate loans.

"Recycling facility" means a location at which the taxpayer disposes of batteries and other component parts in manufacturing of electric vehicles, electric vehicle component parts, or electric vehicle power supply equipment.

"Related member" means a person that, with respect to the taxpayer during any portion of the taxable year, is any one of the following:

an individual stockholder, if the stockholder and the members of the stockholder's family (as defined in Section 318 of the Internal Revenue Code) own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the taxpayer's outstanding stock.

a partnership, estate, trust and any partner or beneficiary, if the partnership, estate, or trust, and its partners or beneficiaries own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the profits, capital, stock, or value of the taxpayer.

a corporation, and any party related to the corporation in a manner that would require an attribution of stock from the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the Taxpayer owns directly, indirectly, beneficially, or constructively at least 50% of the value of the corporation's outstanding stock.

a corporation and any party related to that corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of Section 318 of the Internal Revenue Code, if the corporation and all such related parties own in the aggregate at least 50% of the profits, capital, stock, or value of the taxpayer.

a person to or from whom there is an attribution of stock ownership in accordance with Section 1563(e) of the Internal Revenue Code, except, for purposes of determining whether a person is a related member under this paragraph, 20% shall be substituted for 5% wherever 5% appears in Section 1563(e) of the Internal Revenue Code.

"Renewable energy" means energy produced using the materials and sources of energy through which renewable energy resources are generated.

"Renewable energy manufacturer" means a manufacturer whose primary function is to manufacture or assemble:

equipment, systems, or products used to produce renewable or nuclear energy;

products used for energy conservation, storage, or grid efficiency purposes; or

component parts for that equipment or those systems or products.

"Renewable energy resources" has the meaning ascribed to that term in Section 1-10 of the Illinois Power Agency Act.

"Retained employee" means a full-time employee employed by the taxpayer prior to the term of the Agreement who continues to be employed during the term of the agreement whose job duties are directly related to the project. The term "retained employee" does not include any individual who has a direct or an indirect ownership interest of at least 5% in the profits, equity, capital, or value of the taxpayer or a child, grandchild, parent, or spouse, other than a spouse who is legally separated from the individual, of any individual who has a direct or indirect ownership of at least 5% in the profits, equity, capital, or value of the taxpayer.

"REV Illinois credit" means a credit agreed to between the Department and the applicant under this Act that is based on the incremental income tax attributable to new employees and, if applicable, retained employees, and on training costs for such employees at the applicant's project.

"REV construction jobs credit" means a credit agreed to between the Department and the applicant under this Act that is based on the incremental income tax attributable to construction wages paid in connection with construction of the project facilities.

"Statewide baseline" means the total number of full-time employees of the applicant and any related member employed by such entities at the time of application for incentives under this Act.

"Taxpayer" means an individual, corporation, partnership, or other entity that has a legal obligation to pay Illinois income taxes and file an Illinois income tax return.

"Training costs" means costs incurred to upgrade the technological skills of full-time employees in Illinois and includes: curriculum development; training materials (including scrap product costs); trainee domestic travel expenses; instructor costs (including wages, fringe benefits, tuition and domestic travel expenses); rent, purchase or lease of training equipment; and other usual and customary training costs. "Training costs" do not include costs associated with travel outside the United States (unless the taxpayer receives prior written approval for the travel by the Director based on a showing of substantial need or other proof the training is not reasonably available within the United States), wages and fringe benefits of employees during periods of training, administrative cost related to full-time employees of the taxpayer, or costs which an applicant received a tax credit or payment for the same training costs for the subject employees under another State program. (Section 10 of the Act)

"Underserved area" means any geographic areas as defined in Section 55 of the Economic Development for a Growing Economy Tax Credit Act.

14 Ill. Adm. Code 580.30 Eligibility Determination

a) Any taxpayer that (i) operates a business in Illinois or is planning to locate a business within the State of Illinois and (ii) is engaged in interstate or intrastate commerce for the purpose of manufacturing electric vehicles, electric vehicle component parts, battery recycling and reuse manufacturers or battery raw materials service providers, electric vehicle power supply equipment, or renewable energy manufacturers is an eligible business. [20 ILCS 686/10]

b) In order to qualify for credits under the REV Illinois Program, an Applicant must:

1. for an electric vehicle manufacturer:

A) make an investment of at least $1,500,000,000 in capital improvements at the project site;

B) to be placed in service within the State within a 60-month period after approval of the application; and

C) create at least 500 new full-time employee jobs; or

2. for an electric vehicle component parts manufacturer or a renewable energy manufacturer:

A) make an investment of at least $300,000,000 in capital improvements at the project site;

B) manufacture one or more parts that are primarily used for electric vehicle manufacturing or renewable energy manufacturing.

C) to be placed in service within the State within a 60-month period after approval of the application; and

D) create at least 150 new full-time employee jobs; or

3. for an electric vehicle manufacturer, an electric vehicle power supply equipment manufacturer, an electric vehicle component parts manufacturer, or a renewable energy manufacturer that does not qualify under subsection (b)(2), a battery recycling and reuse manufacturer, or a battery raw materials refining service provider:

A) make an investment of at least $2,500,000 in capital improvements at the project site;

B) for electric vehicle component part manufacturers, manufacture one or more parts that are primarily used for electric vehicle manufacturing or renewable energy manufacturing;

C) to be placed in service within the State within a 48-month period after approval of the application; and

D) create at least 50 new full-time employee jobs or equivalent to 10% of global employment of the taxpayer; or

4. for an electric vehicle manufacturer, an electric vehicle component parts manufacturer, or a renewable energy manufacturer with existing operations within Illinois that intends to convert or expand, in whole or in part, from traditional manufacturing to electric vehicle manufacturing, electric vehicle component parts manufacturing, renewable energy manufacturing, or electric vehicle power supply equipment manufacturing:

A) make an investment of at least $100,000,000 in capital improvements at the project site;

B) to be placed in service within the State within a 60-month period after approval of the application; and

C) create the lesser of 50 new full-time employee jobs or new full-time employee jobs equivalent to 10% of the statewide baseline applicable to the taxpayer and any related member at the time of application.

c) For any applicant creating the full-time employee jobs noted in subsection (b), applicants shall receive credit for those jobs with compensation equal to or greater than 120% of the average wage paid to full-time employees in a similar position within an occupational group in the county where the project is located, and the Department shall utilize the occupational group data provided by the U.S. Bureau of Labor Statistics, the Illinois Department of Employment Security or other reliable data source.

d) For any applicant, within 24 months after being placed in service, it must certify to the Department that it is carbon neutral or has attained certification under one of more of the following green building standards:

1. BREEAM for New Construction or BREEAM In-Use;

2. ENERGY STAR;

3. Envision;

4. ISO 50001 – energy management;

5. LEED for Building Design and Construction or LEED for Building Operations and Maintenance;

6. Green Globes for New Construction or Green Globes for Existing Buildings; or

7. UL 3223. REV Illinois Program; Project Applications. [20 ILCS 686/20]

14 Ill. Adm. Code 580.40 Form of Application

a) Applications will be accepted at any time during the year. An application should be submitted on the standard application form provided by the Department and posted to the Department's website (https://dceo.illinois.gov/businesshelp/rev.html). Submittal of an application does not commit the Department to award assistance or to pay any costs incurred by the applicant in the preparation of an application.

b) Any taxpayer planning a project to be located in Illinois may request consideration for the designation of its project as a REV Illinois project, by application to the Department, in which the Applicant states its intent to make at least a specified level of investment and intends to hire a specified number of full-time employees at a designated location in Illinois as set forth in Section 20 of the Act. [20 ILCS 686/20(b)]

c) Written applications will be required and must be submitted on the standard application form provided by the Department. Applications shall be submitted to the designated Department email address (CEO.REV@Illinois.gov) and also identified on the application form. There is no application fee and the application shall include:

1. Application Cover Page – containing name, address, and telephone number of Applicant; key contact and title; total number of new employees to be hired, and when applicable, the number of Full-time Employees to be retained; company Federal Employer Identification Number (F.E.I.N.); Standard Industrial Code (S.I.C.); if available, Illinois Unemployment Insurance Account Code; State Senate District number; State Representative District number; authorized signatures; and related information.

2. Project Summary – a detailed description of the project that is to be the subject of the agreement. [20 ILCS 686/45(a)(1)]

3. Site Map – an outline of the general location of the project on a site map, including the location of any flood plain areas and wetland areas.

4. Jobs Impact – a detailed description of the number of new employees to be hired, and the occupation and payroll of the full-time jobs to be created or retained as a result of the project, and a schedule of anticipated starting dates of the new hires. In addition, the applicant must provide the total number of full-time employees employed by the applicant and any related member, subsidiary, parent, or sister company in the State of Illinois at the time of the application. If the applicant seeks a credit with respect to retained employees, the application shall include the occupation and payroll of the full-time employees to be retained because of the project. [20 ILCS 686/45(a)(9)]

5. Capital Improvements Planned – a detailed description of the minimum investment the taxpayer will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment. This shall include but not be limited to a description (or specifications or lists) of the planned capital improvements demonstrating the investment is qualified; documentation to substantiate the value of the investment (value of capital improvements as provided by appraisers, vendors, contractors and/or architects and engineers); and a schedule regarding when the eligible investment will be placed in service. [20 ILCS 686/45(a)(10)]

6. Total Project Costs – a detailed description of the total project cost.

7. Statewide Baseline – a detailed description of full-time employees of the applicant and any related members employed by such entities at the time of the application. The information provided for the current full-time employees shall include the following: name, position title, occupation code, date of hire, and facility address.

8. Hiring plan – a detailed description of applicant's hiring plan and commitment to recruit and hire full-time employee positions at the project site. The hiring plan may include a partnership with an institution of higher education to provide internships, including, but not limited to, internships supported by the Clean Jobs Workforce Network Program, or full-time permanent employment for students at the project site. Additionally, the applicant may create or utilize participants from apprenticeship programs that are approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training. The Applicant may apply for apprenticeship education expense credits in accordance with the provisions set forth in 14 Ill. Adm. Code 522. For existing facilities of applicants under Section 580.30(b)(4), if the taxpayer expects a reduction in force due to its transition to manufacturing electric vehicles, electric vehicle component parts, or electric vehicle power supply equipment, the plan submitted under this Section must outline the taxpayer's plan to assist with retraining its workforce aligned with the taxpayer's adoption of new technologies and anticipated efforts to retrain employees through employment opportunities with the taxpayer's workforce. [20 ILCS 686/20]

9. Recycling Capabilities – Each applicant must demonstrate a contractual or other relationship with a recycling facility, or demonstrate its own recycling capabilities, at the time of application. [20 ILCS 686/20(g)]

10. Financial Statement – a balance sheet and a profit and loss statement of the taxpayer for the last two years.

11. Other Provisions – any other provisions or information the Department determines is necessary to evaluate the applicant's eligibility under the Act and if the criteria established in Section 580.30 are met.

d) An applicant that is subject to an existing agreement under the Economic Development for a Growing Economy Tax Credit Act may apply to the Department to amend the agreement to allow the project in that agreement to become a designated REV Illinois project by submitting an application form. If approved, the time accrued during which the project was eligible for credits under the existing agreement under the Economic Development for a Growing Economy Tax Credit Act shall count toward the duration of the credit subject to the limitations described in Section 40 of the Act. [20 ILCS 686/30(h)]

e) The applicant is responsible for the accuracy of all data, information and documentation included in its application. Once submitted, applications shall become the property of the Department.

Chapter I Department of Commerce and Economic Opportunity

Part 580 Reimagining Energy and Vehicles in Illinois Program

14 Ill. Adm. Code 580.50 Application Review

a) Prior to substantive evaluation of an application, the Department shall screen all applications to determine that all requirements of the application package, as described in Section 580.40, have been addressed. Applicants will be notified of deficiencies in applications and given an opportunity to correct those deficiencies through submission of additional documentation.

b) In evaluating applications, the Department shall evaluate and confirm if all of the criteria in subsections (b)(1) through (4) are met. If the applicant demonstrates that all criteria are met, the Department will notify the applicant by electronic mail that the application was accepted. If the applicant cannot demonstrate that all four conditions exist, the application should be denied and notification to the applicant provided in accordance with Section 580.60.

1. the applicant intends to make the required investment in the State and intends to hire the required number of full-time employees;

2. the applicant's project is economically sound and will benefit the people of the State by increasing opportunities for employment and strengthen the economy of the State;

3. awarding the credit will result in an overall positive fiscal impact to the State, as certified by the Department using the best available data; and

4. the credit is not prohibited under this Act. [20 ILCS 686/25]

c) A taxpayer may not enter into more than one agreement under this Act with respect to a single address or location for the same period of time. Also, a taxpayer may not enter into an agreement under this Act with respect to a single address or location for the same period of time for which the taxpayer currently holds an active agreement under the Economic Development for a Growing Economy Tax Credit Act. This provision does not preclude the applicant from entering into an additional agreement after the expiration or voluntary termination of an earlier agreement under this Act or under the Economic Development for a Growing Economy Tax Credit Act to the extent the taxpayer's application otherwise satisfies the terms and conditions of the Act and is approved by the Department. (20 ILCS 686/20(h))

14 Ill. Adm. Code 580.60 Application Denial/Approval

a) Applicants shall be notified in writing as to the Department's evaluation of all completed applications. If the Department denies an application for the Credit, it will specify the reasons for the denial in writing and allow the applicant 30 days to amend and resubmit its application for evaluation. If the applicant disagrees with the Department's decision it may seek relief through the process afforded in the Department's Administrative Hearing Rules set forth at 56 Ill. Adm. Code 2605.

b) For applications accepted by the Department, the Department will send a notification by e-mail to the applicant. The Department will proceed to negotiate a formal agreement with the applicants determined to be eligible for award of a credit.

14 Ill. Adm. Code 580.70 Tax Credit Award

For tax years beginning on or after January 1, 2025, a taxpayer who has entered an agreement under the Reimagining Energy and Vehicles in Illinois Act is entitled to a credit against the taxes imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act in an amount to be determined in the agreement. [35 ILCS 5/236]

a) REV Illinois Credit

1. A taxpayer may receive a tax credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act, not to exceed the sum of:

A) 75% of the incremental income tax attributable to new or retained employees at the applicant's project; and

B) 10% of training costs of the new employees.

2. If the project is in an underserved area or an energy transition area, then the amount of the credit may not exceed the sum of:

A) 100% of the incremental income tax attributable to new or retained employees at the applicant's project; and

B) 10% of the training costs of the new employees.

3. The percentage of training costs includable in the calculation may be increased by an additional 15% for training costs associated with new employees that are recent (2 years or less) graduates, certificate holders, or credential recipients from any of the following:

A) an institution of higher education in Illinois;

B) Clean Jobs Workforce Network Program; or

C) apprenticeship and training program located in Illinois and approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training.

4. The percentage of training costs includable in the calculation shall not exceed a total of 25%.

5. If an applicant agrees to hire the required number of new employees, then the maximum amount of the credit for that applicant may be increased by an amount not to exceed 75% of the incremental income tax attributable to retained employees at the applicant's project; provided that, in order to receive the increase for retained employees, the applicant must, if applicable, meet or exceed the statewide baseline that is specified in the agreement. If the project is an underserved area or an energy transition area, the maximum amount of the credit attributable to retained employees for the applicant may be increased to an amount not to exceed 100% of the incremental income tax attributable to retained employees at the applicant's project; provided that, in order to receive the increase for retained employees, the applicant must meet or exceed the statewide baseline that is specified in the agreement.

6. REV Illinois Credits awarded may include credit earned for incremental income tax withheld and training costs. (Section 30(b) of the Act)

b) REV Construction Jobs Credit

1. For construction wages associated with a project that qualified for a REV Illinois Credit referenced in subsection 570.80(a), the Taxpayer may receive a tax credit against the tax imposed under subsections (a) and (b) of Section 201 of the Illinois Income Tax Act in an amount equal to 50% of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities, as a jobs credit for workers hired to construct the project.

2. The REV construction jobs credit may not exceed 75% of the amount of the incremental income tax attributable to construction wages paid in connection with construction of the project facilities if the project is in an underserved area or an energy transition area. [20 ILCS 686/30(c]

3. The applicant seeking certification for a REV construction jobs credit shall require the contractor to enter into a project labor agreement that conforms with the Project Labor Agreements Act. [20 ILCS 686/30(e)]

c) Tax Credit Certification to the Department of Revenue. The Department shall certify to the Department of Revenue the following information regarding the tax credit award for each taxpayer outlined in subsections 580.70(a) and (b):

1. The identity of taxpayers that are eligible for the REV Illinois credit and REV construction jobs credit;

2. The amount of the REV Illinois credit and REV construction jobs credit awarded in each calendar year; and

3. The amount of the REV Illinois credit and REV construction jobs credit claimed in each calendar year. (20 ILCS 686/30(d))

14 Ill. Adm. Code 580.80 Determination of Amount and Term of the Credit

a) The Department shall determine the amount and duration of the REV Illinois credit awarded under the Act.

b) The credit may be stated as a percentage of the incremental income tax and training costs attributable to the applicant's project and may include a fixed dollar limitation.

c) For the credit term, a project that qualified under paragraph (1), (2), or (4) of subsection (c) of Section 20 of the Act, the duration of the credit may not exceed 15 taxable years, unless the agreement is renewed.

d) For project that qualified under paragraph (3) of subsection (c) of Section 20 of the Act, the duration of the credit may not exceed 10 taxable years, unless the agreement is renewed. (Section 40 of the Act)

14 Ill. Adm. Code 580.90 Tax Credit Agreement

The Department and each taxpayer whom the Department determines qualifies for a credit under the Act shall enter into an Agreement that specifies terms and conditions regarding the provision of the credit and defines the rights and responsibilities of the taxpayer and the Department. Provisions that the taxpayer will be contractually bound to comply with include, but are not limited to, the following:

a) A detailed description of the project that is the subject of the agreement, including the location and amount of the investment and jobs created or retained.

b) The duration of the credit, the first taxable year for which the credit may be awarded, and the first taxable year in which the credit may be used by the taxpayer.

c) The credit amount that will be allowed for each taxable year.

d) For a project qualified under paragraphs (1), (2), or (4) of subsection (c) of Section 20 of the Act, a requirement that the taxpayer shall maintain operations at the project location a minimum number of years not to exceed 15. For project qualified under paragraph (3) of subsection (c) of Section 20 of the Act, a requirement that the taxpayer shall maintain operations at the project location a minimum number of years not to exceed 10.

e) A specific method for determining the number of new employees and if applicable, retained employees, employed during a taxable year. The agreement will specify that an employee of the taxpayer who was previously employed in Illinois by the taxpayer and whose employment was shifted to the project after the taxpayer entered into the tax credit agreement are not considered new employees.

1. An employee may be considered a new employee under the agreement if the employee performs a job that was previously performed by an employee who was:

A) treated under the agreement as a new employee; and

B) promoted by the taxpayer to another job.

2. The agreement will specify that the Department may award a credit to the taxpayer with respect to an employee hired prior to the date of the agreement if:

A) the applicant is in receipt of a letter from the Department stating an intent to enter into a credit agreement;

B) the letter described in the first indented paragraph under the employees that are not included in the term "new employees" is issued by the Department not later than 15 days after the effective date of the Act; and

C) the employee was hired after the date the letter described in the first indented paragraph under the employees that are not included in the term "New Employees" was issued.

3. The agreement will address that an employee shall be considered a new employee under the agreement if the employee fills a job vacancy that had been continuously vacant for the 184 day period immediately preceding the date of the agreement. A job vacancy whose incumbent is on approved leave, is locked out or is on strike is not a vacancy.

f) A requirement that the taxpayer shall annually report to the Department the number of new employees, the incremental income tax withheld in connection with the new employees, and any other information the Department deems necessary and appropriate to perform its duties under this Act.

g) A requirement that the Director is authorized to verify with the appropriate State agencies the amounts reported under subsection (f), and after doing so shall issue a certificate to the taxpayer stating that the amounts have been verified.

h) A requirement that the taxpayer shall provide written notification to the Director not more than 30 days after the taxpayer makes or receives a proposal that would transfer the taxpayer's State tax liability obligations to a successor taxpayer.

i) A detailed description of the number of new employees to be hired, and the occupation and payroll of full-time jobs to be created or retained because of the project.

j) The minimum investment the taxpayer will make in capital improvements, the time period for placing the property in service, and the designated location in Illinois for the investment.

k) A requirement that the taxpayer shall provide written notification to the Director and the Director's designee not more than 30 days after the taxpayer determines that the minimum job creation or retention, employment payroll, or investment no longer is or will be achieved or maintained as set forth in the terms and conditions of the agreement. Additionally, the notification should outline to the Department the number of layoffs, date of the layoffs, and detail taxpayer's efforts to provide career and training counseling for the impacted workers with industry-related certifications and trainings.

l) A provision that, if the total number of new employees falls below a specified level, the allowance of credit shall be suspended until the number of new employees equals or exceeds the agreement amount.

m) If applicable, a provision that specifies the statewide baseline at the time of application for retained employees. Additionally, the agreement must have a provision addressing if the total number retained employees falls below the statewide baseline, the allowance of the credit shall be suspended until the number of retained employees equals or exceeds the agreement amount.

n) A detailed description of the items for which the costs incurred by the taxpayer will be included in the limitation on the Credit provided in Section 40 of the Act.

o) A provision stating that if the taxpayer fails to meet either the investment or job creation and retention requirements specified in the agreement during the entire 5-year period beginning on the first day of the first taxable year in which the agreement is executed and ending on the last day of the fifth taxable year after the agreement is executed, then the agreement is automatically terminated on the last day of the fifth taxable year after the agreement is executed, and the taxpayer is not entitled to the award of any credits for any of that 5-year period. (Section 45 of the Act)

p) A requirement that the taxpayer shall annually report to the Department the number of new employees, if applicable, the number of retained employees, and the incremental income tax withheld in connection with the new employees.

q) A provision stating that the taxpayer must provide the reports outlined in Sections 50(a) and (b) and 55 on or before April 15 each year. The agreement shall state that any taxpayer seeking to claim a credit under this Act that fails to timely submit the report required under Section 50(a) shall not receive a credit for that taxable year unless and until such report is finalized and submitted to the Department.

r) A provision requiring the taxpayer to report annually its contractual obligations or other relationship with a recycling facility for its operations, and report on its own recycling capabilities. Additionally, the taxpayer shall report annually the percentage of batteries used in electric vehicles recycled throughout the term of the agreement.

s) Any other performance conditions or contract provisions the Department determines are necessary or appropriate.

t) A provision stating that each taxpayer under paragraph (1) of subsection (c) of Section 20 of the Act above shall maintain labor neutrality toward any union organizing campaign for any employees of the taxpayer assigned to work on the premises of the REV Illinois project site. This subsection shall not apply to an electric vehicle manufacturer, electric vehicle component part manufacturer, electric vehicle power supply manufacturer or any joint venture including an electric vehicle manufacturer, electric vehicle component part manufacturer, an electric vehicle power supply manufacturer, or renewable energy manufacturer, who is subject to collective bargaining agreement entered into prior to the taxpayer filing an application pursuant to the Act. [20 ILCS 686/45]

u) A provision that the taxpayer must annually report to the Department the total project tax benefits received to date. The report is due no later than May 31 of each year and shall cover the previous calendar year. [20 ILCS 686/30(f)]

v) A provision that the taxpayer shall at all times keep proper books of record and account in accordance with generally accepted accounting principles consistently applied, with the books, records, or papers related to the agreement in the custody or control of the taxpayer open for reasonable Department inspection and audits, and including without limitation, the making of copies of the books, records, or papers, and inspection or appraisal of any the taxpayer or project assets. [20 ILCS 686/15]

14 Ill. Adm. Code 580.100 Certification of Verification

a) The taxpayer shall notify the Department on forms provided by the Department when the minimum eligible capital improvement investments have been placed in service and the minimum new full-time employee jobs have been created and that retained employees remain employed by the taxpayer.

b) The taxpayer shall provide, for land and/or building acquisition, a copy of the purchase agreement; for building construction or renovation, a contractor's or architect's cost certification; for space rental, a rental/lease agreement.

c) For a taxpayer to be eligible for a certificate of verification, the taxpayer shall provide proof as required by the Department prior to the end of each calendar year, including, but not limited to, attestation by that project:

1. has achieved the level of new employee jobs specified in the agreement;

2. has achieved the level of annual payroll in Illinois specified in the agreement;

3. has achieved the level of capital investment in Illinois specified in the agreement;

4. has achieved and maintained carbon neutrality or one of the certifications specified in the Act;

5. has maintained the statewide baseline employment specified in the agreement; and

6. the taxpayer has materially complied with the terms of the agreement and is not otherwise in violation of any provision of the Act.

d) Upon receipt of valid proof from the taxpayer, the Department shall provide the taxpayer with a Certificate of Verification.

e) A taxpayer claiming a credit under the Act shall submit to the Department of Revenue a copy of the Director's certificate of verification under the Act for the taxable year. However, failure to submit a copy of the certificate with the taxpayer's tax return shall not invalidate a claim for a credit. [20 ILCS 686/60]

14 Ill. Adm. Code 580.110 Noncompliance with the Agreement

a) If the Director determines that a Taxpayer who has received a credit under this Act is not complying with the requirements of the agreement or all of the provisions of the Act, the Director shall provide notice to the taxpayer of the alleged noncompliance and allow the taxpayer a hearing under the provisions of the Illinois Administrative Procedure Act. If, after notice and any hearing, the Director determines that a noncompliance exists, the Director shall issue to the Department of Revenue notice to that effect, stating the Noncompliance Date. (Section 70 of the Act) Alleged noncompliance shall include:

1. a demonstration that the taxpayer failed materially to comply with the terms and conditions of the agreement;

2. a determination upon investigation that the taxpayer or any of its agents or representative provided false or misleading information to the Department; or

3. a failure to submit the annual report required by Section 30(f) of the Act.

b) The Department shall notify a taxpayer in writing that its certification of verification subject to revocation. Such notice shall include the reason for revocation and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605.

c) Following revocation of the certification of verification the Department will contact the Director of the Illinois Department of Revenue who may begin proceedings to recover wrongfully exempted State taxes.

14 Ill. Adm. Code 580.120 Recapture and Reallocation of Recaptured Amounts

a) If, during the term of an agreement, the taxpayer ceases principal operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Department and the Department of Revenue shall recapture from the taxpayer the entire credit amount awarded under the agreement prior to the date the taxpayer ceases operations. [20 ILCS 686/70]

1. If the Department determines that a taxpayer ceases principal operations at a project location that is the subject of that agreement with the intent to terminate operations in the State, the Director shall provide notice to the taxpayer of that determination and allow the taxpayer a hearing under the Illinois Administrative Procedure Act [5 ILCS 100]. Example of activities that evidence a cessation of operation at a project location with an intent to terminate operations in the State include, but are not limited to, WARN (Worker Adjustment and Retraining Notification) notices reflecting layoffs in excess of 65% of the full-time employees located at the project site, and public announcements or other media reflecting an intent to relocate operations outside the State.

2. The Department shall notify a taxpayer in writing that the REV construction jobs credit and/or the REV credit is subject to recapture. The notice shall include the reason for revocation of the certification of verification and the date and location of a hearing to be held pursuant to 56 Ill. Adm. Code 2605 (Administrative Hearing Rules).

3. Following a determination that credits received pursuant to an agreement are subject to recapture, the Department will contact the Director of the Illinois Department of Revenue requesting proceedings begin to determine the amounts to be reallocated by the Department pursuant to Section 70 of the Act.

b) The Department shall, subject to appropriation, reallocate the recaptured amount within 6 months to the local workforce investment area, through competitive grants opportunities in accordance with the Grant Accountability and Transparency Act, in which the Project was located for the purposes of workforce development, expanded opportunities for unemployed persons, and expanded opportunities for women and minorities in the workforce. Grant funds shall be distributed in accordance with GATA, and the Department may adopt rules to implement the program. (Section 70 of the Act)

14 Ill. Adm. Code 580.130 Eligibility

a) A taxpayer with a REV Illinois credit for a project that meets the qualifications under paragraphs (1), (2), and (4) of subsection (c) of Section 20 of the Act, may receive an exemption from:

1. the tax imposed at the project site by Section 2-4 of the Electricity Excise Tax Law, and/or

2. any additional charges added to the taxpayer's utility bills at the project site as a pass-on of State utility taxes under Section 9-222 of the Public Utilities Act, and/or

b) to receive a certification for the utility tax exemption, the taxpayer must be registered to self-assess that tax. (Section 95 of the Act)

14 Ill. Adm. Code 580.140 Form of Application

An application for the Utilities Tax Exemption shall be submitted on the standard application form provided by the Department. An application shall include:

a) Taxpayer's fully executed REV Illinois credit agreement with the Department;

b) Name, address, and Federal Employer Identification Number of the taxpayer.

c) The applicant will attest that it is registered to self-assess the utility tax. (Section 95 of the Act)

14 Ill. Adm. Code 580.150 Application Approval Process

a) Application Approval Requirements. Applications shall be submitted to the Department and approved or denied in writing within 90 days after receipt. The Department will issue a certification of exemption to the Illinois Department of Revenue for approved applicants, with a copy to the approved applicant. The application shall be approved if it meets the following requirements:

1. The applicant has an executed REV Illinois agreement; and

2. The applicant eligibility criteria outlined in Section 580.130 are met.

b) 10-Year Exemption Period. All certified businesses shall receive a ten-year exemption from Section 2-4 of the Electricity Excise Tax Law, and Section 9-222 of the Public Utilities Act.

c) Failure to Comply. Applicant shall repay the exempted amount if the applicant fails to comply with the terms and conditions of the executed REV Illinois agreement. [20 ILCS 686/95]

14 Ill. Adm. Code 580.160 Eligibility

A taxpayer with a REV Illinois credit for a project that meets the qualifications under Section paragraphs (1), (2), and (4) of subsection (c) of Section 20 of the Act, may receive an exemption from any State or local use tax or retailers' occupation tax on building materials for the construction of its project facilities and incorporated into the real estate in the approved REV Illinois project site. [20 ILCS 686/110]

14 Ill. Adm. Code 580.170 Form of Application

Application for the building materials exemption shall be submitted on the standard application form provided by the Department. An application shall include:

a) Taxpayer's fully executed REV Illinois credit agreement with the Department;

b) Name, address, and Federal Employer Identification Number of the construction contractor or other entity;

c) The estimated amount of the exemption for each construction contractor or other entity for which a request for a REV Illinois building materials exemption Certificate is made, based on a stated estimated average tax rate and the percentage of the contract that consists of materials; and

d) The period of time over which supplies for project are expected to be purchased.

14 Ill. Adm. Code 580.180 Application Approval Process

a) Application Approval Requirements. Applications shall be submitted to the Department and approved or denied in writing within 90 days after receipt. The Department will issue a certification of exemption to the Illinois Department of Revenue for approved applicants, with a copy to the approved applicant. The application shall be approved if it meets the following requirements:

1. The applicant has an executed REV Illinois agreement; and

2. The application information outlined in Section 580.160 is complete.

b) 5-Year Exemption Period. All certified businesses shall receive a five-year exemption from State and local use tax and retailers' occupation tax, in accordance with Section 5m of the Retailers' Occupation Tax Act.

c) Failure to Comply. Applicant shall repay the exempted amount if the applicant fails to comply with the terms and conditions of the executed REV Illinois Agreement. [20 ILCS 686/105]

Part 590 Illinois Large Business Development Program

14 Ill. Adm. Code 590.10 Purpose

a) Through the Illinois Large Business Development Program (Program), the Department of Commerce and Community Affairs (Department) will provide long term fixed-rate, low-interest loans (i.e., more than three years at below the prime rate then current in the major money centers) to large businesses in Illinois in cooperation with private sector lenders. The ultimate purpose of this program is to provide employment opportunities for Illinois citizens either through job creation or retention.

b) To be eligible to participate in the Program, a company must be mature and stable, have a well-defined market, and employ over 500 persons. A large business includes any for-profit business organized as a sole proprietorship, partnership, corporation, joint venture, association, or cooperative. Companies targeted for assistance include established industrial and service firms with a proven record of earnings which sell their products or services to regions beyond Illinois and which have proven multi-state location options.

c) The business project must be an out of state firm locating in Illinois or an expansion or retention of an existing firm - not an area relocation of an existing Illinois business. A business retention project should allow a company to maintain its output, share of the market, and existing jobs. New ventures will be considered only if the entity is protected with adequate security with regard to its financing and operation.

History

• Source: Amended at 13 Ill. Reg. 2028, effective February 6, 1989

14 Ill. Adm. Code 590.15 Loan Terms (renumbered)

History

• Source: Section 590.15 renumbered to Section 590.70(a) at 10 Ill. Reg. 19386, effective October 31, 1986

14 Ill. Adm. Code 590.20 Application Cycle

Applications under this Program will be accepted throughout the year. The Department will supply interested businesses with an application package upon request. The Department will also solicit businesses to apply for the Program. The Large Business Development Program will be used as a part of a comprehensive package of incentives for attracting large business investments in Illinois. The Department will assist (i.e., provide technical assistance) companies to initiate applications so that funds may be committed immediately as opportunities arise.

14 Ill. Adm. Code 590.25 Application Documentation

The application must include documentation of the following:

a) History of the Company – a brief history of the business and past employment growth.

b) Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

c) Historic Financial Statements – historic financial statements for the past three years and interim statements dated no more than ninety days prior to application including:

1. Profit and Loss Statements;

2. Balance Sheets;

3. Cash Flow Statements; and

4. Disclosure of Contingent Liabilities.

d) Projected Financial Statements – three year projections of the Profit and Loss Statement and Balance Sheet and a one year Monthly Cash Flow Projection.

e) Site Map – an outline of the general location of the project on a site map, reflecting the location of any floodplain areas.

f) Land and Building Information (if applicable) – for land and/or building acquisition, an MAI appraisal and a copy of the purchase option or agreement; for building construction or renovation, a contractor or architect's cost estimates.

g) Description of Machinery and Equipment (if applicable) – identification of major equipment or classes of equipment to be acquired with the Department's program funds; for acquisition of new machinery and equipment, attachment of reliable vendor cost estimates; for moving and installation costs, attachment of written estimates; for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price.

h) Company Management – listing of those individuals who are responsible for the management of the company, their positions and responsibilities, and resumes of key senior individuals at the company location.

i) Ownership – the company shall provide a detailed statement of ownership which shall include the percentage of ownership of all owners of the company. Such statements shall clearly identify any ownership interest which amounts to 20% or more, any ownership interest of individuals who have a position of control in the business, and/or any interest which guarantees any financial or contractual activities of the company. For all such entities which meet any condition of this subsection, a financial statement shall be provided which includes personal statements on individuals and balance sheets on business corporations.

j) Letters of Commitment – documentation of all sources of leveraging as reflected in commitment letters; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved; any commitment to purchase a revenue bond must have an executed inducement resolution and the rates, terms, and conditions of approval by the buyers.

k) The Department shall waive the requirements of subsections (a), (b), (c), (d), (h), and (i) when:

1. The company has provided a comprehensive business plan or company annual reports which address all of the requirements contained in Section 10-5 of the Act; and

2. The company is publicly owned and traded; and

3. The company's historic financial condition is deemed excellent, meeting industry standards in accordance with Section 590.30(d).

History

• Source: Amended at 14 Ill. Reg. 19154, effective November 26, 1990

14 Ill. Adm. Code 590.30 Evaluation Process

The Department shall screen all applications to determine that all requirements of the application package have been addressed. Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through submission of additional documentation (see Section 590.25). This review and evaluation process will be completed within 45 days of the Department's receipt of a complete application. Department staff will conduct an evaluation of each application to assure compliance with the requirements specified in the Large Business Development Act (Ill. Rev. Stat. 1989, ch. 127, par. 2710-1 et seq.) (Act). The evaluation will address the following technical criteria:

a) Evidence of Need for Program Funds

1. It should be demonstrated, for example, that the firm has multi-state location options and that additional funds will be leveraged – to cover up to 75 percent of total project costs.

2. The business project must create or retain at least 300 full-time equivalent jobs over a 24 month period. The Director may waive the requirement for 300 jobs to be created/retained for a large company meeting all other program criteria, as specified in the Act and this Part, but due to extenuating circumstances, cannot create 300 jobs (e.g., distressed community with an unemployment rate which is considerably higher than the state's average; area with limited economic development prospects as evidenced by prior and current development activities; funding would support business with potential to generate additional growth in area and creation of jobs as a result of spinoff businesses; funding needed to avert loss of the area's major source of employment, etc.).

b) Project Implementation Readiness – The company must demonstrate project readiness consisting of commitments identifying loans and investments from all lenders and investors on letterhead, signed and dated; and a time schedule for immediate project initiation.

c) Job Creation – The application must provide evidence of job creation and/or retention including written assurance from the company which identifies the number of jobs to be created/retained; identification of the types of jobs created/retained; evidence that jobs created/retained will generate additional wealth for the community (e.g., final goods or services produced are sold in markets outside Illinois or goods or services produced and sold locally substitute for those imported from outside the State) – these types of jobs will receive some preference; and evidence that the project to be undertaken has the potential to create substantial employment (see subsection (a)(2)) in relation to the principal amount of the loan at generally a ratio of at least one job to each $5,000 in project funds. A project with a higher ratio will be considered for funding if the application demonstrates severe need (e.g., distressed community with an unemployment rate which is considerably higher than the state's average; area with limited economic development projects as evidenced by prior and current development activities; funding would support business with potential to generate additional growth in area and creation of jobs as a result of spinoff businesses; funding needed to avert loss of the area's major source of employment, etc.).

d) Financial Evaluation Component – The company's financial statements, including the annual balance sheets and profit and loss statements for the past three years, as well as the most recent ninety days, and a three year projected balance sheet and profit and loss statement, as well as a one year monthly cash flow statement. A comprehensive business plan or company annual reports may be submitted in lieu of the aforementioned material. This will be reviewed through a standard credit analysis which will determine the: liquidity and debt coverage for the project; ability of the company to manage debt; business trends; and projected earnings. This data will be compared to similar data for companies in the same industry using the 1988 (no later amendments or editions included) "RMA Annual Statement Studies" (published by Robert Morris Associates, P.O. Box 8500, S-1140, Philadelphia, PA 19178), or a comparable source which more closely matches the applicant's business operation if the applicant's industry is evaluated by such source. This standard credit analysis will determine the financial stability of the company in accordance with Section 10-5 of the Act.

History

• Source: Amended at 14 Ill. Reg. 19154, effective November 26, 1990

Chapter I Department of Commerce and Economic Opportunity

Part 590 Illinois Large Business Development Program

14 Ill. Adm. Code 590.40 Selection for Funding

For any application which meets the criteria of Section 590.30, Department staff will then conduct a field visit evaluation to verify the information in the application, leading to the final funding decision. Applications that best meet the program objectives and demonstrate the greatest potential for job creation will receive funding support, until all available funds are expended. The field visits will analyze application characteristics, which include:

a) an assessment of the project in terms of job creation/retention, in relation to the value of the funds requested;

b) a verification of submitted application information; and

c) past performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous grant agreements).

14 Ill. Adm. Code 590.50 Funding Limitations

In accordance with Section 10-4(b) of the Act, the Director will waive the funding limitations governing the amount of the loan and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with Sections 590.30 and 590.40, and subsequent job creation/retention, from occurring.

14 Ill. Adm. Code 590.60 Allowable Leverage

In addition to the forms of allowable leverage defined in Section 10-4(a) of the Act, allowable leverage will include:

a) under-utilized land and/or buildings which are a part of the project;

b) machinery and equipment brought into the state from another state; and

c) use of retained earnings, proceeds of a public offering or other cash equity.

d) Funds expended by the business prior to the date of a loan or grant award; existing in-state equipment, land, buildings, furnishings, inventory (already owned and being utilized); lines of credit; post-project costs, (such as operational expenses); and debt refinancing will not be considered as leverage.

14 Ill. Adm. Code 590.70 Administrative Requirements

a) Loan Terms – The Department will negotiate the loan terms and amortization schedule. These terms will be flexible and consistent with the economic life of the asset being financed. Loans for real estate normally will be amortized for a period of up to 15 to 25 years; Loans primarily utilized for machinery and equipment will generally vary from 7 to 10 years. Installments shall be due and payable to the Department according to a negotiated amortization schedule. All payments shall be applied first to interest and then to principal.

b) Reporting – The Recipient (applicant receiving grant/loan funds) will provide, at least annually, information and reports required by the Department (e.g. reports on job creation/retention; financial statement of assets, liabilities, and net worth).

c) Termination of Grants/Loans – Grants/loans shall be terminated for the following reasons:

1. Termination due to Loss of Funding – In the absence of state funding for a grant year, all grants/loans for that year will be terminated in full. In the event of a partial loss of state funding, the Department will make proportionate cuts to all Recipients. In the event the Department suffers such a loss of funding in full or part, the Department will give the Recipient written notice setting forth the effective date of full or partial termination, or if a change in funding is required setting forth the change in funding and changes in the approved budget.

2. Termination for Cause

A) If the Department determines that the Recipient has failed to comply with the terms and conditions of the grant/loan, the Department shall terminate the grant/loan in whole, or in part, at any time before the date of completion. Circumstances which will result in the termination of a grant/loan include, but are not necessarily limited to the following: consistent failure to submit required reports; failure to maintain required records; failure to protect inventory; misuse of equipment purchased with grant/loan funds; evidence of fraud and abuse; consistent failure to meet performance standards and failure to resolve points of the agreement (i.e., narrative, number to be served). These circumstances are explained in the grant/loan agreement.

B) The Department shall promptly notify the Recipient in writing of the determination to terminate, the reasons for such termination, and the effective date of the termination. Payments made to the Recipient or recoveries by the Department shall be made in accordance with legal rights and liabilities explained in the grant/loan agreement.

3. Termination by Agreement – The Department and the Recipient shall terminate the grant/loan in whole, or in part, when the Department and the Recipient agree that the continuation of the program objectives would not produce beneficial results commensurate with the future expenditures of funds. The Department and the Recipient shall agree upon termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. Recipient shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the Recipient for the Department's share of the noncancellable obligations, properly incurred by the Recipient prior to termination.

d) Events of Default – The entire unpaid principal of the loan, and the interest then accrued thereon, shall become and be immediately due and payable upon the written demand of the Department, without any other notice or demand of any kind or any presentment of protest, if any one of the following events (hereafter an "event of default") shall occur and be continuing at the time of such demand, whether voluntarily or involuntarily, or without limitation, occurring or brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulations of any administrative or governmental body, provided, however that such sum shall not be then payable if Recipient's payments have been deferred. The Department will make deferrals based upon case by case review of the Recipient's financial statements and projections (see Section 590.25(c) and (d)) to determine if the Recipient will be able to make payments at a future date.

1. Non-Payment of Loan – If the Recipient shall fail to make payment when due of any installment of principal on the loan, or interest accrued thereon and if the failure to make payment shall remain unremedied for fifteen (15) days.

2. Non-Payment of Other Indebtedness – If default shall be made in the payment when due of any installment of principal or of interest on any of the Recipient's other indebtedness (any creditor the Recipient owes) and if such default shall remain unremedied for (15) days.

3. Incorrect Representation or Warranty – If any representation or warranty contained in, or made in connection with the execution and delivery of, the loan agreement, or in any certificate furnished pursuant hereto, shall prove to have been incorrect.

4. Default in Covenants – If the Recipient shall default in the performance of any other term, covenant or agreement contained in the loan agreement, and such default shall continue unremedied for thirty (30) days after either:

A) it becomes known to an executive officer of the Recipient; or

B) written notice thereof shall have been given to the Recipient by the Department.

5. Voluntary Insolvency – If the Recipient shall cease to pay its debts as they mature or shall voluntarily file a petition seeking reorganization of, or the appointment of a receiver, trustee, or liquidation of its assets or to effect a repayment plan with creditors, or shall be adjudicated bankrupt, or shall make a voluntary assignment of the benefit of creditors.

6. Involuntary Insolvency – If an involuntary petition shall be filed against the Recipient under any bankruptcy or insolvency law or seeking the reorganization of or the appointment of any receiver, trustee or liquidator for the Recipient, or the property of the Recipient, or a writ or warrant of attachment shall be issued against the property of the Recipient and such petition shall not be dismissed, or such writ or warrant of attachment shall not be released or bonded within thirty (30) days after filing or levy.

7. Judgments – If any final judgment for the payment of money that is not fully covered by liability insurance shall be rendered against the Recipient, and within thirty (30) days, shall not be discharged, or an appeal therefrom taken and execution thereon effectively stayed pending such appeal, and, if such judgment be affirmed on such appeal, the same shall not be discharged within thirty (30) days.

e) Notice of Default – The Recipient agrees to give written notice to the Department of any event, within 15 days of the event, which constitutes an event of default as specified in Section 590.70(d).

f) Monitoring and Evaluation – Recipients must permit any agent authorized by the Department, upon presentation of credentials to, in accordance with the constitutional limitation on administrative searches, have full access to and the right to examine any documents, papers, and records of the Recipient involving transactions related to a grant/loan from the Department.

g) Audits

1. The Recipient shall be responsible for having an audit of all grant/loan records and such audit must be performed by an independent public accountant, certified and licensed by authority of the State of Illinois. The audit must be conducted in accordance with generally accepted government auditing standards adopted by the AICPA (1981).

2. The Recipient may secure an independent audit of its grant/loan in the same manner as it secures its regular audits, provided it provides for maximum open and free competition. The audit should be conducted as part of the Recipient's normal annual audit or, when the ending period of the audit covers the expenditure of all grant/loan funds, bi-annual audit.

3. The Recipient shall work cooperatively with the audit firm selected; actively work with both the audit firm and the Department to resolve any and all audit findings; and work cooperatively with the Department's staff in preparing for, conducting, and resolving audits.

4. Any Recipient receiving a grant will provide the Department with 6 copies of its annual audit which addresses Department grant(s). In instances where the grant period or term does not coincide with the Recipient's fiscal year, two fiscal audit reports shall be forwarded to the Department. Any Recipient receiving a loan will provide the Department with 3 copies of its audit which addresses funds expended under the Department's loan, within thirty days of its publication.

5. The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours of funds expended under Department grants/loans.

6. Any independent public accounting firm that provides consultant services to a Recipient is prohibited from conducting an audit of that Recipient for the period during which services were rendered.

h) Complaint Process – In the event of a Recipient complaint, the Department will follow the procedures outlined in the Administrative Review Law (Ill. Rev. Stat. 1985, ch. 110, pars. 3-101 et seq.).

i) Nondiscrimination – The Recipient shall refrain from unlawful discrimination in employment and undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act (Ill. Rev. Stat. 1985, ch. 68, pars. 1-101 et seq.).

j) Financial Management Standards – The Recipient's financial management system shall be structured under the Accounting Standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (June, 1984) to maintain control and accountability over grant/loan funds.

k) Maintenance and Insurance of Property –

1. The Recipient shall at all times maintain the property provided as security for the loan in such condition and repair that the Department's security will be adequately protected.

2. The Recipient shall maintain, during the term of the loan, adequate (at least covering the amount of the loan) hazard (e.g., tornado, hail, acts of God) insurance policies, covering fire and extended coverage for all such other hazards and issued by an insurance company authorized to do business in the State of Illinois with loss payee clauses in favor of the Department.

3. The Recipient shall, if at any time during the life of the loan the Recipient's property is declared to be within a flood hazard area, purchase federal flood insurance if available. Such insurance shall be equal to the amount of the loan.

4. The Recipient shall maintain liability and worker's compensation insurance. The Recipient shall provide written notice to the Department of any public hearing or meeting before any administrative or other public agency which may, in any manner, affect the chattel, personal property or real estate securing the loan.

History

• Source: Section 590.70 renumbered from Section 590.15 and amended at 10 Ill. Reg. 19386, effective October 31, 1986

14 Ill. Adm. Code 590.80 Purpose

Grants are available to assist municipalities and counties to fund the demolition of abandoned buildings for the purpose of making unimproved land available for purchase by businesses for economic development.

History

• Source: Added at 13 Ill. Reg. 2028, effective February 6, 1989

14 Ill. Adm. Code 590.81 Application Evaluation

The Department shall screen applications to determine that all application requirements specified in this Part have been met. The evaluation will address the following technical criteria:

a) Application Documentation

1. The applicant municipality or county must provide an executed contract for sale between the owner of the property on which the abandoned building is located and the business.

2. The applicant municipality or county must provide a copy of a court order to demolish the identified abandoned building.

3. The application shall contain documentation to support the amount of funds requested. This shall consist of copies of three separate bids for the demolition. The amount of funds requested shall represent the lowest of the three bids.

4. The business which has entered into the contract to purchase the property must be an eligible large business as defined in Section 590.10 of this Part and provide a written certification that pursuant to Section 10-3(i) of the Act, it will use the property for a project which is a new plant start-up or expansion or a new venture opportunity and is not an area relocation within the state. In addition, the business must provide the appropriate documentation that a project will be undertaken, resulting in job creation. The documentation requirements are outlined in Section 590.25 of this Part.

b) Job Creation – The business project must result in new employment consistent with Section 590.30(a)(2) of this Part. The application must further provide written commitment for job creation from the company which identifies the number of jobs to be created and the types of those jobs, and the time frame for job creation.

c) Financial Evaluation Component

1. The Department will conduct a review consistent with Section 590.30(d) of this Part.

2. If a municipality or county receives such a grant, it must file a lien against the owner or owners of the demolished building(s) to recover expenses incurred in the demolition of such building(s). Municipalities and counties must comply with Section 11-31-1 of the Illinois Municipal Code (Ill. Rev. Stat. 1987, ch. 24, par. 11-31-1) or Section 25.24 of "AN ACT to revise the law in relation to counties" (Ill. Rev. Stat. 1987, ch. 34, par. 429.8), whichever is applicable. A copy of the court order must be submitted to the Department with the application. The notice of first lien to recover costs and expenses must be filed within 60 days after such demolition. Department funds will not be released until a copy of the lien is provided to the Department.

3. Those costs and expenses incurred in the demolition by the county or municipality which are recoverable shall be recovered by the county or municipality and paid to the Department. These funds shall be repaid to the Department in a lump sum upon the transfer of clear title from the property owner to the business.

4. If within 120 days after the date of completion of the demolition these funds are not repaid to the Department, the lien shall be enforced by proceedings to foreclose, pursuant to Section 11-31-1 of the Illinois Municipal Code or Section 25.24 of "AN ACT to revise the law in relation to counties".

5. In accordance with Section 10-3(i) of the Act, priority will be given to enterprise zones or those areas with high unemployment whose tax base is adversely impacted by the closing of existing factories.

History

• Source: Added at 13 Ill. Reg. 2028, effective February 6, 1989

14 Ill. Adm. Code 590.90 Purpose

The Department shall provide grants to or for the direct benefit of a business for the sole purpose of reducing the cost of financing a project. Funds shall be used to achieve an optimum effective interest rate for the total project, in cooperation with other funding sources.

History

• Source: Added at 13 Ill. Reg. 2028, effective February 6, 1989

14 Ill. Adm. Code 590.91 Application Cycle

Applications under this Program will be accepted throughout the year. The Department will supply interested applicants with an application package upon request. The award of grants for interest write-downs is subject to the availability of funds in any given fiscal year.

History

• Source: Added at 13 Ill. Reg. 2028, effective February 6, 1989

14 Ill. Adm. Code 590.92 Evaluation Process

The Department shall screen all applications to determine that all application documentation has been submitted in accordance with Section 590.25. Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through submission of additional documentation (see Sections 590.25 and 590.30). This review and evaluation process will be completed within 45 days of the Department's receipt of a complete application. Department staff will conduct an evaluation of each application to assure compliance with the requirements specified in the Act. The evaluation will address the following technical criteria:

a) Evidence of Need for Program Funds.

1. It should be demonstrated, for example, that the firm has multi-state location options and that additional funds will be leveraged – to cover up to 75 percent of total project costs. Types of allowable leverage financing are provided in Section 590.60 of this Part.

2. The business project must create or retain at least 300 full-time equivalent jobs over a 24 month period. The Director may waive the requirement for 300 jobs to be created for a large company meeting all other program criteria, as specified in the Act and this Part, but due to extenuating circumstances, cannot create 300 jobs (e.g., distressed community with unemployment rate which is considerably higher than state's average; area with limited economic development prospects as evidenced by prior and current development activities; funding would support business with potential to generate additional growth in area and creation of jobs as a result of spinoff businesses; funding needed to avert loss of the area's major source of employment, etc.).

b) Project Implementation Readiness – The company must demonstrate project readiness consisting of commitments identifying loans and investments from all lenders and investors on letterhead, signed and dated; and a time schedule for immediate project initiation.

c) Job Creation – The application must provide evidence of job creation including written assurance from the company which identifies the number of jobs to be created/retained; identification of the types of jobs created/retained; evidence that jobs created/retained will generate additional wealth for the community (e.g., final goods or services produced are sold in markets outside Illinois or goods or services produced and sold locally substitute for those imported from outside the State) – these types of jobs will receive some preference; and evidence that the project to be undertaken has the potential to create substantial employment. A project with a higher ratio will be considered for funding if the application demonstrates severe need (e.g., distressed community with an unemployment rate which is considerably higher than the state's average; area with limited economic development projects as evidenced by prior and current development activities; funding would support business with potential to generate additional growth in area and creation of jobs as a result of spinoff businesses; funding needed to avert loss of the area's major source of employment, etc.).

d) Financial Evaluation Component – The company's financial statements, including the annual balance sheets and profit and loss statements for the past three years and the most recent ninety days, a three year projected balance sheet and profit and loss statement, and a one year monthly cash flow statement. A comprehensive business plan or company annual reports may be submitted in lieu of the aforementioned material. These statements will be reviewed through a standard credit analysis which will determine the: liquidity and debt coverage for the project, ability of the company to manage debt, business trends, and projected earnings. This data will be compared to similar data for companies in the same industry using the 1988 (no later amendments or editions included) "RMA Annual Statement Studies" (published by Robert Morris Associates, P.O. Box 8500, S-1140, Philadelphia, PA 19178) , or a comparable source which more closely matches the applicant's business operation if the applicant's industry is evaluated by such source. This standard credit analysis will determine the financial stability of the company in accordance with Section 10-5 of the Act.

History

• Source: Amended at 14 Ill. Reg. 19154, effective November 26, 1990

14 Ill. Adm. Code 590.93 Funding Limitations

In accordance with Section 10-4 of the Act, the Director will waive the funding limitations governing the amount of the grant and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with Sections 590.30 and 590.40 of Subpart A, and subsequent job creation/retention from occurring. This determination will be based on such factors as: distressed community with an unemployment rate which is higher than the State's average; area with limited economic development projects; funding would support business with potential to generate additional growth in the area and creation of jobs as a result of spinoff businesses; funding is needed to avert loss of the area's major source of employment, etc.

History

• Source: Added at 13 Ill. Reg. 2028, effective February 6, 1989

Part 600 Illinois Equity Investment Fund

14 Ill. Adm. Code 600.10 Purpose

a) Through the Illinois Equity Investment Fund (Program), the Department of Commerce and Community Affairs (Department) will provide equity investments to small businesses in Illinois in cooperation with private sector lenders or other investors. Projects supported with Program funds will be with industries in new advanced technology sectors which hold promise for job creation in Illinois and start-up and early stage businesses that demonstrate entrepreneurial talent. The Department will accept applications from companies in a number of advanced technology fields. Although no one technical area has been specified, the following areas have been shown to be growth industries for Illinois: construction machinery; composite materials; drugs and medical products; electronic computing devices; electronic components; food and forestry products; printing/publishing; plastics; research labs; repair services; software; telecommunications equipment; transportation equipment; and wholesale trade. Program funds may be used for such costs as the purchase of real estate and machinery and equipment, working capital, research and development costs, and organizational fees. The ultimate purpose of the Program is to provide employment opportunities for Illinois citizens, through job creation.

b) Any small business operating in Illinois may make an application for financial assistance under this program. A small business includes any for-profit business in Illinois organized as a sole proprietorship, partnership, corporation, joint venture, association, or cooperative. For the purposes of this program, a small business is one which has, including its affiliates, less than 500 full-time employees, or is determined by the Department not to be dominant in its field.

14 Ill. Adm. Code 600.20 Application Cycle

Applications under this Program will be accepted throughout the year. The Department will supply interested businesses with an application package upon request. Applications submitted by the 25th of each month will be reviewed. Submissions after the 25th will be held for consideration during the next monthly review cycle until equity funds are exhausted.

14 Ill. Adm. Code 600.25 Application Documentation

The application must include documentation of the following:

a) History of the Company – a brief history of the business and past employment growth.

b) Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

c) Corporate Financial Statements – historical corporate financial statements for the past three years and interim statements dated no more than ninety days prior to application including:

1. Profit and Loss Statements;

2. Balance Sheets;

3. Cash Flow Statements; and

4. Disclosure of Contingent Liabilities.

d) Three Year Projections – three year projections of the Profit and Loss Statement and Balance Sheet and a one year Monthly Cash Flow Projection.

e) Site Map – an outline of the general location of the project on a site map, reflecting the location of any floodplain areas.

f) Land and Building Information (if applicable) – for land and/or building acquisition, an MAI appraisal and a copy of the purchase option or agreement; for building construction or renovation, a contractor or architect's cost estimates.

g) Description of Machinery and Equipment (if applicable) – identification of major equipment or classes of equipment to be acquired with the Department's program funds; for acquisition of new machinery and equipment, attachment of reliable vendor cost estimates; for moving and installation costs, attachment of written estimates; for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price.

h) Description of Working Capital (if applicable) – a detailed explanation of the need for an use of the funds.

i) Company Management – a listing of those people that are responsible for the management of the company, their positions, and percentages of ownership.

j) Personal Resume(s) – a resume for senior staff at the proposed project site.

k) Personal Financial Statement – a personal financial statement(s) for each principal owning more than 20 percent of the company.

l) Letters of Commitment – commitment letters documenting all sources of leveraging; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved; any commitment to purchase a revenue bond must have an executed inducement resolution and the rates, terms, and conditions of approval by the buyer.

14 Ill. Adm. Code 600.30 Evaluation Process

Applications will be evaluated on the technical, market, and financial feasibility of the proposal to assure compliance with the requirements and the purpose of the Small Business Development Act (Sections 9-1, 9-2, 9-3, 9-5 et seq. of P.A. 84-109, effective July 25, 1985) (Act). Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through resubmission (see Section 600.25). This review and evaluation process will be completed within 30 days. The evaluation will address the following criteria:

a) Technical evaluation component – The Department will require applicants to show: evidence of need for program funds in accordance with Section 9-5(c) of the Act, including identification of alternative funding sources pursued and leverage of other funds to cover 66⅔ percent of total project costs in accordance with Section 9-5(a) of the Act; project implementation readiness, including commitments from all lenders and investors; written cost estimates which support project costs; and evidence of job creation, including written assurances from the company which identify the number and types of jobs to be created at generally a ratio of at least one job to each $5,000 of project funds. A project with a lower ratio will be considered for funding if the application demonstrates severe need (e.g., distressed community with an unemployment rate which is considerably higher than the State's average; area with limited economic development projects as evidenced by prior and current development activities; funding would support business with potential to generate additional growth in area and creation of jobs as a result of spinoff businesses; funding needed to avert loss of the area's major source of employment, etc.).

b) Financial Evaluation Component – The applicant's financial statements, including the annual balance sheet, profit and loss statement, forecast of expenses and earnings, and related information, will be reviewed through a standard credit analysis which will determine the: liquidity and debt coverage for the project; ability of the company to manage debt; business trends; and projected earnings. This data will be compared to similar data for companies in the same industry using "Robert Morris Associates Annual Statement Studies" (1985), if such industry is evaluated by this source. This standard credit analysis will determine the financial stability of the company in accordance with Section 9-5(f) of the Act.

c) Market Evaluation Component – The Department will require applicants to show the market feasibility of each application received and shall require applicants to undergo a technical feasibility analysis conducted under the auspices of a designated university technology commercialization center if the Department lacks the expertise to evaluate the market feasibility of an application (See Section 46.19a of the Civil Administrative Code of Illinois (Ill. Rev. Stat. 1984, Supp., ch. 127, par. 46.19a).

14 Ill. Adm. Code 600.40 Selection for Funding

For any application which meets the criteria of Section 600.30, Department staff will then conduct a field visit to verify information in the application which will lead to the final funding decision. Top ranking applications will receive equity funds until all available funds are expended. The field visits will analyze application characteristics, which include:

a) a comparative assessment of projects in terms of job creation, in relation to the funds requested;

b) a verification of submitted application information; and

c) past performance of the applicant under previous departmental programs, if applicable (e.g., success in previous projects and level of compliance with previous grant agreements).

14 Ill. Adm. Code 600.50 Funding Limitations

In accordance with Section 9-5(b) of the Act, the Director will waive the funding limitation governing the amount of the equity and percentage of leverage when it is determined that these funding limitations would prohibit an otherwise approved project, in accordance with Sections 600.30 and 600.40, and subsequent job creation from occurring.

14 Ill. Adm. Code 600.60 Allowable Leverage

In addition to the forms of leverage defined in Section 9-5(a) of the Act, allowable leverage will include:

a) Under-utilized land and/or buildings which are a part of the project when the appraised value qualifies them as under-utilized.

b) A cash outlay by the principals resulting in them becoming stockholders.

c) Funds expended by the business prior to the date of a loan or grant award; existing in-state equipment, land, buildings, furnishings, inventory (already owned and being utilized); lines of credit; post-project costs (such as operational expenses); and debt refinancing will not be considered as leverage.

Part 610 Public Infrastructure Loan and Grant Programs

14 Ill. Adm. Code 610.10 Program Purpose

a) The Business Development Public Infrastructure Loan and Grant Program (Program) of the Department of Commerce and Community Affairs (Department) provides financing assistance directly to local governments to develop public infrastructure needed to support economic development and the creation or retention of private sector job. Funding is targeted toward communities which demonstrate that funding assistance is essential to initiate opportunities for attracting new commercial or industrial ventures or to support the expansion or retention of an existing company.

b) The Department will finance approved infrastructure projects through grants or loans. Grants will be authorized in those circumstances where it can be demonstrated that the locality's financial capacity will not generate the necessary revenues to pay the debt service on the cost of the public improvement. Grants will also be authorized in those circumstances where the proposed infrastructure project is necessary to encourage large out of state firms to locate in Illinois or to encourage existing large companies to undertake substantial job expansion or retention projects.

History

• Source: Amended at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.20 Application Cycle

The Department will supply interested local governments with an application package upon request. Applications under this Program will be accepted on an ongoing basis.

History

• Source: Amended at 14 Ill. Reg. 19164, effective November 26, 1990

14 Ill. Adm. Code 610.25 Application Documentation

The application must include documentation for the business associated with the proposed project as follows:

a) History of the Company – a brief history of the business and past employment.

b) Market Information – information on the company's products or services and identification of existing and potential major customers and competitors.

c) Projected Employment Information – the total number of jobs to be created or retained, including type of jobs, wages, and hiring schedule for job creation/retention.

d) Historic Financial Statement – historic financial statements for the past three years and interim statements dated no more than ninety days prior to application including:

1. Profit and Loss Statements;

2. Balance Sheets;

3. Cash Flow Statements; and

4. Disclosure of Contingent Liabilities.

e) Projected Financial Statements – projected three-year profit and loss statements and balance sheets and a one year monthly cash flow projection.

f) Company Management – listing of those individuals who are responsible for the management of the company, their positions and responsibilities, and resumes of key senior individuals at the company location.

g) Ownership – the company shall provide a detailed statement of ownership which shall include the percentage of ownership of all owners of the company. Such statements shall clearly identify any ownership interest which amounts to 20% or more, any ownership interest of individuals who have a position of control in the company, and/or any interest which is guaranteeing any financial or contractual activities of the company. For all such entities which meet any conditions of this subsection, a financial statement shall be provided.

h) The Department shall waive the requirements of subsections (a), (b), (d), (e), (f) and (g) when:

1. The company has provided a comprehensive business plan or company annual reports which address all of the requirements contained in Section 8-5(g) of the Act; and

2. The company is publicly owned and traded; and

3. The company's historic financial condition is deemed excellent, meeting industry standards in accordance with Section 610.30(b)(2).

History

• Source: Amended at 14 Ill. Reg. 19164, effective November 26, 1990

14 Ill. Adm. Code 610.30 Evaluation Process

The Department shall screen all applications to determine that all requirements of the application package have been addressed. Complete applications will be reviewed and evaluated by Department staff. Applicants will be notified of deficiencies in applications and given an opportunity to correct such deficiencies through submission of additional documentation. This review and evaluation process will be completed within 45 days of the Department's receipt of a complete application. Department staff will conduct a technical and financial evaluation of each application.

a) Technical Evaluation Component – Each application will be reviewed to assure compliance with technical program requirements as specified in the Public Infrastructure Loan and Grant Program Act (Ill. Rev. Stat. 1991, ch. 127, par. 2708-1 et seq.) [30 ILCS 750/Art. 8] (Act). The technical evaluation will address the following criteria:

1. Evidence of Need for Public Participation – The application must demonstrate the need for public funds in the manner set forth in Section 8-5 of the Act, including identification of the essential need for public infrastructure in order to secure the private sector development, expansion, or retention; evidence that the project cannot be financed solely from local revenue sources or cannot be financed at an interest rate and term which makes the project viable; and an indication of the relationship of the proposed public infrastructure improvement to a local capital improvements plan (if applicable) or a documented need for the improvement.

2. Project Implementation Readiness – The application must show that the Infrastructure Program is ready for implementation by providing a time schedule for the immediate project initiation; detailed engineering reports and cost estimates which demonstrate cost feasibility of the project; and a signed resolution of support from the local government.

3. Project Impact – The application must clearly demonstrate a positive project impact consisting of an increase in employment or the retention of jobs and evidence that jobs created/retained will generate additional wealth for the community (e.g., final goods or services produced are sold in markets outside Illinois or final goods or services produced and sold locally substitute for those imported from outside the State) – some preference will be given to these types of jobs.

b) Financial Evaluation Component – The Department will conduct a financial analysis of each application received. The financial evaluation will include an analysis of the local government and the company undertaking the business project.

1. Analysis of Local Government – The Department's local government financial analysis will review alternative funding sources available to and pursued by the applicant, such as general obligation or revenue bonds, federal grant programs, tax increment financing, or special service area tax proceeds and user-charges; a determination of the financial health of the governmental unit based on the most recent audit of governmental funds including current tax rates, outstanding debt structure, utility user charges (if applicable to the project); and the community's ability to pay a portion of the costs for the infrastructure improvement.

2. Analysis of the Business – The firm's financial statements, including the annual balance sheets and profit and loss statements, for the past three years, as well as the most recent ninety days and a three year projected balance sheet and profit and loss statement, as well as a one year monthly cash flow statement. A comprehensive business plan or company annual reports may be submitted in lieu of the aforementioned material. These statements will be reviewed through a standard credit analysis which will determine the: liquidity and debt coverage of the project; ability of the company to manage debt; business trends; and projected earnings. This data will be compared to similar data for companies in the same industry using the 1988 (no later amendments or editions included) "RMA Annual Statement Studies" published by Robert Morris Associates, P.O. Box 8500, S-1140, Philadelphia, PA 19178) or comparable source which more closely matches the applicant's business operation if the applicant's industry is evaluated by such sources. This standard credit analysis will determine the financial stability of the company in accordance with Section 8-5(g) of the Act.

History

• Source: Amended at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.40 Selection for Funding

a) For any application which meets criteria of Section 610.30, Department staff will then conduct a field visit evaluation to verify information in the application, leading to the final funding decision. The field visits will analyze application characteristics, which include:

1. an assessment of the projects in terms of job creation, in relation to the value of the loan/grant and types of jobs preferred as described in Section 610.30(a)(3);

2. a verification of submitted application information; and

3. past performance of the applicant under previous Departmental programs, if applicable (e.g., success in previous projects and the level of compliance with previous grant agreements).

b) Applications which best meet the objectives of the program and demonstrate the greatest potential for job creation will receive loan or grant funds, until all available funds are expended. The Department will provide program funds in the form of a grant only when it can be demonstrated that the locality's financial capability will not generate the necessary revenues to pay the debt service on the cost of the public improvement described in the application. Grants will also be authorized in those circumstances where the proposed Infrastructure project is necessary to encourage large out-of-state firms to locate in Illinois or to encourage existing large companies to undertake job expansion or retention projects.

History

• Source: Amended at 14 Ill. Reg. 19164, effective November 26, 1990

14 Ill. Adm. Code 610.50 Funding Limitations

The Business Development Public Infrastructure Loan and Grant Program helps to fund public infrastructure projects. There is no maximum amount of Department funds which may be invested in any one project. However, loan and grant amounts will be commensurate with the number of jobs created or retained.

History

• Source: Amended at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.60 Administrative Requirements

a) Loan Terms – Infrastructure project loans will be at a fixed, low or no interest rate for a term not to exceed 10 years. However, in extenuating circumstances (e.g., based on the infrastructure improvement's useful life and the local government's financial capacity to repay the loan) a longer term, up to twenty years, will be considered. The loan term and amortization schedule will be flexible, according to not only the life expectancy of the proposed infrastructure improvement, but also the repayment capacity (based upon a review of the local government's last year's audit) of the local government. Installments shall be due and payable to the Department according to a negotiated amortization schedule. All payments shall be applied first to interest and then to principal.

b) Reporting – The Recipient (applicant receiving grant/loan) will provide, at least annually, information and reports required by the Department (e.g. reports on job creation/retention; financial statement of assets, liabilities, and net worth).

c) Termination of Grant/Loans – Grants/loans shall be terminated for the following reasons:

1. Termination due to Loss of Funding – In the absence of state funding for a grant year, all grants/loans for that year will be terminated in full. In the event of a partial loss of state funding, the Department will make proportionate cuts to all Recipients. In the event the Department suffers such a loss of funding in full or part, the Department will give the Recipient written notice setting forth the effective date of full or partial termination, or if a change in funding is required setting forth the change in funding and changes in the approved budget.

2. Termination for Cause

A) If the Department determines that the Recipient has failed to comply with the terms and conditions of the grant/loan, the Department shall terminate the grant/loan in whole, or in part, at any time before the date of completion. Circumstances which will result in the termination of a grant/loan include, but are not necessarily limited to the following: consistent failure to submit required reports; failure to maintain required records; failure to protect inventory; misuse of equipment purchased with grant/loan funds; evidence of fraud and abuse; consistent failure to meet performance standards and failure to resolve points of the agreement (i.e., narrative, number to be served). These circumstances are explained in the grant/loan agreement.

B) The Department shall promptly notify the Recipient in writing of the determination to terminate, the reasons for such termination, and the effective date of the termination. Payments made to the Recipient or recoveries by the Department shall be made in accordance with legal rights and liabilities explained in the grant/loan agreement.

3. Termination by Agreement – The Department and the Recipient shall terminate the grant/loan in whole, or in part, when the Department and the Recipient agree that the continuation of the program objectives would not produce beneficial results commensurate with the future expenditures of funds. The Department and the Recipient shall agree upon termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. Recipient shall not incur new obligations for the terminated portion after the effective date, and shall cancel as many outstanding obligations as possible. The Department shall allow full credit to the Recipient for the Department's share of the noncancellable obligations, properly incurred by the Recipient prior to termination.

d) Events of Default – The entire unpaid principal of the loan, and the interest then accrued thereon, shall become and be immediately due and payable upon the written demand of the Department, without any other notice or demand of any kind or any presentment of protest, if any one of the following events (hereafter an "event of default") shall occur and be continuing at the time of such demand, whether voluntarily or involuntarily, or without limitation, occurring or brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rules or regulations of any administrative or governmental body, provided, however that such sum shall not be then payable if Recipient's payments have been deferred. The Department will make deferrals based upon case by case review of the Recipient's financial statements and projections (see Section 610.25(d) and (e)) to determine if the Recipient will be able to make payments at a future date.

1. Non-Payment of Loan – If the Recipient shall fail to make payment when due of any installment of principal on the loan, or interest accrued thereon and if the failure to make payment shall remain unremedied for fifteen (15) days.

2. Non-Payment of Other Indebtedness – If default shall be made in the payment when due of any installment of principal or of interest on any of the Recipient's other indebtedness (any creditor the Recipient owes) and if such default shall remain unremedied for (15) days.

3. Incorrect Representation or Warranty – If any representation or warranty contained in, or made in connection with the execution and delivery of, the loan agreement, or in any certificate furnished pursuant hereto, shall prove to have been incorrect.

4. Default in Covenants – If the Recipient shall default in the performance of any other term, covenant or agreement contained in the loan agreement, and such default shall continue unremedied for thirty (30) days after either:

A) it becomes known to an executive officer of the Recipient; or

B) written notice thereof shall have been given to the Recipient by the Department.

5. Voluntary Insolvency – If the Recipient shall cease to pay its debts as they mature or shall voluntarily file a petition seeking reorganization of, or the appointment of a receiver, trustee, or liquidation of its assets or to effect a repayment plan with creditors, or shall be adjudicated bankrupt, or shall make a voluntary assignment for the benefit of creditors.

6. Involuntary Insolvency – If an involuntary petition shall be filed against the Recipient under any bankruptcy or insolvency law or seeking the reorganization of or the appointment of any receiver, trustee or liquidator for the Recipient, or the property of the Recipient, or a writ or warrant of attachment shall be issued against the property of the Recipient and such petition shall not be dismissed, or such writ or warrant of attachment shall not be released or bonded within thirty (30) days after filing or levy.

7. Judgments – If any final judgment for the payment of money that is not fully covered by liability insurance shall be rendered against the Recipient, and within thirty (30) days, shall not be discharged, or an appeal therefrom taken and execution thereon effectively stayed pending such appeal, and, if such judgment be affirmed on such appeal, the same shall not be discharged within thirty (30) days.

e) Notice of Default – The Recipient agrees to give written notice to the Department of any event, within 15 days after the event, which constitutes an event of default as specified in Section 610.60(d).

f) Monitoring and Evaluation – Recipients must permit any agent authorized by the Department, upon presentation of credentials to, in accordance with the constitutional limitation on administrative searches, have full access to and the right to examine any documents, papers, and records of the Recipient involving transactions related to a grant/loan from the Department.

g) Audits

1. The Recipient shall be responsible for having an audit of all grant/loan records and such audit must be performed by an independent certified public accountant, licensed by authority of the State of Illinois in accordance with the Illinois Public Accounting Act (Ill. Rev. Stat. 1991, ch. 111, pars. 5500.01 et seq.) [225 ILCS 450]. The audit must be conducted in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants (AICPA) (office located at 1211 Avenue of Americas, New York, N.Y. 10036-8775) (1989, with no later amendments or editions).

2. The Recipient may secure an independent audit of its grant/loan in the same manner as it secures its regular audits, provided it provides for maximum open and free competition. The audit should be conducted as part of the Recipient's normal annual audit or, when the ending period of the audit covers the expenditure of all loan funds, bi-annual audit.

3. The Recipient shall work cooperatively with the audit firm selected; actively work with both the audit firm and the Department to resolve any and all audit findings; and work cooperatively with the Department's staff in preparing for, conducting, and resolving audits.

4. Any Recipient receiving a grant will provide the Department with 3 copies of its annual audit which addresses Department grant(s). In instances where the grant period or term does not coincide with the Recipient's fiscal year, two fiscal audit reports shall be forwarded to the Department. Any Recipient receiving a loan will provide the Department with 3 copies of its audit which addresses funds expended under the Department's loan, within thirty days of its publication.

5. The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours of funds expended under Department grants/loans.

6. Any independent public accounting firm that provides consultant services to a Recipient is prohibited from conducting an audit of that Recipient for the period during which services were rendered.

h) Complaint Process – In the event of a Recipient complaint, the Department will follow the procedures outlined in 47 Ill. Adm. Code 10 (Review and Appeal Procedures).

i) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1991, ch. 127, par. 2310) [30 ILCS 705/10], all interest earned on funds held by the Recipient under the grant shall become part of the grant when earned. Any interest earned under the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

j) Nondiscrimination – The Recipient shall refrain from unlawful discrimination in employment and undertake affirmative action to assure equality of employment opportunity and eliminate the effects of past discrimination in accordance with the Illinois Human Rights Act (Ill. Rev. Stat. 1991, ch. 68, pars. 1-101 et seq.) [775 ILCS 5].

k) Financial Management Standards – The Recipient's financial management system shall be structured under the Accounting Standards of the Financial Accounting Standards Board of the AICPA (September 19, 1987, no later amendments or editions included) to maintain control and accountability over grant/loan funds.

l) Maintenance and Insurance of Property

1. The Recipient shall at all times maintain the property provided as security for the loan in such condition and repair that the Department's security will be adequately protected.

2. The Recipient shall maintain, during the term of the loan, adequate (at least covering the amount of the loan) hazard (e.g., tornado, hail, acts of God) insurance policies, covering fire and extended coverage for all such other hazards and issued by an insurance company authorized to do business in the State of Illinois with loss payee clauses in favor of the Department.

3. The Recipient shall, if at any time during the life of the loan the Recipient's property is declared to be within a flood hazard area, purchase federal flood insurance if available. Such insurance shall be equal to the amount of the loan.

4. The Recipient shall maintain liability and worker's compensation insurance. The Recipient shall provide written notice to the Department of any public hearing or meeting before any administrative or other public agency which may, in any manner, affect the chattel, personal property or real estate securing the loan.

History

• Source: Amended at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.100 Program Purpose

a) The Affordable Financing of Public Infrastructure Loan and Grant Program provides affordable financing of public infrastructure in the form of loans and grants to, or on behalf of, local governments, local public entities, medical facilities, and public health clinics from appropriations from the Public Infrastructure Construction Revolving Loan Fund for the purpose of assisting with the financing, or application and access to financing, of a community's public infrastructure necessary to health, safety, and economic development. Funds are available either directly from DCCA enumerated in Section 610.400 or through the designated intermediaries enumerated in Section 610.300(b).

b) The Department may provide credit enhancement loans and grants to State public infrastructure financing intermediaries on behalf of local governments, local public entities, local medical facilities, and local public health clinics. The funds may be used for the purpose of leveraging access to other sources of financing available from the intermediary. Grants may be used to establish loss reserve funds or purchase letters of credit and other forms of credit enhancement to facilitate financing of public infrastructure projects. Loss reserves shall be established in conformance with 30 ILCS 8/10(f).

History

• Source: Added at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.200 Definitions

"Affordable Financing" shall mean access to a financing rate equivalent to that of an "A" rated borrower.

"Application" shall mean a request for program funds including the required forms and attachments.

"Department" shall mean the Illinois Department of Commerce and Community Affairs.

"Grant" shall mean funds which require no repayment to be used by a qualified applicant.

"Local Government" shall mean any unit of local government as defined in Article VII, Section 1 of the 1970 Illinois Constitution.

"Local Public Entity" shall mean any entity as defined by Section 1-206 of the Local Governmental and Governmental Employees Tort Immunity Act [745 ILCS 10/1-206].

"Medical Facility" shall include a hospital, infirmary, clinic, dispensary, mental institution or similar facility.

"Public Health Clinic" means an outpatient clinic conducted by a locally based not-for-profit corporation, or by any local board of health whose health department is recognized by, and has a designation status established by, the Illinois Department of Public Health.

"Public Infrastructure," for the purposes of the Affordable Financing of Public Infrastructure Loan and Grant Program, shall mean capital acquisitions, construction, and improvements to other local facilities and sites, and associated permanent furnishings and equipment that are a necessary precondition for projects necessary to further the development potential of the community.

"Qualified Applicants," for the purpose of the Affordable Financing of Public Infrastructure Loan and Grant Program, shall mean local governments, local public entities, medical facilities, and public health clinics.

"Resource Leveraging" shall mean a financial contribution which includes other sources of private and public financing (e.g., Economic Development Administration, Environmental Protection Agency, Farmers Home Administration). Costs incurred prior to the date of grant award will not be considered as resource leveraging.

History

• Source: Added at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.300 Cooperative Agreements with State Intermediaries

a) The Department is authorized to enter into cooperative agreements with other State government public infrastructure financing entities for the purpose of reliance upon their application, credit review, security, and loan closing procedures for individual small project loans. [30 ILCS 750/8-10(b)] Small Project Affordable Financing of Public Infrastructure loans may be provided under the following conditions:

1. As the sole financing source when the Department has determined that no other affordable financing source is available for projects that are necessary to local community health, safety and economic development; or

2. As partial project financing in satisfaction of other financing source match requirements, to finance feasibility study and other project development costs necessary to accessing other financing, and to otherwise service financing gaps necessary to project feasibility. [30 ILCS 750/8-10(b)]

b) The State governmental public infrastructure financing intermediaries with which the Department may enter into interagency agreements are the State executive agencies including the Illinois Environmental Protection Agency and the Illinois Department of Public Health and any body politic created under State statute including the Illinois Rural Bond Bank and the Illinois Development Finance Authority.

c) The governmental public infrastructure financing intermediaries may use the funds provided by the Department to provide small project loans which may not exceed $100,000 in principal amount. The repayment period for small project loans shall not exceed 10 years. The small project loans may be provided to local governments, local public entities, medical facilities and public health clinics for the purpose of making affordable the financing of "Public Infrastructure" as defined by 30 ILCS 750/8-2.

d) The cooperative agreements between the Department and the intermediaries shall contain a section that specifies the eligible uses, qualified applicants and responsibilities in implementing the infrastructure assistance funds by each intermediary. The cooperative agreements between the Department and the intermediaries may be modified or supplemented by written agreement of both parties. The agreements may be terminated by either party with 30 days written notice.

e) Repayments of principal and interest on loans made by the intermediaries from the infrastructure assistance funds provided by the Department to qualified applicants and any funds collected due to default or failure to comply with the terms or conditions of a loan made under this program and any excess loss reserve funds (any funds not utilized by the trustee for payment of realized losses, fees and other costs in administering the loss reserve trust fund) shall be paid into the Public Infrastructure Construction Loan Revolving Fund.

f) If applicable, the intermediaries may charge qualified loan applicants reasonable and customary fees.

g) The intermediaries shall develop a set of operating procedures and documents which will be provided to the Department before funds are to be made available to the intermediaries. The operating procedures, at a minimum, shall contain the following:

1. Certification by the intermediary that the proposed project meets the requirements of the Affordable Financing of Public Infrastructure Act.

2. Documentation of sufficiency of tax or revenue source to service debt. A financial feasibility report from an independent accountant or analyst should be provided.

3. Procedure for disbursement of funds to the grantee.

h) The documents, at a minimum, shall contain the following:

1. A preliminary and/or final application, including necessary financial information.

2. Applicable closing documents, i.e., loan agreements, debt authorization ordinance and security agreement, including intercept agreement as appropriate.

i) The intermediaries receiving funds from the Department shall submit quarterly progress reports to the Department in the manner prescribed by the Department.

History

• Source: Amended at 20 Ill. Reg. 1179, effective January 5, 1996

14 Ill. Adm. Code 610.400 Direct Grants and Loans

a) The Department is authorized to provide small project affordable financing of public infrastructure grants and loans to local governments, local public entities, local medical facilities, and public health clinics of up to 25% of the project costs where the Department has determined that affordable financing is available for the balance of the project cost, but not for the amount to be subject to the small project affordable financing of public infrastructure grant or loan. No small project grant or loan shall exceed $100,000. [30 ILCS 750/8-10(d)]

b) The Department is authorized to make small project loans which may not exceed $100,000 in principal. The repayment period for small project loans shall not exceed 10 years.

History

• Source: Amended at 20 Ill. Reg. 1179, effective January 5, 1996

14 Ill. Adm. Code 610.500 Application Cycle and Criteria for Grants and Loans

a) Application Availability

1. Applications for direct grant and loan assistance from the Department will be openly available if sufficient monies are allocated for the program. Upon request, the Department will supply potential applicants with an application package if sufficient monies are allocated for the program.

2. Qualified applicants may apply for grant and loan assistance under this program. Such applicants must submit an application on forms provided by the Department. A standard application form will be used statewide.

b) Program Application – Applications for grant and loan assistance from the Department must address the following items:

1. Written certification by the applicant that an essential need exists for the public infrastructure financing in order to secure a health, safety or economic development project within the community.

2. The applicant's financing capability and its ability to pay for, or secure the payment of, part or all of the proposed public infrastructure improvements, and the local government's tax effort, as shown by local tax rates relative to other local governments of the same type in the State. However, if the applicant is a not-for-profit medical facility or public health clinic, the applicant need not address the local government's tax effort.

3. Local financing mechanisms available to help pay for the costs of the public infrastructure project, including, but not limited to, local revenue bonds, special service area tax proceeds, local user charges, or applicable federal loans or grants.

4. The proposed public infrastructure improvements described in detail which shows their relationship to existing public property and capital improvement plans, as well as the pending health, safety or economic development project.

5. Certification that the project is a health, safety or economic development project.

6. The applicant's readiness to implement the project by providing a time schedule for project initiation; cost estimates which demonstrate the cost feasibility of the project; and a signed resolution of support from the organization's governing body.

History

• Source: Amended at 20 Ill. Reg. 1179, effective January 5, 1996

14 Ill. Adm. Code 610.600 Evaluation Process

a) Department staff will screen all applications to determine that all application requirements of the direct loan and grant application package have been addressed. Applications will be reviewed in accordance with Department review criteria listed in subsection (b) below.

b) A request for grant and loan assistance will be evaluated in accordance with the requirements of this Part. The review and evaluation of applications will take no more than 45 working days after the Department's receipt of a completed application, with financial assistance awards being announced at the end of that period.

1. Applications that address economic development will be evaluated on the basis of:

A) The extent of economic need to be addressed by the project;

B) Time schedule for project initiation, etc., indicating the level of project readiness;

C) The merits of the proposed work plan and consistency of proposed activities with requirements of the Act;

D) The level of economic development results expected (e.g., jobs created or retained, private funds leveraged, etc., or other significant development benefits or impacts); and

E) The financial capability of the applicant to finance the infrastructure improvements from other sources.

2. Applications that address public health and safety issues will be evaluated on the basis of:

A) Documentation that a threat to the health and safety of the community exists, i.e., a deficiency exists in a community facility, and that the project alleviates the identified threat to public health or safety;

B) Time schedule for project initiation, etc., indicating the level of project readiness;

C) Financial capability of the applicant to finance the infrastructure improvements from other sources;

D) The merits of the proposed work plan and consistency of the proposed activities with the requirements of the Act; and

E) The financial capability of the applicant to finance the infrastructure improvements from other sources.

c) Upon selection, the Department will notify applicants of the amount of grant or loan assistance being awarded. The Department will issue an award letter and will issue an agreement for signature by the applicant. The Department may limit the amount of time such grant or loan funds will be available for use by the applicant.

History

• Source: Added at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.700 Selection for Funding for Direct Grants and Loans

Department staff will conduct an evaluation of each application submitted. Applicants that best meet the objectives of the Act through satisfaction of the evaluation criteria specified in Section 610.600 will be funded until all available grant or loan financing is expended. The amount of grant or loan financing made available by the Department will be based upon the extent to which the applicant provides evidence of economic development benefit to the community or reduces a threat to public health or safety.

History

• Source: Added at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.800 Funding Limitations

a) The Department shall not exceed $5,000,000 in total small project loan balances outstanding at any time.

b) The Department shall not award more than $500,000 per fiscal year in small project grants.

c) The Department shall not award an amount of credit enhancement loans and grants which, combined with the total of outstanding affordable financing of public infrastructure credit enhancement loans, exceeds $1,000,000 at any time.

d) Loss reserve fund trusts funded from funding reserve grants shall not exceed 25% of the total public infrastructure financing issued by the State public infrastructure financing intermediary intended to be subject to the loss reserve fund. The Department shall not in total award Affordable Financing of Public Infrastructure grants for loss reserves in excess of $1,000,000.

History

• Source: Added at 18 Ill. Reg. 8398, effective May 23, 1994

14 Ill. Adm. Code 610.900 Administrative Requirements

Affordable Financing of Public Infrastructure grants and loans awarded by the Department are subject to the following conditions:

a) Direct financial assistance through the loans or grants must be used for the purposes specified in Section 8-10 of the Act.

b) On Affordable Financing of Public Infrastructure loans, the Department shall determine the interest rate, if any, that the loans shall bear. The Department shall set the terms and conditions for repayment of the loans. The repayment period of loans shall not exceed 20 years except for the small project loans specified in Section 610.300(c), which shall not exceed 10 years.

c) Repayments of principal and interest on loans made and any funds collected because of a default or failure to comply with the terms or conditions of a loan under this program shall be paid into the Public Infrastructure Construction Loan Revolving Fund.

d) The Department may take whatever actions are necessary or appropriate to protect the State's interest in the event of a default, foreclosure or noncompliance with the terms and conditions of the loans or grants provided under this Act, including the power to sell, dispose, lease, or rent, upon terms and conditions deemed to be appropriate by the Department, real or personal property that the Department may receive as a result thereof.

History

• Source: Amended at 20 Ill. Reg. 1179, effective January 5, 1996

Part 615 State-Designated Cultural Districts

14 Ill. Adm. Code 615.10 Purpose

The purpose of State Designated Cultural District Designations is to:

encourage economic development and entrepreneurship;

encourage the preservation and development of historic and culturally significant structures, traditions, and languages;

foster local cultural development and education;

provide a focal point for celebrating and strengthening the unique cultural identity of the community; and

promote growth and opportunity without generating displacement or expanding inequality. [20 ILCS 605/605-1057(a)(6)]

14 Ill. Adm. Code 615.20 Definitions

"Advisory Committee" means an appointed body of members that will advise the Department on program rules and the certification process. The advisory committee shall reflect the diversity of the State of Illinois, including geographic, racial, and ethnic diversity. The advisory committee must include representatives as follows:

a representative of the Department of Commerce and Economic Opportunity appointed by the Director;

a representative of the Department of Agriculture appointed by the Director of Agriculture;

a representative of the Illinois Housing Development Authority appointed by the Executive Director of the Illinois Housing Development Authority;

two members of the House of Representatives appointed one each by the Speaker of the House of Representatives and the Minority Leader of the House of Representatives;

two members of the Senate appointed one each by the President of the Senate and the Minority Leader of the Senate; and

four community representatives appointed by the Governor representing diverse racial, ethnic, and geographic groups not captured in the membership of the other designees, with the input of community and stakeholder groups. [20 ILCS 605/605-1057(b)(4)(F)]

"Applicant" means the municipalities or 501(c)(3) organizations applying on behalf of a certified geographical area seeking cultural district designation. Multiple municipalities, 501(c)(3) organizations, and units of local government may partner to apply but only one eligible entity may be listed as the primary applicant.

"Application" means the competitive application system by which a municipality or 501(c)(3) organization may apply for certification as a State-designated cultural district.

"Certification" means a geographical area within the State is certified for a period of 10 years, after which the district may renew certification every 5 years, as a State-designated cultural district after a successful application to the Department. The applying entity is responsible for complying with reporting requirements under 20 ILCS 605/605-1057(c).

"Community" means the geographical area that has a distinct historic, and cultural identity seeking State-designated cultural district certification.

"Community Council" means a group of local stakeholders brought together by the Applicant to demonstrate support of the cultural designation. The Community Council may be made up of local council members, employees of local governments, cultural organizations, community organizations, chambers of commerce, education institutions, etc.

"DCEO" means the Department of Commerce and Economic Opportunity.

"Designee" means any applicant whose proposal is selected for a designation under this program.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"State-designated cultural district" means a geographical area certified under this Part that has a distinct, historic, and cultural identity. [20 ILCS 605/605-1057(a)]

"Technical Assistance" means the support provided to State-designated cultural districts to help them identify and achieve their goals for cultural preservation, including, but not limited to, promotional support of State-designated cultural districts and support for small businesses looking to access resources.

14 Ill. Adm. Code 615.30 Eligibility Requirements

a) A municipality or 501(c)(3) organization located in Illinois is eligible to receive certification as a State-designated cultural district from DCEO if the applicant:

1. Demonstrates the community seeking certification has been historically impacted and is currently at risk of losing their cultural identity because of gentrification, displacement, or the COVID-19 pandemic;

2. Demonstrates a history of economic disinvestment; [20 ILCS 605/605-1057(c)(2)]; and

3. Demonstrates strong community support for the cultural district designation through active and formal participation by community organizations and municipal and regional government agencies or officials.

b) To be eligible for certification, an applicant shall have an active GATA registration and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted.

c) Applicants are encouraged to partner with other units of local government or 501(c)(3) organizations, but only one eligible entity may be listed as the primary applicant.

d) An eligible entity may apply for more than one State-designated cultural district designation. Each designation requires a separate application.

14 Ill. Adm. Code 615.40 Administrative Requirements

State cultural district designation awards will be administered in a manner that complies with all State and federal requirements applicable to state funding opportunities including, but not limited to, GATA, the Uniform Guidance and all applicable State or federal laws or rules. Applicants and Designee's shall review all application materials and designation award documents, which will include the specific applicable requirements for the opportunity, on the Department's website.

a) Application Process

1. DCEO will post one or more Notices of Designation Opportunity (NODO) on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible entities contingent upon availability of designations. Applicants shall submit their application materials by the deadlines set by DCEO in the NODO, which will be at least 30 days after the NODO posting.

2. As part of the application, applicants shall provide the following information about the geographic area:

A) a detailed description of the defined geographic boundaries, outlined with a map image;

B) a discussion of the characteristics of a distinct, historic, and cultural identity of the geographic area;

C) a detailed statement of need describing the risk of losing the community's cultural identity because of the impact of gentrification, displacement, or the COVID-19 pandemic;

D) a narrative statement using supporting data that demonstrates property value increases, job loss, population loss, business and organizational loss and/or the negative impacts of the COVID-19 pandemic;

E) a detailed narrative description of historic economic disinvestment in the community, using supporting data that outlines the impact of inequities from a lack of resources and investment;

F) a detailed description demonstrating the applicant has the organizational capacity to carry out plans, apply for and manage grants, and dedicate personnel to the State cultural district;

G) demonstration of strong community support for the designation though active and formal participation by local diverse stakeholders;

H) letters of support from organizations, elected officials, and other stakeholders;

I) if applicable, development plans that include and prioritize the preservation of local businesses and retention of existing residents and businesses; and

J) if applicable, demonstration that the community has an education framework in place informed with a vision of food justice, social justice, community sustainability, and social equity. [20 ILCS 605/605-1057(c)(2)]

3. The applicant is responsible for the accuracy of all data, information and documentation. Once submitted, applications shall become the property of the Department.

b) Designation Selection

1. Prior to a merit review of the applications, DCEO will screen all applications submitted to ensure that all of the requirements of the application package have been met. Applicants will be notified of any deficiencies in their application package and given an opportunity to correct those deficiencies through submission of additional documentation within 30 days of the notice.

2. Certification as a State-designated cultural district will be awarded to eligible entities following a merit review of the applications in accordance with GATA (44 Ill. Adm. 7000.350). In evaluating applications, the Department will consider the following criteria:

A) The application indicates the overall characteristics of a distinct, historic, and cultural identity;

B) The applicant's demonstration of need through the impact of gentrification, displacement, and the COVID-19 pandemic;

C) The level of risk of loss of cultural identity because of gentrification, displacement, and the COVID-19 pandemic;

D) Demonstration of historical economic disinvestment;

E) The level of community support for the designation including whether that community support is formalized with a Community Council;

F) The likelihood that a designation will result in promoting growth, opportunity and economic development without generating displacement or expanding inequality;

G) The level of organizational capacity and expertise to carry out plans, apply for and manage grant opportunities, and provide dedicated personnel to the State-designated cultural district; and

H) Any additional information to demonstrate or support the information submitted by the applicant for the designation.

3. The Department shall give a priority to projects that have development plans that include and prioritize the preservation of local businesses and retention of existing residents and businesses; and projects that demonstrate that the community has an education framework in place informed with a vision of food justice, social justice, community sustainability, and social equity. [20 ILCS 605/605-1057(d)(1)]

4. Applicants shall work with local diverse stakeholders, such as Community Council members, city or town staff, cultural organizations, community organizations, chambers of commerce, educational institutions etc. to develop plans and projects that meet the objectives of the program.

14 Ill. Adm. Code 615.50 Term and Termination

a) Certification as a State-designated cultural district shall be for an initial period of 10 years, after which the district may submit an application for renewal every five years. The Department maintains discretion not to renew a State-designated cultural district's designation based on evaluation of their renewal application, or other factors including, but not limited to, failure to use the original designation, failure to execute plans, and failure to submit timely reports. [20 ILCS 605/605-1057(c)]

b) The Department shall award no more than five State-designated cultural districts each year. At no point shall the total amount of State-designated cultural districts be more than 15. [20 ILCS 605/605-1057(e)]

c) The entity applying for certification is responsible for all reporting requirements. Any State-designated cultural district that fails to file a report for 2 consecutive years shall have their status as a State-designated cultural district terminated. [20 ILCS 605/605-1057(f)]

14 Ill. Adm. Code 615.60 Reporting Requirements

a) Within 12 months after being designated a cultural district, the State-designated cultural district shall submit a report to the Department detailing its current programs and goals for the next 4 years of its designation. [20 ILCS 605/605-1057(f)] The report shall include:

1. Detailed development plans that include and prioritize the preservation of local businesses and retention of existing residents and businesses;

2. A description of an education framework in place, informed with a vision of food justice, social justice, community sustainability, and social equity;

3. A description of existing infrastructure needs in order to expand economic opportunity for businesses and residents;

4. A description and data regarding affordable housing needs for existing residents and plans for how those goals can be achieved;

5. Development plans for transportation improvements that will help residents reach employment and make the community accessible to visitors;

6. Detailed plans to address gaps in ability for families to easily access affordable fruits, vegetables, and produce;

7. List of opportunities for cultural celebration, both for existing residents and visitors; and

8. Plans to promote the district and its events to visitors in traditional and digital media.

b) For each year after the initial reporting period that the district remains a State-designated cultural district, it shall submit a detailed report on the status of the program and future developments of the district.

c) Any State-designated cultural district that fails to file a report for 2 consecutive years shall have their status as a cultural district terminated. [20 ILCS 605/605-1057(f)]

Part 620 Labor-Management Program

14 Ill. Adm. Code 620.10 Purpose

Through the Labor-Management Program (program), the Department of Commerce and Community Affairs (Department) shall promote positive labor-management relations in the State of Illinois by providing matching grants, grants and other resources to establish or assist local labor-management committees and other projects which serve to improve labor-management relations (the Civil Administrative Code of Illinois) (the Act) (Ill. Rev. Stat. 1987, ch. 127, par. 46.32a, as amended by P.A. 85-1385, effective September 2, 1988). In accordance with the Act, the Department has the authority to award grants or matching grants in four categories. At least 60 percent of the annual appropriation to the Department for providing labor-management grants and resources shall be awarded as matching grants to existing local labor-management committees, up to 20 percent may be awarded as matching grants to developing local labor-management committees, up to 10 percent may be awarded as grants to develop and conduct specialized education and training programs and up to 10 percent may be awarded as grants for research and development projects. The Labor-Management Program will be administered by the Office of Labor-Management Cooperation within the Department.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.20 Statewide Committee

Consistent with provisions contained in Section 46.32a of the Civil Administrative Code of Illinois (Act) (Ill. Rev. Stat. 1985, ch. 127, par. 46.32a), there shall be established a Labor-Management Cooperation Committee; the duties of said committee are specified in the Act.

History

• Source: Amended at 11 Ill. Reg. 16096, effective September 29, 1987

14 Ill. Adm. Code 620.30 Local Labor-Management Committee

For the purpose of this Act, local labor-management committee (committee) is defined as a private sector organization created jointly by labor and management representatives, the purposes of which are specified in Section 46.32a(b)(1)(second list of small numerals (i) through (v)) of "AN ACT in relation to labor relations and workers' compensation, amending certain Acts herein named" (P.A. 85-1385, effective September 2, 1988). The labor and management members of the committee jointly determine and carry out a work program to improve labor-management relations in their service area and to maintain and increase their community's competitiveness within the local, state, national and world economies.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.40 Eligible Applicants

The grant application has been divided into four separate categories. Separate eligibility criteria have been established for each of the four grant categories established in the Act as follows:

a) To be eligible for matching grants under Category I, Matching Grants to Existing Local Labor-Management Committees, local labor-management committees must meet the eligibility criteria specified in Section 46.32a(b)(1) (first list of small numerals (i) through (vii)) of "AN ACT in relation to labor relations and workers' compensation, amending certain Acts herein named" (P.A. 85-1385, effective September 2, 1988). However, no funds will be awarded to local labor-management committees under the following circumstances:

1. no assistance can be given for plant labor-management committees unless the employees in that plant are represented by a labor organization and there is in effect at that plant a collective bargaining agreement;

2. no assistance can be given for an area, public sector or industry-wide labor-management committee unless its participants include any labor organizations certified or recognized as the representative of employees of an employer participating in such a committee. However, employers whose employees are not represented by a labor organization may participate on such area or industry-wide committees; and,

3. no assistance can be given to any committee which interferes with the collective bargaining activities in any plant or industry.

b) To be eligible to apply for matching grants under Category II, Matching Grants to Developing Local Labor - Management Committees, the local labor-management committee must meet the eligibility criteria specified in Section 46.32a(b)(2) (small numerals (i) through (iv)) of "AN ACT in relation to labor relations and workers' compensation, amending certain Acts herein named" (P.A. 85-1385, effective September 2, 1988). However, no funds will be awarded to local labor-management committees under the following circumstances:

1. no assistance can be given for plant labor-management committees unless the employees in that plant are represented by a labor organization and there is in effect at that plant a collective bargaining agreement;

2. no assistance can be given for an area, public sector or industry-wide labor-management committee unless its participants include any labor organizations certified or recognized as the representative of employees of an employer participating in such a committee. However, employers whose employees are not represented by a labor organization may participate on such area or industry-wide committees; and

3. no assistance can be given to any committee which interferes with the collective bargaining activities in any plant or industry.

c) Eligible applicants for a grant under Category III, Grants for Education and Training, will include any group, organization, committee or individual who can demonstrate an expertise in the development and delivery of education and training programs designed for labor and/or management representatives or labor-management committees.

d) Eligible applicants for a grant under Category IV, Grants for Research and Development, will include any group, organization, committee or individual who can demonstrate an expertise in the area of research and development projects. Priority consideration will be given to applicants who have experience in the area of labor-management relations and cooperative programs.

e) In addition, the Department will accept an application for funding from any person, organization or consortium of organizations which contains a project proposal which seeks to improve labor-management relations, job security, organizational effectiveness, enhancing economic development or involving workers in decisions affecting their jobs, including improving communications with respect to subjects of mutual interest and concern.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.50 Application Cycle

Applications under the program will be accepted on an ongoing basis. The availability of funds under the program will be advertised in the official state newspaper, and the Department will supply an application package to interested parties upon request. Applications will be reviewed as received, and grants awarded until program funds are exhausted. The original application should be accompanied by two copies and submitted to the Department's Office of Labor - Management Cooperation, 620 East Adams Street, Springfield, Illinois, 62701. The Department with the advice of the Labor - Management Cooperation Committee, will develop and prioritize annually the type and scope of the education and training projects (Category III) and research and development projects (Category IV) by means of telephone surveys and requests for services or information received from local labor-management organizations.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.60 Application Requirements

a) The application for funding under Category I, Matching Grants to Existing Local Labor – Management Committees, must include the following information:

1. Eligibility Certification

A) a description of the structure of the organization (e.g., not-for-profit, incorporated, etc.), including any articles of incorporation, not-for-profit certification and/or current by-laws.

B) the specific geographic area served by the organization.

C) a list of the board members and their affiliation, including current letters of commitment from all committee participants and chairpersons.

D) the name(s), title(s) and job description(s) for all full-time and/or part-time committee staff.

E) a summary of the committee, including its formation (specifying dates), major activities and past funding.

F) a list of the name(s) and a summary of the nature of the committee's affiliation with other local, state or federal organizations.

2. Goals and Objectives – Using specific goals and objectives, a description of what the labor-management committee will accomplish within the next twelve months (for the duration of the grant). These goals and objectives should be expressed in measurable terms. In addition, a description of the criteria used by the committee to evaluate its success in meeting the specific goals and objectives.

3. Implementation Timetable – an outline of the applicant's proposed activities during the grant period; major milestones or activities and target dates for accomplishing goals and objectives.

4. Budget – a detailed budget and narrative for the applicant for the grant period, including a summary of the source(s) of the local match; (from the source(s) of the local match) documentation specifying the dollar amount of their commitment; if in-kind contributions are being included as part of the local match, documentation as to what constitutes the in-kind contribution and its estimated dollar value.

b) An application for funding under Category II, Matching Grants to Developing Local Labor-Management Committees, must include the following information:

1. Eligibility Certification

A) a description of the structure of the organization (e.g., not-for-profit, incorporated, etc.), if applicable, including any articles of incorporation, not-for-profit certification and/or current by-laws or any other documents relating to the structure of the organization.

B) the specific geographic area served by the organization.

C) a list of the board members or participants in the committee and their affiliation, including current letters of commitment from all committee participants and chairpersons.

D) the name, title and job description of any full-time and/or part-time committee staff.

E) a summary of the committee, including its formation (specifying dates), major activities and past funding.

2. Goals and Objectives – Using specific goals and objectives, a description of what the labor-management committee will accomplish within the next twelve months (for the duration of the grant). These goals and objectives should be expressed in measurable terms. In addition, a description of the criteria used by the committee to evaluate its success in meeting the specific goals and objectives.

3. Implementation Timetable – an outline of the applicant's proposed activities during the grant period; major milestones or activities and target dates for accomplishing goals and objectives.

4. Budget – a budget and budget narrative for the next twelve months must be submitted, including a summary of the source(s) of the local match. If in-kind contributions are being included as part of the match, documentation must be included as to what constitutes the in-kind contribution and its estimated dollar value.

c) An application for funding under Category III, Grants for Education and Training, must include the following information:

1. Eligibility Certification

A) a description of the primary nature of the applicant's business (e.g., university, community college, area labor-management committee, consultant, etc.).

B) a description of the applicant's primary audience(s) or client base (e.g., college students, retraining older workers, etc.).

C) the name(s) and a summary of the previous experience of the individual(s) who will be involved in the development and/or delivery of the education and training program(s), including references from previous clients where appropriate.

2. Scope of Work

A) a description of the education and/or training program(s) to be developed or delivered with grant funds, including objectives of the program.

B) an explanation of the target audience for the education or training program.

C) the anticipated benefits of the program to its intended audience.

D) a description of the type of evaluation criteria to be used to determine if the program was successful or achieved its objectives.

3. Implementation Timetable – an outline of the applicant's proposed activities for the program during the grant period; major milestones or activities and target dates for accomplishing the program's objectives.

4. Budget – a budget and budget narrative for the grant period must be submitted, including a summary of any funds to be used to supplement the state grant, the total project cost, as well as the amount and source of other funds to be devoted to the project.

d) An application for funding under Category IV, Grants for Research and Development, must include the following information:

1. Eligibility Certification

A) a description of the primary nature of the applicant's business (e.g., university, community college, area labor-management committee, etc.)

B) description of the intended beneficiaries of the research and development project to be undertaken (e.g., companies, unions, labor-management committees, industries, etc.).

C) the name(s) and a summary of the previous experience of the individual(s) who will be involved in the research and development project and references or copies of other research projects. (Priority consideration will be given to applicants who have experience in the area of labor-management relations and cooperative programs.)

2. Scope of Work

A) a description of the research and development project to be undertaken with the grant funds, including a list of the objectives of the project.

B) a description of the target audience for the research project information who will benefit from the information, and a summary of anticipated results of the project.

C) an explanation of the methodology to be used in the research and development project (e.g., data collection, surveys, personal interviews, etc.).

3. Implementation Timetable – an outline of the proposed activities of the project over the grant period; major milestones or activities and target dates for accomplishing the project's objectives.

4. Budget – a budget and budget narrative for the grant period must be submitted, including a summary of the source of any funds to be used to supplement the state grant, the total project cost, as well as the amount and source of other funds to be devoted to the project.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.70 Application Evaluation

a) The Department shall screen all applications to determine that all requirements of the application package have been addressed. Complete applications will be reviewed and evaluated by Department staff. This review and evaluation process will be completed within 45 days after receipt of the application package by the Department.

b) Upon receipt of a completed application for a grant or matching grant, the Director of the Department of Commerce and Community Affairs (Director) will provide copies of the application to the Labor-Management Cooperation Committee for its review and comment.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.80 Selection for Funding

a) The Department will consider funding any application which provides all documentation requested; thoroughly addresses all issues with no major problems evident; clearly evidences a need for the public funding; clearly demonstrates a project implementation readiness; and, has demonstrated a positive impact on labor-management relations.

b) Selection Criteria

The Department's selection criteria will include the following:

1. the extent to which the application has clearly identified the problems and justified the needs that the proposed project will address;

2. the feasibility of the approach proposed to attain the goals and objectives of the project and the perceived likelihood of accomplishing the intended project results;

3. the appropriateness of committee membership, if applicable, and the degree of commitment of participating individuals to the goals of the application;

4. the feasibility and thoroughness of the implementation plan in specifying major milestones and target dates;

5. the cost effectiveness and fiscal soundness of the application's budget request as well as identification of the amounts and sources of the local match; and,

6. the overall feasibility of the proposed project in light of all of the information presented for consideration and quality of the application.

c) The Director will consider the recommendations of the Labor-Management Cooperation Committee in the awarding of funds under the program.

History

• Source: Amended at 13 Ill. Reg. 1758, effective January 27, 1989

14 Ill. Adm. Code 620.90 Administrative Requirements

a) Matching Grant Limitations

1. Matching grants under Category I, Existing Local Labor-Management Committees, shall not exceed 75% of the total operating cost of the program.

2. Matching grants under Category II, Developing Local Labor-Management Committees, shall not exceed 75% of the total operating cost of the program. Funding of eligible committees under this category shall be limited to three years. Previous years' funding under this program will be included in determining whether those committees have reached their funding limit under this category.

b) Grant and Matching Grant Limitations – All grant awards will be limited to a period of one year. Applications for continued funding must be submitted annually.

c) Match Requirements – In accordance with the Act, Matching Grants under Sections I and II, require that at least 25 percent of the program and operating costs be supported through local match. For the purpose of this program, match must include at least 50 percent cash and no more than 50 percent "in-kind" services (i.e., donated office space, clerical support, equipment, postage, etc.) which directly further accomplishes the objectives under the grant.

d) Reporting Requirements – An applicant receiving funding under the program must submit to the Department a quarterly programmatic report outlining the goals and objectives which have been achieved during the previous quarter. This report must specify if the major milestones identified by the applicant in its application package are being met according to the timetable provided; if not, an explanation of why these milestones have not been met must be provided. An applicant receiving funding under the program must also submit to the Department quarterly expenditure summaries describing line item costs charged to the grant and line item matching share supplied by the applicant where applicable. The Department reserves the right to monitor and evaluate the activities of any committee receiving funding under this program.

e) Recovery of Grant Funds – Recipients of grant funds under this program will be required to abide by provisions of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1991, ch. 127, pars. 2301 et seq.) [30 ILCS 705].

History

• Source: Amended at 18 Ill. Reg. 16564, effective October 27, 1994

Part 640 Rural Diversification Act Program

14 Ill. Adm. Code 640.5 Incorporation by Reference

Any incorporation by reference in this Part of standards of a nationally recognized organization or association includes no new amendments or editions after the date specified.

14 Ill. Adm. Code 640.10 Purpose of Loan Program

Through the Rural Diversification Loan Program, the Department of Commerce and Community Affairs will provide direct loans at market or below market rate interest to rural businesses or agribusinesses for the purpose of rural economic diversification, and the creation and retention of jobs.

14 Ill. Adm. Code 640.20 Definitions

"Act" - The Rural Diversification Act (Ill. Rev. Stat. 1989, ch. 5, pars. 2251 et seq.).

"Application" - A request for program funds, including the required statistical and narrative information and attachments.

"Department" - The Illinois Department of Commerce and Community Affairs.

"Financing" - Direct loans at market or below market rate interest provided to or on behalf of rural businesses or agribusinesses for purposes of rural diversification.

"Program" - The Rural Diversification Loan Program.

"Recipient" - Any eligible applicant receiving funds under this program.

14 Ill. Adm. Code 640.30 Eligible Projects

Loan proceeds shall be used to support rural diversification projects or agricultural diversification projects.

a) "Rural Diversification Project" means a specific activity undertaken to promote:

1. The improvement and expansion of business and industry in rural areas;

2. Creation of entrepreneurial and self-employment businesses;

3. Industry or region wide research directed to profit oriented uses of rural resources, and

4. Value added agricultural supply, production processing or reprocessing facilities or operations and shall include but not be limited to agricultural diversification projects (Section 3(d) of the Act).

b) "Agricultural Diversification Project" means a specific activity undertaken to promote diversification of the farm economy of this State through

1. Profit oriented nonproduction uses of Illinois land resources;

2. Growth and development of new crops or livestock not customarily grown or produced in this State; "new crops or livestock not customarily grown or produced in this State" does not include corn, soybeans, wheat, swine, or beef or dairy cattle; or

3. Developments which emphasize a vertical integration of grain or livestock produced or raised in this State into a finished product for consumption or use. "Vertical integration of grain or livestock produced or raised in this State" includes any new or existing grain or livestock grown or produced in this State (Section 3(f) of the Act).

14 Ill. Adm. Code 640.40 Eligible Applicants

Any Rural Business or Agribusiness operating in Illinois may make application for financial assistance under the Rural Diversification Loan program. Personal service businesses are not eligible to receive funding.

a) Agribusiness – Any sole proprietorship, limited partnership, co-partnership, joint venture, corporation, or cooperative which operates or will operate a facility located within the State of Illinois that is related to the:

1. Processing of agricultural commodities or

2. The manufacturing, production or construction of agricultural buildings, structures, equipment implements or supplies, or any other facilities or processes used in agricultural production (Section 2(i) of the Illinois Farm Development Act (Ill. Rev. Stat. 1989, ch. 5, par. 1202)).

b) Rural Business – Any cooperative, proprietorship, partnership, corporation, or other entity:

1. Engaged in manufacturing, mining, agriculture, wholesale, transportation, tourism, or utilities or in research and development or services to these basic industrial sectors and;

2. Is located or will be located in an incorporated area of 20,000 population or less, but not in contiguous incorporated areas (cities, towns or villages) with a combined population greater than 20,000 or in an unincorporated area, of any county with a population of less than 350,000.

14 Ill. Adm. Code 640.50 Eligible Uses of Loan

Financing to or on behalf of rural businesses or agribusinesses in the State shall be for the purpose of assisting in the cost of agricultural or rural diversification projects including costs of:

a) Acquisition, construction, reconstruction, replacement, repair, rehabilitation, alteration, expansion or extension of real property, buildings or machinery and equipment but not the acquisition of unimproved land for the production of crops or livestock;

b) Working capital items including, but not limited to, inventory, accounts receivable, and prepaid expenses (but not debt refinancing or contingency funding;)

c) Organizational expenses including, but not limited to, architectural and engineering costs, legal services, marketing analyses, production analyses, or other professional services;

d) Needed leasehold improvements, easements, and other amenities required to prepare a site (Section 5(a) of the Act).

14 Ill. Adm. Code 640.60 Fund Availability and Submission Deadlines

a) Availability of funding will be published in the State-recognized newspaper. Upon request, the Department will supply applicants with an application package.

b) Applications for funding under the Rural Diversification Loan Program will be accepted on an ongoing basis as long as funding is available.

14 Ill. Adm. Code 640.70 Loan Application Package

Applications for loans must include the following documentation as appropriate:

a) Agricultural or Rural Diversification Project Description – A summary description of the project including a description of what the company plans to do with the proceeds of the loan.

b) Need for Funds – A statement and proof (justification) of a need for State supported low-interest, long term funds as evidenced by rate of return, inadequate private market financing, inability to acquire financing from other state authorities or agencies, interstate competition of facilities, or other similar evidence of essential need for public financing (Section 6(b)(i) of the Act).

c) Project Impact and Employment Projections – A statement documenting an increase or potential increase in taxes or employment, a potential to retain existing jobs, or a potential improvement in the diversification of the rural economy or job market in relation to the financing requested (Section 6(b)(iii) of the Act).

d) Company History – A brief history of the applicant, past employment growth, and other facts detailing the past and present condition and structure of the company, as well as identification of the common name of the company if different from the legal name.

1. Subsidiaries and Parents – Name and identification of the relationship to parent companies, subsidiaries, or affiliates.

2. Articles of Incorporation – Copy of the articles of incorporation and bylaws or partnership agreement, as appropriate.

e) Market Information and Future Market Prospects – A description of the primary business of the company, types of products and services offered, information on the applicant's present and future market prospects, and identification of existing and potential major customers and competitors.

f) Management Qualifications – A listing of those people who are responsible for the management of the applicant firm, their positions, and percentage of ownership;

1. Personal resumes for senior staff at the proposed project site; and

2. Personal financial statement(s) for each principal owning more than 20 percent of the applicant firm.

g) Actual and Pro forma Financial Statements – Financial statements must be submitted by the applicant as follows, unless the firm is a start up operation. Audited financial statements are preferred; prepared statements are the minimum which is acceptable. Financial statements shall include:

1. Historical corporate financial statements for the past three years, including profit and loss statements, balance sheets, and disclosure of contingent liabilities;

2. Interim financial statements (profit and loss statements and balance sheets) dated not more than ninety days prior to application; and

3. Three year projections of the profit and loss statement and balance sheet and a monthly cash flow projection for the first year.

h) Site Map – An outline of the general location of the project on a site map, including the location of any floodplain areas.

i) Uses of Funds Statement – As appropriate;

1. Land and Building Information – If funds are to be used for land and/or building acquisition, an appraisal and a copy of the purchase option or agreement; for building construction or renovation, a contractor or architect's cost estimates.

2. Description of Machinery and Equipment – If major equipment or classes of equipment are to be acquired with the Department's program funds, identification of the equipment; if for acquisition of new machinery and equipment, reliable vendor cost estimates; for moving and installation costs to be incurred, attachments of written estimates; if for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price.

3. Description of Working Capital – A detailed explanation of the need for and use of funds; for acquisition of new inventory, written estimates of cost must be provided from the vendor.

j) Letters of Commitment – Commitment letters documenting all sources of leveraging; loans from financial institutions must have language indicating the loan amount, the specified term and interest, collateral, conditions attendant to the loan, and the fact that the loan is approved.

k) Project Implementation Schedule – A list of the timelines for major project milestones and/or activities including the start date and end date of each activity.

14 Ill. Adm. Code 640.80 Committee Review of Loan Applications

a) Confidentiality – Any document, materials or data made or received by any member, agent, or employee of the Department, to the extent that such material or data consist of trade secrets or commercial or financial information regarding the operation of any business conducted by a beneficiary or recipient of any form of assistance which the Department is empowered to render under this Act, or regarding the competitive position of such entity in a particular field of endeavor, is confidential and shall not be deemed public records, provided that information relating to the ownership of such recipient or beneficiary is not to be exempt under this Section from public disclosure requirements (Section 9 of the Act).

b) Application Screening – The Department shall screen all loan applications to determine that all requirements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given the opportunity to correct such deficiencies through resubmission. Complete applications will be reviewed and evaluated by Department staff and review committee. The review and evaluation process will be completed within forty-five (45) working days after the receipt of application.

c) The Department shall establish an internal review committee with the Director of the Rural Affairs Council, or his designee, the Director of the Department of Agriculture, or his designee, and the Director of the Illinois Farm Development Authority, or his designee, as members to assist in the review of all project applications (Section 5(c) of the Act).

d) At the discretion of the Department, the "Internal Review Committee" will meet to review applications and recommend applications for Department loan consideration. The Committee's determination shall be based upon analysis of the operating history of the applicant, the project's readiness and additional similar information as determined by the Committee in accordance with subsections (e) and (f) of this Section.

e) The applicant must demonstrate a meaningful operating history through documentation including:

1. Company history – history of company growth through the analysis of facts provided by the applicant detailing the company's past and present condition and structure;

2. Market information – information provided by the applicant detailing the existence of the company's present and future market prospects and existing and potential customers;

3. Management qualifications – the background and experience of those in management and at least 20% ownership positions of the applicant company at the project site to determine qualification to administer the project.

f) The applicant must demonstrate project readiness through documentation, including:

1. Lender Commitments – identifying loan and investment commitments from all lenders and investors on letterhead, signed and dated;

2. Time Schedule – a written time schedule for immediate project initiation; and

3. Cost Estimates – firm, written cost estimates from architects, contractors or suppliers which support project costs.

14 Ill. Adm. Code 640.90 Department Technical Review

Each application will be reviewed by the Department to assure compliance with the technical program requirements as specified in subsections (a) through (d) of this Section.

a) Loan Project Type – The application will be evaluated to assure that:

1. the loan project meets the requirements for a Rural Diversification Project or an Agricultural Diversification Project as defined in Section 640.30 of this Part;

2. the entity meets the conditions outlined as an eligible loan applicant as contained in Section 640.40 of this Part;

3. that the rural business or agribusiness costs being funded are allowable expenses as defined in Section 640.50 of this Part; and

4. that applicant certifications in accordance with Section 640.130 of this Part have been signed.

b) Evidence of Need for Loan Program Funding – The applicant must show the essential need which must be documented for agricultural or rural diversification financing as evidenced by (Section 6(b)(i) of the Act):

1. the project's inability to acquire financing from other State authorities or agencies (Section 6(b)(i) of the Act) with proof, such as a denial letter, failure to respond within the applicable program(s)' specified time frame(s), identification of the project's ineligibility for other public programs or other evidence that other State and federal program funding has been considered;

2. calculation showing the rate of return is below the average return on investment for the company or industry, or similar evidence showing Department participation is needed at an interest rate and term which makes the project viable;

3. compelling economic benefit to the State for the business project because of interstate competition for facilities (Section 6(b)(i) of the Act); or

4. lender documentation that capital is not available to complete the project.

c) Leverage Financing – The rural business or agribusiness must:

1. Provide a minimum of fifteen (15) percent of the equity in the project (Section 7(c) of the Act);

2. Show evidence that the loan will be leveraged with other funds such that program financing covers no more than 25 percent of the total costs of the diversification project unless the Director of the Department waives the 25 percent limitation (Section 7(c) of the Act) in accordance with Section 640.110.

d) Financial Statements – The applicant's financial statements, including annual balance sheets and profit and loss statements for the past three years as well as an interim statement not more than ninety (90) days old; actual and pro forma income statements; a three-year projected balance sheet and profit and loss statement as well as a one-year monthly cash flow statement will be reviewed through a standard credit analysis. This credit analysis will determine the financial viability of the business as compared to similar data for the industry using the 1990 "RMA Annual Statement Studies" (published by Robert Morris Associates, P.O. Box 8500, S-1140, Philadelphia, PA 19178) if such commerce or industry is evaluated by this source. The application must:

1. Demonstrate liquidity and debt coverage for the project showing that balance sheet indicators support the project size; that days receivable, days payable, and inventory are within a normative range; and that working capital is positive.

2. Address quality of debt and debt management showing the debt-to-equity ratio is within the industry's normative range, that short-term and long-term sources and uses of funds are matched; and that contingent liabilities with parent companies, subsidiaries, partners, and other related parties will not have a material adverse effect on loan repayments.

3. Reflect positive and stable sales growth, profit margins, operating margins, and overhead, and show other positive, supportive trends and projections.

4. Show projected market prospects and earnings report that demonstrate a consistency between past performance, assumptions, and projected performance.

5. Demonstrate a positive cash flow as evidenced by a net income before taxes of five (5) percent of the gross income of the rural business or agribusiness based on actual or projected income and expenses (Section 7(c) of the Act).

14 Ill. Adm. Code 640.100 Selection for Financing

Applicants that best meet the objectives of the Act through satisfaction of the evaluation criteria of Sections 640.80 and 640.90 will be funded until all available loan financing is expended. The amount of loan financing made available by the Department will be based upon the extent to which the applicant provides evidence of economic benefit to the community. Economic benefit evidence includes:

a) evidence the loan project will diversify or increase the structure of the local economy with documentation of an increase or potential increase in employment (Section 6(b)(iii) of the Act);

b) identification of the amount and documentation of an increase or potential increase in taxes (Section 6(b)(iii) of the Act) with the types and amounts of increased state or local taxes expected to be generated in relation to funds used;

c) evidence that the loan project will create additional personal income for the community through a potential improvement in the diversification of the rural economy (Section 6(b)(iii) of the Act) for example, the project adds new types of industries to the local economy, the projects' goods and/or services to be produced are to be sold outside the community or the final goods and/or services are to be produced and sold locally to substitute for those goods and/or services from outside the state; or

d) A potential to retain existing jobs (Section 6(b)(iii) of the Act), with a written assurance from the rural business or agribusiness which identifies the number of, the occupational type, and wage level of jobs to be created/retained in relation to funds used.

14 Ill. Adm. Code 640.110 Loan Funding Limitations

In accordance with Section 7(c) of the Act, a waiver of limitations on the percentage of leverage in accordance with Section 640.90 (c)(2) of this Part will be allowable when it is determined that this funding limitation would prohibit an otherwise approved project, and subsequent rural diversification from occurring if the applicant demonstrates severe need, including but not limited to:

a) Distressed community or county with an unemployment rate which is 25 percent higher than the State average, or a per capita income which is less than the State average;

b) Area with limited economic development as evidenced by absence of development activities within the last two years or as evidenced by new job growth rate less than the state or national average;

c) Funding would support business which has provided assurance that the project will generate business growth and job creation in the community as a result of spinoff businesses, and thus evidence that the additional jobs will be created or retained;

d) Funding is needed to avert loss of a major employment source (more than 100 jobs or 2 percent of the local employment base) in the community;

e) Jobs to be created or retained offer wages substantially higher than the prevailing wage in the industry as determined by the Illinois Department of Labor pursuant to (Ill. Rev. Stat. 1989, ch. 48, pars. 39sl-s12) and Section 6-3 of the Illinois Purchasing Act (Ill. Rev. Stat. 1989, ch. 127, par. 132.6-3) or an annual wage higher than the State's median income as completed by the Department's Division of Research and Analysis, 620 E. Adams St., Springfield, Illinois 62701, (217) 782-1438.

14 Ill. Adm. Code 640.120 Allowable Leverage

a) Each rural business receiving funds under the program must leverage financial resources for the project over and above Department funding. Owner equity or other private sector equity shall be a significant part of the project. Sources other than public funds shall serve as the primary sources of financing for the project.

b) In calculating the Department's share, allowable leverage by the applicant may include such tangible contributions as:

1. Cash expended by the applicant (during the period of the project) derived from any source other than the Department including expenditure of retained earnings, use of owner equity, or use of proceeds of debt of the applicant, and used on project-eligible expenses;

2. The purchase price of project-related machinery and equipment leased by the company (for or after the start of the project) provided the company shall own, or may purchase for a nominal fee, the asset at the end of the lease;

3. The unutilized portion of buildings which are made a part of the project whose value shall be determined by taking the depreciated cost of the area used exclusively on the project (thus excluding common areas);

4. Previously purchased but unutilized machinery and equipment at book value provided it has not been in productive use in the past year but will be placed in productive use for the benefit of the project; and

5. Project-related machinery and equipment brought into the State from another state, country or territory (provided the first productive use in Illinois occurs after the Department's letter of commitment).

c) All contributions of cash, real property or machinery and equipment must meet each of the following criteria:

1. are verifiable from the applicant's records;

2. are utilized (if real property) or expended (if cash) after the Department's commitment during the period of the project;

3. are necessary and reasonable for the accomplishment of the project.

d) The following items are not allowable leverage:

1. Cash expended prior to the date of the Department's loan commitment letter;

2. Existing in-state land, building, furnishings, inventory or supplies already owned and productively utilized;

3. Actual or donated operational and general overhead expenses (e.g., salaries, utilities, rent, supplies) incurred before, during or after the project is completed; and

4. Debt-refinancing, lines of credit or other unexpended available funds.

14 Ill. Adm. Code 640.130 Applicant Certifications

Each loan applicant for program financing will be required to satisfy the following certifications:

a) Farmland Preservation (if applicable) – Certification that the proposed project is compatible with established State policy regarding farmland preservation pursuant to the Farmland Preservation Act (Ill. Rev. Stat. 1989, ch. 5, pars. 1301 et seq.).

b) Floodplain – Certification that the proposed project will comply with the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001 et seq. (1984)) and Executive Order 79-4, effective June 1, 1979, which requires special environmental procedures if any activities will be carried out in a flood hazard area.

c) Nondiscrimination – Certification that the recipient shall comply with all applicable laws and regulations which prohibit discrimination on the basis of race, sex, religion, national origin, age or handicaps, including but not limited to the Illinois Human Rights Act (Ill. Rev. Stat. 1989, ch. 68, pars. 1-101 et seq.).

d) Student Loan – Where the recipient is an individual, the recipient certifies that he/she is not in default on an educational loan as provided in Section 3 of the Educational Loans Act (Ill. Rev. Stat. 1989, ch. 127, par. 3553).

e) Historic Preservation – Recipient certifies that this project does not involve the destruction, alteration, renovation, transfer or sale, or utilization, of an historic property, structure or structures, or the introduction of visual, audible or atmospheric elements to an historic property, structure or structures, and will, therefore, not result in any changes in the character or use of any historic property, in accordance with the State Agency Historic Resources Preservation Act (Ill. Rev. Stat. 1989, ch 127, pars. 133c21 et seq.).

f) Bribery Certification – That neither the applicant nor the applicant's employees have been convicted of bribery or attempting to bribe an officer or employee of the State of Illinois nor has there been an admission of guilt of such conduct which is a matter of public record pursuant to Section 10.1 of the Illinois Purchasing Act (Ill. Rev. Stat. 1989, ch. 127, par. 132.10-1).

g) Interest of Public Officials – Recipient certifies that it is in compliance with the provisions of Section 11.4 of the Illinois Purchasing Act prohibiting conflict of interest (Ill. Rev. Stat., 1989, ch. 127, pars. 132.11-4).

h) Bidding on State Contracts – Applicant certifies that it has not been barred from bidding on or entering into State contracts as a result of a violation of the Criminal Code of 1961 (Ill. Rev. Stat. 1989, ch. 38, pars. 33E-3 and 33E-4).

14 Ill. Adm. Code 640.140 Loan Terms

a) Financing shall be made available to the borrower in periodic allotments as determined by the fund balance position of appropriated funds available to the Department for this program in comparison to the cash needs of all recipients.

b) Financing awarded by the Department is subject to the following conditions:

1. The repayment period shall not exceed 10 years (Section 7(b) of the Act);

2. Financial assistance for any one project shall not exceed $200,000 (Section 7(c) of the Act).

c) Loans for real estate will be amortized over a period of up to 10 years; loans primarily utilized for machinery and equipment will generally vary from 7 to 10 years. Loans primarily intended for short term working capital needs will normally extend for 3 to 5 years.

d) Working capital loans may require personal guarantees from all individuals owning or controlling 20 percent or more of the applicant company. For small companies without major identifiable principals (e.g., no one owns 20 percent or more of the company), the amount of the loan is limited to 80 percent of the value of the fixed asset securing the loan. The Department shall be authorized to require personal guarantees for asset-based loans not secured by a lien on the fixed asset. The Department shall require personal guarantees in any loan transaction in which the loan to asset collateral ratio is less than one to one.

e) Monthly installments shall be due and payable to the Department at a time specified in the loan agreement.

14 Ill. Adm. Code 640.150 Loan Agreement

A loan agreement will be developed for each business borrower that receives loan funds. The loan agreement will contain, at a minimum, the following items:

a) Definition Section – Defining the key terms used in the agreement.

b) Loan Conditions – Including statements relating to representations and warranties, evidence of other financing, note, collateral, corporate or partnership document, and legal matters.

c) Borrower Representations and Warranties – Concerning form of ownership, authorization of agreement, binding effect, accuracy of application, collateral, accuracy of financial statements, absence of loan defaults, absence of litigation, absence of tax delinquencies, and possession of appropriate licenses and permits.

d) Covenants and Continuing Agreements – To expend public funds in accordance with approved budget, keep detailed project records, furnish proof that its corporate or partnership existence is in full effect, pay all applicable taxes and required insurance, prohibit loans to officers/directors/stockholders, and comply with all applicable state and federal laws.

e) Default Provisions – Listing the conditions under which the borrower would be in default of the agreement.

f) Use of Loan Proceeds – Briefly describing the business project for which the loan is being made and the exact use of loan funds.

g) Financing of Borrower – Information on primary lender, the amount of the lender's loan, terms of this loan, etc., as well as information and schedule of expected payout of the Department's loan commitment to the borrower.

h) Labor Compliance Requirements – As appropriate, including equal opportunity employment, minimum wage, and other state or federal labor standards.

i) Other – Such other terms and conditions necessary to secure or document the loan, including, but not limited to: key man life insurance, liens, and Uniform Commercial Code (U.C.C.) (Ill. Rev. Stat. 1989, ch. 26, pars. 1-101 et seq.) filings.

14 Ill. Adm. Code 640.160 Loan Security

Financial assistance shall be secured by first, second, or third mortgage positions on real or personal property, by royalty payments, by personal notes or guarantees, or by any other security satisfactory to the Department to secure repayment, if required, by the financial assistance agreement. Security for Department loans shall include but is not limited to any or all of the following:

a) First or second lien security interest in favor of the Department on all personal property of the borrower.

b) First or second position real estate mortgage in favor of the Department on real estate of the borrower.

c) Personal guarantees and/or corporate guarantees in the amount of the loan.

d) Irrevocable letter of credit.

e) First or second security interest in negotiable securities of the borrower or business principle owners.

14 Ill. Adm. Code 640.170 Maintenance and Insurance of Property

a) The recipient shall at all times maintain the property provided as security for the loan in such condition and repair as a reasonably prudent person would who held title to the property.

b) The recipients shall maintain, during the term of the loan, fire and hazard insurance policies, covering the amount of the loan with a loss payee clause in favor of the Department.

c) The recipient shall, if at any time during the life of the loan the recipient's property is declared to be within a flood hazard area, purchase federal flood insurance if available, and in an amount equal to the amount of the loan.

d) The recipient shall maintain liability and workers' compensation insurance.

e) The recipient shall provide written notice to the Department of any public hearing or meeting before any administrative or other public agency which may, in any manner, affect the personal property or real estate securing the loan.

14 Ill. Adm. Code 640.180 Administrative Requirements

a) Financial Management – The loan recipient's financial management system shall be structured under the Accounting Standards of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (AICPA) (September 19, 1987) to maintain control and accountability over the loan funds. The AICPA is located at 1211 Avenue of the Americas, New York, New York 10036-8775.

b) Reporting – The loan recipient shall provide, at least annually, information and reports on project impact, job creation/retention, and company financial statements.

c) Department Monitoring and Evaluation – Loan recipients shall permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to:

1. inspect, examine or audit any documents, papers, and records involving transactions related to a loan from the Department, including making copies thereof, and

2. inspect or appraise any of the loan recipient's business assets.

d) Authorizations – The loan recipient shall, upon written request by the Department issue any necessary authorization to the appropriate Federal, State or local authority or private person or entity for the release of information concerning a business or project financed under the provisions of this program, with the information requested to include, but not be limited to, financial reports, returns, or records relating to that business or project.

14 Ill. Adm. Code 640.190 Audits

a) It shall be the loan recipient's responsibility to secure any compliance audit of the use of loan proceeds. Such audit must be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act (Ill. Rev. Stat. 1989, ch. 111, pars. 5500 et seq.). The audit shall be conducted in accordance with generally accepted auditing standards adopted by the AICPA (1989).

b) The Department reserves the right to conduct special audits of funds expended under Department loans, at any time during normal working hours.

14 Ill. Adm. Code 640.200 Events of Default

a) The entire unpaid principal of the loan, and the interest then accrued thereon, shall become and be immediately due and payable upon the written demand of the Department, without any other notice or demand of any kind or any presentment of protest, if any one of the following events (hereafter an "event of default") shall occur and be continuing at the time of such demand, whether voluntarily or involuntarily, or without limitation, occurring or brought about by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order:

1. Non-Payment of Loan – If the recipient shall fail to make payment when due of any installment of principal on the loan, or interest accrued thereon and if the failure to make payment shall remain unremedied for fifteen (15) working days.

2. Non-Payment of Other Indebtedness – If default shall be made in the payment when due of any installment of principal or of interest on any of the recipient's other indebtedness (any creditor the recipient owes) and if such default shall remain unremedied for fifteen (15) working days.

3. Incorrect Representation or Warranty – If any representation or warranty contained in, or made in connection with the execution and delivery of, the loan agreement, or in any certificate furnished pursuant hereto, shall prove to have been incorrect.

4. Default in Covenants – If the recipient shall default in the performance of any other term, covenant or agreement contained in the loan agreement, and such default shall continue unremedied for thirty (30) working days after either:

A) it becomes known to an executive officer of the recipient, or

B) written notice thereof shall have been given to the recipient by the Department.

5. Voluntary Insolvency – If the recipient shall cease to pay its debts as they mature or shall voluntarily file a petition seeking reorganization of, or the appointment of a receiver, trustee, or liquidation of its assets or to effect a repayment plan with creditors, or shall be adjudicated bankrupt, or shall make a voluntary assignment for the benefit of creditors.

6. Involuntary Insolvency – If an involuntary petition shall be filed against the recipient under any bankruptcy or insolvency law or seeking the reorganization of or the appointment of any receiver, trustee or liquidator for the recipient, or the property of the recipient, or a writ or warrant of attachment shall be issued against the property of the recipient and such petition shall not be dismissed, or such writ or warrant of attachment shall not be released or bonded within thirty (30) working days after filing or levy.

7. Judgments – If any final judgment for the payment of money that is not fully covered by liability insurance shall be rendered against the recipient, and within thirty (30) working days, shall not be discharged, or an appeal therefrom taken and execution thereon effectively stayed pending such appeal, and, if such judgment be affirmed on such appeal, the same shall not be discharged within thirty (30) working days.

b) Notice of Default – The recipient agrees to give written notice to the Department of any event, within fifteen (15) working days of the event, which constitutes an event of default.

14 Ill. Adm. Code 640.210 Purpose of Grant Program

Through the Rural Diversification Grant Program, the Department of Commerce and Community Affairs will provide grants to local governments and not-for-profit agencies for the purpose of rural economic diversification.

14 Ill. Adm. Code 640.220 Definitions

"Act" – The Rural Diversification Act (Ill. Rev. Stat. 1989, ch. 5, pars. 2251 et seq.) which creates the Rural Diversification Program.

"Application" – A request for program funds, including the required statistical and narrative information and attachments.

"Department" – The Illinois Department of Commerce and Community Affairs.

"Financing" – Grants to or on behalf of local governments or not-for-profit agencies for purposes of rural diversification, except that no grants under this Program shall be made directly with a rural business.

"Program" – The Rural Diversification Grant Program.

"Recipient" – Any eligible applicant receiving funds under this program.

14 Ill. Adm. Code 640.230 Eligible Applicants

Applications shall be accepted from the chief elected official of cities, villages, towns, counties, college districts and from officials of not-for- profit agencies including regional planning and development commissions, economic development organizations, or community based organizations which are located in or serve any incorporated area (including contiguous cities, towns or villages combined) of 50,000 population or less or any unincorporated area, of a non urban county with a population of less than 350,000.

14 Ill. Adm. Code 640.240 Eligible Program Activities

a) The Department may provide financing to or on behalf of an eligible applicant in the State for the purpose of industry or region wide research directed to profit oriented uses of rural resources (Section 3(d)(iii) of the Act) including:

1. Region-wide research, such as feasibility studies, opportunity analyses, reuse studies, needs assessments, cost/benefit analyses or other studies required by a rural community in order to explore its options for economic development or diversification.

2. Business and industry research and reports such as market analyses, production analyses, customer surveys, feasibility studies, and related research to explore, identify or create new markets for actual or potential rural businesses.

b) The Department may provide financing to or on behalf of an eligible applicant in the State for the purpose of information, technical support and technical assistance contracts regarding private, State and federal resources, programs or grant assistances and the needs and opportunities for diversification (Section 5 (a)(v) of the Act) including:

1. Community information and training including conferences and workshops and technical or reference guides on private, local, state and federal programs, services or resources related to community or economic development needs, opportunities, strategies and programs.

2. Technical support and technical assistance including on-site technical advice and problem solving or self-help technical assistance related to the needs or opportunities for public or private responses to rural or agricultural diversification.

14 Ill. Adm. Code 640.250 Eligible Program Costs

Project costs which shall be eligible for reimbursement with Grant proceeds include contractual services, consultant fees, commodities, materials and supplies, travel and other project-related direct expenses necessitated by the project.

14 Ill. Adm. Code 640.260 Fund Availability and Submission Deadlines

a) Upon request, the Department will supply applicants with an application package. Public notice of the availability of funding and the application due dates will be published in the State-recognized newspaper.

b) Applications for funding under the Rural Diversification Grant Program will be made available at least quarterly on a schedule determined by the Department and published in the State-recognized newspaper. Applications received after 5:00 p.m. on the appropriate submission date will be held for consideration during the next review cycle. Final award announcements will be made within forty-five (45) working days of the application deadline.

14 Ill. Adm. Code 640.270 Grant Application Package

Applications for grants must include the following documentation:

a) Project Summary – a brief statement and description of the project for which funds are being sought.

b) Evidence of Need – a description of the conditions of the community requiring study or action such as absence of opportunities, over-reliance on limited industries, history of low wages or high unemployment, or level of knowledge or education.

c) Background of Applicant – a brief discussion of the applicant's organization, purpose, history and capabilities to carry out the proposed project.

d) Project Description – a description of the proposed research or technical assistance project for which the grant would be used, including a project work statement detailing project objectives, work activities and deadlines as well as identification of the individual(s) or group(s) responsible for carrying out the project.

e) Project Results – identification of the anticipated results of the proposed project in terms such as rural or agricultural diversification, potential for creation or retention of jobs, or number of communities to be served.

f) Follow-up Work and Timelines – a description of the expected follow-up work of the organization to continue the work begun by the project.

g) Project Management – identification and information on the staff and/or consultants to be involved in the proposed project, including qualifications, functional responsibilities, percent of time and related information.

h) Financial Statements – if necessary, financial statements of the applicant.

i) Coordination – description of any cooperative working relationships which are or will be developed with other organizations involved in similar or related activities, and the relationship of the project to existing local, regional or state economic development plans.

j) Related Activities or Assistance Sought – information concerning project-related activities undertaken within the last two years, and information concerning any other public financing applied for or received.

k) Budget – a project budget by cost categories, including quarterly projections of fund requirements, as required in the Department's application package.

14 Ill. Adm. Code 640.280 Review of Grant Applications

a) Application Screening – The Department shall screen all grant applications to determine that all elements of the application package have been addressed. Applicants will be notified of deficiencies in applications and given the opportunity to correct such deficiencies through resubmission during the next cycle of funding. Complete applications will be reviewed and evaluated by Department staff in accordance with the criteria listed in subsections (b) through (h) of this Section. This review and evaluation process will be completed within forty-five (45) working days of the due date for applications.

b) Basic Eligibility Evaluation – Each grant application will be reviewed to assure compliance with the eligibility requirements as detailed below:

1. Eligible Applicant – Eligible applicant as detailed in Section 640.230.

2. Eligible Project Type – Project activities consistent with the eligible activities of a Rural Diversification Project as detailed in Section 640.240.

c) Evidence of Need – The applicant must show:

1. The essential need which must be documented for agricultural or rural diversification (Section 6 (b)(i) of the Act): for example, absence of development projects; lack of knowledge, education or skills of economic development; potential opportunity for economic benefit, or related need.

2. proof of the project's inability to acquire financing from other state authorities or agencies (Section 6(b)(i) of the Act), in an amount adequate to complete the project, such as a letter of partial funding or indication that other state and federal program funding has been considered.

d) Costs – The applicant must demonstrate that the project costs:

1. are eligible program costs as defined in Section 640.250;

2. can be substantiated given the amount of work to be undertaken and the results expected; and

3. the amount to be paid from the Department's share does not exceed the maximum percentage participation as detailed in Section 640.310.

e) Program Objectives and Methodology – The applicant must demonstrate the activities and outcomes of the project are accomplishable, such that:

1. objectives are measurable and describe benefit to the population or area being served;

2. methods and sequence of activities logically address the problems or opportunities identified and achieve the objectives that have been set.

14 Ill. Adm. Code 640.290 Rural Diversification Review Committee

a) There is created an internal review committee with the Director of the Rural Affairs Council, or his designee, the Director of the Department of Agriculture, or his designee, and the Director of the Illinois Farm Development Authority, or his designee and other members as deemed necessary by the Director of the Department to assist in the review of all project applications (Section 5(c) of the Act).

b) Within 10 working days of the application due date, the "Internal Review committee" shall meet to review all project applications. The committee will identify applications for grant consideration based upon analysis of the applicant organization, the project design and the project's readiness in accordance with the requirements of subsections (c) through (e) of this Section.

c) Project Implementation Readiness – The applicant must demonstrate project readiness, including:

1. a time schedule for immediate project initiation;

2. written cost estimates which support project costs; and

3. scope of activities which can be conducted within the grant agreement time period.

d) Project Administrative Capacity – The applicant must demonstrate:

1. its capability of successfully completing the proposed project, based on past experience or previous performance; and

2. its capability of complying with grant agreement based on past experience, or previous performance.

e) Program Objectives and Methodology – The applicant must demonstrate the activities and outcomes of the project are accomplishable, such that:

1. objectives are measurable and describe benefit to the population or area being served; and

2. methods and sequence of activities logically address the problems or opportunities identified and achieve the objectives that have been set.

14 Ill. Adm. Code 640.300 Selection for Financing

Applications that meet the criteria of Sections 640.280 and 640.290 will be funded until all available grant financing is expended. The amount of grant financing made available by the Department will be based on the extent to which the application provides evidence of economic benefit to the community including:

a) the degree to which the proposed project ameliorates the problems or needs identified within the area;

b) the extent to which the project addresses substate regional, rather than individual, community concerns;

c) the innovativeness and replicability of the proposed projects in relation to approaches used in the past; and

d) the residual economic benefit to the community, such as jobs created or retained, increase tax base or revenues, added community wealth or similar benefits.

14 Ill. Adm. Code 640.310 Grant Limitations

a) The Department shall approve Grants in amounts necessary to pay up to 25 percent of eligible costs as defined in Section 640.250, incurred by or on behalf of an eligible entity up to a maximum of $200,000, unless the Director waives the percent share or maximum amount in accordance with Section 640.320.

b) In calculating the Department's share of costs, total financing for the project shall include cash amounts or other contributions of in-kind goods or services provided by the applicant, derived from any source, and used on the project's eligible expenses, and included as a part of the grant agreement budget. Funds derived from other departmental programs will be considered as matching funds if they are:

1. verifiable from the applicant's records, and

2. utilized or expended after the Department commitment during the period of the project, and

3. clearly identified in the project's scope of work and related to the accomplishment of the project objective.

14 Ill. Adm. Code 640.320 Waivers

In accordance with Section 7(c) of the Act, a waiver of limitations on the percentage of leverage in accordance with Section 640.310 of this Part shall be allowable when it is determined that these funding limitations would prohibit an otherwise approved project, and subsequent rural diversification, including job creation or retention, from occurring if the application demonstrates severe need, including but not limited to:

a) The area to be served is a distressed community or county with an average unemployment rate for the last two years which is 25 percent higher than the State average, or a per capita income which is less than the State average;

b) Area with limited economic development potential as evidenced by absence of development activities within the last two years or as evidenced by new job growth rate less than the State or national average;

c) Funding would support a project which has provided assurance that it will generate business growth and job creation in the community as a result;

d) Funding is needed to avert loss of a major employment source (more than 100 jobs or 2 percent of the local base) in the community;

e) The project is designed to benefit multiple rural jurisdictions across the State; or

f) The project is a model project, new program innovation or demonstration effort with the potential for replicability within numerous regions or areas of the State.

14 Ill. Adm. Code 640.330 Applicant Certifications

Each applicant for program financing will be required to satisfy the following certifications, when applicable:

a) Farmland Preservation (if applicable) – certification that the proposed project is compatible with established State policy regarding farmland preservation pursuant to the Farmland Preservation Act.

b) Floodplain – certification that the proposed project will comply with the Flood Disaster Protection Act of 1973 (42 U.S.C. 4001 et seq. (1984)) and Executive Order 79-4, effective June 1, 1979, which requires special environmental procedures if any activities will be carried out in a flood hazard area.

c) Nondiscrimination – Certification that the recipient shall comply with all applicable laws and regulations which prohibit discrimination on the basis of race, sex, religion, national origin, age or handicaps, including but not limited to the Illinois Human Rights Act, and the Equal Employment Opportunity Clause promulgated pursuant thereto.

d) Historic Preservation – Recipient certifies that this project does not involve the destruction, alteration, renovation, transfer or sale, or utilization, of an historic property, structure or structures, or the introduction of visual, audible or atmospheric elements to an historic property, structure or structures, and will, therefore, not result in any changes in the character or use of any historic property in accordance with the State Agency Historic Resources Preservation Act.

e) Bribery Certification – That neither the applicant nor the applicant's employees have been convicted of bribery or attempting to bribe an officer or employee of the State of Illinois nor has there been an admission of guilt of such conduct which is a matter of public record pursuant to Section 10.1 of the Illinois Purchasing Act.

f) Interest of Public Officials – Recipient certifies that it is in compliance with the provisions of Section 11.4 of the Illinois Purchasing Act prohibiting conflict of interest.

g) Bidding on State Contracts – Applicant certifies that it has not been barred from bidding on or entering into State contracts as a result of a violation of the Criminal Code of 1961 (Ill. Rev. Stat. 1989, ch. 38, par. 1-1 et seq.).

14 Ill. Adm. Code 640.340 Administrative Standards for Grant Recipients

a) Grant Agreement – The Department will negotiate as needed with the applicant. The grant agreement will set out the scope of work of the grant, the terms and conditions of the grant, and the budget of the grant agreement.

b) Grant Period – The grant shall have a period of completion as determined by the Department.

c) Complaint Process – In the event of a recipient complaint, the Department will follow the procedures outlined in 47 Ill. Adm. Code 10 (Review and Appeal Procedures).

d) Fund Availability – Payments pursuant to a grant are subject to the availability of funds appropriated to the Department by the Illinois General Assembly. Grant funds must be expended or obligated within the period of the grant agreement and liquidated within the period of time in accordance with the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1989, ch. 127, pars. 2301 et seq.).

e) Disbursement of Funds – Payments to the recipient pursuant to a grant are subject to the initiation of an invoice voucher and receipt of an expenditure summary or documentation of expenses. Further, financing shall be made available to the recipient in periodic allotments as determined by the fund balance position of appropriated funds available to the Department for this program in comparison with the cash needs of the various recipients under this program.

f) Financial Management – The recipient is accountable for funds received under this grant and shall maintain effective control and accountability over all funds and other assets under the grant. The recipient shall keep records which detail and accurately document the recipient's expenditures of grant funds for a period of two years from the end of the grant agreement.

g) Interest on Grant Funds – In accordance with Section 10 of the Illinois Grant Funds Recovery Act, all interest earned under the grant shall become part of the grant when earned. Any interest earned during the term of the grant, and not expended as grant principal during the term of the grant, shall be returned to the Department.

h) Recovery of Funds – If the grant recipient expends funds contrary to the provisions of the grant agreement, such action shall require the repayment of those funds.

i) Department Monitoring and Evaluation – Recipients and their subcontractors, if any, must permit any agent authorized by the Department, upon presentation of credentials, to have full access to and the right to examine any documents, papers, and records of the recipient involving transactions related to a grant from the Department.

j) Reports – Grant recipients must submit, at least semi-annually during the period of the grant agreement, reports on the financial status of the project and narrative reports on the activities and achievement of objectives and results.

k) Audits – The recipient shall be responsible for securing any compliance audit required of grant records. Such audit must be performed by an independent certified public accountant, licensed by authority of the State of Illinois pursuant to the Illinois Public Accounting Act. The audit must be conducted in accordance with generally accepted government auditing standards adopted by the AICPA (1989).

l) Special Audits – The Department reserves the right to conduct special audits, including but not limited to an agency-wide audit, at any time during normal working hours, of the funds expended under Department grants.

14 Ill. Adm. Code 640.350 Modification, Breach and Termination of Grants

a) Modification and Amendment of the Grant – The grant award is subject to revision as follows:

1. Modifications by Operation of Law – The grant award is subject to such modifications as may be required by changes in State law or regulations. Any such required modification shall be incorporated into and made a part of the grant as within the provisions of the Illinois Grant Funds Recovery Act (Ill. Rev. Stat. 1989, ch. 127, pars. 2301 et seq.). The Department shall notify the recipient in writing of any amendment to such regulations and the effective date.

2. Modifications in Budget – A recipient's request for budget variations in the amount or line item costs shall be in writing by registered letter and shall give justifications for the requested variations. The Department may approve modification requests, if, the Department determines such is necessary to achieve program objectives. Any changes in cost categories or line items shall not alter the activities or deliverables for the project. If the Department approves the modification request, the recipient will be notified in writing of the change and the effective date of the change.

3. Other Modifications by Department or Recipient – If either the Department or the recipient requests to modify the terms of the grant award other than as set forth in subsections (a)(1) and (2) above, written notice of the proposed modification shall be given to the other party. No modification shall take effect unless agreed to in writing by both the Department and the recipient.

b) Breach – Should the recipient fail, refuse or elect not to complete the grant agreement, the recipient shall notify the Department within ten (10) days after the date upon which performance ceases.

c) Suspension

1. If the Department determines that a recipient has failed to perform the terms and conditions of the scope of work of the project, then the Department shall, after notice and an opportunity to correct has been provided to the recipient, suspend the grant and withhold further payments until the grant is terminated, or the recipient's failure has been corrected.

2. The Department will determine that a recipient has failed to faithfully perform the terms and conditions of the scope of work of the project when:

A) The Department has notified the recipient in writing of the existence of circumstances such as repeated failure to submit required reports, misapplication of grant funds, failure to match Department funds, evidence of fraud and abuse, repeated failure to meet performance timelines or standards, or failure to resolve negotiated points of the agreement; and

B) The recipient fails to develop and implement a corrective action plan within 30 calendar days of the Department's notice.

d) Termination – A grant shall be terminated for any of the following reasons:

1. Termination Due to Loss of Funding – In the absence of State funding for a specific year, all grants that year will be terminated in full. In the event of a partial loss of State funding, the Department will make proportionate cuts to all recipients.

2. Termination for Cause – If the Department determines that the recipient has failed to comply with the terms and conditions of the grant agreement the Department shall terminate the grant in whole, or in part, at any time before the date of completion. Such termination may be appealed by the recipient through the complaint process outlined in Section 640.340(c).

3. Termination by Agreement – The Department and the recipient shall terminate the grant in whole, or in part, when the Department and recipient agree that the continuation of the project would not produce beneficial results commensurate with the further expenditures of funds.

Part 645 Grocery Store Initiative Grant Program

14 Ill. Adm. Code 645.10 Purpose

The Department shall provide grants and other forms of financial assistance to eligible applicants for the purpose of expanding access to healthy foods in food deserts. Following a Grocery Initiative Study that examines food insecurity, examines food deserts, and identifies areas at risk of becoming food deserts in Illinois, the Department shall also provide grants and other forms of financial assistance to eligible applicants for the purpose of expanding access to healthy foods in areas at risk of becoming food deserts.

14 Ill. Adm. Code 645.20 Definitions

The following definitions are applicable to this Part.

"Act" means the Grocery Initiative Act [20 ILCS 750].

"Agreement" means a grant agreement between an applicant and the Department pursuant to Section 645.40.

"Applicant" means a unit of local government, co-operative, not-for-profit corporation, or for-profit entity.

"Co-operative" means an organization that is organized according to the Co-operative Act [805 ILCS 310].

"Department" means the Department of Commerce and Economic Opportunity.

"Energy efficient" means reducing the amount of energy needed to achieve a given end use or uses, or reducing the amount of electricity or natural gas needed to achieve that end use or uses.

"Food desert" means a census tract that:

meets one of the following poverty standards:

the census tract has a poverty rate of at least 20%; or

the census tract is not located within a metropolitan statistical area and has a median family income that is less than or equal to 80% of the statewide median household income; or

the census tract is located within a metropolitan statistical area and has a median family income that is less than or equal to 80% of the greater of:

the statewide median household income; or

the metropolitan area median family income; and

meets one of the following population density and food accessibility standards:

the census tract is a rural tract, and at least 33% of the population of the tract or at least 500 residents in the tract reside more than 10 miles from the nearest grocery store; or

the census tract is an urban tract, and at least 33% of the population of the tract or at least 500 residents in the tract reside more than one-half mile from the nearest grocery store.

The Department may also designate an area that does not meet the standards set forth in this Section as a food desert if the designation is made using data such as poverty metrics and access to existing stores.

"Grocery store" means an existing or planned retail establishment that:

has or will have a primary business of selling a variety of grocery products, including fresh produce;

derives or will derive no more than 30% of its revenue from sales of tobacco and alcohol in any given year;

is or will be classified as a supermarket or other grocery retailer in the 2022 North American Industry Classification System under code 445110, a meat retailer under code 44524, a fruit and vegetable retailer under code 44523, or a fish and seafood retailer under 44525;

accepts or will accept Supplemental Nutrition Assistance Program benefits and Special Supplemental Nutrition Program for Women, Infants, and Children benefits; and

provides or will contribute to the greater availability of a substantial variety of perishable foods, including fresh or frozen dairy products, fresh produce, and fresh meats, poultry, and fish.

"Independently owned" means an applicant that owns no more than 4 grocery stores in the State of Illinois and has no more than 500 employees.

"Local ownership" means that primary ownership is located within the State of Illinois.

"Local governmental unit" means any county, municipality, township, special district, or unit that is designated as a unit of local government by law and exercises limited governmental powers or powers in respect to limited governmental subjects. "Local governmental unit" also includes any school district or community college district.

"Not-for-profit corporation" means an organization or institution that is organized and conducted on a not-for-profit basis with no personal profit inuring to anyone as a result of the operation and that is organized according to the General Not For Profit Corporation Act of 1986.

"Project Labor Agreement" has the same meaning as used in the Project Labor Agreements Act [30 ILCS 571].

"Rural tract" means a census tract that is not an urban tract.

"Urban tract" means a census tract having its geographic centroid in an urban area, as defined by the Bureau of the Census for the most recent year in which all relevant data to identify food deserts is available. [20 ILCS 750/5]

14 Ill. Adm. Code 645.30 Eligible Applicants and Projects

a) An applicant shall own and operate a grocery store, seek to acquire a grocery store, or establish a grocery store. Unless the applicant is a local governmental unit, the grocery store shall be independently owned and locally owned.

b) The Department may award grants or provide loans to an applicant establishing a new grocery store in a food desert for any one or more of the following:

1. market and site feasibility studies, promotional materials, and marketing;

2. salaries and benefits for workers;

3. rent or a down payment to acquire a facility;

4. purchase of ownership of a grocery store as part of establishing a new grocery store;

5. capital improvements, planning, renovations, land acquisition, demolition, durable and non-durable equipment purchases; or

6. other costs as determined eligible by the Department, including, but not limited to, insurance and utility cost. Costs unrelated to the provision of food, such as acquisition of video poker machines or equipment for lottery sales, are excluded. [20 ILCS 750/15]

c) In addition to the eligible uses listed in subsection (b), the Department may award a grant to an applicant that is a co-operative, non-for-profit corporation, or for-profit corporation for equipment upgrades focused on providing access to equipment that is energy efficient. The Department shall use no more than 20% of total program funding for this purpose. [20 ILCS 750/15(b)]

14 Ill. Adm. Code 645.40 Administrative Requirements

Grant opportunities and awards will be administered in a manner that complies with all State requirements applicable to each funding opportunity, including, but not limited to, GATA and all applicable State laws. Applicants and grant recipients shall review all application materials and grant award documents which will include the specific applicable requirements for the grant opportunity. The Department reserves the right to suspend or terminate a grant agreement or withhold any future year funding for non-compliance with these provisions.

a) Application Process

1. The Department will post one or more NOFO on the GATA Grantee Portal seeking applications contingent upon available funds. Applicants shall submit their application materials by the deadlines set forth by DCEO in the Notice of Funding Opportunities (NOFO) which will be at least 30 days after posting the NOFO.

2. Applicants are required to submit the following:

A) the name of the applicant;

B) whether the applicant is a unit of local government, independently owned for-profit grocery store, co-operative grocery store, or not-for-profit grocery store;

C) the operating name of the grocery store;

D) the location of the grocery store;

E) a detailed explanation of how the grocery store proposes to use any award;

F) two or more letters in support of the application from entities that represent the relevant community, with at least one such letter coming from a local elected official;

G) for an applicant seeking a grant or other financial assistance for a new grocery store in a food desert, as described in Section 645.30(b), the applicant should submit a detailed financial plan that includes:

i) the grocery store's projected costs, revenues, and profits;

ii) the amount and sources of other investments in the planned grocery store;

iii) the long-term assets, including but not limited to real property and equipment, that the grocery store has already secured or still needs; and

iv) the projected number of employees of the grocery store.

H) for an applicant seeking a grant or other financial assistance to establish a new store in a food desert for an independently owned for-profit grocery store, co-operative grocery store, not-for-profit grocery store or municipality-owned grocery store as described in Section 645.30(c), a detailed financial plan that includes:

i) The grocery store's projected costs, revenues, and profits;

ii) The amount and sources of other investments in the planned grocery store;

iii) The long-term assets, including but not limited to real property and equipment, that the grocery store has already secured or still needs; and

iv) The projected number of employees of the grocery store; and

I) for an independently owned for-profit grocery store, co-operative grocery store, municipally owned grocery store, or not-for-profit grocery store, a detailed explanation of the ownership and operation structure, including the location of all primary owners.

b) Grant Award Selection

1. Grants will be awarded by DCEO to grantees following a merit review by DCEO pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). In evaluating applications, the Department will consider all requirements as set forth in this Part.

2. In reviewing applications, the Department will prioritize applicants that:

A) are units of local government;

B) are seeking to establish, or have already established and are operating, grocery stores with local ownership;

C) are seeking to establish, or have already established and are operating, grocery stores with less than $5 million in annual revenue;

3. In addition, the Department may prioritize applicants by geography, where applications involving areas of higher poverty, lower income, or greater geographic distance from the nearest grocery store receive greater consideration.

4. Applicants may appeal any denial pursuant to the process described in 44 Ill. Adm. Code 7000.350(g).

c) Grant Disbursements

Disbursement of grant funds from the Department will be made in accordance with a schedule included in the grant agreement. The Department will disburse funds based on the outcomes outlined in the grant agreement.

d) Grant Performance, Monitoring and Reporting Requirements

Grant recipient shall comply with all GATA and Department requirements for grant performance, administration, monitoring and reporting, including monitoring any subrecipients.

e) Grant Extensions

Contingent upon the availability of funds and consistent with GATA as applicable, the Department may negotiate grant extensions and add funds for grant projects that were originally competitively awarded and performed successfully.

f) Records Retention

A grant recipient shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 430(a) and (b)), adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim, or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Grant recipients shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

g) Project Labor Agreement

Pursuant to the Project Labor Agreements Act [30 ILCS 571] and Executive Order 02-19, the Department will evaluate each application to determine if a project labor agreement would advance the State's interests of cost, efficiency, quality, safety, timeliness, skilled labor force, labor stability, or the State's policy to advance minority-owned and women-owned businesses and minority and female employment. If a project labor agreement would advance those interests, then the Department may require one as part of the agreement.

Chapter I Department of Commerce and Economic Opportunity

Part 650 Cannabis Social Equity Program

14 Ill. Adm. Code 650.10 Purpose

a) In the interest of establishing a legal cannabis industry that is equitable and accessible to those most adversely impacted by the enforcement of drug-related laws in Illinois, including cannabis-related laws, the General Assembly has found that a social equity program in the cannabis industry should be established to help remedy the harms resulting from the disproportionate enforcement of cannabis-related laws. The Cannabis Social Equity Program authorized by the Act should offer, among other things, financial assistance and License application benefits to individuals most directly and adversely impacted by the enforcement of cannabis-related laws who are interested in starting Cannabis Business Establishments.

b) In furtherance of this purpose, the Department is authorized to:

1. identify geographic areas that have been disproportionately impacted by the enforcement of cannabis-related laws (Disproportionately Impacted Areas);

2. provide financial assistance, loans, grants, and technical assistance to Social Equity Applicants;

3. conduct outreach that may be provided or targeted to attract and support Social Equity Applicants; and

4. assist with job training and technical assistance for Illinois residents in Disproportionately Impacted Areas.

c) The Cannabis Social Equity Program includes the Business Loan and Financial Assistance Program through which the Department will undertake the following activities:

1. Subject to the availability of funding, the Department will provide term loans and lines of credit on a low or no interest basis to eligible Illinois businesses that are seeking or have received licensure under the Act.

2. Applications will be accepted following an announcement on the Department's website. The Department will prioritize loans and lines of credit based on market entry dates, demand, the availability of funding, and the extent to which the financial support furthers the purposes of the Act.

3. The Department may issue conditional commitment letters to Social Equity Applicants to support applications for licensure.

4. The Department may enter into agreements with financial institutions and other sources of capital to leverage additional funding for Qualified Social Equity Applicants or to otherwise facilitate social equity in the cannabis industry.

14 Ill. Adm. Code 650.15 Definitions

The following definitions are applicable to the Cannabis Social Equity Program.

"Act" means the Cannabis Regulation and Tax Act [410 ILCS 705].

"Adult Use Dispensing Organization License" means a license issued by the Department of Financial and Professional Regulation that permits a person to act as a dispensing organization under the Act and any administrative rule made in furtherance of the Act. [410 ILCS 705/1-10]

"Agreement" means a loan or line of credit agreement under the Program.

"Applicant" means a person that intends to apply or has applied for licensure under the Act as a Social Equity Applicant.

"Basic Wage" means compensation for employment that is no less than the legal minimum wage of the jurisdiction in which the person is employed. Basic wage shall not include overtime pay, bonus pay, stock options, awards or any other equity-based incentive, unreimbursed employee expenses, piecemeal rate of pay, or any form of deferred compensation.

"Borrower" means a Qualified Social Equity Applicant that has entered into an agreement with the Department or a financial institution partner under the Business Loan and Financial Assistance Program.

"Business Applicant" means an applicant or a Social Equity Applicant who is seeking to participate in the Business Loan and Financial Assistance Program.

"Business Loan and Financial Assistance Program" or "Program" means the loan and line of credit Program, designed to promote social equity within the Illinois cannabis industry, set forth in this Part.

"Cannabis Business Establishment" means a cultivation center, craft grower, processing organization, dispensing organization, or transporting organization. [410 ILCS 705/1-10]

"CI Act" means the Criminal Identification Act [20 ILCS 2630].

"Conditional Adult Use Dispensing Organization License" means a license awarded to top-scoring applicants for an Adult Use Dispensing Organization License that reserves the right to an Adult Use Dispensing Organization License if the applicant meets certain conditions described in the Act, but does not entitle the recipient to begin purchasing or selling cannabis or cannabis-infused products. [410 ILCS 705/1-10]

"Conditional Commitment Letter" means a letter from the Department indicating that an applicant has been provisionally approved for a loan or line of credit under the Program, subject to receipt of a license and meeting other requirements described in a conditional commitment letter.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"DFPR" means the Illinois Department of Financial and Professional Regulation.

"Disproportionately Impacted Area" means a census tract or comparable geographic area that:

satisfies, as determined by the Department, at least one of the following criteria:

the area has a poverty rate of at least 20%, according to the latest federal decennial census or the U.S. Census Bureau American Community Survey 5-Year Estimates, 2013-2017, whichever is more current;

75% or more of the children in the area participate in the federal free lunch program, according to reported statistics from the State Board of Education, if current and uniform statewide data is available;

at least 20% of the households in the area receive assistance under the Supplemental Nutrition Assistance Program, according to data from the U.S. Census Bureau American Community Survey 5-Year Estimates, 2013-2017; or

the area has an average unemployment rate, as determined by the Illinois Department of Employment Security, that is more than 120% of the national unemployment average, as determined by the United States Department of Labor, for a period of at least 2 consecutive calendar years preceding the date of the application; and

has high rates of arrest, conviction, and incarceration related to the sale, possession, use, cultivation, manufacture, or transport of cannabis. [410 ILCS 705/1-10]

"Financial Institution Partner" means a chartered bank, credit union, or other responsible source of financing that has entered into an agreement with the Department to provide funding to a Qualified Social Equity Applicant on behalf of or in tandem with the Department.

"Full-Time Employee" means an individual for whom a W-2 is issued by the applicant and who is employed for a basic wage for at least 35 hours each week.

"High Rates of Arrest, Conviction, and Incarceration" means an average annual rate of arrests that exceeds 30 per 10,000 residents of the census tract, according to population data from the latest U.S. Census Bureau American Community Survey 5-year estimates, 2013-2017, and arrest data maintained by the Illinois State Police for the period of January 1, 2009 through May 8, 2019. When at least 20% of arrests by an arresting agency have arrestee address information, those arrests without arrestee address information will be assigned to a census tract as follows:

the distribution of each arresting agency's arrests with known addresses shall be determined for each census tract within that agency's jurisdiction (each tract's share of the total known addresses for that arresting agency being that census tract's "census tract share" for that arresting agency);

the number of arrests with unknown addresses for each arresting agency shall be multiplied by each tract's census tract share, with the product of each calculation being allocated to each census tract as an arrest (each such allocation being an "imputed arrest" for that census tract and arresting agency); and

the imputed arrest for each census tract will be summed across all arresting agencies, with the total being added to the known arrests in each census tract summed across all arresting agencies to arrive at each census tract's total number of estimated arrests for that census tract over the period.

However, if uniform statewide data on annual rates of conviction and incarceration is unavailable, the Department may use an average annual rate of persons being released onto parole or mandatory supervised release for offenses eligible for expungement under CI Act Section 5.2 that exceeds 1 per 10,000 residents and has a minimum of 5 persons being released onto parole or mandatory supervised release for offenses eligible for expungement under the Act between July 1, 2009 and August 23, 2019), according to population data from the latest U.S. Census Bureau American Community Survey 5-year estimates, 2013-2017, and data maintained by the Illinois Department of Corrections for the period of July 1, 2009 through August 23, 2019.

"License" means any of the Cannabis Business Establishment licenses established under the Act.

"Member of an Impacted Family" means an individual who has a parent, legal guardian, child, spouse, or dependent, or was a dependent of an individual who, prior to the effective date of the Act, was arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the Act. [410 ILCS 705/1-10]

"Ordinary and Necessary Expenses" are those expenses incurred in day-to-day operations that are appropriate, helpful to the success of the business, and approved by the Department.

"Organizational and Ownership Records" means records requested by the Department to verify the bona fide ownership and control of an applicant. These records may include, but are not limited to:

a Table of Organization, Ownership and Control as described in Section 15-50 of the Act;

articles of incorporation or organization, trust agreement, partnership agreement, joint venture agreements and the like, including any exhibits to these documents;

operating agreement, articles of partnership, corporate bylaws and the like, including any exhibits;

capitalization tables and other records of ownership interests;

to the extent any owner, member, partner, or trustee of the applicant is a corporate entity, the governing documents of that entity and records showing its owners;

copies of all guarantees to which the applicant is a party;

licensing or franchise agreements; and

any other information requested by the Department to identify ownership or any significant beneficial interests in the applicant.

"Ownership and Control" means ownership of at least 51% of the business, including corporate stock if a corporation, and control over the management and day-to-day operations of the business and an interest in the capital, assets, and profits and losses of the business proportionate to percentage of ownership. [410 ILCS 705/1-10]

"Pay Stub" means a written receipt that shows hours worked, rate of pay, overtime pay and overtime hours, gross wages, an itemization of all deductions, and wages and deductions for the year to date for an employee.

"Person" means a natural individual, firm, partnership, association, joint stock company, joint venture, public or private corporation, or limited liability company, or a receiver, executor, trustee, guardian, or other representative appointed by order of any court. [410 ILCS 705/1-10]

"Qualified Social Equity Applicant" means a Social Equity Applicant who has been awarded a conditional license under the Act to operate a Cannabis Business Establishment. [410 ILCS 705/1-10]

"Residency Records" means records requested by the Department to verify an applicant's eligibility to participate in the Program. These records may include, but are not limited to:

a signed lease agreement that includes the applicant's name;

a property deed that includes the applicant's name;

records reflecting government housing or other assistance that contain the applicant's name and address;

school records;

a voter registration card;

an Illinois driver license, an Illinois Identification Card, or an Illinois Person with a Disability Identification Card;

paycheck stubs;

utility bills;

military service records showing the member's state of legal residency or home of record;

proof of receipt of a homestead exemption for Illinois property (see 35 ILCS 200/15-175);

a certification of homeless status during the time relevant for consideration;

the applicant's most recent State tax return showing the applicant is subject to the Illinois Income Tax and the Personal Property Tax Replacement Income Tax as a resident of Illinois; or

other proof that is generally accepted by DFPR, the Department of Agriculture (DOA), the Department of Revenue, or the Illinois Secretary of State to establish a person's status as a resident in Illinois and that is approved by the Department.

"Social Equity Applicant" means an applicant that is an Illinois resident that meets one of the following criteria:

an applicant with at least 51% ownership and control by one or more individuals who:

have resided for at least 5 of the preceding 10 years in a Disproportionately Impacted Area;

have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the CI Act; or

are members of an impacted family; or

for applicants with a minimum of 10 full-time employees, an applicant with at least 51% of current employees who:

currently reside in a Disproportionately Impacted Area; or

have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the CI Act or member of an impacted family. [410 ILCS 705/1-10]

14 Ill. Adm. Code 650.20 Fees

a) The Department may charge a borrower a closing fee of up to $5,000, which may be paid at closing or, in the case of a term loan, added to the principal balance of the loan.

b) If, during the term of an Agreement, a borrower transfers, sells, or grants its license within 5 years after it was issued to a person or entity that does not qualify as a Social Equity Applicant, the transfer agreement shall require the new license holder to pay the Department a Program closeout fee of up to $10,000 in addition to the balance of the loan or line of credit.

c) If, during the term of an Agreement, a borrower ceases to meet the criteria of a Social Equity Applicant, the Department may accelerate repayment of the balance of the loan or line of credit and require the borrower to pay a Program closeout fee of up to $10,000.

14 Ill. Adm. Code 650.25 Application Cycle

Applications under the Program will be accepted until allocated Program funds are exhausted, subject to the availability of funding as determined by the Department. Funding decisions will also be subject to market entry or license issuance dates and demand for financial support. The Department will supply an application package upon request.

14 Ill. Adm. Code 650.30 Loan and Financial Assistance Program Application Documentation

Receipt of an application to the Program does not commit the Department to award a loan or line of credit or to pay any costs incurred by a Business Applicant in preparation of an application. Written applications will be required and must be submitted on the standard application form provided by the Department.

a) Applications shall be submitted to the Department office location identified on the application. The application for loans and lines of credit will include:

1. Social Equity Applicant Status Information

A) DFPR or DOA Certification shall be provided. Certification means any letter or other written documentation from DFPR or DOA verifying the applicant's status as a Social Equity Applicant or a Qualified Social Equity Applicant for a license issued by that agency. This verification may be provided at any time prior to entering into the loan or line of credit agreement.

B) The Business Applicant shall provide:

i) Proof of the Business Applicant's Illinois Residency. The proof must consist of at least two residency records. Residency will be verified at the time of application to the Program and certified by the borrower at closing. The Department may require more than two residency records to confirm eligibility.

ii) Owner Information. If the Business Applicant's eligibility is based on the majority of its owners having resided in a Disproportionately Impacted Area, the Business Applicant shall provide, for each owner who is relevant to the eligibility determination, the following:

• at least two residency records that establish residency in a Disproportionately Impacted Area for 5 of the 10 years preceding the application; and

• organizational and ownership records requested by the Department.

iii) Eligibility Documentation. If the Business Applicant's eligibility is based on the majority of its owners having been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the CI Act or being a member of an impacted family, the Business Applicant shall provide, for each owner who is relevant to the eligibility determination, a record of the arrest, conviction or adjudication from the responsible legal authority. If an owner is a member of an impacted family, the Business Applicant may be required to provide proof (e.g., copies of birth certificates or other records) of the owner's relation to the individual who was arrested for, convicted of, or adjudicated delinquent for such an offense.

iv) Employee Information. If the Business Applicant has at least 10 full-time employees at the time of its application, it may be considered a Social Equity Applicant if at least 51% of its full-time employees reside in a Disproportionately Impacted Area or have been arrested for, convicted of, or adjudicated delinquent for any offense that is eligible for expungement under the CI Act or a member of an impacted family. A Business Applicant eligible under this criterion shall provide, for each relevant employee:

• a W-2 issued to the employee by the Business Applicant and the two most recent pay stubs if the employee was first employed by the Business Applicant prior to January 1, 2019. If an employee was first employed by the Business Applicant after January 1, 2019, then the Business Applicant may provide a copy of the W-4 and the two most recent pay stubs. "Most recent" means the two regular pay periods most proximate to the date the application is submitted to the Department. In lieu of W-4s, a Business Applicant may submit copies of the New Hire Reporting Form that it submitted to the Illinois Department of Employment Security for that employee;

• the Business Applicant's most recent payroll run; and

• the residency records for the employee or the arrest, conviction or adjudication records. If the employee is a member of an impacted family, the Business Applicant shall also provide proof of the employee's relation to the individual who was arrested for, convicted of, or adjudicated delinquent for an offense eligible for expungement under the CI Act.

v) Impact of Cannabis-Related Laws. The Business Applicant shall provide a brief narrative of how the Business Applicant, its owners, or its employees were directly and adversely impacted by the enforcement of cannabis-related laws and any supporting documents (e.g., criminal history or case records, affidavits of impacted individuals, public records and news articles; evidence of business or employment opportunities being denied because of criminal history, etc.).

vi) Maintenance of Status. A statement that a Business Applicant approved for a conditional commitment letter will maintain its status as a Social Equity Applicant.

2. Company Information

A) History of the Company. A brief history of the Business Applicant and the employee headcount in each year the business has been in operation (limited to the past five years). If the Business Applicant has been in operation for less than one year, only the current headcount is required.

B) Market Information/Business Plan. To the extent available, information on the Business Applicant's intended products or services and identification of existing and potential major customers and competitors. A Business Applicant may substitute a general business plan for a market analysis.

C) Project Summary. A description of what the Business Applicant intends to do if it receives a license under the Act and funding under the Program, including the type of license the Business Applicant is seeking under the Act and when it was applied for or when the Business Applicant plans to apply for it.

D) Need for Funds. A statement and any supporting justification of a need for support under the Program. The request shall also identify the amount of financial support it seeks from the Department. The request shall also detail how funds borrowed from the Department could be secured and repaid (including the anticipated timing for use and repayment of the funds), and how the Business Applicant intends to use any borrowed funds. The Business Applicant should also indicate whether it would prefer a term loan or access to a line of credit under the Program and demonstrate why such an arrangement would be beneficial.

E) Financial Information. If the Business Applicant has been operating for more than six months, it shall provide historic financial statements for each of the past three years (to the extent it was operating), if the Business Applicant is not a new plant start-up or new business opportunity (i.e., has not been in operation for more than six months), and interim statements dated no more than 90 days prior to application that include:

i) profit and loss (income) statements;

ii) balance sheets; and

iii) disclosure of contingent liabilities (if applicable).

F) Five-Year Projections. Five-year projections of the profit and loss statement and a breakdown of projected expenses and monthly cash flow over a five-year period.

G) Site Map (if known). An outline of the general location of the project on a site map, including the location of any floodplain areas. If the site is not known at the time of application, potential sites may be submitted.

H) Description of Machinery and Equipment (if applicable). Major equipment or classes of equipment to be acquired with the Department's Program funds identified; for acquisition of new machinery and equipment, attachments of reliable vendor cost estimates; for moving and installation costs, attachments of written estimates; and for used machinery and equipment acquisition, an appraisal demonstrating that the fair market value is in line with the purchase price, and a specific description of the equipment, including serial numbers if available.

I) Company Management. A listing of those individuals who are responsible for the management of the company, their positions and responsibilities, and resumes of key senior individuals (e.g., owner, partner, president, vice president, treasurer) at the company location. Also include information about any long-term management or operational support from investors, incubators, or community-based organizations (or other sources of external support).

J) Organizational and Ownership Records. As to the extent the Business Applicant did not provide organizational and ownership records as part of application, the Business Applicant shall provide organizational and ownership records sufficient to explain the legal structure of the Business Applicant's business and to identify all owners and persons having a beneficial interest in the applicant and its business.

K) Letters of Commitment (if any). Commitment letters documenting all sources of funding. Loans from investors or lenders must have language indicating the investment or loan amount, the specified term and interest, collateral, conditions attendant to the investment or loan, and whether the investment or loan is approved or contingent.

L) Any additional records or information to verify eligibility.

b) The Department may, at its discretion, accept documentation in place of records listed in subsection (a)(1) when the record has been destroyed, lost, or is otherwise unavailable in the time needed to apply to the Program and for licensure under the Act.

c) Should any information change between the time of application submission and the time the Department and the Business Applicant enter into an Agreement, the Business Applicant shall notify the Department of any change.

14 Ill. Adm. Code 650.35 Business Loan and Financial Assistance Application Evaluation

The Department will evaluate eligible applications taking into consideration funding available for the Program, demand to participate in the Program, and availability of licenses under the Act. The Department will also consider a Business Applicant's creditworthiness, the potential economic benefit of the project, and the extent to which a Business Applicant demonstrates that the company, its owners, or its employees have been directly and adversely impacted by the enforcement of cannabis-related laws. Specific terms of any loan or line of credit, including the amount, interest rate, security required, and performance measures, will be determined based on the needs and risk profile of each Business Applicant.

a) The Department will only evaluate completed applications. The Department will deem an application complete only after it has received all information it has requested from the Business Applicant.

b) General Criteria for Evaluating Applications. The Department will screen all applications to determine that all requirements of the application package have been addressed. A Business Applicant will be notified of deficiencies in its application and given an opportunity to correct any deficiencies through submission of additional documentation. Department staff will conduct a technical and financial evaluation of each application.

1. Technical Evaluation. Each application will be reviewed to determine whether issuance of a loan or line of credit will further the goals of the General Assembly as set forth in Section 7-1 of the Act. The evaluation will address the following criteria:

A) Evidence of Need for Program Funding. The Business Applicant must demonstrate the need for Program funds, including evidence that a loan or line of credit will improve the likelihood of the Business Applicant receiving a license under the Act or that the Business Applicant faces barriers to obtaining sufficient working capital to maintain licensure or operate a successful business without the Department's support. The Department will also evaluate whether the proposed use of funds is consistent with the purposes of the Act.

B) Project Implementation Readiness. The Business Applicant must demonstrate project readiness, including identifying loans and investments from all lenders and investors (or any such investment that is contingent on receipt of a license or conditional commitment letter); a time schedule for project initiation; commitments from material project partners; and cost estimates that support proposed project costs.

C) Employment Impact. The application shall provide evidence of: employment impact/opportunity (e.g., potential job creation), including a description of the type and the number of any jobs to be created; the average salary or wage of each position category; and any evidence that the jobs will generate additional wealth or employment opportunities for persons living in Disproportionately Impacted Areas or who have been adversely impacted by the enforcement of cannabis-related laws.

D) Social Equity Applicant Status. The Business Applicant must demonstrate that it falls within the definition of Social Equity Applicant. It must also demonstrate that its owners or employees have been directly and substantially adversely impacted by enforcement of cannabis-related laws. Funding may be prioritized for Business Applicants with owners who have arrests or convictions for offenses eligible for expungement under the CI Act. The Department will also consider the extent to which the Business Applicant demonstrates a commitment to retain, hire and promote residents of Disproportionately Impacted Areas or other persons directly and substantially adversely impacted by the enforcement of cannabis-related laws.

2. Financial, Management, and Operational Evaluation. The Department will conduct an analysis of the Business Applicant's financial information, which may consider the liquidity and debt coverage for the project, ability of the company to manage debt, business trends, and projected earnings. The Department will also consider the extent to which the Business Applicant demonstrates commitments from investors, incubators, community-based organizations, or other external partners to provide long-term operational or management support to the Business Applicant to enable it to secure and maintain licensure. The Department may consider the credit risk of the Business Applicant's owners and officers and the presence of management or a workforce with experience in the cannabis business or comparable industries.

14 Ill. Adm. Code 650.40 Selection for Funding

a) Applications that best meet the objectives of the Program and demonstrate the greatest potential for benefit to persons and communities directly and adversely impacted by enforcement of cannabis-related laws may be issued conditional commitment letters or approved to participate in the Program. The conditional commitment letters may be provided to and relied upon by DFPR or DOA in scoring applications for licensure under the Act. The conditional commitment letters will indicate that the Business Applicant is eligible for funding under the Program if it is issued a license under the Act. The amount of funding will be expressed as a minimum amount, but the total funding amount will be determined after licenses have been issued.

b) Funding Terms. The amount of funding available to a Business Applicant, the repayment terms, the applicable interest rates, and other terms will be determined after the Business Applicant is verified to be a Qualified Social Equity Applicant.

c) Conditions to Close. To proceed to closing, a Qualified Social Equity Applicant must maintain its eligibility for the loan or line of credit and comply with all pre-closing instructions. The Department will verify that the Business Applicant remains eligible prior to closing, and it may decline issuance of a loan or line of credit if the Business Applicant ceases to be a Social Equity Applicant, if funding from the Department is not necessary due to additional investment in the company post-license issuance, or if the Business Applicant is unable to fulfill all terms of the loan or line of credit agreement.

14 Ill. Adm. Code 650.45 Loan and Financial Assistance Administrative Requirements

a) Agreement. A borrower must comply with all terms of the loan or line of credit Agreement, as applicable. A borrower must be able to make all representations, warranties, and covenants set forth in the Agreement. In the event of default under the Agreement, the Department and the borrower may enter into a forbearance agreement at the sole discretion of the Department.

b) Security. The Department may protect its interests in the event of default by requiring personal guarantees from the borrower's principals (all individuals/entities owning or controlling 20% or more of the borrower) or other persons with a material interest in the borrower.

c) Use of Proceeds. The funding made available is to be used for the borrower's ordinary and necessary expenses to start and operate a cannabis business establishment. Proceeds may not be used on capital expenditures unless otherwise approved by the Department.

d) Payments. Payments shall be due and payable to the Department in the method and times specified in the Agreement. Unless otherwise provided in the Agreement, all payments shall be applied first to interest and then to principal on all simple interest loans. All payments on amortized loans will be applied to the amortization schedule as stated.

e) Reporting. A borrower shall provide, at least quarterly, information and reports required by the Department (e.g., reports on job creation/retention; uses of proceeds; financial statement of assets and liabilities; statements of status as a Qualified Social Equity Applicant; and changes in owners, officers and directors).

f) Monitoring and Evaluation. A borrower must permit any agent authorized by the Department, the Illinois Attorney General, the Illinois Auditor General, or any other legal authority, upon presentation of credentials, to have full access to and the right to examine any documents, papers, and records of the borrower involving transactions related to the Program.

g) Records. A borrower shall keep detailed records of the project and the use of proceeds. A borrower of more than $100,000 is required to furnish to the Department, with the periodic submission of financial statements following the expenditure of project funds, a copy of any audit reports received during a specified period. The Department, pursuant to the Agreement, may require a borrower to undergo an audit to verify the use of loan or line of credit proceeds.

h) Performance Requirements. The Department may require a borrower to meet certain economic development objectives (e.g., create a minimum number of full-time jobs within a certain time or achieve certain job quality standards identified in an Agreement).

i) Transfer of License. Loans and lines of credit will not be transferrable, and any outstanding amount owed by a borrower at the time of a transfer of its license shall be paid by the new license holder, along with any waived fees. (See Section 7-25 of the Act.)

j) Confidentiality. Any documentary materials or data made available or received by the Department or any agent of the Department shall be deemed confidential and shall not be deemed public records to the extent that the materials or data consists of trade secrets, commercial or financial information regarding the operation of the business conducted by the applicant or borrower, or any information regarding the competitive position of a business in a particular field of endeavor, or any information, the disclosure of which would be an unwarranted invasion of personal privacy (e.g., criminal history record information or information about the impact of the enforcement of cannabis-related laws on a specific person or family). Nothing in this subsection shall prevent the Department from sharing information with other governmental entities. The names of borrowers and the amounts of any financial assistance shall be considered a public record.

Part 651 Cannabis Business Incubator and Sponsorship Programs

14 Ill. Adm. Code 651.10 Purpose

This Part identifies the eligibility requirements and process for Early Approval Adult Use Dispensing and Cultivation Organization Licensees' participation in the Cannabis Business Incubator and Sponsorship Programs.

14 Ill. Adm. Code 651.15 Definitions

The following definitions are applicable to the Cannabis Business Incubator and Sponsorship Programs:

"Act" means the Cannabis Regulation and Tax Act [410 ILCS 705]. Article 15 of the Act authorizes these programs.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Host" means:

an Early Approval Adult Use Dispensing or Cultivation Organization License holder that provides a loan of at least $100,000 and provides mentorship to one or more licensees that qualify as Social Equity Applicants; or

a Social Equity Applicant intending to seek a license as part of a Social Equity Inclusion Plan.

"Incubate" means providing direct financial assistance and training necessary to engage in licensed cannabis industry activity similar to that of the host licensee. [410 ILCS 705/15-15(b)(8)(d) and 15-20(d)(4)]

"Loan" means a traditional financial arrangement governed by a written document establishing the terms of repayment and term of that document. Loan, as used in the Cannabis Business Incubator Program, does not include instruments of convertible debt or other forms of financial arrangements differing from that of a traditional loan. Transfers of these loans are prohibited.

"Mentor" means an Early Approval Adult Use Dispensing or Cultivation Organization license holder that participates in the Cannabis Business Sponsorship Program.

"Mentorship" means a mentor providing business guidance in the start-up and operation of a successful cannabis business. Mentorship can include, but is not limited to, offering advice on developing a business plan, cultivating cannabis products, securing real estate, developing a cannabis product supply chain, soliciting investment in cannabis businesses, navigating legal compliance for cannabis businesses, and networking with other participants in the cannabis industry.

"Ownership Interest" means a substantial economic benefit gained by the Early Approval Adult Use Dispensing or Cultivation Organization Licensee from a Social Equity Applicant being incubated or sponsored by the licensee, but not to include the payment of fair market value consideration for goods provided by the host.

"Sponsor" means an Early Approval Adult Use Dispensing Organization License holder that enters into a no interest loan agreement with a value of at least $200,000 to a Social Equity Applicant that intends to seek a license.

14 Ill. Adm. Code 651.20 Cannabis Business Incubator Program

a) Through the Cannabis Business Incubator Program, the Department may approve hosts that provide the following required services to a Social Equity Applicant intending to seek a license, or a licensee that qualifies as a Social Equity Applicant. All such services shall commence by March 31, 2020 and shall be substantially completed by March 31, 2021. The host shall:

1. agree to provide incubation services to a Social Equity Applicant intending to seek a license, or a licensee that qualified as a Social Equity Applicant for at least one year. Those services shall include mentorship;

2. provide a loan of at least $100,000, with the loan complying with the following conditions:

A) the interest rate shall not exceed 12% and the repayment term shall be no less than 5 years, with the first payment being due no less than one year from the execution of the loan documents. If the host charges fees in connection with the loan, then the annual percentage rate of the loan shall not exceed 12%;

B) if the Social Equity Applicant defaults on this loan, no penalties, fees, or costs shall be charged and the borrower's liability shall not exceed the principal balance and accrued interest; and

C) securing this loan with a controlling interest in the Social Equity Applicant's license (whether by agreeing to use the license as collateral or requiring a majority equity pledge of the borrower's owners, or by any other mechanism to secure control over a license upon default under the loan) is strictly prohibited;

3. in the event the host does not charge interest on the loan, hold no more than a 10% ownership interest in the licensee; and

4. abide by all other statutory restrictions on ownership, including, but not limited to, those expressed in Section 15-30(k) of the Act.

b) The Department shall review those hosts engaged in the incubation of a Social Equity Applicant intending to seek a license, or a licensee that qualifies as a Social Equity Applicant. Hosts with multiple licenses are allowed to combine the loan maximums of this Section into a lesser number of Social Equity Applicants. For example, a host that possesses 4 licenses may provide a total of $400,000 in loans to 2 Social Equity Applicants.

c) Incubation services shall be provided to a Social Equity Applicant engaging in a similar licensed cannabis activity as the host. For example, a medical cannabis dispensing organization that obtains an Early Approval Adult Use Dispensing Organization License shall incubate a Social Equity Applicant that obtains or is seeking to obtain a Conditional Adult Use Dispensing Organization License.

d) During the term of the incubation services, hosts shall not enter into agreements with Social Equity Applicants in which the host receives payment for the services provided to the Social Equity Applicant, including, but not limited to, legal fees. This prohibition does not include real estate agreements in which the Social Equity Applicant agrees to lease or license space from the host (or an affiliate of the host) at no higher than market rates for cannabis-related business. The term of any lease or license agreement must not exceed the time necessary to complete the incubation services unless the Social Equity Applicant has the option to terminate the lease or license after one year of incubation services without payment of any fee or penalty. Additionally, delinquency on real estate lease or license payments cannot be the sole cause to default on any loan or for any action that would impair the Social Equity Applicant's continued licensure. Once the incubation services are complete, the host shall provide the Department, for 5 years, with documentation of any agreements related to payments for services between the host and incubated business, including, but not limited to, revenue sharing agreements and service contracts. These agreements would result in the host acquiring ownership interest in the incubated business that may trigger the application of the ownership cap. (See Sections 15-36(d) and 20-30(j) of the Act.)

e) Hosts are prohibited from charging fees related to loans and services provided through the Cannabis Business Incubator Program.

f) Hosts shall be required to document all incubation-related services provided to Social Equity Applicants. These records shall detail the hours and types of services provided. Those services include, but are not limited to, mentoring, training, networking, assistance with real estate, and acquisition of financing. Additionally, hosts shall keep records on loans provided to Social Equity Applicants, loan terms, and history of repayment.

g) The organizational and ownership records must show that the revenue, profits or losses of the Social Equity Applicant are realized by those owners that satisfy the requirements of being a Social Equity Applicant. Contracts that provide for substantial economic benefit of a license to be realized by a third party shall not satisfy the social equity component of the Departmental staff review.

h) Application Process

1. Applications. Applications will be reviewed on a first-come, first-served basis, when the application is deemed complete in accordance with programmatic and application requirements.

2. Those applications that have been received by the Department and are incomplete shall not be reviewed until a complete application is received. Receipt of an incomplete application will not reserve an applicant's position in the Department's review process.

3. A staff review by the Department will be conducted to determine whether all the required information is contained in the application.

4. The applications shall be reviewed for the presence and totality of the following elements:

A) A comprehensive mentoring strategy to provide the incubated organization with assistance with:

i) Development of business plans;

ii) Marketing;

iii) Networking;

iv) Security plans;

v) Product handling;

vi) Design of physical space;

vii) Real estate acquisition; and

viii) Acquisition of capital beyond the loan, as required by subsection (a)(3).

B) Loan interest charged.

C) Any ongoing assistance to be offered to the Social Equity Applicant beyond the initial year of incubation.

D) A schedule of fees and expenses that may be charged as part of the program.

E) Any mentoring of Social Equity Applicants that was done prior to application should be reported in detail including any of the comprehensive mentoring strategy components under subsection (h)(4)(A).

5. Length of Review. Provided that all the required contents of the application are complete and adequate, the Department will notify the applicant within 45 days after the receipt of the complete application of its preliminary approval or denial.

i) Preliminarily Approved Incubator Programs; Reporting and Final Approval. Incubator programs that receive preliminary approval shall provide semiannual reports to the Department using the form provided by the Department. These reports shall include descriptions of services rendered to Social Equity Applicants, status of loan repayment, the progress of the incubated Social Equity Applicant in achieving viability, and any other information requested by the Department. The Department will review the report for completeness and to verify whether the host has continued to provide the preliminarily approved services. Each satisfactory report will be deemed a verified report. If a host does not submit a report or the Department cannot verify that the preliminarily approved incubator services were provided on a consistent basis throughout the reporting period, the Department may exclude that period (or any appropriate portion of the reporting period) from consideration in determining completion of the 12-month incubator program requirement.

1. Incubator programs shall submit two semiannual reports to the Department that will be due on the following dates:

A) October 15, 2020; and

B) April 15, 2021.

2. If a Social Equity Applicant does not complete the Incubator Program, the host shall:

A) find another Social Equity Applicant to incubate. If the host chooses this option, time spent incubating Social Equity Applicants shall be aggregated in order to meet the one year program requirement;

B) proceed with the Cannabis Business Sponsorship Program; or

C) make a contribution of the lesser of either 3% total sales during June 1, 2018 through May 31, 2019 or $100,000 to either the Cannabis Business Development Fund or to a community college for a cannabis training or education program.

3. If a Social Equity Applicant ends its participation in the incubation program after 6 months but before one year, the Department may deem the program complete if the Social Equity Applicant provides the Department with information sufficient to verify that the host was willing to continue the program, that the Social Equity Applicant voluntarily ended its participation and was satisfied with the services being offered, and that the Social Equity Applicant or its principals received no consideration to terminate participation in the program;

4. After the second semiannual report has been deemed verified, the Department will issue the host a final approval letter verifying completion of the minimum requirements of the Cannabis Business Incubator Program.

j) Records Retention. Hosts shall retain records relating to the Cannabis Business Incubator Program for 5 years from date of submission of the final quarterly report or from the date of the final approval letter, whichever is later.

k) Compliance with Laws; Notice to Department. Notice of any change in host status or participation in the Cannabis Business Incubator Program shall be sent to the Department in writing within 5 business days after the change takes effect.

l) Access to Legal Authorities; Audits. A host must permit any agent authorized by the Department, the Illinois Department of Agriculture, the Illinois Department of Financial and Professional Regulation, the Illinois Attorney General, the Illinois Auditor General, or any other legal authority, upon presentation of credentials, to have full access to and the right to examine any documents, papers and records of the hosts involving transactions related to the Program. The Department, at its own discretion, may require hosts to submit to an audit of all documentation related to the Cannabis Business Incubator Program, including, but not limited to, all logs of time spent on mentorship activities.

14 Ill. Adm. Code 651.25 Cannabis Business Sponsorship Program

a) Through the Cannabis Business Sponsorship Program, the Department may approve sponsors that provide the following required services to licensees that qualify as a Social Equity Applicant. The sponsors shall:

1. participate in the sponsorship program for at least 2 years; and

2. provide an interest-free loan of at least $200,000 to a Social Equity Applicant [410 ILCS 705/15-20 (d)(5)], with a period of disbursement to the Social Equity Applicant over no longer than 2 years. Repayment terms shall be no less than 5 years, with the first payment being due no less than one year from the execution of the loan documents. Loan funds shall be used for day-to-day operating expenses and shall not be used for specialized purposes, including, but not limited to, legal expenses.

b) Ownership Interest. An Early Approval Adult Use Dispensing Organization Licensee:

1. shall not take an ownership stake in the Social Equity Applicant [410 ILCS 705/15-15(b)(8)(E)]; or

2. that applies for a second site license shall not take more than a 10% ownership stake in any cannabis business establishment receiving sponsorship services for that site. [410 ILCS 705/15-20(d)(5)]

c) The restriction on ownership contained in Sections 15-15 and 15-20 of the Act does not prohibit hosts from entering into agreements with Social Equity Applicants in which the sponsor receives payment for the services provided to the Social Equity Applicant. For example, a sponsor may enter into an agreement in which the Social Equity Applicant acquires cannabis product and packaging from the host in exchange for a 2% share of the Social Equity Applicant's revenue that represents a fair market value for products provided. Revenue sharing agreements could lead to a determination of ownership triggering the application of the statutory limit on ownership.

d) Sponsors with multiple licenses are allowed to combine the loan maximums of this Section to benefit a smaller number of Social Equity Applicants. For example, a sponsor that possesses 3 licenses may choose to combine the maximum loan allowed by this Section for the 3 licenses to provide a total of $600,000 in loans to one Social Equity Applicant.

e) Sponsors shall be required to document any support services provided to Social Equity Applicants. These records shall detail the hours and the services. These services include, but are not limited to, mentoring, training, networking, and assistance with real estate and with acquisition of financing. Additionally, sponsors shall keep records on loans provided to Social Equity Applicants, loan terms, and history of repayment.

1. This documentation shall be compiled into a final report to be submitted to the Department at the end of the two-year sponsorship program. After review, the Department shall issue a letter verifying the completion of the minimum requirements of the program.

2. All records shall be kept for a period of 5 years after award of the license that triggered the social equity inclusion plan requirement.

f) Sponsors are prohibited from charging fees for activities undertaken, which may include, but are not limited to, space allocation as a part of the sponsor's Social Equity Plan. Nothing in this Section shall be construed to prohibit the Social Equity Applicant and the sponsor from entering into separate agreements for services-for-fee arrangements outside the Sponsor's Social Equity Plan, but those arrangements shall in no instance be connected to, or required as a part of, the Social Equity Applicant's participation in the Cannabis Business Sponsorship Program.

g) Application Process

1. Applications. Complete formal applications will be reviewed on a first-come, first-served basis, in accordance with programmatic and application requirements.

2. Those applications that have been received by the Department and are incomplete shall not be reviewed until the complete application is received. Receipt of an incomplete application will not reserve an applicant's position in the Department's review process.

3. Staff Review. A staff review by the Department will be conducted to determine whether all the required information is contained in the application.

4. Submission of Required Information

A) The applications shall include the following elements:

1. The granting of an interest-free loan to the Social Equity Applicant in the amount of at least $200,000 for each license sought under Sections 15-15 and 15-20 of the Act.

2. Listing of additional loans provided to Social Equity Applicants, beyond those required by this Section, if any, and interest rates charged on those loans.

3. Any ongoing assistance to be offered to the Social Equity Applicant beyond the initial year of sponsorship.

B) Length of Review. Provided that all the required contents of the application are complete and adequate, the Department will notify the applicant, within 45 days after the receipt of the complete application, of its approval or denial.

h) Access to Legal Authorities; Audits. A sponsor must permit any agent authorized by the Department, the Illinois Department of Agriculture, the Illinois Department of Financial and Professional Regulation, the Illinois Attorney General, the Illinois Auditor General, or any other legal authority, upon presentation of credentials, to have full access to and the right to examine any documents, papers, and records of the sponsors involving transactions related to the Program. The Department, at its own discretion, shall require sponsors to submit to an audit of all documentation related to the Cannabis Business Sponsorship Program, including, but not limited to, all logs of time spent on mentorship activities.

i) Compliance with Laws; Notice to Department. All activities undertaken under this Section shall be performed in compliance with all applicable laws. Notice of any change in sponsorship status or participation in the Cannabis Business Sponsorship Program shall be sent to the Department in writing within 5 business days after the change takes effect.

Part 670 Human Services Capital Investment Grant Program

14 Ill. Adm. Code 670.10 Purpose

The purpose of the Human Services Capital Investment Grant Program is to make capital improvement grants to human services providers serving low-income and marginalized populations [20 ILCS 605/605-1030(a)]. The Human Services Capital Investment Grant Program is established through a collaboration between DCEO and DHS. The Agencies will cooperate on program establishment and administration. DCEO shall be responsible for issuing and administering capital improvement grants to human services providers, either directly or indirectly through one or more intermediaries, subject to appropriation. DCEO will consult with DHS on the issuance of rules and the priorities for capital improvement grants to human services providers, based on available data.

14 Ill. Adm. Code 670.20 Definitions

"Agencies" means DCEO and DHS, collectively.

"Bondable Capital Improvements" means a specific class of capital improvement projects eligible to be funded by the Build Illinois Bond Fund and which meet the requirements of the Build Illinois Bond Act [30 ILCS 425].

"Build Illinois" means the Build Illinois Bond Fund [30 ILCS 105/5.160].

"Capital improvement" means a project with a purpose to physically expand or physically improve upon a facility owned or leased by a human services provider.

"Community-based provider" means a not-for-profit corporation (which may include a faith-based organization), that is representative of a community or a significant segment of a community and provides services directly to low-income or marginalized populations.

"DCEO" means the Department of Commerce and Economic Opportunity.

"DHS" means the Department of Human Services.

"DUNS Number" means a unique nine-digit identification number provided by Dun & Bradstreet for each physical location of an organization.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means the administrative rules of the Governor’s Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Grantee" means any human services provider applicant for a grant award under this program whose proposal is funded by DCEO either directly or through a subaward issued by an intermediary.

"Human Services Provider" means a not-for-profit corporation in good standing to operate in the State of Illinois that provides services directly to low-income or marginalized populations in one of the core program divisions of DHS − mental health, rehabilitation services, substance use prevention and recovery, family and community services, developmental disabilities, early childhood and any additional core program areas DHS creates. A "human services provider" is not required to be a current or former recipient of grant funds from DHS. A "human services provider" includes, but is not limited to, domestic violence shelters; rape crisis centers; comprehensive youth centers; Teen Responsibility, Education, Achievement, Caring and Hope (Teen REACH) providers; supportive housing providers; developmental disability community providers; behavioral health providers; and other community-based providers [20 ILCS 605/605-1030(a)].

"Intermediary" means an organization in good standing to operate in the State of Illinois, secured through an agreement with DCEO, to provide assistance for administration of the program which may include issuing subawards to eligible human services providers.

"Low-income" means an individual who:

receives, or in the past 6 months has received, or is a member of a family that is receiving or in the past 6 months has received, assistance through:

the supplemental nutrition assistance program established under:

the Food and Nutrition Act of 2008 (7 U.S.C. 2011),

the program of block grants to States for temporary assistance for needy families program under Title IV of the Social Security Act (42 U.S.C. 601),

the supplemental security income program established under Title XVI of the Social Security Act (42 U.S.C. 1381), or

State or local income-based public assistance;

is in a family with total family income that does not exceed the higher of:

the poverty line; or

70 percent of the lower living standard income level;

is a homeless individual (as defined in 34 U.S.C. 12473(6)), or a homeless child or youth (as defined in 42 U.S.C. 11434a(2));

receives or is eligible to receive a free or reduced price lunch under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751);

is a foster child on behalf of whom State or local government payments are made; or

is an individual with a disability whose own income meets the requirements of this definition; however, the individual is permitted to be a member of a family whose income does not meet these requirements.

"Lower living standard income level" means that income level (adjusted for regional, metropolitan, urban, and rural differences and family size) determined annually by the U.S. Secretary of Labor.

"Marginalized" means individuals, groups and communities that have experienced disparities or disadvantages in obtaining assistance or services.

"Not-for-profit corporation" means an organization that is registered as a not-for-profit corporation and is in good standing with the Illinois Secretary of State.

"Poverty line" means the level of income (as defined by the Office of Management and Budget, and revised annually in accordance with 42 U.S.C. 9902(2)) applicable to a family of the size involved.

"Program" means the Human Services Capital Investment Grant Program.

"Public assistance" means federal, State, or local government cash payments for which eligibility is determined by a needs or income test.

"Rebuild Illinois" means the Rebuild Illinois Projects Fund.

"State" means the State of Illinois.

"Subaward" means a grant award provided by an intermediary to a human services provider for the purpose of carrying out a capital improvement project.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR 200.

Chapter I Department of Commerce and Economic Opportunity

Part 670 Human Services Capital Investment Grant Program

14 Ill. Adm. Code 670.30 Use of Intermediaries

DCEO may enter into agreements or contracts with one or more intermediaries to assist in administering the program, including, but not limited to, issuing subawards to human services providers through a grant award from DCEO. DCEO may also enter into an inter-governmental agreement with DHS or other State agencies to provide funds to DCEO to secure an intermediary. The nature of the services provided shall determine whether the arrangement with an intermediary is a grant, procurement or other relationship.

14 Ill. Adm. Code 670.40 Funding Sources

a) The Build Illinois Bond Fund and the Rebuild Illinois Projects Fund are the sources of funding for the grants awarded to human services providers for capital improvement projects [20 ILCS 605/605-1030(a)], unless State and federal laws permit another funding source.

b) Funding for grants or contracts issued to intermediaries to assist with administration of the program may be provided by any source of funding as permitted by State and federal law.

14 Ill. Adm. Code 670.50 Eligible Capital Improvement Project Activities

a) DCEO shall make grant awards through a competitive application process to eligible human services providers as described in this Part, contingent on available funds. The grant awards shall be made to support capital improvements to facilities located in Illinois and utilized by human services providers to deliver services to low-income or marginalized populations. The specific types of capital improvement project activities permitted will be dependent on the funding source.

1. Grant awards funded by Build Illinois must be used by the grantees for bondable capital improvements. A bondable capital improvement is a project for which:

A) The activities improve upon or expand a facility owned or leased by a human services provider and generally include, but are not limited to, one or more of the following purposes:

i) architectural planning and engineering design;

ii) demolition (in preparation for additional work);

iii) site preparation and improvement;

iv) utility work;

v) new construction of buildings and structures;

vi) reconstruction or improvement of existing buildings or structures;

vii) original furnishings and durable equipment;

viii) replacement of currently utilized assets by a better asset; or

ix) expansion of existing buildings or facilities; and

B) The useful life of the project is greater than or equal to the average life of the bond issuance from which the project is financed. Most of the State's bonds are issued as 25-year level principal issues with an average life of approximately 13 years.

2. Grant awards funded by Rebuild Illinois must be used by the grantees for capital improvements. A capital improvement funded by Rebuild Illinois is a project for which:

A) The activities physically expand or improve upon a facility owned or leased by a human services provider and generally include, but are not limited to, one or more of the following purposes:

i) building maintenance projects;

ii) addressing building life-safety code deficiencies;

iii) architectural planning and engineering design;

iv) demolition (in preparation for additional work);

v) site preparation and improvement;

vi) utility work;

vii) new construction of buildings and structures;

viii) reconstruction or improvement of existing buildings or structures;

ix) original furnishings and durable equipment;

x) replacement of currently utilized assets by a better asset; or

xi) expansion of existing buildings or facilities.

3. Activities for both Build Illinois and Rebuild Illinois do not include:

A) capital improvements made to a personal residence even if it is used by the human services provider to perform services; or

B) using grant funds to acquire land or a building or to conduct site selection.

b) DCEO may issue grant awards to human services providers either directly (see Subpart B) or through subawards issued by an intermediary (see Subpart C).

c) DHS shall establish standards for determining the priorities concerning the necessity for capital facilities for the provision of human services based on data available to DHS [20 ILCS 605/605-1030(c)].

1. DHS will consult with DCEO and engage with human services providers across the State to determine the priorities and capital improvement needs of the providers.

2. DCEO will utilize the data gathered by DHS, and based on the funding available, will set capital improvement project priorities for each round of funding for the program.

d) A cash match of grant funds issued by DCEO under this Part will not be required of grantees.

14 Ill. Adm. Code 670.60 Eligible and Ineligible Grant Expenditures for Human Services Providers

Grant expenditures for capital improvement projects must comply with GATA, the Uniform Guidance and any applicable funding source, be reasonable and necessary, and support the allowable grant project activities set forth in Section 670.50. Specific eligible grant costs will be set forth in the applicable NOFO, dependent on the funding source and the project priorities (Section 670.50(c)).

a) Grants funded by Build Illinois

1. Expenditures for grants funded through Build Illinois must support bondable capital improvement projects (Section 670.50(a)(1)) for facilities owned or leased by human services providers. Eligible bondable capital improvement project expenditures include the following characteristics:

A) The expenditures are not recurring. In this context, recurring expenses are defined as those costs which are incurred at frequent or regular periodic intervals within the initial term of financing, and which would cause an accumulation of costs for the same expenditure purpose before the expenses initially incurred for such purpose are completely amortized;

B) The project is a physical improvement to the human services provider's facility and is of a durable nature not consumed in use;

C) The project reflects an extended useful life or longevity to the human services provider's facility, which in effect confers long-term (non-transitory) benefits to the citizens of the State of Illinois;

D) The project purposes are not subject to inherent risk of failure, rapid technological obsolescence, or primarily intended to fulfill temporary requirements or needs;

E) The project appreciably increases, improves, or enhances the equitable interests of the of the human services provider's facility, which in turn benefits the State of Illinois, or its legally constituted subdivisions, in the property, land, building or asset to be developed, constructed or improved; and

F) The expenditures are considered as internal components of a project, which if considered separately may not reflect the extended useful life, but will be bondable provided that such components are initially required and appreciably contribute to effective functioning, or are otherwise incapable of separation from a more complex unit which in itself is bondable.

2. Eligible budget cost categories for grants funded by Build Illinois will include the following:

A) Design/Engineering (limited to 10-15% of total grant budget);

B) Wiring/Electrical;

C) Equipment/Materials/Labor;

D) Paving/Concrete/Masonry;

E) Construction Management/Oversight (limited to 10-15% of total grant budget);

F) Mechanical System;

G) Excavation/Site Preparation/Demolition;

H) Plumbing;

I) Other Construction Expenses; and

J) Contingency (limited to maximum 10% of total grant budget).

3. Any expenditures by human services providers funded through Build Illinois that are not within the eligible characteristics and cost categories set forth in this Section will be considered ineligible including, but not limited to, the following:

A) Operational and administrative expenses;

B) Lease payments for rental of equipment or facilities;

C) Costs of staff or resident labor and material;

D) Expenditures to acquire or construct temporary facilities;

E) Purchase of automobiles, trucks, farm equipment, boats or rolling stock;

F) Livestock or laboratory animals;

G) Unpredictable or unusual legal expenses;

H) Costs for archaeological digs, research or exploration;

I) Costs related to the acquisition of land or a building or to conduct site selection; and

J) Work that contains repairs, maintenance or remodeling of a limited nature or scope, which is not done as part of a larger bondable improvement project.

b) Grants funded by Rebuild Illinois

1. Expenditures for grants funded through Rebuild Illinois must support capital improvement projects (Section 670.50(a)(2)) for facilities owned or leased by human services providers. Eligible budget cost categories for grants funded by Rebuild Illinois will include the following:

A) Design/Engineering (limited to 10-15% of total grant budget);

B) Wiring/Electrical;

C) Equipment/Materials/Labor;

D) Paving/Concrete/Masonry;

E) Construction Management/Oversight (limited to 10-15% of total grant budget);

F) Mechanical System;

G) Excavation/Site Preparation/Demolition;

H) Plumbing;

I) Other Construction Expenses; and

J) Contingency (limited to maximum 10% of total grant budget).

2. Any expenditures by human services providers funded through Rebuild Illinois that are not within the eligible characteristics and cost categories set forth in this Section will be considered ineligible including the following:

A) Administrative and operational expenditures including, but not limited to, utilities, personnel, insurance, indirect costs and debt obligations; and

B) Costs related to the acquisition of land or a building or to conduct site selection.

c) For all funding sources, no portion of a human services capital investment grant awarded under this Part may be used by a grantee to pay for any ongoing operational costs or outstanding debt [20 ILCS 605/605-1030(d)].

Chapter I Department of Commerce and Economic Opportunity

Part 670 Human Services Capital Investment Grant Program

14 Ill. Adm. Code 670.100 Grantee Eligibility Requirements

a) A human services provider is eligible to receive a grant award directly from DCEO if the provider:

1. offers services within Illinois in a manner that supports and fulfills the mission of DHS;

2. has delivered services for a minimum of two years directly to low-income or marginalized populations in Illinois in one of the core program areas of DHS − mental health, rehabilitation services, substance use prevention and recovery, family and community services, developmental disabilities, early childhood and any additional core program areas DHS creates;

3. has an active GATA registration and is qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted; and

4. is considered a regarded entity by the Internal Revenue Service for federal income tax purposes.

b) A human services provider is ineligible to receive a grant award directly from DCEO if the provider:

1. does not meet the eligibility criteria set forth in this Section;

2. is delinquent on payment of any State of Illinois tax obligation and the provider does not have an approved installment payment plan in place with the Department of Revenue;

3. is on the Illinois Stop Payment List, the State's debarred or suspended contractor lists, or is in default of any contractual obligation to DHS or DCEO;

4. is engaged in an enterprise that is unlawful or renders the provider ineligible under applicable State or federal law;

5. is on the federal System for Award Management excluded parties list (https://sam.gov/content/exclusions); or

6. is considered a disregarded entity by the Internal Revenue Service for federal income tax purposes.

c) Human services providers that are faith-based organizations, to be eligible, must use grant funds to make capital improvements to parts of their facility (whether the facility is owned or leased) that are used exclusively to provide human services. Grant funds may not be used for projects that provide a benefit to space used for the purpose of religious worship (e.g., chapel or sanctuary, etc.). Grant funds also may not be used to improve a facility for the benefit of members, clergy or attendees participating in religious activities (such as a parking lot or an elevator).

14 Ill. Adm. Code 670.110 Administrative Requirements

Grant opportunities and awards will be administered in a manner that complies with all State and federal requirements applicable to each funding opportunity including, but not limited to, GATA, the Uniform Guidance and all applicable State or federal laws or guidance. Grant applicants and grantees shall review all application materials and grant award documents which will include the specific applicable requirements for the grant opportunity. DCEO reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with the provisions in the grant agreement or non-compliance with applicable State and federal laws including those listed in Section 670.110(e).

a) Application Process for Direct Grant Awards to Human Services Providers

1. DCEO will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal seeking applications from human services providers, contingent upon available funds. The NOFO will describe in detail the types of projects for which funding is available (see Section 670.50). Applicants shall submit their application materials by the deadlines set forth in the NOFO, which will be at least 30 days after posting the NOFO.

2. The applicants will be required to submit an application package, which will include the following:

A) uniform grant application;

B) uniform budget template;

C) conflict of interest disclosure form;

D) mandatory disclosures form;

E) project narrative;

F) documentation demonstrating that applicant is in good standing to operate in the State of Illinois, including but not limited to, proof of current registration with all government entities the applicant is required to register with in order to operate;

G) articles of incorporation and bylaws;

H) an organizational chart for staff of the applicant;

I) resumes of key program staff (both those that will be managing the grant award and those that provide human services within the DHS core programs or areas for the applicant);

J) a copy of the lease agreement if the applicant is renting the facility which is the subject of the capital improvement project, and written permission from the landlord to conduct the grant-funded activities;

K) W-9 and Internal Revenue Service letter to verify the W-9;

L) documentation demonstrating the types of services the applicant provides that are within the core DHS programs or areas and demonstrating that applicant is qualified to provide these services; and

M) any additional documentation to demonstrate or support the information submitted by the applicant for the proposed project.

3. Applicants shall provide the following information about the proposed project in the narrative:

A) a description of the purpose of the grant project;

B) a detailed budget and supporting justification of the costs requested;

C) the location of the project, including a description of the facility

proposed to be improved with grant funds;

D) the ownership and lease information, as applicable, for the facility where the proposed project would occur;

E) a description of the human services provider applicant, including but not limited to:

i) the history of the provider and the provider's mission and goals;

ii) the number of current staff and a list of current board members, if applicable;

iii) the populations and geographic areas served by the provider;

iv) the existing linkages or partnerships with other community resources or organizations;

v) how the populations served by the applicant meet the definitions of low-income or marginalized, including the approximate percentages of individuals served within each category; and

vi) the core DHS programs or areas for which the applicant provides services, including a description of the programs and services provided by the applicant and the length of time the applicant has provided the services;

F) a description of the participants served by the human services provider's programs including:

i) a description of any eligibility criteria for participation in the programs (e.g., income level, age, employment status);

ii) a description of how participants are identified or recruited,

or who refers participants to the organization for services;

iii) if services cannot be provided to all that apply, a description of the manner in which participants are selected (e.g., standardized testing; first-come, first-served); and

iv) a description of the costs to participants for these programs and services, and whether a sliding scale (e.g., cost for services is reduced or waived, based on income or ability to pay) is enacted;

G) the public purpose and public benefit of the project;

H) the financial need of the human services provider for the grant funds;

I) a description of additional funding sources the provider is receiving or requesting for the project, if any;

J) an estimated timeline for completion of the project;

K) a statement regarding whether the applicant will have the ability to deliver services at its facility if the proposed project is not completed;

L) a description of whether the applicant has received prior grant awards from DCEO or DHS and the applicant's grant performance under these awards, if applicable;

M) an explanation of how the applicant will be able to administer and complete the project within the allowable grant period; and

N) any additional information required to demonstrate or support the information submitted by the applicant for the proposed project.

b) Grant Award Selection

Grants will be awarded by DCEO to grantees following a merit review by DCEO and DHS pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). In evaluating applications, DCEO and DHS will consider the criteria listed below:

1. Whether the applicant meets the eligibility criteria (see Section 670.100);

2. The financial needs of the applicant;

3. Whether the project is an eligible capital improvement project activity (see Section 670.50);

4. Whether the proposed project expenditures are eligible (see Section 670.60) and will comply with the Uniform Guidance and all other applicable federal and State laws;

5. Whether the proposed project is among the priorities identified by DCEO (see Section 670.50(c));

6. The ability of the applicant to deliver services at its facility if the proposed project is not completed;

7. The applicant's prior grant performance under grants awarded by DCEO or DHS, if applicable; and

8. The ability of the applicant to administer and complete the project within the allowable grant period.

For projects and applicants that meet all the eligibility requirements (see Sections 670.50, 670.60 and 670.100), grant awards will be prioritized for applicants with the most financial need for the grant funds and therefore, this criterion will be weighted most heavily during the merit review process (see Section 670.110(b)(2)).

c) Grant Disbursements

Disbursement of grant funds from DCEO will be made in accordance with a schedule included in the grant agreement. DCEO will disburse funds based on the grantee making satisfactory progress to implement grant activities.

d) Grant Performance, Administration, Monitoring and Reporting Requirements

Grantees shall comply with all GATA and DCEO requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement.

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Grantees must monitor their grant activities to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. DCEO will monitor the activities of grantees to assure compliance with all requirements and performance expectations of the award. Grantees shall timely submit all financial and performance reports, and shall supply, upon DCEO's request, documents and information relevant to the award. DCEO may monitor activities through site visits.

e) Compliance with Applicable Laws

Grantees shall comply with all applicable State and federal laws, including, but not limited to, the Prevailing Wage Act [820 ILCS 130], the Illinois Works Jobs Program Act [30 ILCS 559/20], the Business Enterprise Program for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575], the Employment of Illinois Workers on Public Works Act [30 ILCS 570], the Environmental Protection Act [415 ILCS 5], the Illinois Endangered Species Protection Act [520 ILCS 10], the Illinois Natural Areas Preservation Act [525 ILCS 30], the Interagency Wetland Policy Act of 1989 [20 ILCS 830], and the Illinois State Agency Historic Resources Preservation Act [20 ILCS 3420]. DCEO may suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with this subsection (e).

f) Records Retention

Grantees shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. The applicable retention period will be dependent on the type of capital improvement project for the grant award as set forth in the GATA rules. Grantees shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

Chapter I Department of Commerce and Economic Opportunity

Part 670 Human Services Capital Investment Grant Program

14 Ill. Adm. Code 670.200 Selection of Intermediaries to Issue Subawards

a) If DCEO determines, based on the needs of DCEO, to utilize intermediaries to issue subawards to human services providers, DCEO will issue a grant award to one or more intermediaries which will receive grant funds from DCEO to issue and administer the subawards with oversight from DCEO. Intermediaries are ineligible to receive grant subawards for capital improvement projects while the intermediary is actively serving as an intermediary through a grant issued by DCEO under this Part.

b) Grant opportunities and awards to intermediaries will be administered in a manner that complies with all State and federal requirements applicable to each funding opportunity, including, but not limited to GATA, the Uniform Guidance and all applicable State or federal laws or guidance. Intermediary applicants and recipients shall review all application materials and grant award documents which will include the specific applicable requirements for the grant opportunity. DCEO reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part, or withhold any future year funding for non-compliance by the intermediaries with the provisions in the grant agreement.

14 Ill. Adm. Code 670.210 Eligibility of Human Services Providers for Subawards

a) A human services provider is eligible to receive a grant subaward through an intermediary if the provider:

1. offers services within Illinois in a manner that supports and fulfills the mission of DHS;

2. has delivered services for a minimum of two years directly to low-income or marginalized populations in Illinois in one of the core program areas of DHS − mental health, rehabilitation services, substance use prevention and recovery, family and community services, developmental disabilities, early childhood and any additional core program areas DHS creates; and

3. has a valid DUNS number or unique entity identifier (see 2 CFR 25.300) prior to receiving the subaward, if applicable.

b) A human services provider is ineligible to receive a grant subaward from an intermediary if the provider is:

1. unable to meet the eligibility criteria set forth in this Section;

2. an intermediary for the program at the time of application or award;

3. delinquent on payment of any State of Illinois tax obligation and the provider does not have an approved installment payment plan in place with the Department of Revenue;

4. on the Illinois Stop Payment List, the State's debarred or suspended contractor lists, or is in default of any contractual obligation to DHS or DCEO;

5. engaged in an enterprise that is unlawful or renders the provider ineligible under applicable State or federal law; or

6. on the federal System for Award Management excluded parties list (https://sam.gov/content/exclusions).

c) Human services providers that are faith-based organizations, to be eligible for a grant subaward, must use grant funds to make capital improvements to parts of their facility (whether the facility is owned or leased) that are used exclusively to provide human services. Grant funds may not be used for projects that provide a benefit to space used for the purpose of religious worship (e.g., chapel or sanctuary, etc.). Grant funds also may not be used to improve a facility for the benefit of members, clergy or attendees participating in religious activities (such as a parking lot or an elevator).

14 Ill. Adm. Code 670.220 Intermediary Activities

a) Intermediaries will be required to issue and administer subawards to human services providers with oversight from DCEO, and engage in the following activities:

1. evaluating and selecting project subaward applications, through a competitive process, from eligible human services providers (Section 670.210) for eligible capital improvement projects (Section 670.50) as permitted by the applicable funding source;

2. issuing subaward agreements and disbursing grant funds to selected human services provider grantees;

3. collecting and evaluating required documentation from grantees to ensure project work is for appropriate uses and complies with applicable laws and requirements;

4. reviewing expenditures of grantees to ensure they are eligible (Section 670.60);

5. conducting monitoring reviews of grantees;

6. complying with the requirements for pass-through entities set forth in 2 CFR 200.332, as applicable;

7. engaging in technical assistance with human services providers; and

8. reporting to DCEO on the activities and expenditures for both the intermediary's activities and the subaward projects.

b) Subawards issued by intermediaries must meet the eligible capital improvement project activities requirements in Section 670.50 and the eligible grant expenditures in Section 670.60. To receive a subaward from an intermediary, human services providers must apply through a competitive process (similar to the process and requirements described in Section 670.110) approved by DCEO and meet the eligibility requirements of Section 670.210.

Chapter I Department of Commerce and Economic Opportunity

Part 670 Human Services Capital Investment Grant Program

14 Ill. Adm. Code 670.230 Eligible and Ineligible Grant Expenditures for Intermediaries

Grant expenditures for intermediaries must comply with GATA, the Uniform Guidance and any applicable funding source, be reasonable and necessary, and support the allowable grant project activities for intermediaries set forth in Section 670.220.

a) Eligible expenditures for intermediaries to administer the subawards to human services providers include the following:

1. Personnel wages;

2. Personnel fringe benefits;

3. Travel within Illinois;

4. Contractual/Subaward (if necessary and reasonable to carry out the terms of the award);

5. Consultant (if necessary and reasonable to carry out the terms of the award);

6. Supplies;

7. Telecommunications;

8. Occupancy (Rent & Utilities);

9. Direct administrative costs;

10. Indirect costs; and

11. Other miscellaneous costs, which are necessary, reasonable and allocable to the grant award.

b) Intermediaries shall not use grant funds for the acquisition of land or a building, site selection or capital improvements. Ineligible expenditures for intermediaries include the eligible expenditures for human services provider grantees set forth in Section 670.60(a) and (b).

14 Ill. Adm. Code 670.240 Intermediary Grant Award Eligibility Requirements

An organization is eligible to receive a grant award as an intermediary to provide subawards to human services providers if the organization:

a) is in good standing to operate in the State of Illinois;

b) has demonstrated experience administering grants for construction or other capital projects in Illinois;

c) has the capacity to administer a large volume of subawards;

d) has an active GATA registration and is qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted; and

e) is considered a regarded entity by the Internal Revenue Service for federal income tax purposes.

14 Ill. Adm. Code 670.250 Administrative Requirements

a) Application Process for Grant Awards to Intermediaries

1. DCEO will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal seeking applications from eligible organizations, contingent upon available funds. The NOFO will describe in detail the types of projects for which funding is available (see Sections 670.50 and 670.220). Applicants shall submit their application materials by the deadlines set forth by DCEO in the NOFO which will be at least 30 days after posting the NOFO.

2. The applicants will be required to submit an application package, which will include the following:

A) uniform grant application;

B) uniform budget template;

C) conflict of interest disclosure form;

D) mandatory disclosures form;

E) project narrative;

F) documentation demonstrating that applicant is in good standing to operate in the State of Illinois, including but not limited to, proof of current registration with all government entities the applicant is required to register with in order to operate;

G) resumes of key program staff;

H) W-9 and Internal Revenue Service letter to verify the W-9;

I) agreements with contractors or subrecipients demonstrating the intent to provide services if the applicant receives the award, if the intermediary applicant will be sharing responsibilities for some of the grant project with one or more organizations; and

J) any additional documentation to demonstrate or support the information submitted by the applicant for the proposed project.

3. Applicants shall provide the following information about the proposed project in the narrative:

A) A description of the structure of the applicant organization, including:

i) identification of the organization's leadership team and a description of their responsibilities;

ii) a summary of the organization's core skills and competencies;

iii) identification of relevant experience and skill sets of staff who will be assigned responsibility over the program; and

iv) other factors that make the applicant organization well-suited for overseeing a grant program for capital improvement projects;

B) A description of the applicant's experience working with human services providers and low-income or marginalized populations;

C) A description of the applicant's administrative capacity to manage a grant program, including:

i) the organization's experience overseeing grant programs pertaining to economic development or capital improvement projects; and

ii) a demonstration that the applicant has a good understanding of the Human Services Capital Investment Grant Program requirements and will commit resources necessary to successfully complete responsibilities;

D) A narrative explaining how the organization would be capable of administering a program statewide or within certain regions of the State, if required by the NOFO;

E) A detailed budget and supporting justification of the expenditures requested;

F) A description of the applicant's ability and plan to offer technical assistance to human services provider grantees and applicants in a manner that does not create a conflict of interest, including both webinars and individual assistance;

G) A description of the applicant's plan for the subaward application process, evaluating and selecting applications from human services providers, disbursing grant funds and timelines for the subaward application and selection processes;

H) A description of the applicant's understanding of the laws and rules applicable to State capital improvement projects or bondable capital improvements; and

I) A description of how the applicant will manage and oversee a large number of subawards to human services providers.

b) Grant Award Selection

Grants will be awarded by DCEO to one or more intermediaries following a merit review by DCEO and DHS pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). In evaluating applications, the Agencies will consider the following criteria:

1. Demonstrated grant administration experience, including the ability to issue large numbers of grants for eligible capital improvement projects or bondable capital improvements, as applicable, and disburse funds in a timely manner while following all program requirements;

2. The ability to establish a grant application and award process that is clear and simple for applicants to apply, while following all program requirements;

3. The ability to effectively and timely evaluate proposed subaward projects that are eligible, and an efficient process for sending recommendations to DCEO for final subaward selection;

4. Demonstrated understanding of or experience working with human services providers or low-income or marginalized populations;

5. The ability of the organization to administer a program statewide or within certain regions of the State, if required by the NOFO;

6. A sufficiently detailed budget that includes only eligible expenditures and demonstrates efficient use of funds that aligns properly with the program goals;

7. Demonstrated knowledge of State and federal requirements for capital improvement grants or bondable capital improvements, as applicable;

8. The ability to perform all intermediary responsibilities within the timeframes set forth in the NOFO; and

9. The ability to provide effective oversight and technical assistance in a manner that does not create a conflict of interest, including webinars and individual assistance to human services provider applicants and grantees to promote a successful program.

c) Grant Disbursements

Disbursement of grant funds from DCEO to selected intermediaries will be made in accordance with a schedule included in the grant agreement. DCEO will disburse funds based on the intermediary making satisfactory progress to implement grant activities.

d) Grant Performance, Administration, Monitoring and Reporting Requirements

Intermediaries shall comply with all GATA and DCEO requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly and final financial and performance close-out reports after the end of the grant term (see 44 Ill Adm. Code 7000.440). Intermediaries will be required to gather and report to DCEO detailed information on the subawards issued to human services providers with their quarterly and close-out reports. The deadlines for all required reports will be set forth in the grant agreement.

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Intermediaries must monitor their grant activities and the human services provider grantees to assure compliance with applicable State and federal requirements and to assure their performance expectations and those of the human services providers are being achieved. DCEO will monitor the activities of the intermediaries to assure compliance with all requirements and performance expectations of the award. Intermediaries shall timely submit all financial and performance reports, and shall supply, upon DCEO's request, documents and information relevant to the award. DCEO may monitor activities through site visits.

e) Compliance with Applicable Laws

Intermediaries shall comply with, and shall be responsible for compliance by the grantees, with all applicable State and federal laws, including, but not limited to, the Prevailing Wage Act [820 ILCS 130], the Illinois Works Jobs Program Act [30 ILCS 559/20], the Business Enterprise Program for Minorities, Females, and Persons with Disabilities Act [30 ILCS 575], the Employment of Illinois Workers on Public Works Act [30 ILCS 570], and the Environmental Protection Act [415 ILCS 5], the Illinois Endangered Species Protection Act [520 ILCS 10], the Illinois Natural Areas Preservation Act [525 ILCS 30], the Interagency Wetland Policy Act of 1989 [20 ILCS 830], and the Illinois State Agency Historic Resources Preservation Act [20 ILCS 3420]. DCEO may suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with this subsection (e).

f) Records Retention

Intermediaries shall maintain, for the period of years set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)), adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Intermediaries shall be responsible for ensuring that contractors, subrecipients and human services provider grantees comply with the retention requirements and shall retain all supporting documentation received from the grantees for the appropriate period. The applicable retention period for human services provider grantees will be dependent on the type of capital improvement project for the grant award as set forth in the GATA rules.

Chapter I Department of Commerce and Economic Opportunity

Part 680 Illinois Works Jobs Program Act

14 Ill. Adm. Code 680.10 Purpose

It is in the public policy interest of the State to ensure that all Illinois residents have access to State capital projects and careers in the construction industry and building trades, including those who have been historically underrepresented in those trades. To ensure that those interests are met, the General Assembly has created the Illinois Works Preapprenticeship Program and the Illinois Works Apprenticeship Initiative. [30 ILCS 559/20-5]

14 Ill. Adm. Code 680.20 Definitions

The following definitions are applicable to this Part.

"Act" means the Illinois Works Jobs Program Act [30 ILCS 559/Art. 20].

"Agency" means each officer, board, commission, and agency created by the Constitution, whether in the executive, legislative, or judicial branch of State government, but other than the circuit court; each officer, department, board, commission, agency, institution, authority, university, and body politic and corporate of the State; each administrative unit or corporate outgrowth of the State government that is created by or pursuant to statute, other than units of local government and their officers, school districts, and boards of election commissioners; and each administrative unit or corporate outgrowth of these entities and as may be created by executive order of the Governor. [5 ILCS 100/1-20]

"Applicant" means a person, business, public or private corporation, partnership, individual, union, committee, club, unincorporated association, or other organization or group of individuals, or other legal entity corporation, partnership, limited liability company, or joint venture that applies for a grant or contract from appropriated capital funds to finance, in whole or in part, a public works project.

"Apprentice" means a participant in an apprenticeship program approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training. [30 ILCS 559/20-10]

"Apprenticeship program" means an apprenticeship and training program approved by and registered with the United States Department of Labor's Bureau of Apprenticeship and Training. [30 ILCS 559/20-10]

"Appropriated capital funds " means moneys appropriated by the General Assembly from either a fund holding State of Illinois bonds proceeds or any other fund that receives and holds public funds for use in funding capital programs and projects. "Appropriated capital funds" are those appropriations designated as capital appropriations in the Governor's Office of Management and Budget document entitled "Enacted Budget – Enacted Appropriations by Line Item", produced for each Fiscal Year and posted on the GOMB website at https://www2.illinois.gov/sites/budget/Pages/BudgetBooks.aspx.

"Awarding authority" is the State, an agency of the State, or a grantee or loan recipient of the State that ultimately awards a bid and enters into an agreement for a public works project. This term shall not be construed to denote direct involvement or assent by the Chief Procurement Office.

"Base bid" means the value of a bid before any available credits are applied.

"Bid credit" means a virtual dollar for a contractor or subcontractor to use toward future bids on contracts with the State for public works projects. [30 ILCS 559/20-10]

"Bid credit certificate" is the certificate issued by the Department to the contractor or subcontractor identifying the total amount of bid credits a contractor or subcontractor may use to bid on a public works project.

"Community-based Organization" means a nonprofit organization, including an accredited public college or university, industry associations, chambers of commerce, local workforce areas, community colleges, technical schools and school districts, selected by the Department to participate in the Illinois Works Preapprenticeship Program. To qualify as a "community-based organization", the organization must demonstrate the following:

the ability to effectively serve diverse and underrepresented populations, including by providing employment services to those populations;

knowledge of the construction and building trades;

the ability to recruit, prescreen, and provide preapprenticeship training to prepare workers for employment in the construction and building trades; and

a plan to provide the following:

preparatory classes;

workplace readiness skills, such as resume preparation and interviewing techniques;

strategies for overcoming barriers to entry and completion of an apprenticeship program; and

any prerequisites for acceptance into an apprenticeship program. [30 ILCS 559/20-10]

"Construction trades" means any trade or occupation involved in the building, altering, repairing, improving, or demolishing any structure or building, or making improvements of any kind to real property. Construction trades do not include the routine operation, routine repair, or routine maintenance of existing structures, buildings, or real property.

"Contractor" means a person, corporation, partnership, limited liability company, or joint venture entering into, or seeking to enter into, a contract to construct a public work, or non-public work, whether the contract is entered directly with an agency or indirectly with a grantee using appropriated capital funds to pay for the contract. [30 ILCS 559/20-10]

"Department" means the Department of Commerce and Economic Opportunity. [30 ILCS 559/20-10]

"Estimated Total Project Cost" means a good faith approximation of the costs of an entire project being paid for in whole or in part by appropriated capital funds to construct a public work. Operational costs are not included in the calculation of estimated total project costs.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"Grant" means a grant award issued under the Illinois Works Jobs Program Act. [30 ILCS 559]

"Grantee" means the recipient of a grant award from an agency paid from appropriated capital funds for the purpose of funding a public works project.

"Illinois Works Credit Bank" means the electronic system used by the Department to track the bid credits of each contractor and subcontractor participating in the bid credit program.

"Intentional failure to comply" or "intentional violation" means an act or omission by a contractor, grantee or loan recipient that violates the Illinois Works Apprenticeship Initiative, for which a reduction or waiver was not granted, and which remains uncured despite receiving notice from the State agency. Seeking a waiver or a reduction will not be considered evidence of an intentional failure to comply or intentional violation. If a contractor, grantee or loan recipient makes its best efforts to cure an act or omission, then that act or omission will not be considered an intentional violation.

"Labor hours" means the total hours for workers who are receiving an hourly wage and who are directly employed for the public works project. "Labor hours" includes hours performed by workers employed by the contractor and subcontractors on the public works project. "Labor hours" does not include hours worked by the forepersons, superintendents, owners, and workers who are not subject to prevailing wage requirements. [30 ILCS 559/2-10]

"Lowest effective bid" means the value of the base bid minus available bid credits on the bid credit certificate. The awarding authority shall utilize this value for the purpose of determining which party submitted the lowest bid amount. The use of this value is not intended to supersede or disrupt existing procurement procedures relating to any other selection criteria.

"Minorities" means minority persons as defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act [30 ILCS 575]. [30 ILCS 559/2-10]

"NOFO" or "Notice of Funding Opportunity" means an agency's formally issued announcement of the availability of State, federal or federal pass-through funding through one of its financial assistance programs. A NOFO will provide eligibility and evaluation criteria, funding preferences/priorities, the submission deadline, and information on how to obtain an application for the funding opportunity, among other information.

"Non-public works" means any construction project that is paid for without the use of State appropriated capital funds.

"North region" means the region comprised of the following counties: Cook, DeKalb, DuPage, Grundy, Kane, Kankakee, Kendall, Lake, McHenry, and Will.

"Participant" is an individual enrolled in a Preapprenticeship Program.

"Preapprenticeship Program" is a program funded under the Illinois Works Jobs Program Act that has a documented partnership or relationship with employers (including union and non-union contractors) and trade unions, and is designed to prepare individuals to enter and succeed in a registered apprenticeship program.

"Project" means the activities established by the agency and set forth in the grant agreement or contract that are funded, in whole or in part, by appropriated State funds.

"Public Works" means all projects, contracted or funded by the State or any agency of the State, in whole or in part, from appropriated capital funds (as defined in this Section), that constitute public works under the Prevailing Wage Act [820 ILCS 130]. [30 ILCS 559/2-10]

"Qualified apprentice" means an apprentice who:

has graduated the Illinois Works Preapprenticeship Program;

is actively enrolled in a USDOL-registered apprenticeship program in the construction trades or construction professional services; and

is six years or less from the date the person first enrolled in a USDOL-registered apprenticeship program.

"Qualified and Responsible" means a contractor or offeror that meets all required evaluation criteria and requirements outlined in the solicitation or invitation for bid documentation disseminated by the awarding agency; and has the capability in all respects to fully performance the contract requirements, and the integrity and reliability that will assure good faith performance.

"Region" means either the north region or the south region.

"South region" means the region comprised of all Illinois counties not contained in the north region.

"State" means the State of Illinois.

"Stipend" is a sum of money fixed by the Department and paid to a participant in a preapprenticeship program in accordance with the participant's performance in the program. The stipend is to be used for living expenses while the participant is enrolled in the program.

"Subcontractor" means a person, corporation, partnership, limited liability company, or joint venture that has contracted or intends to contract with the contractor to perform all or part of the work to construct a public work or non-public work by a contractor. [30 ILCS 559/2-10]

"Underrepresented Populations" means populations identified by the Department that historically have had barriers to entry or advancement in the workforce. "Underrepresented populations" includes, but is not limited to, minorities, women, and veterans. [30 ILCS 559/2-10]

History

• Source: Amended at 49 Ill. Reg. 7298, effective May 7, 2025

Chapter I Department of Commerce and Economic Opportunity

Part 680 Illinois Works Jobs Program Act

14 Ill. Adm. Code 680.30 Apprenticeship Goal

a) The goal of the Illinois Works Apprenticeship Initiative Apprenticeship Goal is that, for projects estimated to cost $500,000 or more, apprentices will perform either 10% of the total labor hours actually worked in each prevailing wage classification or 10% of the estimated labor hours in each prevailing wage classification, whichever is less (the "Apprenticeship Goal"). [30 ILCS 559/20-20(a)(2)]

1. For contracts and grant agreements executed after July 28, 2023, and before January 1, 2024: at least 25% of the Apprenticeship Goal shall be performed by graduates of the Illinois Works Pre-apprenticeship Program, the Illinois Climate Works Pre-apprenticeship program, or the Highway Construction Careers Training Program; [30 ILCS 559/20-20(a)(2)]

2. For contracts and grant agreements executed on or after January 1, 2024: at least 50% of the Apprenticeship Goal shall be performed by graduates of the Illinois Works Pre-apprenticeship program, the Illinois Climate Works Pre-apprenticeship Program, or the Highway Construction Careers Training Program. [30 ILCS 559/20-20(a)(2)]

b) Unless otherwise provided by an agency, the applicant, grantee or contractor shall provide the estimated total project cost. To establish the estimated total project cost, the applicant, grantee or contractor may provide the following information:

1. Good faith estimates from contractors with supporting documentation, including, but not limited to, contracts, estimates and bids;

2. The funding sources for the project; and

3. Any and all additional information and documents requested by the agency providing the funding through a contract or Grant Agreement.

c) For projects that are estimated to receive $500,000 or more of appropriated capital funds:

1. If the State's contribution to the project amount is 50% or more of the estimated total project cost for the public works project, the Apprenticeship Goal applies to all prevailing wage eligible work performed on the project.

2. If the State's contribution to the project is less than 50% of the estimated total project cost for the public works project, the Apprenticeship Goal applies only to prevailing wage eligible work being funded by appropriated capital funds.

d) For projects that are estimated to receive less than $500,000 of appropriated capital funds, but the estimated total project cost is $500,000 or more:

1. If the estimated total project cost is $500,000 or more and the State contribution of appropriated capital funds represents 50% or more of the total cost, the Apprenticeship Goal applies to all prevailing wage eligible work on the project.

2. If the estimated total project cost is less than 50% funded by the State contribution of appropriated capital funds, the Apprenticeship Goal does not apply.

e) If the estimated total project cost is less than $500,000, the Apprenticeship Goal does not apply.

History

• Source: Amended at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.40 Reduction or Waiver of the Apprenticeship Goal

a) Before or during the term of a contract or Grant Agreement, the Department may reduce or waive the Apprenticeship Goal, as described in subsection (d).

1. To obtain a reduction or waiver in the Apprenticeship Goal, the applicant, grantee or contractor shall submit a waiver request form to the Department and the agency administering the contract or grant. Requests for a reduction or waiver of the Apprenticeship Goal shall be submitted to the Department and the agency administering the contract or grant as soon as practicable after discovering the existence of one or more factors set forth in subsection (b). The request form will be available on the Department's website.

2. Upon receipt of the waiver request, the Department and/or the Agency may request additional information from the applicant, grantee or contractor.

b) Prior to the Department granting a request for a reduction or waiver, and within 15 days after the Department's receipt of a request for a reduction or waiver, the Department shall determine, in its discretion, whether to hold a public hearing on the request. In determining whether to hold a public hearing, the Department may consider factors, including, but not limited to:

1. the scale of the project;

2. whether the applicant, grantee, contractor or subcontractor seeking the reduction or waiver has previously requested reductions or waivers on other projects; and

3. the value of, and frequency of, grant awards and contracts previously received from the State by the applicant, grantee, contractor or subcontractor.

c) If the Department decides to hold a public hearing, it must publish a hearing notice as soon as is practicable following its decision and hold the hearing at least 15 days, but no more than 30 days, after receipt of the reduction or waiver request.

d) The Department will grant a reduction or waiver upon a determination that:

1. the applicant, grantee, contractor or subcontractor has demonstrated that insufficient apprentices are available;

2. the reasonable and necessary requirements of the contract or grant do not allow the goal to be met;

3. there is a disproportionately high ratio of material costs to labor hours that makes meeting the goal infeasible;

4. apprentice labor hour goals conflict with existing requirements, including federal requirements, in connection with the public work; or

5. the contractor or subcontractor has demonstrated that insufficient graduates of the Illinois Works Pre-apprenticeship Program, the Illinois Climate Work Pre-apprenticeship Program, or the Highway Construction Careers Training Program are available to meet the requirements of Section 680.30(c). Examples of establishing insufficient availability of graduates include, but are not limited to, providing a letter from a USDOL registered apprenticeship program that indicates that the program does not have graduates of the Illinois Works Preapprenticeship Program, or that those graduates are not available; a letter from the Department stating that there are no graduates available; or a letter from the contractor stating that even if graduates are available, they are not able to sponsor the graduates into a USDOL registered apprenticeship program for contractual reasons and provide supporting documentation.

e) The Department may also consult with the Business Enterprise Council under the Business Enterprise for Minorities, Women, and Persons with Disabilities Act and the Chief Procurement Officer of the agency administering the public works contract. [30 ILCS 559/20-20(b)]

f) The 10% apprenticeship goal does not apply to contracts or Grant Agreements in existence on the effective date of the Act (June 28, 2019). [30 ILCS 559/20-20(f)]

g) If the Department does not grant or deny a waiver or reduction request within 45 days after the Department's receipt of a complete waiver or reduction request, then the reduction or waiver request is automatically granted.

h) When the Department denies a request for a reduction or waiver, it will explain its rationale in writing to the applicant, grantee, contractor, or subcontractor and to the awarding agency.

History

• Source: Amended at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.50 Certification of Compliance

a) Upon completion of the work set forth in the contract or Grant Agreement, grantees, contractors and subcontractors must submit a certification to the Department and the agency that is administering either the contract or the grant agreement, demonstrating that the grantee, contractor or subcontractor has:

1. met the Apprenticeship Goal;

2. received a reduction or waiver of the Apprenticeship Goal pursuant to Section 20-20(b) of the Act and Section 680.40 of this Part; or

3. submitted but not been granted or denied a request for a waiver or reduction. [30 ILCS 559/20-20(c)]

b) Upon completion of all of the work for the project, and not just the work set forth in the contract or Grant Agreement, grantees, contractors and subcontractors must submit a certification to the Department and the agency that is administering either the contract or the Grant Agreement, demonstrating that the grantee, contractor or subcontractor has:

1. met the 10% apprenticeship goal;

2. submitted but not been granted or denied a request for a waiver or reduction;

3. received a reduction or waiver of the 10% apprenticeship goal pursuant to Section 20-20(b) of the Act and Section 680.40 of this Part; or

4. not complied with the labor hours in Section 680.30(c) and did not receive a reduction or waiver pursuant to Section 680.40(d).

c) The certification form, which shall be made available on the Department's website, shall include:

1. The contract or grant number;

2. The estimated total project cost;

3. The final total cost of the project, if known;

4. The total labor hours actually worked in each prevailing wage classification on the job, or the estimated labor hours in each prevailing wage classification, whichever is applicable;

5. The actual labor hours worked by apprentices in each prevailing wage classification; and

6. Whether the contractor received a reduction or waiver of the 10% apprenticeship goal.

d) Grantee, contractor or subcontractor shall submit a certification upon completion of the work set forth in the contract or Grant Agreement and upon completion of the project, if applicable. Depending on the estimated total project cost, a grantee, contractor or subcontractor may be required to submit additional reports after the completion of the contract or grant.

e) The Department will collect summary data from each certification form and publish the data on its website quarterly. The summary data will include:

1. The project's county or counties;

2. The number of individuals that have graduated from an Illinois Works preapprenticeship program located within the county;

3. The five Illinois Works Preapprenticeship Program locations closest to project and the distance from each one to the project;

4. Whether the project met the apprenticeship goal;

5. Whether the contractor or subcontractor submitted a request for a waiver or reduction of the apprenticeship goal;

6. Whether the project was granted a waiver or reduction of the apprenticeship goal;

7. If the contractor requested but was not granted a waiver or reduction, why the waiver or reduction request was denied; and

8. If the project was granted a waiver or reduction, why it was granted.

History

• Source: Amended at 49 Ill. Reg. 7298, effective May 7, 2025

Chapter I Department of Commerce and Economic Opportunity

Part 680 Illinois Works Jobs Program Act

14 Ill. Adm. Code 680.60 Failure to Comply

a) Material Breach Due to Misrepresentation

1. When the agency enters into a contract with a contractor, it shall be deemed to be a material breach of the contract and to entitle the agency to declare a default, terminate the contract, and exercise those remedies provided for in the contract, at law, or in equity if the contractor or subcontractor submits false or misleading information. [30 ILCS 559/20-20(c)]

2. When the agency enters into a Grant Agreement with a grantee, it shall be deemed to be a material breach of the Grant Agreement and to entitle the agency to declare a default, terminate the Grant Agreement, and exercise those remedies provided for in the Grant Agreement, at law, or in equity if the grantee submits false or misleading information. [30 ILCS 559/20-20(c)]

b) Intentional Failure to Comply; Permissible Penalties

1. Intentional failure to comply with the Illinois Works Apprenticeship Initiative may result in the State agency that contracted or funded the public works project:

A) terminating the contract or agreement involved;

B) prohibiting the party that contracted with the State from participating in public contracts or agreements for a period not to exceed 3 years;

C) seeking a penalty of up to 25% of the contract or agreement as a result of the violation; or

D) any combination of items. [30 ILCS 559/20-20(c)]

2. State agencies shall report to the Department all projects that did not comply with the Illinois Works Apprenticeship Initiative and any action taken against the noncompliant party and shall provide an action plan to address the reported instance of noncompliance with the Illinois Works Apprenticeship Initiative [30 ILCS 559/20-20(c)].

History

• Source: Amended at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.70 Compliance with Federal Apprenticeship Requirements

a) Notwithstanding any provisions to the contrary in the Act, any State agency that administers a construction program for which federal law or regulations establish standards and procedures for the utilization of apprentices may implement the Illinois Works Apprenticeship Initiative using the federal standards and procedures for the establishment of goals and utilization procedures for the State-funded, as well as the federally assisted, portions of the program. In such cases, these goals shall not exceed those established pursuant to the relevant federal statutes or regulations. [30 ILCS 559/20-20(g)]

b) To apply the federal apprenticeship standards and procedures to a program, the agency shall submit a request to the Department on a form that will be available on the Department's website.

History

• Source: Amended at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.80 Agency Responsibilities

Each agency is responsible for the following regarding compliance with the Act for all contracts and grants it administers or plans to administer:

a) Reviewing the applicable federal and/or State statutes and administrative rules to determine whether the Act applies to the funding source of the grant and/or contract.

b) Submitting a request for a program to apply federal apprenticeship standards and procedures to a program as set forth in Section 680.70(a).

c) Gathering and reviewing information from applicants, contractors and grantees for all contracts and grants to determine whether the Act applies to each contract or grant.

d) Including language in applications, bid documents, notices of funding opportunities, contracts and Grant Agreements to notify applicants, contractors and grantees of their obligations to comply with the Act and to ensure compliance with the Act.

e) Collecting reports and supporting documents from contractors and grantees both during the term of the contract or grant and after the term ends, if applicable, to track compliance with the Act.

f) Requiring completion of all forms requested by the Department to track compliance with the Act, and keeping such records as required by the Department and the State Records Act [5 ILCS 160].

g) Completing an initial review of all requests for waivers or a reduction in the 10% apprenticeship goal and transmitting the paperwork to the Department with a recommendation regarding the waiver or reduction.

h) Monitoring the contractors and grantees and addressing noncompliance with the Act.

14 Ill. Adm. Code 680.90 Purpose

The goal of the Illinois Works Preapprenticeship Program is to create a network of community-based organizations throughout the State that will recruit, prescreen, and provide preapprenticeship skills training, for which participants may attend free of charge and receive a stipend, to create a qualified, diverse pipeline of workers who are prepared for careers in the construction and building trades. Upon completion of the Illinois Works Preapprenticeship Program, the candidates will be skilled and work-ready. [30 ILCS 559/20-15(a)]

History

• Source: Added at 46 Ill. Reg. 17668, effective October 18, 2022

14 Ill. Adm. Code 680.100 Eligible Grant Applicants

Eligible grant applicants must be Community-Based Organizations. To be eligible for a grant award, an applicant shall have an active GATA registration and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted.

History

• Source: Added at 46 Ill. Reg. 17668, effective October 18, 2022

14 Ill. Adm. Code 680.110 Administrative Requirements

Grant opportunities and awards will be administered in a manner that complies with all State requirements applicable to each funding opportunity, including, but not limited to, GATA and all applicable State laws. Grant applicants and grant recipients shall review all application materials and grant award documents which will include the specific applicable requirements for the grant opportunity. The Department reserves the right to suspend or terminate a grant agreement or withhold any future year funding for non-compliance with these provisions.

a) Application Process

1. The Department will post one or more NOFO on the GATA Grantee Portal seeking applications contingent upon available funds. Applicants shall submit their application materials by the deadlines set forth by DCEO in the NOFO which will be at least 30 days after posting the NOFO.

2. The applicants will be required to submit an application package, which will include the following:

A) a description of the how the applicant will design, develop, and implement a high-quality preapprenticeship program that will increase apprenticeship opportunities for underrepresented populations;

B) a description of the plan to provide stipends;

C) a description of the plan to provide wrap-around services;

D) a description of the plan to provide student support services;

E) a narrative description of how the applicant will articulate their understanding of how race, ethnicity and gender may impact individuals' access to and experience within the context of construction and building trade apprenticeships;

F) a description of the plan for marketing, outreach, wraparound supports, and accommodations;

G) a description of how the applicant plans to coordinate with local workforce areas and local and regional apprenticeship navigators and intermediaries focused on construction and building trades, union groups, community colleges, employers, employer associations, community-based organizations and secondary schools;

H) A description of the outcome measures, including but not limited to:

i) a description of the applicant's recruitment, screening, and training efforts;

ii) the number of individuals who apply to, participate in, and complete the applicant's program, broken down by race, gender, age and veteran status, and

iii) the number of individuals referenced in subsection (a)(2)(H)(ii) who are initially accepted and placed into apprenticeship programs in the construction and building trades;

I) a description of how applicant will coordinate education and learning, necessary support and retention services, coaching from other partner institutions;

J) a proposed curriculum;

K) a description of proposed opportunities for preapprentices to do construction work at job sites while taking instruction or immediately after completing instruction or a description of alternative options if on-site instruction is not feasible;

L) a description of the plan for applicants to assist students in transitioning to registered apprenticeship programs, including connecting them to employers and unions;

M) a description of the plan to refer program applicants who do not have the minimum program requirements to educational services in their communities, such as free literacy, GED, ESL classes, among others; and

N) a description of the plan to support and track participants who do not immediately apply to enroll in a DOL-registered apprenticeship program.

b) Grant Award Selection

1. Grants will be awarded by DCEO to grantees following a merit review by DCEO pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). In evaluating applications, the Department will consider all requirements as set forth in the NOFO, including some or all of the following criteria and any additional criteria set forth in the NOFO:

A) The application indicates the project will serve individuals who are within underrepresented populations;

B) The applicant's grant performance history, including meeting the goals of any previous grants and the level of success in achieving employment, wage, and retention goals, if applicable;

C) The experience of the applicant in serving individuals who are in the underrepresented populations of the outcomes achieved with past programs;

D) The level of participation of local employers or industry associations in the training partnership and the proposed work plan;

E) The amount of matching and/or leveraged funds provided (either cash or in-kind);

F) The likelihood that training will result in the placement of individuals who are in the underrepresented population into the specific occupations within the target industries and the average wage at placement;

G) The credentials, licenses or certifications training participants will earn;

H) The career pathways facilitating long-term advancement with the employer or within the industry sector a participant will gain.

I) The qualifications of personnel assigned to the proposed project; and

J) The quality of the proposed curricula and related materials.

2. Applicants shall work with local partners, including, but not limited to, local employers, unions, and/or industry associations to design programs with maximum benefits to individuals in the underrepresented populations.

c) Grant Disbursements

Disbursement of Grant funds from the Department will be made in accordance with a schedule included in the grant agreement. The Department may disburse funds based on the outcomes outlined in the grant agreement.

d) Grant Performance, Monitoring and Reporting Requirements

Grant recipient shall comply with all GATA and Department requirements for Grant performance, administration, monitoring and reporting, including monitoring any subrecipients.

e) Grant Extensions

Contingent upon the availability of funds and consistent with GATA as applicable, the Department may negotiate Grant extensions and add funds for grant projects that were originally competitively procured and performed successfully.

f) Records Retention

A grant recipient shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 430(a), (b)), adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the Program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Grant recipients shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

History

• Source: Added at 46 Ill. Reg. 17668, effective October 18, 2022

14 Ill. Adm. Code 680.120 Allowable Costs

Grant expenditures must comply with GATA and be reasonable and necessary. Specific allowable grant costs will include one or more of the following:

a) expenses to design training curricula and related materials;

b) expenses to provide industry linked skill training and work-based learning to individuals in the underrepresented populations (e.g., instructor costs, curriculum materials);

c) expenses for the ongoing evaluation and refinement of the curricula and related materials;

d) expenses for the design and implementation of a needs assessment to determine the education and training needs of the underrepresented populations relative to the skill needs of local industries;

e) expenses related to wrap-around costs;

f) expenses related to student/participant support services, such a career counseling, life coaching, and tutoring;

g) stipends;

h) expenses for technical assistance as set forth in the applicable NOFO;

i) expenses incurred to meet grant administration requirements;

j) expenses related to securing participants industry recognized certifications;

k) expenses related to professional development and certifications for staff and instructors; or

l) any other costs determined to be reasonable and necessary to carry out the grant program activities as permitted by GATA, the applicable NOFO, and approved by the Department.

History

• Source: Added at 46 Ill. Reg. 17668, effective October 18, 2022

14 Ill. Adm. Code 680.130 Reporting

Each community-based organization that receives funding from the Illinois Works Fund shall provide an annual report to the Illinois Works Review Panel by April 1 of each calendar year. The annual report shall include the following information [30 ILCS 559/20-15(c)]:

a) a description of the community-based organization's recruitment, screening, and training efforts;

b) the number of individuals who apply to, participate in, and complete the community-based organization's program, broken down by race, gender, age, and veteran status; and

c) the number of the individuals referenced in subsection (b) who are initially accepted and placed into apprenticeship programs in the construction and building trades.

History

• Source: Added at 46 Ill. Reg. 17668, effective October 18, 2022

14 Ill. Adm. Code 680.200 Purpose

a) The Department shall create and administer the Illinois Works Bid Credit Program that shall provide economic incentives, through bid credits, to encourage contractors and subcontractors to provide contracting and employment opportunities to historically underrepresented populations in the construction industry. [30 ILCS 559/20-15(d)]

b) The Illinois Works Bid Credit Program shall allow contractors and subcontractors to earn bid credits for use toward future bids for public works projects contracted or funded by the State or an agency of the State in order to increase the chances that the contractor and the subcontractors will be selected.

History

• Source: Added at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.210 Eligibility

a) Contractors and subcontractors may participate in the Illinois Works Bid Credit Program by registering with the Department using a form provided by the Department.

b) A contractor or subcontractor who has been awarded bid credits under any other State program for employing apprentices who have completed the Illinois Works Preapprenticeship Program is not eligible to receive bid credits under the Illinois Works Bid Credit Program relating to the same contract. [30 ILCS 559/20-15(d)]

History

• Source: Added at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.220 Earning Bid Credits

a) Contractors or subcontractors may be eligible to earn bid credits by employing qualified apprentices on public works and non-public works projects in Illinois.

b) By January 30 of each calendar year, the Department shall post on its website and the mean statewide prevailing wage for each construction trade.

c) For each hour a qualified apprentice works, the qualified apprentice earns $0.50 of bid credits per dollar of the mean statewide prevailing wage of the qualified apprentice's trade.

d) Contractors and subcontractors who wish to participate in the Bid Credit Program who employ a qualified apprentice shall submit a Bid Credit Apprentice Report to the Department.

1. A Bid Credit Apprentice Report shall be submitted to the Department by the 15th of each month for work that was performed by a qualified apprentice.

2. The Bid Credit Apprentice Report will record the county of the program the apprentice graduated from and the county in which the apprentice performed the creditable work. The Department will collect this data and present it on its website quarterly.

3. If the contractor or subcontractor employed the qualified apprentice on a public works project, the contractor or subcontractor shall file the certified payroll for the qualified apprentice for whom the credit is requested with the Illinois Department of Labor.

4. If the contractor or subcontractor employed the qualified apprentice on a non-public works project, the contractor or subcontractor shall provide the Department with certified payroll for the qualified apprentice for whom credit is requested.

e) After processing the Bid Credit Apprentice Report, the Department shall notify the contractor or subcontractor of the total number of bid credits earned by the contractor or subcontractor with respect to the Bid Credit Apprentice Report, the region in which the bid credits were earned, the date in which those bid credits are deemed earned, and when the bid credits expire. The Department shall track all bid credits in the Illinois Works Credit Bank.

f) For work performed by qualified apprentices prior to May 1, 2025, contractors and subcontractors shall submit a Bid Credit Apprentice Report by August 1, 2025. For work performed by qualified apprentices on or after May 1, 2025, the Department will process bid credit requests for work performed no more than 90 calendar days prior to submittal of the Bid Credit Apprentice Report, absent extenuating circumstances.

g) The Department shall publish on its website a registry of active Bid Credit Program contractors and subcontractors and the amount of available bid credits.

h) Bid credits will expire 10 years after they are deposited into the contractor's Bid Credit account. Expired bid credits will be debited from the contractor's or subcontractor's account.

History

• Source: Added at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.230 Using Bid Credits

a) Requesting Bid Credits for Use in a Bid

1. Contractors and subcontractors may request a Bid Credit Certificate from the Department to be used for a bid on a specific project. The Bid Credit Certificate will identify the amount of available bid credits that a contractor or subcontractor elects to use for the project. Prior to July 1, 2027, the bid credit certificate will only include credits earned in the project's region.

2. The Bid Credit Certificate may only be used in connection with the bid for the specific project for which it is was requested.

3. The bid credits requested by the contractor or subcontractor for the Bid Credit Certificate will be sequestered in the contractor or subcontractor's account and cannot be used for more than one bid at a time bid.

b) Applying the Bid Credits

1. The awarding authority for public works projects shall include language in the Invitation for Bid specifically advising that contractors and their subcontractors may use Bid Credits earned from the Illinois Works Jobs Program Act, including the maximum amount of bid credits that can be used for the project as set forth in subsection (d).

2. Contractors shall attach all Bid Credit Certificates to their bid for the public works project, or as otherwise directed in the Invitation for Bid issued by the awarding authority.

3. Bid credits are used to lower the base bid of a contractor to outbid the lowest qualified and responsible bidder who did not use bid credits by at least $1. The awarding authority will only apply the amount of bid credits necessary for the contractor to outbid the lowest qualified and responsible bidder by at least $1.

4. The contractor with the lowest effective bid will have the opportunity to accept the contract at the bid amount that was submitted by the lowest qualified and responsible bidder who did not use bid credits. For example, Contractor A submits a bid for $1,000,000. Contractor B submits a bid for $1,050,000, but also uses $60,000 Bid Credit Certificate. Contractor B's base bid is lowered to $990,000, and would then have the opportunity to accept the contract at the base bid submitted by Contractor A ($1,000,000).

5. If the awarding authority receives multiple bids from contractors who submit Bid Credit Certificates, the contractor with the lowest effective bid will be selected as the prevailing bidder, and will have the opportunity to accept the contract at the lowest base bid amount.

6. If the awarding authority determines that two bidders have the same adjusted bid value, all pre-existing selection criteria shall apply to select the prevailing bidder. No preference shall be afforded to the bidding party which submitted the most bid credits.

7. The use of bid credits shall not be treated as a procurement preference pursuant to the Illinois Procurement Code [30 ILCS 500/45-5], and unless otherwise provided in the Invitation for Bid, all applicable procurement preferences shall apply.

c) Combining Bid Credit Certificates

1. Multiple Bid Credit Certificates may be combined in a bid for a specific project.

2. A contractor who combines its Bid Credit Certificate with that of a subcontractor must use at least $5,000 of its own bid credits.

3. In the event the contractor accepts the contract from the awarding authority at a value below that contractor's base bid, the difference between the contractor's base bid and the price it accepts the contract at should be distributed proportionally among all contractors and subcontractors that are part of the bid. The proportion of the difference that is applied to each contractor should not be more than the proportion of their share of the base bid. For example, prime contractor submits a base bid of $1,000,000. That bid is comprised of subcontractor A's bid of $200,000, subcontractor B's bid of $200,000, and subcontractor C's bid of $100,000. Prime contractor used a Bid Credit Certificate of $100,000, which consisted of prime contractor's $40,000 bid credits, subcontractor A's $30,000 bid credits, and subcontractor B's $30,000 bid credits. If prime contractor accepts the contract at $900,000, then the prime contractor should receive $450,000, subcontractor A should receive $180,000, and subcontractor C should receive $90,000 of the overall contract amount.

4. The contractor that submits a Bid Credit Certificate of a subcontractor on a bid must use that subcontractor on the project for which the bid is submitted, unless the subcontractor elects not to participate in the project or is disqualified by the Awarding Authority.

5. A subcontractor who elects not to participate in a project after the bid is submitted shall forfeit their bid credits. The prevailing bid shall not be disrupted, and the contractor will not be required to elicit or submit additional bid credits.

6. In the event that a subcontractor is disqualified by the Awarding Authority after the bid is selected and during due diligence review, the credits contributed by that disqualified subcontractor will not be returned. The prevailing bid shall not be disrupted, and the prime contractor will not be required to elicit or submit additional bid credits.

d) Maximum Permitted Credit Usage. The maximum amount of bid credits that may be used for a specific project when bidding on a public works project shall be as follows:

1. 3% of the total project cost for projects that are $5 million or less.

2. 4% of the total project cost for projects that are $50 million or less but more than $5 million.

3. 5% of the total project cost for projects more than $50 million.

e) Return of Bid Credits

1. Bid credits ultimately applied by an awarding authority will be subtracted from the prevailing contractor or subcontractor's account at the expiration of the protest period of the award. Any excess bid credits that were not used by the awarding authority will be returned to the contractor or subcontractor's account.

2. In the event that a bid contained multiple Bid Credit Certificates, excess bid credits shall be calculated, and ultimately returned to the parties that submitted the Bid Credit Certificates, in a manner proportional to the original contribution of each party. This provision shall not be construed to contravene the requirement that a prime contractor must submit no less than $5,000 of its own credits with each bid (see Section 680.230(c)(2)).

3. Bid credits that were sequestered in an account will be unfrozen if they are not accepted by the awarding authority, or if the contractor or subcontractor withdraws its bid with the awarding authority and returns the bid credit certificate to the Office of Illinois Works, or if the Bid Credit Certificate expires. Contractors shall notify the Office of Illinois Works if the bid credits are not accepted by the awarding authority using a form provided by the Department. The Department will return the sequestered bid credits to the contractors account within 10 business days of receipt of notice.

4. Unless the Department receives notice from the contractor or awarding authority that the bid credits were not accepted or withdrawn, or unless additional time is requested by the contractor to extend the duration of the Bid Credit Certificate, the Bid Credit Certificates shall expire 90 days after issuance. After expiration, the credits will be returned to the contractor or subcontractor's account within 10 business days.

History

• Source: Added at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.240 Transferring of Bid Credits

a) Bid credit certificates may be combined for a specific project.

b) Bid credits cannot be bought, sold, or gifted to another contractor or subcontractor.

c) Bid credits may be transferred to another entity through a merger or acquisition.

History

• Source: Added at 49 Ill. Reg. 7298, effective May 7, 2025

14 Ill. Adm. Code 680.250 Penalties

a) Upon a finding that a contractor or subcontractor has reported falsified records to the Department in order to fraudulently obtain bid credits, the Department may bar the contractor or subcontractor from participating in the Illinois Works Bid Credit Program. [30 ILCS 559/20-15(d)]

b) A contractor or subcontractor who knowingly submits a falsified bid credit certificate to fraudulently win a bid may be suspended from participating in the bid credit program and/or forfeiture of bid credits.

c) False or fraudulent claims for payment relating to false bid credits may be subject to damages and penalties under applicable law. [30 ILCS 559/20-15(d)]

History

• Source: Added at 49 Ill. Reg. 7298, effective May 7, 2025

Part 690 Business Interruption Grant Program

14 Ill. Adm. Code 690.10 Purpose

The purpose of the Business Interruption Grant Program (BIG) is to provide financial support to businesses that have experienced interruption of business or other adverse conditions attributable to the COVID-19 public health emergency [20 ILCS 605/605-1050]. Financial assistance provided through BIG shall be consistent with the requirements of section 5001 of the federal Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136) and any rules or guidance issued by the U.S. Department of the Treasury or other responsible federal agency. The provision of support to for-profit and not-for-profit businesses that have experienced adversity attributable to the COVID-19 epidemic is necessary response to the public health emergency. Financial assistance shall be prioritized for communities most in need of assistance, as determined by numbers or rates of infection and economic measures identified in this Part. BIG will be implemented in multiple phases of funding.

14 Ill. Adm. Code 690.20 Definitions

"Acutely Distressed Industry" means a business that has annual revenues of $20 million or less; has been closed or is operating at a significantly diminished capacity since March 13, 2020; is likely to continue to do so until Phase 5 of the Restore Illinois Plan; and is a member of a select industry. Select industries include, but are not limited to, amusement parks, bus operating companies, event venues, indoor recreation, movie theaters, museums, music venues, and performing arts venues.

"Affiliate" means a business that is at least 50% or more owned or controlled by another person with at least 50% ownership or control. Control is not required to be exercised to establish an affiliate relationship; it is sufficient for one person to possess the authority to control the other person to establish an affiliate relationship.

"Allotment Tier" means the classification of a county as either having received a direct allotment from the CRF or not having received a direct allotment from the CRF.

"Allowable Expenditure" means a necessary expenditure that the Department has authorized for reimbursement under BIG in accordance with Section 690.90.

"Amusement Park" means a park, fairground, or recreational and entertainment complex that supplies refreshments and multiple entertainment and recreational activities, including, but not limited to, amusement parks, theme parks, water parks, and attractions.

"Applicant" means a qualifying business that applies for funding under BIG.

"Barbershops and Salons" means an entity possessing an active license under Article IIID of the Barber, Cosmetology, Esthetics, Hair Braiding, and Nail Technology Act of 1985 [225 ILCS 410], or a person possessing an active barber, cosmetologist, esthetician, nail technician, or hair braider license under that Act who is self-employed and has no employees or contractors.

"Bus Operating Company" means a business that provides, for a third party, transportation, including the bus and driver, for a group of people from one location to another. These businesses may provide, but are not limited to, charter buses, interurban and rural buses, and shuttle services.

"Business" means a for-profit enterprise or non-profit organization lawfully conducting business in Illinois. This term does not include any business that is prohibited from receiving funds under section 5001(b) of the CARES Act.

"CARES Act" means the federal Coronavirus Aid, Relief, and Economic Security Act (P.L. 116-136).

"Cost of Business Interruption" means:

decreases in revenue caused by closing or limiting access to the business establishment to comply with COVID-19 prevention directives or to otherwise prevent the spread of COVID-19 within the business establishment;

decreases in revenue caused by decreased customer demand as a result of the COVID-19 emergency; or

other revenue reductions approved for reimbursement from the CRF by the U.S. Department of the Treasury.

"COVID-19" means the novel coronavirus disease deemed COVID-19 by the World Health Organization on February 11, 2020. [20 ILCS 605/605-1050(g)(1)]

"COVID-19 Emergency" means the national public health emergency declared March 13, 2020.

"COVID-19 Prevention Directives" means all laws, orders, regulations, and guidance relevant to and in effect during the COVID-19 emergency that pertain to preventing the spread of COVID-19, including Executive Orders and preventative guidelines issued by the Illinois Governor, the Illinois Emergency Management Agency, the Department, or the Illinois Department of Public Health.

"CRF" means the Coronavirus Relief Fund established by the CARES Act.

"CURE Fund" means the State Coronavirus Urgent Remediation Emergency Fund (see 20 ILCS 605/605-1045).

"DCEO Law" means the Department of Commerce and Economic Opportunity Law [20 ILCS 605].

"DCFS" means the Illinois Department of Children and Family Services.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Depopulation and Disposal Event" or "DDE" means swine destroyed in a 7-day period at a single location (based on premise ID) due to market supply chain disruption.

"DHS" means the Illinois Department of Human Services.

"Disproportionately Impacted Area" means those ZIP Codes most severely affected by the COVID-19 emergency, to be determined based on positive COVID-19 case per capita rates, and high rates in at least one of the following poverty-related categories relative to other ZIP Codes within their region:

share of population consisting of children age 6 to 17 in households with income less than 125% of the federal poverty level;

share of population consisting of adults over age 64 in households with income less than 200% of the federal poverty level;

share of population in household with income less than 150% of the federal poverty level; and

share of population consisting of children ages 5 and under in households with income less than 185% of the federal poverty level.

The Department, using these criteria, may determine different eligibility thresholds when allocating funding for the Allotment Tiers.

"DOA" means the Illinois Department of Agriculture.

"Downstate Illinois" includes all counties in the State of Illinois that did not receive a direct allocation from the Coronavirus Relief Fund. Those counties that did receive a direct allocation are Cook, DuPage, Kane, Lake, and Will Counties.

"Eligible Loan" means a loan of up to $50,000 that was deemed eligible for funding under the Department's Emergency Loan Fund Program and for which repayment will be eligible for reimbursement from CRF monies pursuant to section 5001 of the CARES Act and any related federal guidance. [20 ILCS 605/605-1050(g)(3)]

"Emergency Loan Fund Program" or "ELF" means a program implemented by the Department by which the State Small Business Credit Initiative Fund is utilized to guarantee loans released by a financial intermediary or qualified partner. [20 ILCS 605/605-1050(g)(4)]

"Event Venue" means a business (excluding a higher education institution) that is engaged in leasing out a location for private events.

"Financial Assistance" means financial support to an Illinois business in the form of a grant, expense reimbursement, or subsidy.

"Fitness Center" means a business consisting of at least one fixed establishment that is open to members or the general public to participate in activities related to physical fitness at that location, with those activities including:

instruction, training, or assistance in physical culture, bodybuilding, exercising, weight loss, figure development, judo, karate, self-defense training, or any similar activity;

access to the business' facilities for self-directed exercise; or

membership in any group formed by a physical fitness center for any of the above purposes.

"Food and Beverage Establishment" means a restaurant or bar business enterprise consisting of at least one establishment that is licensed or otherwise permitted to sell food or beverages for on-site consumption, and does not include event spaces or banquet halls, grocery or convenience stores, night clubs or strip clubs, or a business that derives less than 80% of its gross revenue from food and beverage sales.

"GATA" means the Illinois Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means 44 Ill. Adm. Code 7000.

"Indoor Recreation" means a business that provides an indoor facility with usable indoor space designated for indoor play or fitness activities. These activities include, but are not limited to, bowling alleys, skating rinks, trampoline parks, indoor playgrounds, field houses, laser tag, arcades, and indoor sports facilities (not fitness centers).

"Leadership Member" means any:

executive officer of the Department, including the Director, Assistant Director, Chief Operating Officer, Chief Financial Officer, and Chief of Staff; or

any corporate officer of an independent business entity, including the president, any vice president in charge of a principal business unit, division or function, or any "C" level executive, including, but not limited to, the Chief Executive Officer, Chief Financial Officer, or the Chief Operations Officer, who is responsible for company-wide decisions or who performs major policymaking functions.

"Livestock Management Facility" means an operation where livestock (swine, beef cattle, dairy cattle, poultry, sheep, and meat goats):

are primarily used in the production of food, fiber, or other products; and

have been, are, or will be fed, confined, maintained or stabled for a total of 45 days or more in any 12-month period.

"Microbusiness" means a business with annual sales valued at less than $100,000 per year, with fewer than 10 employees including the owner.

"Movie Theater" means a theater where movies are shown for public entertainment.

"Museum" means an institution or entity located in Illinois that:

is operated by a 501(c)(3) organization (that is not owned or operated by a government entity);

is operated primarily for educational, scientific, historic preservation, cultural, or aesthetic purposes; and

owns, borrows, cares for, exhibits, studies, archives, or catalogs property.

"Music Venue" means a business entity that provides space for live music performance and whose primary source of revenue comes from the attendance of patrons of those performances. These venues often provide:

a defined performance and audience space;

a mixing desk and a public address system;

for the receipt of a cover charge (through ticketing or a front door entrance fee) from patrons attending a music performance; and

marketing of specific acts through gig listings in printed or electronic publications, or through event listings in physical or electronic format.

"Necessary Expenditure" means an expenditure of funds that is eligible for reimbursement from the CRF and necessary to:

respond to the COVID-19 emergency; or

reimburse the cost of business interruption.

"Non-Profit Organization" means an organization that is registered as a non-profit corporation with the Illinois Secretary of State.

"Performing Arts Venue" means a business that provides space for various performing arts, including music, dance, drama, or similar presentations. These venues exclude organizations that primarily operate as an educational institution.

"Premises ID" means the standardized unique identifier that is permanently assigned to a physical location by the U.S. Department of Agriculture (USDA).

"Program Participant" means the business that receives financial assistance under the Program.

"Qualified Non-Profit Organization" means a community-based organization that:

is a certified non-profit under State or federal laws;

is located in modest and low-income census tracts; and

has a demonstrable record of serving diverse, underserved, and minority-owned small businesses.

"Qualifying Business" means a business or organization that experienced or is experiencing business interruption due to the COVID-19 public health emergency and for which provision of financial assistance under the Program is eligible for reimbursement as prescribed by section 601(a) of the Social Security Act (42 USC) as added by section 5001 of the CARES Act, or other federal legislation addressing the COVID-19 emergency. A qualifying business includes self-employed individuals and independent contractors. [20 ILCS 605/605-1050(g)(2)]

"Qualified Partner" means a financial institution or nonprofit with which the Department, or another State agency pursuant to an intergovernmental agreement with the Department, has entered into an agreement or contract to provide or incentivize assistance to qualifying businesses. [20 ILCS 605/605-1050(g)(5)]

"Qualifying Small Business" means a small business that is a qualifying business, as those terms are defined in this Section.

"Restore Illinois Plan" means the framework announced by the Governor of the State of Illinois to safely reopen Illinois in five phases, with any modifications to that plan.

"Severely Disproportionately Impacted Area" means a disproportionately impacted area that has experienced heightened adverse economic conditions since March 13, 2020, which may include high rates of business closures or losses, unemployment, poverty rates, or other economic factors.

"Small Business" means a business enterprise that:

is physically operating in Illinois;

generated 51% or more of its revenue in Illinois in 2019; and

has fewer than 250 full-time employees prior to March 13, 2020 or is not dominant in its field within Illinois, as determined by the Department.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, codified at 2 CFR 200, as amended.

Chapter I Department of Commerce and Economic Opportunity

Part 690 Business Interruption Grant Program

14 Ill. Adm. Code 690.30 Gata Requirements

a) The Program established in this Part is subject to the Grant Accountability and Transparency Act [30 ILCS 708], with any exceptions granted.

b) To the extent the Program is implemented using Grant Agreements, at minimum the following provisions of the Uniform Guidance apply to grant recipients: 2 CFR 200.303 and 330 through 332.

14 Ill. Adm. Code 690.40 Qualified Partners

a) The Department may enter into Grant Agreements, contracts, or intermediary agreements with qualified partners to implement the Program. The nature of the services provided by the qualified partner shall determine whether the arrangement is a grant, procurement, or other relationship. The Department may award grants to qualified partners to provide financial assistance to qualifying businesses or contract with qualified partners to secure services to implement the Program.

b) A qualified partner shall include a non-profit agency or organization registered to conduct business in the State of Illinois or a financial institution that has demonstrated experience providing financing or services to businesses or residents located in disproportionately impacted areas.

c) An agreement with a qualified partner shall specify the qualified partner's responsibility, if any, for determining eligibility for financial assistance and monitoring BIG participants for compliance with Program requirements.

d) Nothing in this Part shall restrict the Department from securing services from entities other than qualified partners to assist in implementing the Program.

14 Ill. Adm. Code 690.50 Identifying Disproportionately Impacted Areas

a) The Department will allocate funding within the Program such that no less than 30% will be provided to qualifying businesses located in disproportionately impacted areas. The Department will determine which ZIP Codes constitute disproportionately impacted areas based on available COVID-19 case information and economic data at the time it announces funding opportunities under the Program, and areas may be added or removed from prioritization based on changes in relative COVID-19 rates and economic distress.

b) Within each Allotment Tier, the Department will rank each ZIP Code by COVID-19 cases per capita and by each of the poverty-related criteria. ZIP Codes with moderate, high, and very high COVID-19 cases per capita will be considered to be disproportionately impacted areas if they also have moderate to high rates of economic distress, as demonstrated by high rates within at least one of the poverty-related criteria (see Section 690.20 (Disproportionately Impacted Area)). The Department will include areas with significantly higher rates of COVID-19 cases per capita and lower levels of the poverty-related criteria, as well as areas with significantly higher levels of the poverty-related criteria and lower relative COVID-19 cases per capita.

c) The Department will reserve funding opportunities for qualifying businesses located in or predominantly serving severely disproportionately impacted areas.

14 Ill. Adm. Code 690.60 Form of Financial Assistance

Financial assistance under the Program may be in the form of a grant, subsidy, or expense reimbursement. Regardless of the form of assistance, a BIG participant shall be obligated to comply with requirements set forth in this Part and in any agreement or certification executed as part of applying for financial assistance.

14 Ill. Adm. Code 690.70 Financial Assistance Application Process

a) The Department will announce funding availability on its website as funding opportunities are made available. The Department may direct prospective applicants to apply via qualified partners or another State agency that has agreed to implement a financial assistance program for a particular industry.

b) Application

1. As part of applying for financial assistance, applicants will be required to complete an application form and sign a certification that attests to eligibility for the Program and conditions funding on compliance with programmatic requirements.

2. The application will require applicants to demonstrate eligibility for the funding. Supporting documents required for the application may include, but are not limited to:

A) applicant's 2018 (for applications prior to August 15, 2020) or 2019 income tax return;

B) completed W-9 form;

C) proof of eligible necessary expenditures;

D) information or records identifying the applicant and its owners;

E) proof of licensure, if applicable;

F) DUNS number or other unique identifier requested by the Department;

G) any other information or proof necessary to confirm the existence of the applicant and its eligibility to participate in the Program.

3. Completed application materials must be signed by the applicant's authorized representative and received by the Department, or the entity processing the application, by the announced deadline for the submission of applications.

14 Ill. Adm. Code 690.80 Selection Process

The Department, its qualified partners, or other State agencies administering parts of the Program will select recipients of financial assistance using competitive scoring, first-come first-served basis, lotteries, or discretionary selection procedures set forth in a financial assistance opportunity notice. The method of selection may vary based on industry and population served to maximize the effectiveness of the amount of financial assistance available and the equitable distribution of financial assistance among disproportionately impacted areas and other impacted areas, industries, and businesses.

14 Ill. Adm. Code 690.90 Eligibility Requirements and Allowable Expenditures

a) The following business types are excluded from the Program:

1. a private club or business that limits membership for reasons other than capacity;

2. a government-owned business entity (except for businesses owned or controlled by a Native American tribe);

3. a business that derives at least 33% of its gross annual revenue from legal gambling activities, unless, subject to the Department's approval, the business is a restaurant with gaming terminals;

4. a business engaged in pyramid sales, in which a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

5. payday lenders.

b) A business shall be ineligible to participate in the Program if it:

1. did not comply with COVID-19 prevention directives;

2. is delinquent on payment of any State of Illinois tax obligation;

3. is on the Illinois Stop Payment List or in default of any contractual obligation to the Department, DHS, or DOA;

4. is engaged in a business that is unlawful under Illinois or federal law;

5. has already received assistance under the Program, unless the Department allocates funding specifically for severely impacted businesses that have already received assistance;

6. is on the federal System for Award Management excluded parties list; or

7. does not meet any other eligibility criteria established in a financial assistance application.

c) Allowable expenditures must be incurred on or after March 1, 2020 and by the deadline identified in any announcement or certification applicable to any financial assistance opportunity.

d) Ineligible expenditures include:

1. expenses that have been or will be reimbursed under any State, local, or federal program, such as expense or losses that were reimbursed by a loan forgiven under the CARES Act's Payroll Protection Program;

2. damages covered by insurance;

3. expenditures prohibited by section 5001(b) of the CARES Act;.

4. reimbursement to donors for donated items or services;

5. workforce bonuses other than hazard pay or overtime;

6. severance pay;

7. legal settlements; or

8. any other expense not reasonably incurred due to the COVID-19 emergency.

e) Expenses shall be submitted to the State agency or qualified partners for review, either as part of the application process or following selection for financial assistance. Expenses shall be reviewed for eligibility and funding will be provided to BIG participants after verifying allowable expenditures.

14 Ill. Adm. Code 690.100 Reporting, Cooperation, and Record Retention

a) BIG participants shall not deviate from the budget, project scope, or objectives stated in the financial assistance agreement or certification, except with prior approval of the Department and any qualified partner or other State agency administering the specific program.

b) On or before March 31, 2021, BIG participants shall submit a report to the Department on the use of financial assistance, in relation to the project and initial budget, and any information about the impact of BIG requested by the Department.

c) BIG participants shall:

1. permit access to their premises, and inspection of records relating to BIG, to any lawful governmental authority, including, but not limited to, the Department, DHS, DOA, the Illinois Attorney General, the Illinois Auditor General, the Illinois Office of the Executive Inspector General, the Office of Inspector General of the U.S. Department of the Treasury; and

2. cooperate in any audit, monitoring, or investigation relating to BIG.

d) BIG participants shall retain records relating to BIG until at least December 31, 2026, unless another retention period is set forth in the financial assistance agreement or certification or until after the conclusion of all litigation, claims, or audit exceptions involving the records have been resolved and final action taken.

e) Participation in BIG requires a business to have complied with, and remain in compliance with, all laws, orders, and regulations that are relevant to operation of the business, including the COVID-19 Prevention Directives.

14 Ill. Adm. Code 690.110 Noncompliance

A BIG participant shall return all funds provided under BIG if it makes any material misrepresentation in applying for, or reporting on, the use of financial assistance or if it does not comply with any requirements in this Part or breaches any material term of the financial assistance agreement or certification. A material term is any term that relates to eligibility for BIG participation, reimbursement under the CRF, or compliance with State and federal law, including COVID-19 Prevention Directives. Recovery of funds in the event of noncompliance may be effectuated by any means authorized under Illinois law, including the Grant Funds Recovery Act [30 ILCS 705] for any financial assistance in the form of a grant.

14 Ill. Adm. Code 690.120 Prioritizing Severely Impacted Businesses and Industries

a) The Department will provide targeted funding opportunities for industries and businesses most impacted by the COVID-19 emergency. In determining which industries and businesses to prioritize, the Department will consider the impact of compliance with the COVID-19 Prevention Directives on business operations or impact of the COVID-19 emergency on the workforce. The Department will also prioritize funding to qualifying small businesses. The targeted funding opportunities will be announced on the Department's website.

b) Targeted funding opportunities to qualifying businesses will include financial assistance to:

1. Bars and restaurants that: earned between $80,000 and $3 million in revenue in 2019, or a pro-rated amount of revenue if the establishment was in business for less than the entire year; operated for at least the three months prior to March 2020; did not provide outdoor food and beverage service during phase 3 of the Restore Illinois Plan; and incurred necessary expenditures of at least $10,000 since March 21, 2020.

2. Businesses in severely disproportionately impacted areas that: earned between $80,000 and $2 million in revenue in 2019, or a pro-rated amount of revenue if the establishment was in business for less than the entire year; operated for at least the three months prior to March 2020; and incurred necessary expenditures of at least $10,000 since March 21, 2020.

3. Barbershops and salons that: earned between $80,000 and $500,000 in revenue in 2019, or a pro-rated amount of revenue if the establishment was in business for less than the entire year; operated for at least the three months prior to March 2020; and incurred necessary expenditures of at least $10,000 since March 21, 2020.

4. Fitness centers that: earned between $80,000 and $2 million in revenue in 2019, or a pro-rated amount of revenue if the establishment was in business for less than the entire year; operated for at least the three months prior to March 2020; incurred necessary expenditures of at least $10,000 since March 21, 2020; and operated out of a single permanent location.

5. Qualifying small business having experienced severe impacts during the COVID-19 emergency, in particular those whose return to normal activity is limited by phases of the Restore Illinois Plan or COVID-19 Prevention Directives.

14 Ill. Adm. Code 690.130 Applicant Affiliations

In a financial assistance opportunity that may be applied for on or after July 21, 2020, a business' revenue and headcount shall include that of any parent company, affiliate, and subsidiary for the purposes of any revenue or employee headcount eligibility criteria set forth in this Subpart.

14 Ill. Adm. Code 690.140 Child Care Restoration Grant Program

a) This Subpart implements Section 1050 of the DCEO Law.

b) For purposes of this Subpart C, "Program" means the Child Care Restoration Grant Program.

14 Ill. Adm. Code 690.145 Requirements for Child Care Restoration Grants

In order to qualify for a Child Care Restoration Grant, the applicant must:

a) be a licensed child care provider holding a valid day care license from DCFS (see 89 Ill. Adm. Code 406, 407 or 408).

b) regularly provide full-day, year-round child care services.

c) typically rely on private-pay tuition receipts and/or payments through DHS' Child Care Assistance Program (CCAP (see 89 Ill. Adm. Code 50)) for at least 25% of its revenues.

d) be open and receiving children at the time of application.

e) certify that its operating capacity has been reduced as a result of COVID-19 restrictions.

14 Ill. Adm. Code 690.150 Calculation of Child Care Restoration Grant Award Amounts

a) Grant amounts will be determined based on four factors:

1. The licensed capacity of the applicant, as indicated on its day care license as of March 1, 2020. If the applicant received its license after March 1, 2020, then its grant award amount will be determined based on its licensed capacity as of the date of its application.

2. The applicant's current Circle of Quality in the ExceleRate Illinois Quality Rating and Improvement System (see 23 Ill. Adm. Code 235.65).

3. The CCAP county grouping in which the applicant is located.

4. Whether the applicant is in a disproportionately impacted area.

b) If an applicant is located in a disproportionately impacted area, its grant amount will be increased by 10%.

c) The first round of grants will be issued between July 1, 2020 and September 30, 2020. If funds allow, a second round of grants will be made in September 2020 to cover the period of October 1, 2020 through November 30, 2020. The amount of the grants will be determined using the same criteria as the first round (see Section 690.140). After the conclusion of the second round, any grant funds still available may be utilized to fund additional rounds. The selection method may vary based on location and population served to maximize the equitable distribution of financial assistance among disproportionately impacted areas and other affected areas.

14 Ill. Adm. Code 690.160 Eligible Expenses

a) Grant awards may be used to cover any operational cost that is not otherwise covered by a grant or refundable loan from any source (e.g., Paycheck Protection Program, Economic Disaster Injury Loan, other disaster relief, Head Start or Early Head Start, Early Childhood Block Grant, philanthropic grants) and is eligible for reimbursement through the CRF.

b) After the conclusion of the second round, any grant funds still available may be utilized to fund additional rounds. The selection method may vary based on location and population served to maximize the equitable distribution of financial assistance among disproportionately impacted areas and other affected areas.

c) Examples of eligible operational costs include, but are not limited to, staff wages and benefits, occupancy costs, materials and supplies, and professional services.

14 Ill. Adm. Code 690.170 Reporting Requirements

a) Program participants shall provide monthly expenditure reports documenting how grant funds were used. Reporting will be in a format determined by DHS. Expenditure reports will be due the 15th of the month following the month of expenditure. Documented expenses will be reconciled with grant funds received on a quarterly basis.

b) Program participants shall provide a final expenditure report of all grant funds by the 15th of the month following the month of termination of the award.

14 Ill. Adm. Code 690.180 Monitoring

Program participants will be monitored for compliance with contractual obligations, applicable administrative rules, and legislation, ensuring that Child Care Restoration Grant funds are spent appropriately as specified in the financial assistance agreement/certification. Monitoring may include desk reviews and on-site reviews of the Program participant.

14 Ill. Adm. Code 690.200 General Provisions of the Livestock Management Facilities Program (lmfp)

a) Applicants for livestock management facilities financial assistance must submit an application to DOA for one of the following programs:

1. Swine Depopulation Program (SDP)

SDP covers the costs and expenses of swine producers associated with the depopulation and disposal of livestock due to the disruption of the livestock market caused by the COVID-19 emergency.

2. Agriculture Business Interruption Program (ABIP)

ABIP covers monetary losses of livestock producers due to the disruption of the livestock market caused by the COVID-19 emergency.

3. Meat and Poultry Capacity Program (MPCP)

MPCP covers costs for operations and costs associated with facility improvements necessary to decrease or eliminate COVID-19 related slowdowns and mitigate capacity reductions.

b) Applicants are only permitted to apply to one program established in this Subpart.

c) Applicants must comply with all relevant State and federal laws and rules, including prevailing wage requirements, when applicable.

d) Applications must be received by DOA on or before the deadline indicated on the application.

e) DOA will determine, on a continuing basis, the amount of money allocated to each program established in this Subpart and may eliminate payments for a program at any time based on continuing review and assessment of the following factors:

1. Initially received applications;

2. Relevant industry's analysis and appraisal of the greatest need for allocation; and

3. Additional information that becomes available to DOA.

14 Ill. Adm. Code 690.210 Swine Depopulation Program (sdp)

a) In order to qualify for financial assistance under SDP, an applicant must be a livestock owner or producer that experienced financial loss as the result of a depopulation and disposal event.

b) Applicants for the SDP are eligible to receive financial assistance for costs associated with a DDE that occurred on or after April 15, 2020, under the following conditions:

1. An applicant may receive up to $135 for each 1000 pounds of disposed carcasses.

2. An applicant is eligible to receive up to $10,000.

3. An applicant may apply for financial assistance for no more than 5 DDEs.

4. An applicant who received financial assistance for carcass disposal from the USDA Environmental Quality Incentives Program is ineligible for the SDP.

5. If an applicant is located in a disproportionately impacted area, the amount of financial assistance will be increased by 10%.

c) Applicants of the SDP must submit the following documentation:

1. Completed application;

2. IRS Form W-9;

3. Certification from the applicant attesting that:

A) The disposal of carcasses complied with the Illinois Dead Animal Disposal Act [225 ILCS 610];

B) The applicant did not receive financial assistance for carcass disposal from the USDA Environmental Quality Incentives Program; and

C) Depopulation was the only option because of market supply chain disruption caused by the COVID-19 emergency.

4. Certification from a veterinarian containing the following:

A) Confirmation of a veterinarian-client-patient relationship;

B) Confirmation that the veterinarian has reviewed the applicant's records and that the records accurately depict the number and weight of the applicant's animals at the time of depopulation; and

C) Attestation that euthanasia practices were consistent with American Veterinary Medical Association guidelines.

5. Inventory records documenting total site inventories and dates and location of depopulation and disposal.

14 Ill. Adm. Code 690.220 Agriculture Business Interruption Program (abip)

a) In order to qualify for financial assistance under ABIP, an applicant must be a livestock owner or producer that experienced monetary losses due to the disruption of the livestock market caused by the COVID-19 emergency.

b) Financial assistance for losses incurred due to market disruption will be based on the following calculations:

1. Swine (market ready hogs greater than 280 lbs.) − $8/head. Pricing is calculated based on a 15-day holding period. Culled breeding stock and sow abortions are not eligible.

2. Beef cattle (market ready fed cattle greater than 1,200 lbs.) − $30/head. Pricing is calculated at 50% of a 15-day holding period. Culled breeding stock is not eligible.

3. Dairy cattle (market ready animal or product) − $1.00/hundredweight. Pricing is calculated based on the producer's production records.

4. Lamb (less than 2 years of age) − $4/head.

5. Poultry − $3/head.

6. Meat Goats − $4/head.

c) Financial assistance under the ABIP will be issued under the following conditions:

1. An applicant is eligible to receive up to $10,000 total under ABIP.

2. Eligible expenses are increased input costs and expenses associated with holding animals and animal-related products for an extended period of time, based on the calculations set forth in this Section, due to the disruption of the livestock market that occurred between April 15 and May 15, 2020.

3. If an applicant is located in a disproportionately impacted area, the amount of financial assistance will be increased by 10%.

d) Applicants for ABIP must submit the following documentation:

1. Completed application;

2. IRS Form W-9;

3. Certification from the applicant verifying applicable losses due to the disruption in the market; and

4. Inventory records documenting total site inventories and sales information.

14 Ill. Adm. Code 690.230 Meat and Poultry Capacity Program (mpcp)

a) To be eligible to receive financial assistance under MPCP, applicants must meet the following conditions:

1. The applicant must be:

A) A USDA licensed, State licensed, or custom exempt slaughter and/or processing facility; or

B) A slaughter and/or processing facility that submitted an application for licensure to USDA or the State prior to the MPCP application deadline;

2. The applicant must employ no more than 60 total employees;

3. The applicant's license must be registered and in good standing with the Illinois Secretary of State;

4. The applicant's proposed or existing facility must be located in the State of Illinois;

5. Expenses for approved projects must be accrued and all required documentation for reimbursement must be received by DOA by the date indicated on the application; and

6. An entity/facility is only permitted to submit one application for reimbursement under MPCP.

b) Financial assistance received under MPCP may be used for:

1. Costs related to expansion or improvement of an existing facility;

2. Fixtures or equipment necessary to expand animal throughput, processing capacity, the amount or type of products produced, or processing speed;

3. Engineering controls/barriers to reduce disease spread, including, but not limited to, plexiglass barriers/partitions, expansion of work spaces and breakrooms/cafeterias, and ventilation improvements to improve airflow;

4. Development of administrative controls (policies, procedures, training and workplace practices) to reduce disease spread, including, but not limited to, development of masking, screening and disinfection policies, standard operating procedures, and additional training. This may also include the resources necessary to execute these policies and procedures, including, but not limited to, facial coverings, facial shields, thermometers, hand washing stations and supplies, hand sanitizers and dispensers, environmental disinfection supplies, multilingual signage, videos and/or infographics on COVID-19 related information, and policies and procedures; and

5. Equipment necessary for compliance with the federal hazard analysis and critical control point (HACCP) plan.

c) Financial assistance received under MPCP cannot be used for:

1. Wages or salaries;

2. Travel costs;

3. Any part of a project that has already been reimbursed by another federal or State grant program;

4. Purchase of a building/facility; or

5. Land acquisition or associated fees.

d) Financial Assistance under MPCP will be issued under the following conditions:

1. An applicant, including any parent company, affiliate, and subsidiary, is eligible to receive up to $25,000.

2. Eligible payments will be made after the applicant provides DOA with documentation demonstrating that expenses for eligible projects have been accrued.

3. If an applicant is located in a disproportionately impacted area, the amount of financial assistance will be increased by 10%.

e) Applicants for MPCP shall submit the following documentation:

1. Completed application;

2. IRS Form W-9; and

3. Certification from the applicant verifying eligible expenses, as set forth in subsection (b), and attesting that no part of the project has been reimbursed by another federal or State grant program.

14 Ill. Adm. Code 690.240 Reporting Requirements for All Lmfps

If applicable, LMFP participants shall provide a final expenditure report to DOA no later than December 31, 2020 in a format determined by DOA. This date could be extended based on extenuating circumstances. Documented expenses will be reconciled with funds received.

14 Ill. Adm. Code 690.250 Monitoring of All Lmfps

LMFP participants will be monitored for compliance with contractual obligations, applicable administrative rules, and legislation, ensuring that LMFP funds are spent appropriately. Monitoring may include desk reviews, correspondence with certifying veterinarians, and on-site reviews of the LMFP participant.

14 Ill. Adm. Code 690.300 General

For purposes of this Subpart E, references to "this Program" means the repayment program created by this Subpart E.

14 Ill. Adm. Code 690.305 Eligibility

A qualifying business that applied for an eligible loan under ELF during March 2020 shall be eligible for financial assistance under BIG providing the business has met the minimum criteria established by BIG and this Subpart E. Financial assistance will include either a loan repayment for borrowers who have outstanding debts under ELF or a grant for applicants who ultimately were not awarded a loan.

14 Ill. Adm. Code 690.310 Selection Process

a) Subject to the availability of funds, the Department and its qualified partner will announce, to eligible businesses, fund availability and the application procedures for financial assistance via its website and other communication mediums. The application shall identify the information and supporting documentation applicants must include in their requests for financial assistance. The Department's qualified partner shall accept the applications for financial assistance.

b) Each application for financial assistance shall include a request for the following information:

1. The amount of funds borrowed by the applicant from ELF and how much remains unpaid;

2. The amount of costs and losses experienced by the applicant's business from March 1, 2020 until the present;

3. The amount of funds received from other CARES Act-funded programs by the applicant;

4. 2020 bank statements; and

5. Any other information requested by the Department or its qualified partner to assist in determining eligibility under this repayment program, the offering of financial assistance to an applicant, and the type of assistance that may be offered.

c) Under ELF, borrowers who have costs and losses equal to or greater than the loan amount outstanding shall qualify to receive an award of equal value that repays the outstanding loan amount. ELF applicants who were never awarded a loan and are currently on the waitlist for an emergency loan may qualify to receive financial assistance equal to $10,000 or $20,000 if the scale of costs and losses experienced since March are equal to or greater than the available award. The number of awards available to applicants will be based on the availability of funds set aside for this repayment program.

14 Ill. Adm. Code 690.320 Priority Status

Priority for financial assistance under this repayment program shall be given to borrowers first. After eligible borrowers are offered financial assistance, priority will be given to businesses who applied but did not receive a loan under ELF that are located in a disproportionately impacted area, did not receive financing under the Paycheck Protection Program, or are located in downstate Illinois. If funds under this repayment program remain unobligated after the initial disbursement to the previously mentioned groups, the Department's qualified partner will select additional recipients from applicants of this repayment program, utilizing a lottery method.

14 Ill. Adm. Code 690.400 Prioritizing Acutely Distressed Industries

a) This Subpart F creates a program offering funding opportunities to acutely distressed industries (ADI) that meet the minimum requirements established under BIG and the CARES Act. The Department will be responsible for determining which industries shall be designated as ADI. To determine which applicants will qualify as a member of an ADI, the Department will establish and provide to its qualified partners evaluation criteria that will include, but are not limited to, the following:

1. Intent and purpose of the enabling legislation;

2. State and federal guidelines regarding COVID-19;

3. Data from the Illinois Department of Public Health and other reputable sources; and

4. Any other factors deemed necessary to reach the most impacted businesses and industries.

b) The Department will limit the amount of financial assistance available to a qualifying business under this prioritization to no more than $150,000. A subaward under this Subpart F shall be determined based on the availability of funds and the value of eligible costs and losses incurred by the qualifying business.

14 Ill. Adm. Code 690.500 Set-Aside for Technical Assistance

The Department will utilize CURE funds to implement a program that will provide financial assistance to qualified non-profit organizations to provide technical assistance to diverse, underserved and minority-owned small businesses. Technical assistance will be provided to increase the awareness of, and to assist in the procurement of, financial assistance under BIG and other relevant resources.

Part 691 Back to Business Grant Program

14 Ill. Adm. Code 691.10 Purpose

The purpose of the Back to Business Grant Program ("Program") is to provide financial support to for-profit businesses or not-for-profit organizations that have experienced economic harm, financial hardship, or other adverse conditions due to the COVID-19 public health emergency [20 ILCS 605/605-1050]. In this Part, financial assistance provided through the Program shall be consistent with the requirements of the Coronavirus State Fiscal Recovery Fund ("CSFRF") implemented by Section 602 of Title VI of the federal Social Security Act (42 U.S.C. 802 et seq.) and any rules or guidance issued by the U.S. Department of the Treasury (including, but not limited to https://www.govinfo.gov/content/pkg/FR-2021-05-17/pdf/2021-10283.pdf and https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf), the Department of Commerce & Economic Opportunity ("DCEO"), and any other applicable State and federal agency. Financial assistance shall be prioritized for communities most in need of assistance, as determined by numbers or rates of infection and economic measures identified in this Part. Assistance may be used to adopt safer operating procedures, weather periods of closure, or mitigate financial hardship resulting from the COVID-19 public health emergency. DCEO will identify how the Program addresses the identified need or impact faced by small businesses. The Program may utilize a series of funding opportunities.

14 Ill. Adm. Code 691.20 Definitions

"Affiliate" means another business that is at least 50% or more owned or controlled by a person with at least 50% ownership or control of the Applicant.

"Allowable Expenditure" means a necessary expenditure that the Department has authorized for reimbursement under the Program in accordance with Section 691.110.

"Applicant" means a Qualifying Business that applies for funding under the Program.

"ARPA" means the American Rescue Plan Act (P.L. 117-2).

"Authorized Representative" is an individual with legal authority to bind the business or non-profit organization.

"Business" means a for-profit enterprise or non-profit organization lawfully conducting business in Illinois.

"Business district(s)" means an area containing shops and offices where persons engage in the purchase and sale of commodities or in related financial transactions.

"COVID-19" means the novel coronavirus disease deemed COVID-19 by the World Health Organization on February 11, 2020 [20 ILCS 605/605-1050(g)(1)].

"COVID-19 Public Health Emergency" means the Statewide public health emergency declared March 9, 2020, the national public health emergency declared March 13, 2020, and the major disaster declared in Illinois by the President on March 26, 2020.

"COVID-19 Prevention Directives" means all state laws, orders, administrative rules and guidance relevant to and in effect during the COVID-19 Public Health Emergency that pertain to preventing the spread of COVID-19, including Executive Orders and preventative guidelines issued by the Illinois Governor, the Illinois Emergency Management Agency, the Department, or the Illinois Department of Public Health.

"CSFRF" means the Coronavirus State Fiscal Recovery Fund as implemented by Section 602 of Title VI of the federal Social Security Act [42 U.S.C. 802].

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Disproportionately Impacted Area" means those zip codes most severely affected by the COVID-19 Public Health Emergency, to be determined based on positive COVID-19 case per capita rates, and high rates in at least one of the following poverty-related categories relative to other zip codes within their region:

share of population consisting of children age 6 to 17 in households with income less than 125% of the federal poverty level;

share of population consisting of adults over age 64 in households with income less than 200% of the federal poverty level;

share of population in household with income less than 150% of the federal poverty level; and

share of population consisting of children ages 5 and under in households with income less than 185% of the federal poverty level.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means 44 Ill. Adm. Code 7000.

"Financial Assistance" means financial support to an Illinois business in the form of a grant, expense reimbursement, or subsidy.

“Hard-hit industry” means an industry that was negatively impacted by the pandemic including the arts, travel, tourism, and hospitality industries (a full list of hard-hit industries to be identified by the Department based on COVID-19 impact on each industry, and to be posted on the Department's website).

“High traffic area” means a location that is zoned to allow for commercial use and located within 2 blocks or ¼ mile of a transportation facility (train station, bus station, or intermodal facility); an educational institution providing on-site, in-person instruction; or at least two establishments meeting one of the following criteria: retail or commercial business offering on-site, in-person services or sales to customers, or non-profit or government office providing on-site, in-person services to residents.

“Home-based business" means a small business that operates from the business owner’s home.

“Independently Owned and Operated” means, with respect to a business, that the ownership interests, management, and operation of the business are not subject to control, restriction, modification, or limitation by a person with no formal role in the operation of the business.

"Non-Profit Organization" means an organization which is registered as a not-for-profit corporation with the Illinois Secretary of State and is registered with the Internal Revenue Service as a 501(c)(3), 501(c)(6), or as a 501(c)(19) entity.

“Occupy” means to hold in possession with the legal authority thereof; to hold or keep for use.

"Program" means the financial assistance funding opportunities administered by the Department and implemented in this Part.

"Program Participant" means the business that receives financial assistance under the Program.

"Qualifying Business" means a business or organization that has experienced or is experiencing business interruption or other adverse conditions due to the COVID-19 public health emergency, and includes a new business or organization started after March 1, 2020 in the midst of adverse conditions due to the COVID-19 public health emergency, includes self-employed individuals and independent contractors [20 ILCS 605/605-1050(g)(2)].

"Qualified Partner" means a financial institution or non-profit organization with which the Department, or another state agency pursuant to an intergovernmental agreement with the Department, has entered into an agreement or contract to provide or incentivize assistance to Qualifying Businesses. [20ILCS 605/605-1050(g)(5)].

"Revenue" means the total amount a business or a non-profit organization has received from sales or contributions during its annual accounting period, without subtracting any costs or expenses. Revenue is equal to the gross receipts of a business or non-profit organization as reported on their federal tax return.

"SLFRF" means the Federal Coronavirus State and Local Fiscal Recovery Funds.

"Small business" means a business that earns gross receipts less than $20 million annually.

"Smallest business" means a business that earns gross receipts less than $5 million annually.

"Targeted Funding Opportunity" means a formal announcement of the availability of funding through the Program from the Department for a Qualifying Business that operates in an industry or an area that has been the most disproportionately impacted by the COVID-19 Public Health Emergency.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards ("Uniform Guidance"), codified at 2 CFR 200.

History

• Source: Amended at 47 Ill. Reg. 3723, effective March 1, 2023

14 Ill. Adm. Code 691.30 Gata Requirements

a) The Program is subject to the Grant Accountability and Transparency Act [30 ILCS 708], with any exceptions granted by GOMB.

b) To the extent the Program is implemented using grant agreements, at a minimum, the provisions of 2 CFR 200.303 and 200.330 through 200.332 of the Uniform Guidance apply to grant recipients.

14 Ill. Adm. Code 691.40 Qualified Partners

a) The Department may enter into grant agreements, contracts, or intermediary agreements with Qualified Partners to implement the Program. The Department may award grants to Qualified Partners to provide financial assistance to Qualifying Businesses or contract with Qualified Partners to secure services to implement the Program. The nature of the services provided by a Qualified Partner shall determine whether the arrangement is a grant, procurement, or other relationship.

b) A Qualified Partner shall operate as a non-profit organization registered to conduct business in the State of Illinois or a financial institution that has demonstrated experience providing financing or services to businesses or residents located in Disproportionately Impacted Areas.

c) An agreement with a Qualified Partner shall specify the Qualified Partner's responsibility, if any, for determining Qualified Business' eligibility for financial assistance and monitoring Program Participants for compliance with Program requirements.

d) In accordance with 20 ILCS 605/605-1050(h), nothing in this Part shall restrict the Department from securing services from entities other than Qualified Partners to assist in implementing the Program.

14 Ill. Adm. Code 691.50 Prioritization

a) The Department will provide targeted funding opportunities for industries and businesses most impacted by the COVID-19 Public Health Emergency. In determining which industries and businesses to prioritize, the Department will consider the impact of compliance with the COVID-19 Prevention Directives on business operations or the impact of the COVID-19 Public Health Emergency on the impacted industry. The Department will also prioritize funding to small and smallest businesses. Assistance will be targeted to businesses facing financial insecurity, with substantial declines in gross receipts, or facing other economic harm due to the pandemic, as well as businesses with less capacity to weather financial hardship, such as the smallest businesses, those with less access to credit, or those serving disadvantaged communities. The Department will make this determination on whether to provide targeted funding opportunities based on an ongoing assessment regarding the needs of the business community and announce the targeted funding opportunities on its website as permitted by statute [20 ILCS 605/605-1050(h)(6)].

b) To prioritize funding for industries and business districts that were not enumerated within ARPA, the Department shall maintain an assessment for a period of 5 years, from the date a prioritized industry is selected, that outlines how these industries or business districts experienced a negative economic impact due to the pandemic comparable to enumerated industries. Additionally, the Department shall outline how program funding will address this negative economic impact.

14 Ill. Adm. Code 691.60 Disproportionately Impacted Areas

a) The Department will allocate no less than 40% of program funding to Qualifying Businesses located in Disproportionately Impacted Areas.

b) A Disproportionately Impacted Area may be added or removed from prioritization based on changes in relative COVID-19 rates and economic distress. If the Department recategorizes an area, removing its designation as a disproportionately impacted area, businesses that have applied prior to that update will maintain the previous prioritization status.

c) In determining prioritization of industries or zip codes within Disproportionately Impacted Areas, the Department will give greater weight to areas that had significantly higher rates of COVID-19 cases per capita and zip codes with higher levels of poverty.

d) The Department shall maintain records for a period of 5 years, from the date a prioritized zip code or industry is selected, the assessment of how the Department identified each Disproportionately Impacted Area.

14 Ill. Adm. Code 691.70 Eligible Applicants

a) An eligible applicant for financial assistance under the Program is a business operating within the State of Illinois that:

1. annually earns a gross income of $20 million or less except for hotels, which may annually earn a gross income of $35 million or less;

2. for purposes of determining loss, was in operation as of December 2019;

3. earned less gross income during the 2020 calendar year than the 2019 calendar year due to the negative impact of the COVID-19 pandemic, and that total loss exceeds $5,000;

4. temporarily closed, had reduced operations, or experienced depressed consumer demand during the COVID-19 pandemic; and

5. is not excluded due to select funding rounds providing financial assistance for prioritized industries.

b) In determining whether an applicant is eligible under the revenue requirement as identified under subsection (a)(1), a business shall include all gross income earned from any applicable parent company, affiliate, and subsidiary to determine the total amount earned by an applicant.

c) The following businesses are ineligible to participate in the Program:

1. independent contractors or freelance workers that do not operate a sole proprietorship;

2. child care providers that have received and/or are registered for Child Care Restoration Grants;

3. a private club or business that limits membership for reasons other than capacity;

4. a business primarily engaged in speculative activities that develop profits from fluctuations in price rather than through normal course of trade;

5. a business that earns more than a quarter of its annual net revenue from lending activities, unless the business is a non-bank or non-bank holding company certified as a Community Development Financial Institution (CDFI);

6. a business that derives at least 33% of its gross annual revenue from legal gambling activities;

7. a business engaged in pyramid sales, where a participant's primary incentive is based on the sales made by an ever-increasing number of participants;

8. a business engaged in activities that are prohibited by federal law or applicable law in the jurisdiction where the business is located or conducted;

9. a business that derives a majority of its income as an owner of real property that leases that property to a tenant or tenants under a lease agreement;

10. a business principally engaged in teaching, instructing, counseling, or indoctrinating religion or religious beliefs, whether in a religious or secular setting;

11. a government-owned business entity (except for businesses owned or controlled by a Native American tribe);

12. a business primarily engaged in political or lobbying activities;

13. a business that manufactures or sells at wholesale tobacco products or, liquor or that manufactures or sells firearms at wholesale or retail;

14. a night club or strip club;

15. an employment agency;

16. a pawn shop;

17. a liquor store;

18. a storage facility, trailer-storage yard or junk yard;

19. an establishment similar to any enumerated above;

20. a business in which a majority owner has a financial or familial connection to a director, principal shareholder or leadership member of the Department or Department's partner under the program; or

21. a business on the federal System for Award Management excluded parties list (https://sam/gov/content/exclusions).

d) In addition to the exclusions listed in subsection (c), a business will be excluded from participating under this Program or required to return funds received if that business does not adequately address any of the following deficiencies within a reasonable time, not to exceed 30 days:

1. Noncompliant with COVID-19 Prevention Directives;

2. Delinquent on payment of any State of Illinois tax obligation;

3. On the Illinois Stop Payment List or in default of any contractual obligation to the Department; or

4. Does not meet any other eligibility criteria established in a financial assistance application, which for this point, must be completed prior to the closing of the application window or within 30 days, whichever comes first.

14 Ill. Adm. Code 691.80 Form of Financial Assistance

Financial Assistance under the Program may be in the form of a grant, subsidy, or expense reimbursement, to respond to the negative economic impacts of the COVID-19 public health emergency. Regardless of the assistance structure, a Program Participant shall be obligated to comply with requirements outlined in this Part and any accompanying agreements incorporated within an application for Financial Assistance.

14 Ill. Adm. Code 691.90 Financial Assistance Application Process

a) Interested businesses shall apply to this Program, utilizing an electronic application, which the applicant will access by visiting the Department's website and clicking the appropriate hyperlink that will forward the applicant to the application portal administered by the Qualified Partner of the Department. If the Department announces additional funding opportunities requiring an applicant to use a different application procedure, that information will be made available on its website.

b) Applicants selected for an award shall be required to sign a certification agreement that attests to their eligibility for the Program and compliance with programmatic requirements for funding as described in this Part.

c) To assist in determining whether an applicant is eligible and to ensure compliance with State and federal requirements, Qualified Partners will request the applicant to submit the following documentation with their application:

1. Business Owner/Representative Valid Identification (Driver's License, State ID, Passport, or Matricular Consular Card);

2. 2019 Federal Income Tax Return;

3. 2020 Federal Income Tax Return;

4. Completed W-9 form;

5. Most recent bank statement;

6. One monthly business bank statement between April 1, 2020 and December 31, 2020 that reflects business expenses;

7. Data Universal Numbering System (DUNS) number or other unique identifier requested by the Department and;

8. Any other information or proof necessary to confirm the existence of the applicant and its eligibility to participate in the Program.

d) Completed application materials must be signed by the applicant's authorized representative and received by the Department or the entity processing the application by the announced deadline for the submission of applications.

e) If an applicant has been marked ineligible or not belonging to a priority grouping, the Qualified Partner will provide electronic notice of their ineligibility or priority status. The notice will contain the reason for ineligibility or the priority change and a link to a decision appeal form. The Qualified Partner's appeals team will review appeals by rereviewing the application, the appeal form, and any supporting documentation provided by the applicant. Upon conclusion of this review, the Appeals team will provide a follow-up email to the business identifying a decision and supporting evidence for that decision. The Qualified Partner will review appeals until funds are exhausted. Providing program funding is still available, an applicant may request an appeal of the final decision issued by the Qualified Partner, by submitting electronic correspondence to the Qualified Partner or the Department requesting the Department to review the decision. The Department will review all documents provided to the Qualified Partner and may review other relevant information related to the appeal. Within 60 days of receipt of the request for appeal, the Department will conduct an investigation and provide a final determination to the appealing applicant. The rights outlined in this Part shall apply to applicants of the Program.

14 Ill. Adm. Code 691.100 Selection Process

a) The Department or its Qualified Partners shall select awardees under the Program using a competitive scoring model. Businesses will receive a higher score if they meet any of the following priority codes:

1. Deemed a smaller business;

2. Located with a DIA;

3. Has yet to qualify for state or federal assistance; or

4. Has been prioritized as a hard-hit industry (full list of priority industries on Department website).

b) For eligible applicants selected, excluding hotels, the amount of financial assistance made available by the Department will be based upon one-sixth of the decline in revenue from the 2019 calendar year to the 2020 calendar year, as supported by relevant information provided by the applicant in their federal tax return filings. The award will be equal to one-sixth of the revenue decline experienced by the applicant between the 2019 and 2020 calendar year, rounded up to the nearest $5,000. Each eligible applicant may qualify for an award of financial assistance up to $150,000. Eligible applicants who applied on behalf of various entities owned by the applicant may receive an award for each business. However, the total amount of funding an eligible applicant that owns multiple eligible businesses may receive shall not exceed $300,000 in assistance.

c) Hotels that annually earn gross receipts equal to or less than $35 million may qualify for an award of financial assistance up to $250,000. All other requirements of subsection (b) apply to this provision.

14 Ill. Adm. Code 691.110 Allowable Expenditures

a) ARPA permits program funding to be used to respond to the COVID-19 Public Health Emergency and its negative economic impacts.

b) Allowable expenditures under ARPA include permitted expenses incurred on or after March 1, 2020, and up to December 31, 2024, providing obligations incurred by December 31, 2024, are expended by December 31, 2026. Eligible expenses include supporting payroll and benefits costs, costs to retain employees, mortgage payments, rent or utility costs, and other operating costs. Additionally, eligible expenses also include costs to implement COVID-19 Prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, construction of barriers or partitions, and related expenses according to U.S. Department of the Treasury guidance and ARPA.

c) The Department will identify allowable expenditures under the Program and outline those permitted expenses on the Department's website. The Department will utilize ARPA and the applicable rules and guidelines furnished by the federal government to establish the State's guidelines regarding allowable uses. It will update this information as more federal guidelines become available.

d) Expenditures that have been or will be reimbursed under other programs that utilize federal funds are not allowable under this program.

14 Ill. Adm. Code 691.120 Reporting Requirements

Each Program Participant and Qualified Partners shall submit all reports required pursuant to any project and expenditure reporting requirements identified by the Department of the Treasury in a format and at a time required by the Department. As this information becomes more readily available through federal rules and guidelines, the Department will include this information on its website and other available mediums.

14 Ill. Adm. Code 691.130 Recordkeeping Requirements

a) Program participants shall maintain, for 5 years from the date the award was last expended or returned to the Qualified Partners, adequate books, financial records and supporting documents, statistical records, and all other records pertinent to awards made under this Program. If any litigation, claim, or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims, or audit exceptions involving the records have been resolved, and final action is taken.

b) Program participants shall provide or make available all records related to awards made under this Program to the Qualified Partner, the Department or to the U.S. Department of the Treasury upon request, and to any authorized oversight body, including, but not limited to, the Illinois Attorney General, the Illinois Auditor General, the Illinois Office of the Executive Inspector General, the Government Accountability Office ("GAO"), Treasury's Office of Inspector General ("OIG"), and the Pandemic Relief Accountability Committee ("PRAC").

14 Ill. Adm. Code 691.140 Noncompliance

A Program Participant shall return all funds provided under the Program if it does not adequately address a deficiency within a reasonable amount of time, not to exceed 30 days, does not comply with any requirements in this Part or breaches any material term of the Financial Assistance agreement or certification. A material term is any term that relates to eligibility for Program participation, reimbursement under the SLFRF, or compliance with State and federal law, including COVID-19 Prevention Directives. Recovery of funds in the event of noncompliance may be effectuated by any means authorized under Illinois law, including the Grant Funds Recovery Act for any Financial Assistance in the form of a grant or the Illinois False Claims Act for any Financial Assistance gained using false information.

14 Ill. Adm. Code 691.210 Program Administration

a) Programs

Businesses seeking financial assistance under this Subpart must submit an application to the Department's Qualified Partner for one of the following programs:

1. Startup Grants Program: A grant program to provide relief for lost revenues and costs incurred due to COVID-19 for businesses that incorporated and started operations between January 1, 2020, and December 31, 2021.

2. Reactivating Vacant and Mainstreet Places (REVAMP) Grants Program: A grant program that reimburses businesses for COVID-19 related costs incurred after March 13, 2020, for businesses occupying a commercial property that had been vacant without a tenant for a minimum of 90 consecutive days ending on or after March 1, 2020.

b) Application Process

1. Interested businesses shall apply to the programs in this Subpart, utilizing an electronic application provided by the Department’s Qualified Partner. The Department will list on its website (https://www2.illinois.gov/dceo/Pages/default.aspx) a link to the website hosted by the Qualified Partner. Once the interested business arrives at the Qualified Partner’s website and accesses the appropriate hyperlink for the grant program the business seeks to apply to, the business will be forwarded to the application portal for that program which is administered by the Qualified Partner of the Department. To assist in determining the eligibility of an applicant under either program in this Subpart, the following documents will be required from an applicant:

A) An attestation that will be provided by the Department's Qualified Partner that attests to their eligibility for the program and compliance with programmatic requirements for funding as described for this Subpart;

B) A valid government-issued identification (driver's license, State ID, passport, or Matricular Consular Card) for the business owner or the authorized representative of the business;

C) Proof of establishment by a business organization including copies of articles of incorporation, articles of organization, certificate of good standing in the State of Illinois, or a business license from the appropriate local government agency that exercises jurisdiction over the applicant;

D) Proof of tax exemption as provided by the IRS, if applicable;

E) Proof of professional licensure (if the applicant operates a business that requires a professional license);

F) If applying for funding under the REVAMP program, relevant receipts, credit card statements, or bank statements that reflect expenditures incurred, which are reimbursable by the program applied to;

G) Tax returns for 2019, 2020, and 2021, if applicable;

H) A utility bill that provides proof of address for the business; and

I) If applying for funding under the REVAMP program, a copy of the applicant’s fully executed lease agreement, proof of mortgage payment, or a copy of the deed of the business.

2. Completed application materials must be signed by the applicant's authorized representative and received by the Department’s Qualified Partner by the announced deadline for the submission of applications. If an applicant has been marked ineligible, the Qualified Partner will provide the applicant with electronic notice of their ineligibility. The notice will contain the reason for ineligibility and a link to a decision appeal form. The Qualified Partner will review appeals by re-reviewing the application, the appeal form, and any supporting documentation provided by the applicant. Upon conclusion of this review, the Qualified Partner will provide a follow-up email to the business identifying a decision and supporting evidence for that decision. The Department’s Qualified Partner will review appeals until funds are exhausted.

c) Selection Process

1. The Department’s Qualified Partner shall select awardees under the programs in this Subpart using a competitive scoring model to determine the prioritization of review for each application. The following is each worth one priority point if applicable to the applicant:

A) Applicants operating a business that earned gross receipts of less than $5 million annually;

B) A business within a hard-hit industry;

C) A business that has not received funding from a COVID-19 relief program that was funded utilizing federal dollars (including federal funds that was issued by the State of Illinois); or

D) A business operating within a DIA.

2. Applications with the highest number of priority points will be reviewed first by the Qualified Partner. Once the order of review is determined, the Qualified Partner will review each application until funds are exhausted. For eligible applicants selected in the REVAMP program, the amount of an award will be based on 100% of eligible expenditures incurred, providing the applicant incurred at least $5,000 of eligible expenditures, and the award will be capped at a maximum amount of $150,000. For eligible applicants selected under the Startup Grants Program, the amount of award will be a flat amount pre-determined by the Department to align with estimated costs and revenues lost by eligible businesses. These amounts may vary based on the date that the applicant opened and whether the applicant is a home-based business and/or sole proprietor. Once an award is determined, the Qualified Partner will notify the applicant; and require the business to sign a Financial Assistance agreement and an attestation before funds are disbursed to the applicant.

d) Noncompliance

A Program Participant shall return all funds provided under either program in this Subpart if it does not comply with any requirements in this Part or breaches any material term of the Financial Assistance agreement or attestation. A material term is any term that relates to eligibility for Program participation, reimbursement under the SLFRF, or compliance with State and federal law, including COVID-19 Prevention Directives. Recovery of funds in the event of noncompliance may be effectuated by any means authorized under Illinois law, including the Grant Funds Recovery Act for any Financial Assistance in the form of a grant or the Illinois False Claims Act for any Financial Assistance gained using false information.

e) Reporting Requirements

Each Program Participant and Qualified Partners shall submit all reports required pursuant to any project and expenditure reporting requirements identified by the Department of the Treasury in a format and at a time required by the Department. As this information becomes more readily available through federal rules and guidelines, the Department will include this information on its website and other available mediums.

f) Recordkeeping Requirements

1. Program participants shall maintain, for 5 years from the date the award was last expended or returned to the Qualified Partners, adequate books, financial records and supporting documents, statistical records, and all other records pertinent to awards made under this Program. If any litigation, claim, or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims, or audit exceptions involving the records have been resolved, and final action is taken.

2. Program participants shall provide or make available all records related to awards made under this Program to the Qualified Partner, the Department or to the U.S. Department of the Treasury upon request, and to any authorized oversight body, including, but not limited to, the Illinois Attorney General, the Illinois Auditor General, the Illinois Office of the Executive Inspector General, the Government Accountability Office ("GAO"), Treasury's Office of Inspector General ("OIG"), and the Pandemic Relief Accountability Committee ("PRAC").

History

• Source: Added at 47 Ill. Reg. 3723, effective March 1, 2023

Chapter I Department of Commerce and Economic Opportunity

Part 691 Back to Business Grant Program

14 Ill. Adm. Code 691.220 Startup Grants Program Eligibility

A business applying for the Startup Grants Program must be an independently owned and operated for-profit corporation, a limited liability corporation, a partnership, a non-profit organization or a sole proprietorship authorized to conduct business and operating in the State of Illinois. To be eligible, the business must be either (1) operating in a hard-hit industry, or (2) majority-owned by an individual or individuals that became unemployed between March 13, 2020, and the date that the business started operations. All ineligible businesses listed in Subpart A (see Section 691.70(c) and (d)) are also ineligible to apply under the Startup Grants Program, except for businesses that derive a majority of their income as an owner of real property that leases that property to a tenant or tenants under a lease agreement (see Section 691.70(c)(9)); and employment agencies (see Section 691.70(c)(15)). Businesses that operate COVID-19 testing sites or COVID-19 vaccine distribution sites primarily, and businesses that previously received a Back to Business or Business Interruption Grant, are ineligible to apply for the Startup Grants Program. To be eligible, all applicants that incorporated (or for businesses not required to incorporate, began operating) between January 1, 2020 and the date of application submission, shall have earned less than $20 million in gross operating revenue for 2021. If the business incorporated (or for businesses not required to incorporate, began operating) starting January 1, 2021 or later, to be eligible, a pro-rated amount of the applicant's earnings in 2021 must equate to less than $20 million in gross operating revenue based on the number of days in operation when extrapolated for a full year.

History

• Source: Added at 47 Ill. Reg. 3723, effective March 1, 2023

14 Ill. Adm. Code 691.230 Reactivating Vacant and Mainstreet Places (revamp) Grants Program Eligibility

a) Program eligibility

A business applying for the REVAMP Program must be an independently owned and operated for-profit corporation, a limited liability corporation, a partnership, a non-profit organization or a sole proprietorship authorized to conduct business and operating in the State of Illinois; or an Illinois local unit of government. All ineligible businesses listed in Subpart A (see Section 691.70(c) and (d)) are also ineligible to apply under the REVAMP Program, except for businesses that derive a majority of their income as an owner of real property that leases that property to a tenant or tenants under a lease agreement (see Section 691.70(c)(9)); employment agencies (see Section 691.70(c)(15)); and government-owned business entities (see Section 691.70(c)(11)). Businesses that operate COVID-19 testing sites or COVID-19 vaccine distribution sites primarily, and businesses that previously received a Back to Business or Business Interruption Grant, are ineligible to apply to the REVAMP Program. The physical location of the establishment that benefits from the grant must be currently occupied by the applicant business and have been previously vacant without a tenant for 90 consecutive days ending on or after March 1, 2020. The physical location of the establishment which benefits from the grant must be located in a high traffic area. To be eligible, all non-governmental applicants shall have earned less than $20 million in gross operating revenue for 2021. If the business incorporated (or for businesses not required to incorporate, began operating) starting January 1, 2021, or later, to be eligible, a pro-rated amount of the applicant's earnings in 2021 must equate to less than $20 million in gross operating revenue based on the number of days in operation when extrapolated for a full year.

b) Program-specific expenditures

Under the REVAMP Program, expenditures must have been incurred directly and paid for by an eligible business on or after March 13, 2020, up to the date of application submission, for the benefit of an establishment meeting the description in subsection (a). The following COVID-19-related expenditures are reimbursable:

1. Rent or mortgage payments made during temporary closures due to COVID-19 Prevention Directives;

2. Insurance payments made during temporary closures due to COVID-19 Prevention Directives;

3. Utility payments made during temporary closures due to COVID-19 Prevention Directives;

4. COVID-19 vaccination, testing, and contact tracing;

5. Renovations or investments to the facility that encouraged distancing, erected barriers, improved ventilation, or permitted the use of outdoor space to mitigate the spread of COVID-19;

6. Investment in technology that supported remote work or the delivery or pick-up of goods sold by the business;

7. Personal protective equipment;

8. Sanitation and deep cleaning; and

9. Commercial property rehabilitation, storefront improvements, and façade improvements for businesses operating within a Qualified Census Tract.

History

• Source: Added at 47 Ill. Reg. 3723, effective March 1, 2023

Part 700 Local Coronavirus Urgent Remediation Emergency (or Local Cure) Support Program

14 Ill. Adm. Code 700.10 Purpose

The purpose of the Local Coronavirus Urgent Remediation Emergency (or Local CURE) Support Program is to administer federal funds from the Coronavirus Relief Fund provided to the State pursuant to section 5001 of the federal CARES Act to provide financial support to units of local government for purposes authorized by section 5001 of the CARES Act and related federal guidance and any subsequent guidance issued by the U.S. Department of the Treasury. Upon receipt of those funds, and based on appropriations for their use, the Department shall administer a program to provide financial support to units of local government that have incurred necessary expenditures due to the COVID-19 public health emergency. [20 ILCS 605/605-1045(a)]

14 Ill. Adm. Code 700.20 Definitions

The following definitions are applicable to the Local Coronavirus Urgent Remediation Emergency (or Local CURE) Support Program:

"Administrative expenses" means costs associated with the administrative work necessary due to the COVID-19 public health emergency, including, but not limited to, costs related to managing the Local CURE Program and developing and managing an Economic Support Payments Grant.

"Administrative compliance expenses" means administrative expenses that are related to eligible uses of funds under the Local CURE Program (see Sections 700.50(a) and 700.60) and are necessary for a local government to comply with the requirements of the CARES Act or Local CURE Program. These expenses would include, for example, a reasonably proportionate share of the expenses incurred to comply with the Single Audit Act (31 USC 7501 through 7507) and for reporting and recordkeeping requirements imposed by the CARES Act or Local CURE Program.

"Business" means a for-profit enterprise or non-profit organization lawfully conducting business in Illinois. This term does not include any business that is prohibited from receiving funds under section 5001(b) of the CARES Act.

"Business Interruption Grant Program" or "BIG Program" means the financial assistance program funding opportunities administered by the Department and implemented in 14 Ill. Adm. Code 690. (See 20 ILCS 605/605-1050.)

"Business participant" means the business that receives financial assistance under the economic support payments grant program.

"CARES Act" means the Coronavirus Aid, Relief, and Economic Security Act (42 USC 801).

"Certified Public Health Department" means a unit of local government that is a local public health department certified by the Illinois Department of Public Health.

"Cost of business interruption" means the following costs incurred during the allowed time period set forth in the Local CURE Program and posted on the Department's website:

decreases in revenue caused by closing or limiting access to the business establishment to comply with COVID-19 prevention directives or to otherwise prevent the spread of COVID-19 within the business establishment;

decreases in revenue caused by decreased customer demand as a result of the COVID-19 emergency; or

other revenue reductions approved for reimbursement from the CRF by the U.S. Department of the Treasury.

"COVID-19" means the novel coronavirus disease deemed COVID-19 by the World Health Organization on February 11, 2020 [20 ILCS 605/605-1047(d)(1)].

"CRF" means the Coronavirus Relief Fund established by the CARES Act.

"Department" means the Department of Commerce and Economic Opportunity.

"Disproportionately impacted area" means those ZIP Codes most severely affected by the COVID-19 Crisis, to be determined based on positive COVID-19 case per capita rates, and high rates in at least one of the following poverty-related categories relative to other ZIP Codes within their region:

share of population consisting of children age 6 to 17 in households with income less than 125% of the federal poverty level (FPL);

share of population consisting of adults over age 64 in households with income less than 200% FPL;

share of population in household with income less than 150% FPL; and

share of population consisting of children ages 5 and under in households with income less than 185% FPL.

"Economic Support Payments Grants" means grants applied for and issued to units of local government under Sections 700.80(e) and 700.120 to provide financial support to businesses that have experienced interruption of business attributable to the COVID-19 public health emergency.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means 44 Ill. Adm. Code 7000.

"Incurred":

in relation to expenses for funding allotments received by local governments under Section 700.80(a), (b) or (c), means services were performed for or goods were received by units of local government to respond directly to the COVID-19 public health emergency.

in relation to the Economic Support Payments Grants Program, means:

expenditures by the local government associated with economic support in connection with the COVID-19 public health emergency; or

in reference to businesses, the cost of business interruption due to the COVID-19 public health emergency during the allowed time period for incurring costs set forth in the Local CURE Program and posted on the Department's website.

"LGDF formula" means the Local Government Distributive Fund formula established by the Illinois Department of Revenue.

"Local CURE Program" means the Local Coronavirus Urgent Remediation Emergency (or Local CURE) Support Program (see 20 ILCS 605/605-1047).

"Local government" or "unit of local government" means any unit of local government as defined in Article VII, Section 1 of the Illinois Constitution [20 ILCS 605/605-1047(d)(2)].

"Local Health Protection Grant Program formula" means the methodology established by the Illinois Department of Public Health (see 77 Ill. Adm. Code 615.210).

"Necessary expenditure" means an expenditure of funds that is eligible for reimbursement from CRF and necessary to:

respond to the COVID-19 public health emergency, including, but not limited to, expenditures incurred to allow local governments to respond directly to the emergency, such as by addressing medical or public health needs of the local governments or local businesses; or

reimburse the cost of business interruption.

"Non-profit organization" means an organization that is registered as a non-profit corporation with the Illinois Secretary of State.

"Participating" means that a municipality, county, certified local public health department or other local government, as applicable, is receiving Local CURE Program allotments under Section 700.80(a), (b) or (c).

"Public health employees" means:

local government employees involved in providing:

medical and other health services to patients, including supervisory personnel, and including medical staff assigned to schools, prisons, and other such institutions; or

other support services essential for patient care (e.g., laboratory technicians); and

employees of public health departments who:

are directly engaged in matters related to public health; or

serve as related supervisory personnel.

"Public safety employees" means local government employees, including police officers, sheriffs and deputy sheriffs, firefighters, emergency medical responders, correctional and detention officers, and those who directly support public safety employees, such as dispatchers and supervisory personnel.

"Qualifying business" means a business or organization that experienced or is experiencing business interruption due to the COVID-19 public health emergency and for which provision of financial assistance under the Economic Support Payments Grants Program is eligible for reimbursement as prescribed by section 601(a) of the Social Security Act (42 USC) as added by section 5001 of the CARES Act, or other federal legislation addressing the COVID-19 emergency. A qualifying business includes self-employed individuals and independent contractors.

"Restore Illinois Plan" means the framework announced by the Governor of the State of Illinois to safely reopen Illinois in 5 phases, with any modifications to that plan.

"Substantially dedicated use" means the payroll and benefits expenses for local government employees whose services were focused on mitigating or responding to the COVID-19 public health emergency. These classes of employees include public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to COVID-19. The full amount of payroll and benefits expenses of substantially dedicated local government employees are eligible for reimbursement under the Local CURE Program. Payroll and benefit costs associated with public employees who could have been furloughed or otherwise laid off but who were instead repurposed to perform previously unbudgeted functions substantially dedicated to mitigating or responding to COVID-19 are also included. In accordance with guidance from the U.S. Department of the Treasury, a local government may presume that public health employees and public safety employees meet the substantially dedicated use test unless the chief executive (or equivalent) of the local government determines that specific circumstances indicate otherwise. Thus, if this presumption applies, all work performed by public health and public safety employees is considered to be a substantially different use than accounted for in the most recently approved budget as of March 27, 2020.

"Substantially different use" means costs that include, but are not necessarily limited to, costs of personnel and services that were budgeted for in the most recently approved budget, but that, due entirely to the COVID-19 public health emergency, have been diverted to substantially different functions. A public function does not become a "substantially different use" merely because it is provided from a different location or through a different manner. Included within the category of substantially different uses are payroll and benefits expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency.

"Third party administrator" means a service provider selected by the Department to provide operational assistance with the administration of the Local CURE Program [20 ILCS 605/605-1047(d)(3)].

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

14 Ill. Adm. Code 700.30 GATA Requirements

a) The Department will be excepted from the following Grant Accountability and Transparency Act requirements for funds allotted to local governments under Section 700.80(a), (b) and (c):

1. The Department will not be required to issue a notice of funding opportunity (NOFO);

2. Applications will not be subject to a merit-based review process;

3. In lieu of the GATA Uniform Grant Agreement, the Department will utilize a certification form for the units of local government to complete in order to receive funding.

b) The Department and units of local government must still comply with the following GATA requirements for funds allotted to local governments under Section 700.80(a), (b) and (c):

1. Local CURE Program payments are considered "other financial assistance" under 2 CFR 200.40(a)(6).

2. The Department shall create a Catalog of State Financial Assistance (CSFA) entry for the disbursement of Local CURE Program funds and shall record on the GATA Grantee Portal the payments made to units of local government.

3. Local CURE Program payments made to local governments are considered to be federal financial assistance subject to the Single Audit Act (31 USC 7501 through 7507) and the related provisions of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200):

A) 2 CFR 200.303 regarding internal controls;

B) 2 CFR 200.330 through 200.332 regarding subrecipient monitoring and management;

C) subpart E regarding cost eligibility requirements; and

D) subpart F regarding audit requirements.

4. Local governments must have a current registration on SAM.gov to receive a reimbursement payment. Local governments do not need to register or be pre-qualified in the GATA Grantee Portal.

5. Local governments shall not use funds received under the Local CURE Program to pay an entity that is listed on the federal or State debarred and suspended list.

c) All GATA requirements apply to the Economic Support Payments Grant Program under Sections 700.80(e) and 700.120.

14 Ill. Adm. Code 700.40 Local Government Eligibility Requirements

a) Local governments are eligible for Local CURE Program allocations under Section 700.80(a), (b) and (c) if they meet the following criteria:

1. The local government is within the State of Illinois, except that units of local government, or portions thereof, located within the five Illinois counties that received direct allotments from the CARES Act fund will not be included in the Local CURE Program; and

2. The local government incurred necessary expenses due to the COVID-19 public health emergency.

b) Local governments are eligible for Local CURE Program Economic Support Payments Grants under Sections 700.80(e) and 700.120 if they meet the following criteria:

1. The local government is a municipality or county within the State of Illinois, except that local governments, or portions thereof, located within the five Illinois counties that received direct allotments from the CARES Act fund will not be eligible; and

2. Local government applicants shall have an active GATA registration and shall be pre-qualified on the GATA Grantee Portal at the time of application submission.

Chapter I Department of Commerce and Economic Opportunity

Part 700 Local Coronavirus Urgent Remediation Emergency (or Local Cure) Support Program

14 Ill. Adm. Code 700.50 Restrictions on the Use of Program Funds

a) The Local CURE Program expenditures must follow the requirements of the CARES Act. Accordingly, payments to local governments under the Local CURE Program may only be used to cover costs that:

1. Are necessary expenditures incurred due to the public health emergency with respect to COVID-19;

2. Were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the local government; and

3. Were incurred during the allowed time period set forth in the Local CURE Program statute [20 ILCS 605/605-1047] and posted on the Department's website.

b) The uses of program funds set forth in subsection (a) will be modified by the Department, in accordance with the IAPA, if:

1. the CARES Act, or the U.S. Department of the Treasury guidance, or other applicable federal law authorizes different categories of eligible uses that affect the administration of the Local CURE Program;

2. eligible uses are consistent with the applicable State laws; and

3. Local CURE Program funds remain unspent at the time of the changes in the eligible uses of funds.

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

14 Ill. Adm. Code 700.60 Eligible and Ineligible Costs for Incurred Expenses

a) Funding Allotments Under Section 700.80(a), (b) and (c)

1. Eligible incurred expenses for funding allotments received under Section 700.80(a), (b) and (c) include the following five categories of costs and meet the restrictions on use of Local CURE Program funds (see Section 700.50):

A) Medical expenses, including, but not limited to, expenses of establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity, costs of providing COVID-19 testing, and emergency medical response expenses;

B) Public health expenses, including, but not limited to, expenses for communication and enforcement by local governments of public health orders related to COVID-19;

C) Payroll expenses for public safety, public health, health care, human services, and similar employees whose services were substantially dedicated to mitigating or responding to COVID-19;

D) Expenses for actions taken to facilitate compliance with COVID-19 related public health measures, including purchases by local governments to implement public health recommendations at local businesses; and

E) Any other COVID-19 related expenses reasonably necessary to the function of government that satisfy the Local CURE Program eligibility criteria (see Section 700.40), including, but not limited to, administrative expenses. Local governments must document how expenses are related to COVID-19.

2. Ineligible costs for incurred expenses by local governments for funding allotments received under Section 700.80(a), (b) and (c) include the following:

A) Governmental revenue shortfall replacement, unless applicable federal law or guidance allows for these expenses;

B) Damages covered by insurance;

C) Payroll or benefits expenses for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency or whose work is not an eligible administrative expense;

D) Expenses associated with the provision of economic support in connection with COVID-19, except for eligible administrative expenses;

E) Reimbursement to donors for donated items or services;

F) Workforce bonuses other than hazard pay or overtime;

G) Severance pay;

H) Legal settlements;

I) Indirect costs; and

J) Incurred expenses that have been or will be reimbursed through another State or federal funding opportunity.

b) Economic Support Payments Grants under Sections 700.80(e) and 700.120

1. The following business types are excluded from receiving funding from Economic Support Payments Grants:

A) a private club or business that limits membership for reasons other than capacity;

B) a government-owned business entity (except for businesses owned or controlled by a Native American tribe);

C) a business that derives at least 33% of its gross annual revenue from legal gambling activities, unless, subject to the Department's approval, the business is a restaurant with gaming terminals;

D) a business engaged in pyramid sales, in which a participant's primary incentive is based on the sales made by an ever-increasing number of participants; or

E) payday lenders.

2. A business shall be ineligible to receive funding through an Economic Support Payments Grant if it:

A) is delinquent on payment of any State of Illinois tax obligation;

B) is engaged in a business that is unlawful under Illinois or federal law;

C) has already received assistance, or notice of award of assistance, under the BIG Program;

D) is on the federal System for Award Management excluded parties list; or

E) does not meet any other eligibility criteria established in a financial assistance application.

3. Eligible incurred expenses for the Economic Support Payments Grants must meet the restrictions on the use of Local CURE Program funds (see Section 700.50) and reimburse the cost of business interruption.

4. Ineligible expenditures under the Economic Support Payments Grants include:

A) expenses that have been or will be reimbursed under any State, local, or federal program, such as expenses or losses that were reimbursed by a loan forgiven under the CARES Act's Paycheck Protection Program;

B) damages covered by insurance;

C) expenditures prohibited by section 5001(b) of the CARES Act;

D) reimbursement to donors for donated items or services;

E) workforce bonuses other than hazard pay or overtime;

F) severance pay;

G) legal settlements;

H) indirect costs;

I) administrative expenses of the local government, except that administrative expenses related to the Economic Support Payments Grants may be reimbursed only through funding received by the local governments under Section 700.80(a); and

J) any other expense not reasonably incurred due to the COVID-19 emergency.

c) The categories of eligible and ineligible expenditures set forth in this Section will be modified by the Department, in accordance with the IAPA, if:

1. the CARES Act, or the U.S. Department of the Treasury guidance, or other applicable federal law authorizes different eligible expenditures that affect the administration of the Local CURE Program;

2. expenditures are consistent with the applicable State laws; and

3. Local CURE Program funds remain unspent at the time of such changes in the eligible uses of funds.

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

14 Ill. Adm. Code 700.70 Third Party Administrator

The Department may enter into agreements with one or more third party administrators to provide operational assistance with the administration of the Local CURE Program, including, but not limited to:

a) reviewing documentation submitted and recommending approval of financial support payments to local governments; and

b) providing technical assistance to local governments.

14 Ill. Adm. Code 700.80 Allocations to Units of Local Government

a) A portion of the funds (80%) appropriated for the Local CURE Program will be allotted to municipalities and counties based on proportionate population. In consultation with the Illinois Department of Revenue, the method of distribution for this allotment will be utilizing the LGDF formula.

b) A portion of the funds (5%) appropriated for the Local CURE Program will be allotted to Certified Local Public Health Departments based on the Illinois Department of Public Health's State Fiscal Year 2020 Local Health Protection Grant program formula that is based on proportionate population and poverty rates within the jurisdiction.

c) A portion of the funds (6%) appropriated for the Local CURE Program will be allotted for units of local government eligible to receive financial support under this Part, that do not qualify for an allotment under subsection (a) or (b). These units of local government can apply for reimbursement for eligible Local CURE Program expenses up to an amount of county allotment set by the Department, based on a funding availability. The Department will allot funds on a per capita basis by county. Applications may be submitted for a pro rata share with preference going to units of local government located or serving a disproportionately impacted area. If additional funds remain in the portion of funds described in this subsection (c) after the application process has been completed and funds have been allocated, the Department may provide an additional allotment to those local governments that have received their entire initial allotment as of January 31, 2021 and request a need for additional funds. If, by June 30, 2021, local governments that received allotments under this subsection (c) have not submitted requests for reimbursement for the entirety of the allotments, the Department may, at its option, either reallocate the unused portion of the allotments to other local governments that have received funding under this subsection (c) and have a need for additional funds, or the Department may host a new application to distribute the unused funds pursuant to the procedures set forth in Section 700.100. Units of local government that qualify for an allotment under subsection (a) or (b) cannot receive an allotment under this subsection (c).

d) The Local CURE Program allotments described in this Section are contingent upon and subject to the availability of sufficient appropriated funds.

e) A portion of the funds (9%) appropriated for the Local CURE Program will be allocated by the Department as follows:

1. 8% will be allocated for Economic Support Payments Grants, on a reimbursement basis, to eligible municipalities and counties (see Section 700.40(b)) for distribution to qualifying businesses within their jurisdiction to cover necessary expenditures incurred due to the public health emergency of COVID-19 [20 ILCS 605/605-1047(f)(1)] (see Section 700.120); and

2. 1% will be allocated for the costs of the Department associated with the administration of the Local CURE Program, including the third party administrator contract fee.

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

14 Ill. Adm. Code 700.90 Certification Process for Allocations Based on Proportionate Population

a) Eligible local governments, as defined in Section 700.40, will be notified by the Department or third party administrator regarding their maximum allotment based on proportionate population, as described in Section 700.80(a) and (b). A local government does not need to register or be pre-qualified with the GATA Grantee Portal.

b) Notification of Allotment

1. The notification of allotment will contain a certification form for the local government to complete. The local government will be required to certify, among other things, that, as a recipient of financial support under the Local CURE Program, the local government will:

A) use the funds in accordance with the requirements of the Local Cure Program;

B) provide access to financial records in accordance with the prescribed audit (see Section 700.30(b)(3)) and record retention (see Section 700.110) requirements;

C) only request reimbursement for expenses related to the COVID-19 public health emergency;

D) repay to the Department any funds received but not used for the purposes of the Local CURE Program;

E) not seek reimbursement for incurred expenses (see Section 700.50) that have been or will be reimbursed through another State or federal funding opportunity;

F) comply with all applicable federal and State laws and rules;

G) include Local CURE funding in the applicable financial statement and/or audit of the unit of local government;

H) not seek reimbursement for costs paid to an entity on the federal or State debarred and suspended list; and

I) state whether it intends to spend the full allotment.

2. Units of local government may also be required to complete additional documents required by the Illinois Comptroller and State Treasurer to disburse funds.

c) Completed certification materials must be signed by the local government's authorized representative and received by the Department, or the Department's authorized third party administrator.

d) Funds will be paid on a reimbursement basis for eligible costs incurred by units of local government. After the local government submits its completed certification to the Department or the third party administrator, the local government may request funds up to the amount of the stated allotment provided in the notification. To request funds, the local government must submit to the Department or third party administrator:

1. a report certifying the costs, as required by 2 CFR 200.415, and providing the categories set forth in the U.S. Department of the Treasury Office of Inspector General reporting requirements for which reimbursement is sought and the amounts within each category. Local governments shall organize their expenditures by month and expenditure type as follows:

A) Payroll for public health and public safety employees;

B) Budgeted personnel and services diverted to a substantially different use;

C) COVID testing and contact tracing;

D) Expenses associated with the issuance of tax anticipation notes;

E) Food programs;

F) Nursing home assistance;

G) Personal protective equipment;

H) Improvement of telework capabilities of public employees;

I) Medical expenses;

J) Public health expenses;

K) Facilitation of distance learning;

L) Administrative expenses;

M) Housing support;

N) Unemployment Benefits;

O) Workers' Compensation; and

P) Expenditures organized by subcategories for eligible costs (see Section 700.60(a)(1)) not listed in this subsection (d)(1);

2. information regarding whether the local government intends to use its full allotment of funds and whether the local government anticipates additional Local CURE Program eligible costs, incurred by December 30, 2020, that exceed the local government's allotment;

3. support documents for the incurred expenses to demonstrate that the costs meet the eligible expense requirements;

4. proof of payment of the expenses; and

5. documentation regarding how expenses are necessary and related to COVID-19.

e) The Department or third party administrator will review the documents submitted to ensure the costs are allowed by the Local CURE Program and within the assigned allocation. If the costs submitted are approved, the Department will then process the reimbursement request and disburse funds to the local government pursuant to the payment procedures of the Illinois State Comptroller and State Treasurer.

f) A Certified Local Public Health Department may, at its option, voluntarily transfer all, or a portion of, its allotment to the county or counties in which it is located as long as the county or counties are eligible under Section 700.40. To transfer all, or a portion of, an allotment, a Certified Local Public Health Department must submit to the Department or its third party administrator all relevant documentation, including, but not limited to, a copy of an executed intergovernmental agreement between the local governments, that demonstrates agreement to the transfer of the allotment by the appropriate authorized personnel of both the Certified Local Public Health Department and the county or counties, as applicable. If, after reviewing the documentation, the Department approves the allotment transfer, each county receiving an allotment transfer must complete and submit a supplemental certification that includes the additional allotment amount. The county or counties receiving the transfer of funds may then request the additional funds as set forth in this Section.

g) A county may, at its option, voluntarily transfer all or a portion of its allotment to the Certified Local Public Health Departments serving that county as long as the Certified Local Public Health Departments are eligible under Section 700.40. To transfer all or a portion of an allotment, a county must submit to the Department or its third party administrator all relevant documentation, including, but not limited to, a copy of an executed intergovernmental agreement between the local governments, that demonstrates agreement to the transfer of the allotment by the appropriate authorized personnel of both the Certified Local Public Health Departments and the county. If, after reviewing the documentation, the Department approves of the allotment transfer, each Certified Local Public Health Department receiving an allotment transfer must complete and submit a supplemental certification that includes the additional allotment amount. The Certified Local Public Health Departments receiving the transfer of funds may then request the additional funds as set forth in this Section.

h) On or around November 1, 2020, the Department, or its third party administrator, will send a notice to each local government participating in the Local CURE Program indicating that the local government must report by December 1, 2020, in detail, how the remainder of the allotment, not to exceed the amount within the certification, will be utilized for necessary and eligible expenditures through December 30, 2020. The local government also must detail in its report any anticipated eligible expenses through December 30, 2020 in excess of the local government's initial allotment. Finally, the local government will be asked to report on any anticipated administrative compliance expenses that it may incur after December 30, 2020 but prior to February 28, 2021. The Department or its third party administrator will provide follow-up and technical support to the local government to communicate the steps of this report.

i) January 31, 2022 is the deadline for local governments that receive allotments of funds as described in Section 700.80(a) and (b) to submit requests for reimbursement for costs incurred to the Department's third party administrator for review.

j) All requests for reimbursement will be processed, and vouchers will be issued by the Department and/or the third party administrator, on or before March 31, 2022.

k) The deadlines set forth in this Section 700.90 will be extended by the Department, in accordance with the IAPA, if:

1. the CARES Act, or the U.S. Department of the Treasury guidance, or other applicable federal law authorizes a subsequent deadline;

2. the extension is consistent with the applicable State laws; and

3. any Local CURE Program funds remain unspent at the time of the deadline extension.

l) Local governments are expected to engage with the Department and/or the third party administrator on an ongoing basis, with updates and reports on their future needs for the unspent balances of their allotment, as well as additional anticipated Local CURE Program eligible expenditures in excess of the allotment received.

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

Chapter I Department of Commerce and Economic Opportunity

Part 700 Local Coronavirus Urgent Remediation Emergency (or Local Cure) Support Program

14 Ill. Adm. Code 700.100 Process for Reimbursement Requests Under Section 700.80(c)

a) For local governments that are applying for Local CURE Program funds pursuant to Section 700.80(c), the Department will announce funding availability and request procedures on its website as funding becomes available. A request must be completed, signed by the local government's authorized representative, and received by the Department or its third party administrator by the deadline to be set by the Department.

b) Local governments chosen to receive funds shall, in the certification form provided by the Department, certify, among other things, that, as a recipient of financial support under the Local CURE Program, the local government will:

1. use the funds in accordance with the requirements of the Local CURE Program;

2. only request reimbursement for expenses related to the COVID-19 public health emergency;

3. repay to the Department any funds received but not used for the purposes of the Local CURE Program;

4. not seek reimbursement for incurred expenses (see Section 700.50) that have been or will be reimbursed through another State or federal funding opportunity;

5. provide access to financial records in accordance with audit and record retention requirements;

6. include Local CURE funding in the applicable financial statement and/or audit of the local government;

7. not seek reimbursement for costs paid to an entity on the federal or State debarred and suspended list; and

8. comply with all applicable federal and State laws and rules.

c) In addition to the certification, to receive funds the local government must submit to the Department or third party administrator:

1. a report certifying its costs as required by 2 CFR 200.415, detailing the categories set forth in the U.S. Department of the Treasury Office of Inspector General reporting requirements for which reimbursement is sought and the amounts within each category. Local governments shall organize their expenditures by month and expenditure type as follows:

A) Payroll for public health and public safety employees;

B) Budgeted personnel and services diverted to a substantially different use;

C) COVID testing and contact tracing;

D) Expenses associated with the issuance of tax anticipation notes;

E) Food programs;

F) Nursing home assistance;

G) Personal protective equipment;

H) Improvement of telework capabilities of public employees;

I) Medical expenses;

J) Public health expenses;

K) Facilitation of distance learning;

L) Administrative expenses;

M) Housing support;

N) Unemployment Benefits;

O) Workers' Compensation; and

P) Expenditures organized by subcategories for eligible costs (see Section 700.60(a)(1)) not listed in this subsection (c)(1);

2. information regarding whether the local government intends to use its full allotment of funds and whether the local government anticipates additional Local CURE Program eligible costs, incurred by December 30, 2020, that exceed the local government's allotment;

3. support documents for the expenses incurred in compliance with Section 700.60 that will demonstrate the costs meet the eligible expense requirements;

4. proof of payment of the expenses for which reimbursement is sought; and

5. documentation regarding how expenses are necessary and related to COVID-19.

d) The Department or third party administrator will review the reimbursement request and documents submitted to ensure the costs are allowed by the Local CURE Program and are within the assigned allocation. If the costs submitted are approved, the Department will then process the reimbursement request and disburse funds to the local government pursuant to the payment procedures of the Illinois Comptroller and State Treasurer.

e) Local governments receiving allotments pursuant to Section 700.80(c) shall follow the reporting procedures and deadlines set forth in Section 700.90(h).

f) January 31, 2022 is the deadline for local governments that receive allotments of funds as described in Section 700.80(c) to submit requests for reimbursement for costs incurred to the Department's third party administrator for review.

g) All requests for reimbursement will be processed, and vouchers will be issued by the Department and/or the third party administrator, on or before March 31, 2022.

h) The deadlines set forth in this Section will be extended by the Department, in accordance with the IAPA, if:

1. the CARES Act, or the U.S. Department of the Treasury guidance, or other applicable federal law or guidance authorizes a subsequent deadline;

2. the extension is consistent with the applicable State laws; and

3. any Local CURE Program funds remain unspent at the time of the deadline extension.

i) Local governments are expected to engage with the Department and/or the third party administrator on an ongoing basis, with updates and reports on their future needs for the unspent balances of their allotment, as well as additional anticipated Local CURE Program eligible expenditures in excess of the allotment received.

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

14 Ill. Adm. Code 700.110 Monitoring and Records Retention

a) The Department or a third party administrator will conduct monitoring of the Local CURE Program to ensure funds were spent in accordance with the Local CURE Program statute and this Part.

b) Local governments shall provide, upon the Department's request, documents and information relevant to any applications, requests, and funds received pursuant to the Local CURE Program. The Department and/or its agents may make site visits as warranted.

c) The Department reserves the right to seek a refund from the local government if it finds the local government made a false or fraudulent claim for funds or the funds were spent on ineligible expenses. The Department also may seek a refund from a local government if the federal government, the Department, or other State agency finds that the local government did not properly spend the funds, was reimbursed for ineligible costs under Sections 700.50 and 700.60, or received reimbursement under the Local CURE Program of costs that were reimbursed through another federal or State program.

d) Units of local government that request or receive funds under the Local CURE program shall maintain, for five years from the date of submission of the final request for reimbursement, adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the Local CURE Program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Business participants in the Economic Support Payments Grants Program shall maintain all records related to the Local CURE Program until at least March 31, 2026, unless a longer retention period is set forth in any financial assistance agreement or certification, or until after the conclusion of all litigation, claims or audit exceptions involving the records have been resolved and final action taken, whichever is latest.

Chapter I Department of Commerce and Economic Opportunity

Part 700 Local Coronavirus Urgent Remediation Emergency (or Local Cure) Support Program

14 Ill. Adm. Code 700.120 Economic Support Payments Grants Program

The Department will administer an Economic Support Payments Grants Program available to eligible local governments (see Section 700.40(b)) through Local CURE Program funding allocated for this purpose (see Section 700.80(e)(1)). The purpose of the grant program is to provide financial support to businesses that have experienced interruption of business attributable to the COVID-19 public health emergency. The funds issued to local governments for the Economic Support Payments Grants shall be provided on a reimbursement basis only and shall follow all processes required by GATA and 2 CFR 200. Local governments that receive grants may be reimbursed for costs incurred by the qualifying businesses during the allowed time period set forth in the Local CURE Program and posted on the Department's website.

a) Form of Financial Assistance

Financial assistance provided by local governments to qualifying businesses may be in the form of a grant, subsidy or expense reimbursement only. Regardless of the form of assistance, a business participant shall be obligated to comply with the requirements set forth in this Part and in any agreement or certification executed as part of applying for or receiving financial assistance.

b) Source of Advance Payments

Funds provided to business participants by local governments for the costs of business interruption shall be advanced by the local governments from a source other than direct federal funds or federal pass-through funds, including, but not limited to, any portion of the allotments received through Section 700.80(a). The Department will then reimburse the local governments for expenditures incurred through an Economic Support Payments Grant.

c) Application Process

1. The Department will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal seeking applications from eligible local governments (see Section 700.40(b)). The Department may accept several rounds of applications through a single NOFO. A local government may apply for multiple funding rounds. However, a local government may only submit one application per funding round. Applicants shall submit their application materials by the deadlines set by the Department.

2. As part of the application, local governments will be required to provide a narrative about the program, which shall include, but is not limited to, a description of the following:

A) The types of businesses or industries that will be served by the program;

B) The method of selecting business participants;

C) A summary of how the proposed grant program adheres to the U.S. Department of the Treasury's CRF guidance;

D) How the program meets the following criteria for reimbursable expenses:

i) The expense is connected to the COVID-19 public health emergency;

ii) The expense is "necessary" as defined by the U.S. Department of the Treasury guidance;

iii) The expense is not filling a shortfall in government revenues;

iv) The expenses were not accounted for in the budget most recently approved as of March 27, 2020;

v) The expense is not being reimbursed through a different emergency response program;

vi) The expense would not exist without the COVID-19 public health emergency or would be for a substantially different use; and

vii) The expense was incurred during the allowed time period set forth in the Local CURE Program and posted on the Department's website and the NOFO;

E) The form of financial assistance being provided to businesses (e.g., grants, subsidies, expense reimbursement); and

F) The due diligence procedures and controls the local government will implement to ensure funds are expended within the parameters of this Part, the CARES Act, and the U.S. Department of the Treasury guidance.

3. Local governments are permitted to receive reimbursements for administrative expenses for administering these grants by requesting reimbursement from their allotments received pursuant to Section 700.80(a) only. Local governments are not permitted to receive reimbursements for administrative expenses directly from the Economic Support Payments Grants.

4. Local governments are not permitted to receive reimbursements for indirect costs related to the Economic Support Payments Grants.

5. Grant applications will be reviewed using the GATA merit-based review process to ensure applicants meet the eligibility requirements of this Part.

d) Grant Award Issuance

1. Grants will be awarded to local governments following a merit review of the local government's economic support payments program, including their due diligence procedures and adherence to subsection (c). If a local government applicant meets the eligibility criteria in subsection (c), the local government shall receive a grant of up to the maximum amount of eligible grant funds if grant funds are still available at the time of application.

2. The maximum amount of eligible grant funds for each local government shall be based on a pro rata share of funds available at the time of application as set forth in the NOFO, based on the populations of the eligible geographic regions set forth in the State's Restore Illinois Plan (see Restore Illinois regions, available at https://coronavirus.illinois.gov/s/ restore-illinois-regional-dashboard).

3. If a local government grantee has expended or will expend all funds awarded under its Economic Support Payments Grant and grant funds are available, the local government may request from the Department that additional funds be added to its grant award. The local government must also submit supporting information or documentation demonstrating that it will expend its full initial award and that there is a need for the additional funds. The Department has no obligation to agree to an increase of funds requested by a local government.

4. If a geographic region's allotted share of funds has not been awarded in full by December 1, 2020, the Department may reallocate funds to other regions for which there remains a need.

5. Grants will be issued through the GATA Uniform Intergovernmental Grant Agreement, which must be executed by both the Department and the local government.

6. The local government grantees will be responsible for the repayment to the Department of any costs for funding issued to businesses that are found, by the federal government, the Department, or any other State agency:

A) to be ineligible under the Economic Support Payments Grants Program; or

B) to have misspent funds.

e) Grant Award Administration

1. Grantees and business participants shall comply with all GATA and Department requirements for grant administration and reporting, including the monitoring and records retention requirements in Section 700.110.

2. Grantees shall:

A) require that all business participants that receive financial support through the grant award shall sign a certification that attests to eligibility for this program; and

B) condition funding on compliance with programmatic requirements, including, but not limited to, the Local CURE Program, the CARES Act, and the U.S. Department of the Treasury guidance.

History

• Source: Amended at 45 Ill. Reg. 9417, effective July 9, 2021

Part 710 Coal to Solar and Energy Storage Initiative Fund Grant Program

14 Ill. Adm. Code 710.10 Purpose

The purpose of the Coal to Solar and Energy Storage Initiative Fund Grant Program is to support installation of energy storage facilities at the sites of up to 3 qualifying electric generating facilities located in the Midcontinent Independent System Operator, Inc., region in Illinois and the sites of up to 2 qualifying electric generating facilities located in the PJM Interconnection, LLC region in Illinois that meet the criteria set forth in 20 ILCS 3855/1-75(c-5)(10)(C) and in this Part [20 ILCS 3855/1-75(c-5)(10)(C)].

14 Ill. Adm. Code 710.20 Definitions

"Agency" means the Illinois Power Agency.

"Act" means the Illinois Power Agency Act [20 ILCS 3855].

"Commission" means the Illinois Commerce Commission.

"Department" or "DCEO" means the Illinois Department of Commerce and Economic Opportunity.

"Environmental justice communities" means the definition of that term as used in the 2022 Long-Term Renewable Resources Procurement Plan, Modified Plan upon Reopening (May 9, 2023), no later amendments or editions, which may be obtained from the Illinois Power Agency online at https://ipa.illinois.gov/. Any changes made to the Solar for All Program will be incorporated in accordance with 5 ILCS 100/5-75.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means the administrative rules of the Governor's Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Grantee" means an applicant for a grant award under this program whose proposal is funded by the Department.

"Midcontinent Independent System Operator, Inc. region" means the geographic area in Illinois that is operated by the RTO, Midcontinent Independent System Operator, Inc.

"PJM Interconnection, LLC region" means the geographic area in Illinois that is operated by the RTO, PJM Interconnection, LLC.

"Program" means the Coal to Solar and Energy Storage Initiative Fund Grant Program.

"Project labor agreement" means a pre-hire collective bargaining agreement that covers all terms and conditions of employment on a specific construction project and must include the following:

provisions establishing the minimum hourly wage for each class of labor organization employee;

provisions establishing the benefits and other compensation for each class of labor organization employee;

provisions establishing that no strike or disputes will be engaged in by the labor organization employees;

provisions establishing that no lockout or disputes will be engaged in by the general contractor building the project; and

provisions requiring the parties to the agreement to work together to establish diversity threshold requirements and to ensure best efforts to meet diversity targets, improve diversity at the applicable job site, create diverse apprenticeship opportunities, and create opportunities to employ former coal-fired power plant workers.

A labor organization and the general contractor building the project shall have the authority to include other terms and conditions as they deem necessary. [20 ILCS 3855/1-10, 1-75(c-5)(10)(C)(12)]

"Regional Transmission Organization" or "RTO" means the independent systems operator that administers and oversees the wholesale electricity markets in which the State participates. In Illinois, the two RTOs are the Midcontinent Independent System Operator, Inc. and PJM Interconnection, LLC. For information on the geographic regions covered by each RTO see https://www.ferc.gov/power-sales-and-markets/rtos-and-isos.

"Retired" or "retirement" means to have fully ceased generating electricity at the facility.

"State" means the State of Illinois.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR 200.

14 Ill. Adm. Code 710.30 Funding Source

The grant awards described in this Part are contingent upon the availability of funding in the Coal to Solar Energy Storage Initiative Fund [20 ILCS 3855/1-75(c-5)(10)(A)], which is funded by the Coal to Solar Energy Storage Initiative Charge [20 ILCS 3855/1-75(c-5)(9)]. The Department shall utilize up to $280,500,000 in the Coal to Solar and Energy Storage Initiative Fund for grants to qualified applicants. [20 ILCS 3855/1-75(c-5)(10)(C)]

14 Ill. Adm. Code 710.40 Grantee and Project Eligibility Requirements

a) The following types of entities are eligible to apply for a grant award under the program:

1. An owner of an electric generating facility that meets the requirements listed in subsections (b) and (c) and that:

A) has an active GATA registration and is qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) at the time the application is submitted; and

B) is considered a regarded entity by the Internal Revenue Service (26 U.S.C. 1361(b)(3)) for federal income tax purposes.

2. A subsidiary or special purpose entity of an owner of an electric generating unit, but only if this subsidiary or entity:

A) includes with its application a written statement from the owner of the electric generating unit that demonstrates the requirements of subsections (b) and (c) will be met and describes the applicant's relationship to the owner company;

B) provides documentation of the corporate structure demonstrating the applicant's relationship to the owner of the electric generating unit;

C) provides documentation showing it will meet the requirements listed in subsection (c);

D) has an active GATA registration and is qualified on the GATA Grantee Portal at the time the application is submitted;

E) is considered a regarded entity by the Internal Revenue Service for federal income tax purposes; and

F) can meet all requirements of 20 ILCS 3855/1-75(c-5)(10)(C) as if it were the owner of an electric generating unit.

3. An affiliate of a company that owns an electric generating unit, but only if the affiliate applicant:

A) includes with its application a written statement from the owner company that demonstrates the requirements of subsections (b) and (c) will be met and describes the applicant's relationship to the owner company;

B) provides documentation of the corporate structure demonstrating the applicant's relationship to the owner of the electric generating unit;

C) meets the requirements listed in subsection (c);

D) has an active GATA registration and is qualified on the GATA Grantee Portal at the time the application is submitted;

E) is considered a regarded entity by the Internal Revenue Service for federal income tax purposes; and

F) provides documentation that an entity with an ownership interest in the affiliate meets the requirements of 20 ILCS 3855/1-75(c-5)(10)(C).

b) To qualify for a grant award, the electric generating facility site which is the subject of the application:

1. must be located in the Midcontinent Independent System Operator, Inc. region in Illinois or in the PJM Interconnection, LLC region in Illinois;

2. has, or had prior to retirement, an electric generating capacity of at least 150 megawatts at the site of the proposed energy storage facility;

3. burns (or burned prior to retirement) coal as its primary source of fuel;

4. was retired after January 1, 2016, if it is retired at the time of application;

5. was at one time owned, in whole or in part, by a public utility as defined in Section 3-105 of the Public Utilities Act [220 ILCS 5/3-105];

6. is not owned by:

A) an electric cooperative as defined in Section 3-119 of the Public Utilities Act [220 ILCS 5/3-119]; or

B) an entity described in subsection (b)(1) of Section 3-105 of the Public Utilities Act [220 ILCS 5/3-105(b)(1)]; or

C) an association or consortium of or an entity owned by entities described in subsections (b)(6)(A) or (B); and

7. has an owner of the electric generating facility that has not been selected by the Agency pursuant to 20 ILCS 3855/1-75(c-5) to enter into a contract to sell renewable energy credits to one or more electric utilities from a new renewable energy facility located or to be located at or adjacent to the site at which the electric generating facility is located.

c) The proposed project must meet the following requirements:

1. The proposed energy storage facility at the site will have energy storage capacity of at least 37 megawatts;

2. The applicant commits to place the energy storage facility into commercial operation on either June 1, 2023, June 1, 2024, or June 1, 2025, with such date subject to adjustment as needed due to any delays in completing the grant contracting process, in finalizing interconnection agreements and in installing interconnection facilities, and in obtaining necessary governmental permits and approvals;

3. The applicant agrees that the new energy storage facility will be constructed or installed by a qualified entity or entities consistent with the requirements of subsection (g) of Section 16-128A of the Public Utilities Act [220 ILCS 5/16-128A(g)] and any rules adopted under that Section;

4. The applicant agrees that personnel operating the energy storage facility will have the requisite skills, knowledge, training, experience, and competence, which may be demonstrated by completion or current participation and ultimate completion by employees of an accredited or otherwise recognized apprenticeship program for the employee's particular craft, trade, or skill, including through training and education courses and opportunities offered by the applicant to employees of the coal-fueled electric generating facility or by previous employment experience performing the employee's particular work skill or function;

5. The applicant commits that not less than the prevailing wage, as determined pursuant to the Prevailing Wage Act [820 ILCS 130], will be paid to the applicant's employees engaged in construction activities associated with the new energy storage facility and to the employees of the applicant's contractors engaged in construction activities associated with the new energy storage facility, and that, on or before the commercial operation date of the new energy storage facility, the applicant shall file a report with the Department certifying that the requirements of this subsection have been met; and

6. The applicant commits that if selected to receive a grant, it will negotiate a project labor agreement for the construction of the new energy storage facility that includes provisions requiring the parties to the agreement to work together to establish diversity threshold requirements and to ensure best efforts to meet diversity targets, improve diversity at the applicable job site, create diverse apprenticeship opportunities, and create opportunities to employ former coal-fired power plant workers. [20 ILCS 3855/1-75(c-5)(10)(C)]

14 Ill. Adm. Code 710.50 Form of Grant Applications

a) The Department will publish, for at least 30 calendar days, a Notice of Funding Opportunity on the GATA Grantee Portal (https://grants.illinois.gov/portal/).

b) The applicants will be required to submit an application package to the Department, which will include the following:

1. Uniform grant application;

2. Uniform budget template;

3. Conflict of interest disclosure form;

4. Mandatory disclosures form;

5. Project narrative, which shall include the following information:

A) A justification for developing an energy storage facility at the proposed site, including:

i) How the applicant will engage with the local community during and after construction and how the energy storage project will help the local community;

ii) A description of a plan or commitment to ecological site improvement (e.g., installation of native pollinator plantings equivalent to minimum standards defined in the Illinois Department of Natural Resources "Solar Site Pollinator Scorecard");

B) A description of the applicant's ability to successfully complete the project for which funds are intended, including:

i) A description of the applicant's experience in the development of energy storage facilities, how many energy storage facilities the applicant currently has in commercial operation and how many are currently under construction. The applicant or major contractor partner should provide at least three client references for energy storage facilities that are complete and operating, sized 5 megawatt hours (MWh) or larger.

ii) Anticipated timelines for construction and expected date for commercial operation launch. The owner of the proposed energy storage facility must commit to placing the energy storage facility into commercial operation on either June 1, 2023, June 1, 2024 or June 1, 2025, with such date subject to adjustment as needed due to any delays in completing the grant contracting process, in finalizing interconnection agreements and in installing interconnection facilities, and in obtaining necessary governmental permits and approvals. [20 ILCS 3855/1075(c-5)(8)]

iii) Expected capacity of the energy storage facility in megawatts at the site of the proposed energy storage facility.

iv) A technology description that defines the energy storage type (e.g., battery, hydrogen fuel cell) and summarizing the key components and the design of the overall system.

v) A summary of additional key technical characteristics, including:

• Energy storage capacity or the maximum amount of stored energy, in megawatt hours (MWh).

• Storage duration or the amount of time stored energy can discharge at the rated power capacity before depleting the system's energy capacity, in hours.

• Expected system life, in years, based on anticipated operating conditions.

• Estimated energy storage in the first 12 months of system operation, including, Alternating Current (AC) energy (in MWh) for system charging and AC energy (in MWh) discharging from the system to the grid.

• Estimated annual system degradation rate, as a percentage, based on annual reduction in the system's energy capacity.

vi) Documentation, including production technical specification sheets, that provides the basis for key technical characteristics described in this subsection.

C) A description of the applicant's ability and strategy to meet the commitments and agreements listed as criteria for receipt of a grant in 20 ILCS 3855/1-75(c-5)(10)(C). The applicant should:

i) Explain the applicant's plan for ensuring the energy storage facility will be constructed or installed by a qualified entity or entities consistent with the requirements of the Public Utilities Act [220 ILCS 5/16-128A(g)] and any rules adopted under that Section;

ii) Describe existing relationships with workforce training partners and plans to meet training and hiring objectives of the program, particularly how they relate to achieving the program's diversity goals and providing employment opportunities for former employees of the coal-fueled electric generating facility;

iii) Describe previous efforts the applicant took to negotiate project labor agreements for the construction of projects overseen by the applicant, including efforts to meet diversity targets, improve diversity at job sites, create diverse apprenticeship opportunities, and create opportunities to employ former coal-fired power plant workers; and

iv) Describe how it will meet the requirement of paying at least the prevailing wage, pursuant to the Prevailing Wage Act [820 ILCS 130], to the applicant's employees and contractor's employees engaged in construction of the energy storage facilities;

D) Certification of eligibility, which shall be in the form of a signed letter by the applicant on company letterhead which certifies that the applicant and its proposed project meet the criteria listed in Section 710.40(b) and (c). All certifications made by the applicant must also be certified by the electric generating unit owner if they are not the same entity. If a grant applicant is not the owner of the electric generating unit, the applicant shall submit to the Department proof of corporate structure showing the applicant's relationship to the owner of the facility; and

6. Any additional documentation to demonstrate or support the information submitted by the applicant for the proposed project.

c) Applicants may apply for a grant for more than one project but must submit a separate application for each proposed energy storage facility location.

14 Ill. Adm. Code 710.60 Grant Award Selection

Grants will be awarded by the Department to grantees following a merit review by DCEO and pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). The Department will award up to five total grants that support the installation and operation of energy storage facilities at the sites of up to three qualifying electric generating facilities located in the Midcontinent Independent System Operator, Inc. region in Illinois and the sites of up to two qualifying electric generating facilities located in the PJM Interconnection, LLC region in Illinois. In evaluating applications, the Department will consider the criteria listed below:

a) Whether the applicant and the proposed energy storage facility site meet the eligibility criteria (Section 710.40);

b) The need to develop an energy storage facility at the proposed site. This will be based on:

1. A demonstration of how the applicant will engage effectively with the local community during and after construction;

2. A justification for the specific project location of the energy storage project beyond meeting the qualifications established by the Act (e.g., located at a site with generating capacity of at least 150 megawatts; sites burned or is burning coal as its primary source of fuel);

3. Providing documents from Midcontinent Independent System Operator, Inc. or PJM Interconnection, LLC, indicating proposed project may be interconnected to the regional transmission grid, as applicable; and

4. A demonstration of a plan and commitment to ecological site improvement;

c) A demonstration of the ability to successfully complete the energy storage facility project. This will be based on the following criteria:

1. Successful prior experience in the development of energy storage facilities;

2. Significant energy storage performance based on estimated annual MWh energy storage capacity and total estimated MWh energy storage capacity over the life of the energy storage system as follows:

A) Energy storage capacity, or the maximum amount of stored energy, in MWh;

B) Storage duration in hours;

C) Expected system life in years based on anticipated operating conditions;

D) Estimated energy storage in the first twelve months of system operation; and

E) Estimated annual system degradation rate, as a percentage;

3. The ability to provide realistic timelines for construction and the expected date for commercial operation launch, which comply with the requirements of 20 ILCS 3855/1-75(c-5)(10)(C)(8);

4. Energy storage capacity of at least 37 megawatts at the proposed energy storage facility site; and

5. The ability to meet the requirements of 20 ILCS 3855/1-75(c-5)(10)(C) and this Part, as demonstrated in the technology description.

d) A demonstration of the ability to meet the commitments and agreements listed in 20 ILCS 3855/1-75(c-5)(10)(C) and in this Part (Section 710.40). Evaluation will be based on the following criteria:

1. The applicant's plan for ensuring the energy storage facility will be constructed or installed by a qualified entity or entities consistent with the requirements of subsection (g) of Section 16-128A of the Public Utilities Act [220 ILCS 5/16-128A(g)] and any rules adopted under that Section. Applicants should be able to demonstrate the effectiveness of the plan;

2. Existing and proposed relationships with workforce training partners and plans to meet training and hiring objectives of the program, particularly how they relate to achieving the program's diversity goals and providing employment opportunities for employees of the coal-fueled electric generating facility. The applicant should be able to identify current relationships with workforce training partners and provide a quality plan to ensure that personnel operating the energy storage facility will have the skills, knowledge, training and experience to complete the program, as well as efforts to ensure diverse hiring and opportunities for employees of coal plants; and

3. Previous efforts the applicant has had in negotiating project labor agreements for the construction of projects overseen by the applicant and the details describing efforts to meet diversity targets, improve diversity at job sites, provide diverse apprenticeship opportunities, and provide opportunities to employ former coal-fired power plant workers. The applicant should describe past experiences negotiating project labor agreements and the effectiveness of past experience in improving diversity and apprenticeship opportunities.

e) Applicants may appeal any denial pursuant to the process described in 44 Ill. Adm. Code 7000.350(g).

14 Ill. Adm. Code 710.70 Grant Agreements and Grant Administration

a) Grant Agreements and Payment Disbursements

1. Applicants selected to receive a grant will enter into a grant agreement with the Department, which specifies the terms and conditions of the award. Grant awards will be administered in a manner that complies with all applicable State and federal requirements including, but not limited to, GATA, the Uniform Guidance and the Act and this Part. The Department reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with the provisions in the grant agreement or non-compliance with applicable State and federal laws pursuant to the requirements of the Grantee Compliance Enforcement System, 44 Ill. Adm. Code 7000.80.

2. Grant payments shall be made by the Department to a grantee only once the grantee provides an interconnection agreement with PJM Interconnection, LLC or Midcontinent Independent System Operator, Inc. and the grantee's energy storage facility has been placed into commercial operation. Therefore, grantees must be able to pay for energy storage facility construction costs. The Department shall make the grant payments to the grantee in equal annual amounts for 10 years following the date the grantee's energy storage facility is placed into commercial operation. The annual grant payments to a qualifying energy storage facility shall be $110,000 per megawatt of energy storage capacity, with total annual grant payments not to exceed $28,050,000 in any year. [20 ILCS 3855/1-75(c)(10)(C)] Total program expenditures throughout the life of the program may not exceed $280,500,000.

A) Grant award amounts will be based on the energy storage capacity provided by the grantee in its application. The Department reserves the right to reduce the grant award amount or modify the award amount if it determines after installation, based on information provided by the grantee, that the actual energy storage capacity is less than the grantee's proposed energy storage capacity.

B) As part of the grant agreement requirements, grantees will be required to submit a commissioning plan that must be approved by the Department, which will set forth the requirements for when the energy storage facility is considered successfully placed into commercial operation and will include verification of the facility specifications and evidence that the facility is operational.

3. Grant agreements shall specify the date or dates in each year on which the annual grant payments shall be paid. [20 ILCS 3855/1-75(c)(10)(D)]

b) Grant Performance, Administration, Monitoring and Reporting Requirements

Grantees shall comply with all GATA and Department requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which can include periodic financial and performance reports at least annually and financial and performance close-out reports after the end of the grant term (See 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement. In addition to the performance and financial reports, grantees will be required to submit the following to the Department by the deadlines set in the grant agreement:

A) Documentation demonstrating the new energy storage facility is being constructed or installed by a qualified entity or entities consistent with the requirements of subsection (g) of Section 16-128A of the Public Utilities Act [220 ILCS 5/16-128A(g)] and any rules adopted under that Section.

B) Documentation demonstrating that personnel operating the energy storage facility will have the requisite skills, knowledge, training, experience and competence. [20 ILCS 3855/1-75(c-5)(10)(C)]

C) A report certifying that the prevailing wage is being paid to employees engaged in construction activities associated with the new energy storage facility. This includes the energy storage facility owner's employees and employees of the owner's contractors. This report must be submitted before the commercial operation date of the new energy storage facility and before any disbursement of funds.

D) A report detailing a project labor agreement once one is executed with the entities constructing the new energy storage facility. The report will provide evidence that diversity threshold requirements were achieved and detail pathways to meet diversity targets, improve diversity at the applicable job site, create diverse apprenticeship opportunities, and create opportunities to employ former coal-fired power plant workers.

E) A copy of the grantee's diversity, equity and inclusion plan filed with the Illinois Commerce Commission (See subsection (c)) and any revisions thereto. The grantee will be required to submit to the Department the annual report the grantee files with the Illinois Commerce Commission detailing the grantee's progress in implementing its plan and achieving its goals.

F) Documentation or other evidence after installation of the energy storage facility that the energy storage facility is able to meet the provided storage capacity, which was the basis for the grant award amount.

G) An annual report that provides the storage system performance data to the Department electronically. The grantee will annually provide data on:

i) Alternating Current energy consumption for storage system charging; and

ii) Alternating Current energy discharge from the system to the grid.

H) Electronic data submissions will provide energy consumption data and energy discharge data in time-and-date-stamped increments of fifteen minutes or less throughout the annual reporting period.

2. Grant audits shall be based on the standards set forth in the GATA Rule (44 Ill. Adm. Code 7000.90).

3. Grantees must monitor their grant activities and those of any subrecipients and contractors to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. The Department will monitor the activities of grantees to assure compliance with all requirements and performance expectations of the award. Grantees shall timely submit all required reports, and shall supply, upon the Department's request, documents and information relevant to the award. The Department may monitor activities through site visits.

4. All grant recipients shall have an affirmative duty to notify the Department of any changes in corporate structure that affect one or several of these conditions:

A) The ownership interest of the electric generating unit owner;

B) The relationship between the electric generating unit owner and the grant recipient, if the grant recipient is not the unit owner; or

C) The ability of the grantee to complete its requirements in the grant agreement.

5. Grant recipients will be prohibited from interconnecting the energy storage facility project supported by this Program with any new renewable energy facility or energy storage facility located at the same site or an adjacent site and which is selected by the Illinois Power Agency pursuant to Section 1-75(c-5) of the Illinois Power Agency Act [20 ILCS 3855] to enter into a contract to sell renewable energy credits to one or more electric utilities from the new renewable energy facility.

c) Diversity, Equity and Inclusion Plans

1. Each grantee selected by the Department to receive a grant or grants to support the construction and operation of a new energy storage facility or facilities in accordance with this Part shall, within 60 days following execution of a grant agreement with the Department, submit to the Illinois Commerce Commission, in a format determined by the Commission, a diversity, equity, and inclusion plan setting forth the grantee's numeric goals for the diversity composition of its supplier entities for the new energy storage facility, which shall be referred to for purposes of this subsection (c)(1) as the project, and the grantee's action plan and schedule for achieving those goals. [20 ILCS 3855/1-75(c-5)(9)(C)(11)(A)]

2. For purposes of this subsection (c)(1), diversity composition shall be based on the percentage, which shall be a minimum of 25% of eligible expenditures for contract awards for materials and services (which shall be defined in the plan) to business enterprises owned by minority persons, women, or persons with disabilities as defined in Section 2 of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act [30 ILCS 575/2], to LGBTQ business enterprises, to veteran-owned business enterprises, and to business enterprises located in environmental justice communities. The diversity composition goals of the plan may include eligible expenditures in areas for vendor or supplier opportunities in addition to development and construction of the project, and may exclude from eligible expenditures materials and services with limited market availability, limited production and availability from suppliers in the United States, such as solar panels and storage batteries, and material and services that are subject to critical energy infrastructure or cybersecurity requirements or restrictions. The plan may provide that the diversity composition goals may be met through tier 1 (prime contractor) or tier 2 (subcontractor) expenditures or a combination thereof for the project. [20 ILCS 3855/1-75(c-5)(C)(11)(B)]

3. The plan shall provide for, but not be limited to:

A) Internal initiatives, including multi-tier initiatives, by the grantee, or by its engineering, procurement and construction contractor if one is used for the project, which, for purposes of this subsection (c)(3)(A), shall be referred to as the EPC contractor, to enable diverse businesses to be considered fairly for selection to provide materials and services;

B) Requirements for the grantee or its EPC contractor to proactively solicit and utilize diverse businesses to provide materials and services; and

C) Requirements for the grantee or its EPC contractor to hire a diverse workforce for the project.

4. The plan shall include a description of the grantee's diversity recruiting efforts both for the project and for other areas of the grantee's business operations. The plan shall provide for the imposition of financial penalties on the grantee's EPC contractor for failure to exercise best efforts to comply with and execute the EPC contractor's diversity obligations under the plan. The plan may provide for the grantee to set aside a portion of the work on the project to serve as an incubation program for qualified businesses, as specified in the plan, owned by minority persons, women, persons with disabilities, LGBTQ persons, and veterans, and businesses located in environmental justice communities, seeking to enter the renewable energy industry. [20 ILCS 3855/1-75(c-5)]

5. The grantee may submit a revised or updated plan to the Commission from time to time as circumstances warrant. The grantee shall file annual reports with the Commission by June 1, commencing June 1, 2023 or the earliest based on receipt of a grant, detailing the grantee's progress in implementing its plan and achieving its goals and any modifications the grantee has made to its plan to better achieve its diversity, equity and inclusion goals. The grantee shall file a final report on the fifth June 1 following the commercial operation date of the new energy storage facility, but the grantee shall thereafter continue to be subject to applicable reporting requirements of Section 5-117 of the Public Utilities Act [220 ILCS 5/5-117].

d) Records Retention

Grantees shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Grantees shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

Part 810 Energy Transition Community Grant Program

14 Ill. Adm. Code 810.10 Purpose

The purpose of the Energy Transition Community Grant Program is to award grants to promote economic development in communities that are in an area with a closure or reduced operation of a fossil fuel power plant, coal mine or nuclear plant.

14 Ill. Adm. Code 810.20 Definitions

"Act" means the Energy Community Reinvestment Act.

"Closure" means the permanent shutdown of an electric generating unit or coal mine.

"Decommissioned" means a nuclear power plant that has submitted a Certification of Permanent Cessation of Operation to the United States Nuclear Regulatory Commission as is required by 10 CFR 50.82(a)(1)(i).

"Department" means the Department of Commerce and Economic Opportunity.

"Eligible Area" is a community that contains one or more of the following within a 30-mile radius:

a fossil fuel or nuclear power plant that was retired from service or has significantly reduced service within six years before the application for designation or will be retired or have service significantly reduced within six years following the application for designation;

a coal mine that was closed or had operations significantly reduced within six years before the application for designation or is anticipated to be closed or have operations significantly reduced within six years following the application for designation;

a nuclear power plant that was decommissioned, but continued storing nuclear waste before the effective date of the Act. [20 ILCS 735/10-20(c)]

"GATA" means Grant Accountability and Transparency Act [30 ILCS 708].

"Grantee" means an applicant for a grant award under this program whose proposal is funded by the Department.

"Primary Applicant" means local unit or units of government, including municipalities, counties, school districts, and other taxing districts within the eligible area.

"Retired From Service" means a fossil fuel or nuclear power plant that is no longer in service.

"Secondary Applicant" or "Secondary Applicants" means an economic development organization, local educational institutions, community-based groups joining with a primary applicant. [20 ILCS 735/10-20(d)]

"Significantly Reduced Operations" for a coal mine means: tons of coal produced have declined from a non-zero amount to zero within the previous six years and remained at zero through the most recent year for which data is available; or average annual tons of coal produced over the most recent 5 year period for which data is available and tons of coal produced in the most recent year for which data is available are both at last 25% lower than the average annual tons of coal produced during the 5-year period for which data is available.

"Significantly Reduced Service" means a fossil fuel or nuclear power plant that has ceased operations of one or more generating units at the plant and/or converted to a different type of plant, resulting in fewer on-site employees.

14 Ill. Adm. Code 810.30 Funding Source

The grant awards described in this Part are contingent upon the availability of funding in the Energy Transition Assistance Fund [20 ILCS 605/605-1075] up to $40,000,000 annually. [20 ILCS 605/605-1075(b)(9)]

14 Ill. Adm. Code 810.40 Grantee Eligibility

Local units of government within an eligible community may apply for a grant under the Energy Transition Community Grant Program as a primary applicant. Primary applicants may join with any other local unit of government, economic development organization, local educational institutions, community-based groups, or with any number or combination thereof as secondary applicants. Eligible Applicants must have an active GATA registration and is qualified on the GATA grantee portal (https://grants.illinois.gov/portal/) at the time the application is submitted. [20 ILCS 735/10-20(d)]

14 Ill. Adm. Code 810.50 Eligible Uses

Grants must be used to plan for or address the economic and social impact on the community or region of plant retirement or transition. [20 ILCS 735/10-20(g)]

a) Eligible uses for grant funds include, but are not limited to:

1. Research, analysis, and planning regarding economic impact reduced or ceased operations of the regional facility;

2. Environmental remediation of sites of closed facilities and other local infrastructure improvements;

3. Marketing of tourist and recreation opportunities;

4. Business development initiatives to attract, expand, or retain employers;

5. Workforce development and support for individuals displaced by closures or reduced operations, including training for skilled trades in regional industries;

6. Investment for construction or improvement in local job training facilities;

7. Financial assistance for unemployed, underemployed, and/or low-income residents;

8. Public health initiatives; and

9. Other initiatives to address the economic and social impact of reduced production or closure of regional facilities.

b) Third-party vendors for grant writing and implementation costs, including for guidance and opportunities to apply for additional federal, State, local, and private funding resources. If the application is approved for pre-award, one-time reimbursable costs to apply for the Energy Transition Community Grant are authorized up to 3% of the award. [20 ILCS 735/10-20(i)]

Chapter I Department of Commerce and Economic Opportunity

Part 810 Energy Transition Community Grant Program

14 Ill. Adm. Code 810.60 Applications

To receive grant funds, an eligible community must submit an application to the Department, using a form developed by the Department. [20 ILCS 735/10-20(e)]

a) For applicants that are within an eligible area due to their proximity to a fossil fuel or nuclear plant or coal mine that has closed or significantly reduced operations in the past six years or anticipated closure or significantly reduced operations in the next six years, applications will be accepted in two phases as follows:

1. Phase 1:

A) The Department will publish a Phase 1 Notice of Funding Opportunity ("NOFO") with a Phase 1 application form and application for at least 30 days.

B) The applicant must submit:

i) A signed Uniform Grant Agreement;

ii) A Conflict of Interest disclosure;

iii) Mandatory disclosures; and

iv) A statement detailing:

• Name of local government or organizations, specifying primary applicant and any secondary applicants;

• List of parcels that the qualifying physical plant or mine are located on, as well as property tax revenue collected for each of those parcels by each local government entity with jurisdiction in the most recent year available, and in the year six years prior; and

• If the applicant is not the local government that hosts or has hosted the investor-owned electric generating plant, a resolution of support for the project from the local government or local governments that hosts or has hosted the investor-owned electric generating plant. [20 ILCS 735/10-20(f)]

C) The Department will evaluate the submissions and notify applicants of its determination of eligibility and maximum funding amount for their application following the criteria described in Section 810.70(a). Applicants will be designated eligible if they submit a complete application and provide the factual information detailed in Section 810.60(a)(1)(B).

D) The Phase 1 determination of eligibility may be appealed through the process afforded in the Department's Administrative Hearing Rules set forth at 56 Ill. Adm. Code 2605.

2. Phase 2: For primary applicants determined eligible following the Phase 1 publication period, the Department will provide a letter via e-mail containing a notification of eligibility, maximum funding amount, Phase 2 application form, and guidelines for supporting documentation. Primary applicants shall submit an application which includes, but is not limited to, the following:

A) A cover page including the name of primary applicant and any secondary applicants;

B) A detailed project narrative including, but not limited to:

i) A description of what the project will entail and which entity will be responsible for the administration and implementation of the project;

ii) How the project will address the economic and social impacts of the closure and support economic development in the affected area;

iii) The timeline for implementation;

iv) A description of community involvement in planning and implementing the project;

v) A uniform budget template; and

vi) Any additional information and documentation that supports the applicant's project.

b) Applicants that are units of local government that are taxing authorities for a nuclear plant that was decommissioned before January 1, 2021 may submit applications as outlined in this subsection, including, but not limited to, the following: [20 ILCS 735/10-20(j)]

1. A cover page including the name of applicant;

2. A signed Uniform Grant application;

3. A Conflict of Interest disclosure;

4. Mandatory disclosures;

5. A detailed project narrative including the scope of the project;

6. A description of community input and consultation;

7. A uniform budget template; and

8. Any additional information and documentation that supports the applicant.

14 Ill. Adm. Code 810.70 Grant Award Determination

a) Phase 1 determinations of eligibility and maximum funding amounts will be awarded by the Department to grantees following a merit review by the Department and pursuant to the GATA requirements within 44 Ill. Adm. Code 7000.350.

1. Phase 1 applicants will be designated eligible if they submit a complete application and provide the factual information detailed in Section 810.60(a)(1)(B).

2. Phase 1 applicants shall be approved for maximum funding amounts based on employment reduction levels and the loss of property taxes or PILOT revenue corresponding with the closure or reduction of operations of the fossil fuel power plant or coal mine. When more than one local government entity is included in an application, this amount will be calculated for each distinct entity and then aggregated across those entities.

b) Following a determination of eligibility and maximum funding amounts described in subsection (a), final funding amounts will be established after a merit review of the Phase 2 applications described in Section 810.60(a)(2). The funding determinations will be based on the evaluation of project details described in the Notice of Funding Opportunity, including, but not limited to:

1. A detailed description of the project, including, but not limited to:

A) For proposed capital projects, how the project addresses a current deficiency and/or supports economic development in the community; and

B) For proposed non-capital projects, what eligibility factors are used for participants in the proposed project, how the project will be staffed, and plans for outreach to underserved populations.

2. The proposed process for developing and implementing the project, including details regarding:

A) Project administration, implementation, outreach, and participation eligibility as applicable;

B) A timeline for implementation of the project; and

C) Metrics to assess the impact of the project and interim goals of the project.

3. Demonstration of the completion of required stakeholder engagement, including but not limited to:

A) Community input, by hosting at least one public meeting in which proposed use of Energy Transition Community Grant funds was on the agenda; and

B) Requesting input or feedback regarding the use of Energy

Transition Community Grant funds from the following stakeholders: regional planning councils, where applicable; economic development organizations; low-income or environmental justice communities; educational institutions; elected and appointed officials; organizations representing workers; and other relevant organizations. (See 20 ILCS 735/10-20(h).)

c) Approved applicants meeting the criteria described in Section 810.60(b) shall receive grants in proportional shares of $15 per kilogram of spent nuclear fuel stored at such a facility, less any payments made to such communities from the federal government based on the amount of waste stored at a decommissioned nuclear plant and any property tax payments. [20 ILCS 735/10-20(j)]

Part 820 Energy Transition Navigators Program

14 Ill. Adm. Code 820.10 Purpose

In order to engage eligible individuals to participate in the Clean Jobs Workforce Network Program, the Illinois Climate Works Pre-apprenticeship Program, Returning Residents Clean Jobs Program, Clean Energy Contractor Incubator Program, and Clean Energy Primes Contractor Accelerator Program and utilize the services offered under the Energy Transition Barrier Reduction Program, the Department shall, subject to appropriation, contract with community-based providers to serve as Energy Transition Navigators. [20 ILCS 730/5-35(b)] The Department will award grants to Energy Transition Navigators to provide education, outreach and recruitment services to eligible populations to ensure they are aware of and engaged in the Statewide and local workforce training and contractor development programs. Energy Transition Navigators will prioritize individuals eligible for the Clean Jobs Workforce Network Program or the Illinois Climate Works Pre-apprenticeship Program.

14 Ill. Adm. Code 820.20 Definitions

"Accessibility" means when a person with a disability is afforded the opportunity to acquire the same information, engage in the same interactions, and enjoy the same services as a person without a disability in an equally integrated and equally effective manner, with substantially equivalent ease of use.

"APEX Accelerators" (formerly known as "Procurement Technical Assistance Centers") means an entity that serves as a focal point for the coordination of federal, State, local, university, college, and private resources to provide marketing and technical assistance to business firms in selling their goods and services to federal, state, and local governments.

"CEJA" means the Climate and Equitable Jobs Act (P.A. 102-0662).

"Community-based organization" means an organization that:

Provides employment, skill development, or related services to members of the community;

Includes community colleges, nonprofit organizations, and local governments;

Has at least one main operating office in the community or region it serves; and

Demonstrates relationships with local residents and other organizations serving the community.[20 ILCS 730/5-5]

"Community-based provider" means a not-for-profit organization that has a history of serving low-wage or low-skilled workers or individuals from economically disadvantaged communities. [20 ILCS 730/5-35(a)]

"Core values" means the values of diversity, inclusion, accessibility and equity.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Diversity" means the representation of people from a variety of backgrounds and experiences.

"Economically disadvantaged community" means areas of one or more census tracts where the average household income does not exceed 80% of the area median income for the relevant county or counties based on data published most recently by the Secretary of the U.S. Department of Housing and Urban Development. [20 ILCS 730/5-35(a)]

"Eligible populations" means those individuals who meet the requirements to participate in CEJA workforce training or contractor programs listed in the Energy Transition Act [20 ILCS 730] and to whom Energy Transition Navigators will direct their efforts pursuant to the Program, including, but not limited to, individuals in equity focused populations and economically disadvantaged communities.

"Energy Transition Navigators" means the community-based providers selected by the Department to provide the services and activities required by the Program.

"Environmental justice communities" means the definition of that term as defined by the Illinois Power Agency pursuant to the Illinois Power Agency Act [20 ILCS 3855], but excluding racial and ethnic indicators, where residents have historically been subject to disproportionate pollution burdens, including pollution from the energy sector. [20 ILCS 730/5-5] For a map that defines these areas in Illinois, refer to this website: Arcg.is/1Wvv4X.

"Equity" means the state, quality or ideal of being just, impartial and fair.

"Equity focused populations" means

low-income persons;

persons residing in equity investment eligible communities;

persons who identify as black, indigenous, and people of color;

formerly convicted persons;

persons who are or were in the child welfare system;

energy workers;

dependents of displaced energy workers;

women;

LGBTQ+, transgender, or gender nonconforming persons;

persons with disabilities; and

members of any of these groups who are also youth. [20 ILCS 730/5-5]

"Equity investment eligible community" and "eligible community" mean the geographic areas throughout Illinois which would most benefit from equitable investments by the State designed to combat discrimination and foster sustainable economic growth. Specifically, the eligible community means the following areas:

Restore, Reinvest and Renew Areas (R3 Areas) as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705], where residents have historically been excluded from economic opportunities, including opportunities in the energy sector. Eligible R3 Areas are defined in the R3 service map (website at Arcg.is/1Wvv4X); and

Environmental justice communities. [20 ILCS 730/5-5] See the Equity Investment Eligible Community Map (website at: Arcg.is/1Wvv4X), which defines the areas that satisfy the criteria above for both R3 Areas and environmental justice communities.

"Equity investment eligible person" or "eligible person" means the persons who would most benefit from equitable investments by the State designed to combat discrimination and foster sustainable economic growth. Specifically, eligible persons means:

Persons whose primary residence is in an equity investment eligible community;

Persons who are graduates of or currently enrolled in the foster care system; or

Persons who were formerly incarcerated. [20 ILCS 730/5-5]

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means the administrative rules of the Governor's Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Inclusion" means the action or state of including and feeling an empowered sense of belonging within a group or organization.

"Low-income person" means an individual whose income does not exceed 80% of the area median income, adjusted for family size, based on the data published most recently by the U.S. Department of Housing and Urban Development.

"Low-skilled worker" means individuals with skillsets that are not currently in high demand in their region, as set forth in the regional level plans, and who could benefit from CEJA training in the clean energy field.

"Not-for-profit organization" means a corporation organized under the General Not For Profit Corporation Act of 1986 in good standing to operate in the State of Illinois, that is representative of a community or a significant segment of a community and provides services directly to low-income individuals or low-skilled workers.

"Program" means the Energy Transition Navigators Program.

"Regional level plans" means the current plans, pursuant to WIOA, 29 U.S.C. 3121(c), prepared by the local workforce innovation boards and chief elected officials within regions designated by the State in the State's WIOA Unified Plan.

"Small Business Development Center" means an entity that serves as a focal point for the coordination of federal, State, local, university, college, and private resources to counsel and train small business owners, managers, and prospective owners in dealing with financial, marketing, production, organization, engineering, technical, and other small business management concerns.

"State" means the State of Illinois.

"State's WIOA Unified Plan" means the current 4-year strategy for the core workforce programs of the State that must be submitted and approved by the Secretary pursuant to WIOA, 29 U.S.C. 3112.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200.

"WIOA" means the Workforce Innovation and Opportunity Act (29 U.S.C. 3101).

14 Ill. Adm. Code 820.30 Funding Source

The grant awards described in this Part are contingent upon appropriation of funding from the Energy Transition Assistance Fund. See 20 ILCS 730/5-35(h); 20 ILCS 605/605-1075.

14 Ill. Adm. Code 820.40 Eligible Grant Applicants

A single organization may propose to deliver all services, or may partner with other entities to provide certain elements of the Program. However, the lead applicant organization alone must meet all the requirements in subsections (a)(1) through (a)(3) and must be able to serve, with assistance from partner organizations as necessary, at least one region listed in subsection (b).

a) To be eligible to receive a grant, at a minimum, applicants must demonstrate the following:

1. Meet the definition of a community-based provider;

2. Have an active GATA registration at the time the application is submitted and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) by the time the application is reviewed by the Department;

3. Be a regarded entity by the Internal Revenue Service (26 CFR 301.7701-3(b)(ii)) for federal income tax purposes; and

4. Meet the criteria set forth in Section 820.80.

b) The Department will award grants to fund Energy Transition Navigators teams that have a physical presence capable of serving and accessible to each of the following areas in Illinois, but the grants may serve an area larger than just the listed communities:

1. Chicago (South Side);

2. Chicago (Southwest and West Sides);

3. Waukegan;

4. Rockford;

5. Aurora;

6. Joliet;

7. Peoria;

8. Champaign;

9. Danville;

10. Decatur;

11. Carbondale;

12. East St. Louis;

13. Kankakee; and

14. Alton.

c) An eligible organization may serve as the designated Energy Transition Navigator for more than one designated area. However, the applicant's team must be able to serve program participants within all the designated areas and their surrounding vicinities for which they apply.

14 Ill. Adm. Code 820.50 Required Program Activities

Selected Energy Transition Navigators will connect individuals to the CEJA workforce and contractor programs. These Energy Transition Navigators, including their partners, will provide education, outreach and recruitment services to eligible populations, including equity focused populations, to ensure they are aware of and engaged in the CEJA and other statewide and local workforce and contractor development programs. The program activities provided by Energy Transition Navigators and their partners must include the following services:

a) Education, outreach and recruitment will include providing information and consultation to eligible individuals on various training opportunities and supportive services available through CEJA and other statewide and local workforce development programs. Outreach and recruitment strategies may include activities and community-hosted events. Energy Transition Navigators also will provide guidance to individuals on training and career opportunities in the emerging clean energy economy.

b) Prioritize outreach and recruitment for individuals eligible for the Clean Jobs Workforce Network Program [20 ILCS 730/5-20] and the Illinois Climate Works Pre-apprenticeship Program [20 ILCS 730/5-40]. Energy Transition Navigators must provide enrollment and participation assistance to prospective and enrolled participants in coordination with the organizations administering these two programs.

c) Partner with organizations that manage the Clean Jobs Workforce Network Program and the Illinois Climate Works Pre-apprenticeship Program in the Energy Transition Navigator's region to coordinate outreach and recruitment activities.

d) Assist eligible individuals in accessing the Energy Transition Barrier Reduction Program [20 ILCS 730/5-30] wrap-around support services through the Clean Jobs Workforce Network Program and the Illinois Climate Works Pre-apprenticeship Program.

e) Encourage eligible individuals interested in starting or growing a business to participate in the Clean Energy Contractor Incubator Program [20 ILCS 730/5-45] or the Clean Energy Primes Contractor Accelerator Program [20 ILCS 730/5-55], or connect them to local Small Business Development Centers, APEX Accelerators or economic development organizations to engage in services, including, but not limited to, business consulting, business planning, regulatory compliance, marketing, training, accessing capital, government contract bidding and certification assistance.

f) In coordination with the organizations that administer the Clean Jobs Workforce Network and the Climate Works Pre-apprenticeship Programs in their region, Energy Transition Navigators:

1. Will refer individuals to local workforce innovation boards and other relevant organizations, if those individuals are not interested in the CEJA workforce and contractor programs; and

2. Must engage with local employers, educational institutions, industry leaders, labor unions and other workforce stakeholders in an inclusive manner to identify the skill and hiring needs of the local clean energy industry and to gather information, which will be used to prioritize training program offerings, curricular modifications, career pathway support, and job placement for eligible populations.

g) Connect individuals interested in entrepreneurial pursuits or other workforce programs to State workforce and business development centers outside of the CEJA programs, including:

1. Small Business Development Centers;

2. APEX Accelerators;

3. American Job Centers (also known as one-stop centers) created through WIOA;

4. Regional or local economic development organizations; and

5. Regional or local workforce innovation boards.

h) Collaborate and coordinate with the Department as well as the grantees and administrators of the programs created by CEJA and other workforce and contractor programs including those programs listed in Sections 820.10 and 820.50(g).

i) Engage potential CEJA program participants across the entirety of all regions the Energy Transition Navigator serves.

j) Foster a welcoming, equitable and inclusive environment. that upholds the core values of diversity, inclusion, accessibility, and equity. These core values should inform all aspects of the program, including, but not limited to, program design and partnerships.

k) Implement a system to track demographic information for program participants, outreach and engagement numbers broken down by race, gender, age, the number of individuals who apply to participate in and complete programs offered through the various CEJA workforce and contractor programs, and other criteria as directed by the Department.

l) Construct an assessment that will be used to evaluate the effectiveness of the Energy Transition Navigator's education, outreach and recruitment efforts and how this information will be used to improve these efforts in a continuous manner.

m) Cooperate with external evaluation efforts, as directed by the Department.

n) Provide an annual report to the Department by April 1 of each calendar year. The Department will publish these annual reports on its website. The annual report shall include the following information:

1. a description of the Energy Transition Navigator's recruitment, screening, and training efforts;

2. the number of individuals who apply to, participate in, and complete programs offered through the CEJA workforce programs, broken down by race, gender, age, and location; and

3. any other information deemed necessary by the Department. [20 ILCS 730/5-35(i)]

14 Ill. Adm. Code 820.60 Eligible Grant Expenditures

Grant expenditures for Program projects must comply with GATA, the Uniform Guidance and the funding source, be reasonable and necessary, and support the allowable grant project activities set forth in Section 820.50. Eligible budget cost categories for this Program include the following:

a) Personnel;

b) Fringe benefits;

c) Travel;

d) Equipment;

e) Supplies;

f) Contractual services and subawards;

g) Consultant services and expenses;

h) Occupancy;

i) Research and development;

j) Telecommunications;

k) Staff training and education;

l) Direct administrative costs;

m) Miscellaneous costs; and

n) Indirect costs.

14 Ill. Adm. Code 820.70 Form of Grant Applications

a) The Department will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible organizations contingent upon available funds. Applicants shall submit their application materials by the deadlines set by the Department in the NOFO, which will be at least 30 days after the NOFO posting. The Department also may accept applications on a rolling basis with no set deadline.

b) The applicants will be required to submit an application package to the Department, which will include the following:

1. Uniform grant application;

2. Uniform budget template;

3. Conflict of interest disclosure form;

4. Mandatory disclosures form;

5. Executive summary or similar requirement, which describes the applicant team, geographic regions to be served, partnership organizations, if applicable, the services to be provided and eligible populations to be served, anticipated goals and outcomes of the project, and the grant amount requested;

6. Budget narrative;

7. Technical proposal, which describes the program activities and outcomes that the applicant will support if selected and must include the following information:

A) The applicant organization's documentation of need (e.g., identification of the specific targeted communities and populations and the barriers they may face, workforce needs in the target communities and expected impact of the proposed project on specific communities and populations).

B) The applicant organization's capacity and qualifications to execute the project according to the requirements of the Program (e.g., staff capacity and CEJA program knowledge, experience and performance on similar grants and projects, experience working with populations from economically disadvantaged communities, equity investment eligible persons, equity focused populations and individuals impacted by climate change, experience addressing barriers to employment, and connections to organizations such as statewide and local workforce development systems, economic development organizations, educational institutions, Small Business Development Centers, APEX Accelerators, labor unions and industry leaders).

C) A description of the applicant's proposed project design and implementation (e.g., program goals and expected outcomes, approach to conducting participant education, outreach and engagement, project work plan, how the applicant will assist CEJA workforce and contractor participants to enroll in programs and connect them to barrier reduction services, plan to engage with other state and local workforce and contractor resources including, employers, apprenticeship programs and labor unions, and a plan to assess and report on the program activities).

continuous manner.

D) Information demonstrating the cost effectiveness of the applicant's proposed program (e.g., justification of the main budget expense items, an analysis of the cost-efficiency, and the ability for the applicant to leverage existing programs to improve cost-effectiveness, return on investment and long-term sustainability of the program).

8. Resumes of existing key program staff that demonstrate the capacity to complete the work outlined in the application. For key staff and instructor positions that will need to be filled using Program funds, include a job description for each position, including individual qualifications sought for each position;

9. Partnership agreements or other agreements between the applicant and its partner or subcontractor organizations for the project. The agreements must detail the entity's information, key staff information, roles and responsibilities associated with the project and dollar amounts for specific services to be rendered; and

10. Any additional information required to demonstrate the applicant's ability to administer a Program or that further supports the information submitted by the applicant for the proposed project.

14 Ill. Adm. Code 820.80 Grant Award Selection

Grants will be awarded by the Department to Energy Transition Navigators following a merit review by the Department and pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). The Department will award grants for each round of funding, representing service to each of the regions identified in Section 820.40(b). All applications will be sorted by proposed region. The highest scoring applications per region will be prioritized. If the concentration of eligible participants justifies it, the Department may award grants to multiple applicants in a region. The final grant awards will be negotiated by the Department based on the applications' alignment with the requirements of the Program. The purpose of negotiations will be to arrive at acceptable grant terms, including budgetary and scope of work provisions, at which time the final decision to make a grant award will be made. In evaluating applications, the Department will consider:

a) Whether the applicant meets the eligibility criteria (Section 820.40);

b) The applicant organization's documentation of need, including:

1. The applicant project's focus on specific eligible populations; identification of barriers that these target communities or populations may face; and the workforce needs in the targeted communities;

2. Identification of the region or regions where this project will operate (see Section 820.40(b));

3. The applicant project's focus on local employment needs and how the program can establish relationships with local employers and facilitate job growth; and

4. The expected impact of the project on the identified target communities and populations, including how the work of the applicant's project will increase participation in the CEJA workforce training or contractor programs.

c) The applicant team's capacity and qualifications to execute the project according to the requirements of the Program, including:

1. Staff capacity, knowledge of all CEJA program offerings and eligibility, and qualifications for successful and timely completion of all program tasks;

2. Relevant experience and administrative performance on similar grants and projects, including experience working to provide services to populations impacted by climate change or to address barriers to employment. Additional credit will be awarded for those organizations with experience providing services to populations impacted by climate change;

3. Relevant experience working with eligible CEJA program participants, including individuals from economically disadvantaged communities, equity investment eligible persons and equity focused populations, and the ability to analyze the impact of policies and practices on these populations and ensure equitable and inclusive program operations; and

4. The quality of the applicant team's connections to and relationships with the statewide and local workforce development systems, economic development organizations, educational institutions, Small Business Development Centers, APEX Accelerators, community-based organizations, local clean energy and other employers, labor unions, trade groups and industry leaders.

d) The quality of the applicant's proposed project design and implementation, including:

1. The program goals and projected outcomes including, but not limited to, the number of individuals served, number of enrollments in a program, and number of outreach activities and events;

2. The applicant's approach to conducting education, outreach, and engagement, and to recruiting eligible participants for the CEJA workforce and contractor programs;

3. The applicant's proposed work plan, which outlines the project tasks, deliverables, and milestones and the ability to reach milestones in a timely manner;

4. The applicant's plans to assist participants in enrolling in the CEJA workforce and contractor programs, providing career navigation support, and connecting participants to barrier reduction services;

5. The applicant's plans to engage with a variety of local stakeholders, including, but not limited to, workforce development and employment organizations, Small Business Development Centers, APEX Accelerators and community-based organizations, to share information about the CEJA programs, recruit participants, coordinate activities, and refer participants to other services;

6. The applicant's plans to engage clean energy employers, industry leaders, labor unions and apprenticeship programs to identify local job and skill needs, facilitate job placement, and work with the CEJA programs to address these needs; and

7. The applicant's plan to conduct reporting activities, assess program activities, and improve the program.

e) The cost effectiveness of the applicant's proposed program, including;

1. The reasonableness of the main budget expense items and the cost efficiency in relation to planned outcomes and to the proposed activities; and

2. The applicant's ability to leverage existing programs, services and partnerships to improve cost effectiveness, return on investment, and long-term sustainability of the program.

14 Ill. Adm. Code 820.90 Grant Administration

a) Grant Agreements and Payment Disbursements

1. Applicants selected to receive a grant will enter into a grant agreement with the Department, which specifies the terms and conditions of the award. Grants will be awarded for an initial term of twelve to fifteen months with the option for the Department to renew the awards for up to two additional years, with additional funding, based on the activities, outcomes and performance of the Energy Transition Navigators as well as the availability of funds. The renewals, if granted, would occur after the initial period of programmatic performance and an evaluation of services and outcomes by the Department.

2. Grant awards will be administered in a manner that complies with all applicable State and federal requirements including, but not limited to, GATA, the Uniform Guidance, the Program statute and this Part. The Department reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with the provisions in the grant agreement or non-compliance with applicable State and federal laws and regulations.

3. The Department will disburse Grant funds in accordance with a schedule included in the grant agreement. The Department may disburse funds based on the outcomes outlined in the grant agreement.

b) Grant Performance, Monitoring and Reporting Requirements

Energy Transition Navigators shall comply with all GATA and Department requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly, and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement. In addition to the performance and financial reports, Energy Transition Navigators will be required to submit an annual report to the Department as required by the Program statute [20 ILCS 730/5-35(i)].

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Energy Transition Navigators must monitor their grant activities and those of any subrecipients and contractors to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. The Department will monitor the activities of Energy Transition Navigators to assure compliance with all requirements and performance expectations of the award. Energy Transition Navigators shall timely submit all required reports, and shall supply, upon the Department's request, documents and information relevant to the award. The Department may monitor activities through site visits.

c) Records Retention

Energy Transition Navigators shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Energy Transition Navigators shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

Part 830 Returning Residents Clean Jobs Training Program

14 Ill. Adm. Code 830.10 Purpose

Subject to appropriation, the Department shall develop and, in coordination with the Department of Corrections, administer the Returning Residents Clean Jobs Training Program. [20 ILCS 730/5-50(a)] The Returning Residents Clean Jobs Training Program will deliver clean energy jobs training in Department of Corrections facilities to participants within 36 months of their scheduled release to prepare them to work in clean energy and related sector jobs upon release. The Program will provide classroom instruction and hands-on learning opportunities, utilizing a standard Clean Jobs Curriculum Framework adapted for returning residents, connect Program graduates with potential employers in the clean energy industry, and address participant needs. The following document is incorporated by reference in this Subpart and does not include any later amendments or editions:

"Returning Residents Clean Jobs Training Program, Clean Jobs Curriculum Framework for Returning Residents" Published by the Department of Commerce and Economic Opportunity February 16, 2024, which may be obtained from the Department online at https://dceo.illinois.gov/content/dam/soi/en/web/dceo/ceja/documents/clean-jobs-curriculum-framework-for-returning-residents.pdf.

14 Ill. Adm. Code 830.20 Definitions

"Accessibility" means when a person with a disability is afforded the opportunity to acquire the same information, engage in the same interactions, and enjoy the same services as a person without a disability in an equally integrated and equally effective manner, with substantially equivalent ease of use.

"Bridge program" means assistance provided to Program participants with limited academic or limited English skills to bridge the gap between participants' initial skills and the skills necessary to enter and succeed in postsecondary education and career-path employment by obtaining the necessary academic, employability and technical skills through three required components:

Contextualized instruction that integrates basic reading, math and language skills and industry or occupation knowledge;

Career development that includes career exploration, career planning within a career area, and understanding the world of work; and

Transition services that provide participants with the information and assistance needed to successfully navigate the process of moving to credit or occupational programs.

"CEJA" means the Climate and Equitable Jobs Act [P.A. 102-0662].

"Clean energy jobs" means jobs in the solar energy, wind energy, energy efficiency, energy storage, solar thermal, green hydrogen, geothermal, electric vehicle industries, other renewable energy industries, industries achieving emission reductions, and other related sectors including related industries that manufacture, develop, build, maintain, or provide ancillary services to renewable energy resources or energy efficiency products or services, including the manufacture and installation of healthier building materials that contain fewer hazardous chemicals. "Clean energy jobs" includes administrative, sales, and other support functions within these industries and other related sector industries. [20 ILCS 730/5-25(a)]

"Commitment" means a judicially determined placement in the custody of the Department of Corrections on the basis of a conviction. [20 ILCS 730/5-50(b)]

"Committed person" means a person committed to the Department of Corrections. [20 ILCS 730/5-50(b)]

"Community-based organization" means an organization that:

Provides employment, skill development, or related services to members of the community;

Includes community colleges, nonprofits, and local governments; and

Has a history of serving committed persons or justice-involved persons. [20 ILCS 730/5-50(b)]

"Core values" means the values of diversity, inclusion, accessibility and equity.

"Correctional institution or facility" means a Department of Corrections building or part of a Department of Corrections building where committed persons are detained in a secure manner. [20 ILCS 730/5-50(b)]

"Department" or "DCEO" means the Illinois Department of Commerce and Economic Opportunity.

"Department of Corrections" or "DOC" means the Illinois Department of Corrections.

"Discharge" means the end of a sentence or the final termination of a detainee's physical commitment to and confinement in the Department of Corrections. [20 ILCS 730/5-50(b)]

"Diversity" means the representation of people from a variety of backgrounds and experiences.

"Environmental justice communities" means the definition of that term as defined by the Illinois Power Agency pursuant to the Illinois Power Agency Act [20 ILCS 3855], but excluding racial and ethnic indicators, where residents have historically been subject to disproportionate pollution burdens, including pollution from the energy sector. [20 ILCS 730/5-5] For a map that defines these areas in Illinois, refer to this website: Arcg.is/1Wvv4X.

"Equity" means the state, quality or ideal of being just, impartial and fair.

"Essential Employability Skills" means those general skills that are required to be successful in all sectors of the labor market and are separate from the technical skills attained in career pathways or academic skills such as math and reading. The essential employability skills, developed by various workforce development stakeholders in Illinois, include, but are not limited to, personal ethics, work ethics, communication skills, and teamwork.

"GATA" means the Grant Accountability and Transparency Act. [30 ILCS 708]

"GATA Rule" means the administrative rules of the Governor's Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Grantees" means the community-based organizations selected by the Department to provide the services and activities required by the Program.

"Grantee team" means the grantee and any partners with which the grantee will be working to carry out the Program activities.

"Inclusion" means the action or state of including and feeling an empowered sense of belonging within a group or organization.

"Location" means where the returning resident is physically located, such as:

a correctional institution or facility;

a county;

a municipality or town; and

a place of employment. [20 ILCS 730/5-50(b)]

"Nonprofit" means a corporation organized under the General Not For Profit Corporation Act of 1986, in good standing to operate in the State of Illinois, that is representative of a community or a significant segment of a community.

"Program" means the Returning Residents Clean Jobs Training Program.

"Program administrator" means, for each Program Delivery Area, the administrator selected by the Department pursuant to 20 ILCS 730/5-50(h)(1). [20 ILCS 730/5-50(b)]

"Program delivery area" means the geographic regions in which the selected grantees and the Program Administrators will provide services.

"Regional administrators" means the three administrators selected by DCEO, pursuant to [20 ILCS 730/5-15], to work together to administer the implementation of the Clean Jobs Workforce Network Program, the Illinois Climate Works Pre-apprenticeship Program, the Clean Energy Contractor Incubator Program, and the Returning Residents Clean Jobs Training Program.

"Returning resident" means any United States resident who is:

17 years of age or older;

in the physical custody of the Department of Corrections, and

scheduled to be re-entering society within 36 months. [20 ILCS 730/5-50(b)]

"State" means the State of Illinois.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200.

"Work-based learning" means opportunities for Program participants to practice and enhance the skills and knowledge gained in their program of study or industry training program, as well as to develop employability, and includes an assessment and recognition of acquired knowledge and skills. "Work-based learning" may include career awareness and exploration activities (e.g., guest speakers, job shadowing, mentorship) as well as workplace experience (internships, service learning, paid work experience, on-the-job training, incumbent worker training, transitional jobs, and apprenticeships).

14 Ill. Adm. Code 830.30 Funding Source

The grant awards described in this Part are contingent upon appropriation of funding from the Energy Transition Assistance Fund. Funding also may be made available from other lawful sources, including donations, grants, and federal incentives. See 20 ILCS 730/5-50(j); 20 ILCS 605/605-1075.

14 Ill. Adm. Code 830.40 Eligible Grant Applicants

A single organization may propose to deliver all required services, including Program Administrator and training provider elements, or may partner with other entities to provide certain elements of the Program. However, the lead applicant organization alone must meet all the requirements in subsections (a)(1) through (a)(3) and must be able to serve, with assistance from partner organizations as necessary, at least one facility or institution described in subsection (b).

a) To be eligible to receive a grant, at a minimum, applicants must demonstrate the following:

1. Meet the definition of a community-based organization;

2. Have an active GATA registration at the time the application is submitted and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) by the time the application is reviewed by the Department;

3. Be a regarded entity by the Internal Revenue Service [26 CFR 301.7701-3(b)(ii)] for federal income tax purposes; and

4. Able to satisfy the required activities set forth in Section 830.50.

b) The Department will award grants to serve eligible returning residents at DOC institutions and facilities approved by DOC and designated in the Notice of Funding Opportunity (NOFO) to offer the Program, based on available programming space, staffing, population, facility mission, and security concerns.

c) The Program Administrator identified for each applicant must have:

1. Strong capabilities, experience, and knowledge related to Program development and financial management;

2. Cultural and language competency needed to be effective in the communities to be served;

3. Knowledge and experience working with committed persons or justice-involved persons;

4. Knowledge and experience in working with providers of clean energy jobs; and

5. Awareness of clean energy and related sector trends and activities, workforce development best practices, regional workforce development needs, and community development.

d) A Department of Corrections background check is required prior to being awarded a grant for the following program staff:

1. The Program Administrator;

2. All instructors or staff who will have regular interactions with committed persons or regular access to a Department of Corrections facility; and

3. All staff who will regularly access a committed person's personal identifying information or other data elements.

e) Program staff shall comply with all DOC facility procedures and protocols. A grantee's grant agreement may be terminated if a grantee staff member, subrecipient, or contractor fails to comply with DOC facility procedures or is otherwise found to constitute a safety or security risk and the grantee does not adequately address the safety or security risk posed by that individual within a reasonable time frame.

14 Ill. Adm. Code 830.50 Required Program Activities

The Program creates career training programming at select DOC facilities. The main objective of the Program is to increase access to, and opportunities for, education, training, and support services to help returning residents succeed in the labor market, generally, and in the clean energy sector, specifically. After participants complete training at DOC facilities, the Program will continue to provide support to participants after release from custody as they prepare for and transition into employment or to another training program. Grantee teams must:

a) Coordinate with DOC to recruit and assess the eligibility of Program candidates, utilizing application and intake procedures developed by DCEO to enroll and orient participants to the training program.

b) Provide training, certification preparation, job readiness, and skill development to program participants, utilizing the Clean Jobs Curriculum Framework for Returning Residents (described in subsection (j)) to prepare participants for entry-level clean energy jobs. The training will consist of a bridge program (Illinois essential employability skills and clean energy basics) and job-specific training options, selected by each grantee and based on local clean energy workforce needs. Training must lead to certifications or credentials that prepare participants for employment. At a minimum, all successful Program graduates must receive from the grantee team a graduation certificate, plus proof of all certifications or credentials earned during Program participation. Consistent with DOC facility requirements, Program delivery methods must be flexible and interactive to improve accessibility and help participants overcome barriers that stand in the way of their participation or success. The entities providing the Program training must be approved to provide training services by all appropriate accrediting bodies.

c) Work in partnerships with entities that provide clean energy jobs, including businesses, nonprofits, and worker-owned cooperatives, to provide access to employment training, work-based learning, and hiring opportunities.

d) Provide access to wrap-around and other supportive services to mitigate challenges participants may face in completing the training while in DOC custody and in gaining employment upon release from custody. Grantee teams may provide these services themselves, where feasible, or connect participants to other CEJA programs or to other workforce training programs in the State for support services upon release. Following participant release, grantee teams will be responsible for providing participants with assistance in connecting with other workforce support services as needed. Grantee teams must identify at least one economic development region in Illinois (see https://dceo.illinois.gov/smallbizassistance/regionspecificassistance.html) or one subregion in the Northeast Illinois region (Cook County; Southern suburbs: Will and Kankakee County; West and southwest suburbs: DuPage, Kane, Kendall, Grundy, and DeKalb Counties; Northern suburbs: Lake and McHenry County) in which the grantee team will provide supportive services to returning residents once they are released from DOC custody. At a minimum, grantee teams shall provide or refer participants to the following support services as needed:

1. Wrap-around Support Services:

A) Referrals for health care, substance use treatment, housing or other needed assistance;

B) Vital document preparation (e.g., social security card, a State identification card and cost to obtain a driver's license);

C) Transportation and childcare costs incurred to utilize post-release support services or participate in additional CEJA workforce training programs;

D) Emergency bill payments; and

E) Expungement and other legal supports.

2. Student Support Services:

A) Tutoring, including extra help with reading, writing and basic arithmetic;

B) Make-up classes;

C) Re-testing;

D) Educational enrichment, including printed materials that can be reviewed if participants are on lockdown at a correctional institution or facility; and

E) Technology assistance, including digital literacy.

3. Transition Support Services:

A) Mentoring and coaching;

B) Job exploration, search and placement services;

C) Resume writing and mock interviews;

D) Job fairs with clean energy employers;

E) Follow-up support services for at least one year after job placement, as needed;

F) Education or training costs associated with entering an apprenticeship program or employment; and

G) Other wrap-around supportive services needed to obtain or retain employment.

e) Track outcomes and identify participant needs to facilitate job placement and retention. Grantees will be required to provide long-term follow-up to track participant outcomes for at least the duration of each grantee's award. All new grantees will assume all existing Program participant follow-up responsibilities.

f) Ensure that the selected Program Administrator delivers the following Program components:

1. Coordinate with DOC to recruit participants and administer the program. The Program Administrators will be the DOC facility liaisons and will supervise the grantee team's delivery of the Program in the correctional facility. DOC shall ensure that the wardens or superintendents of all correctional institutions and facilities visibly post information on the Program in an accessible manner for committed individuals. Program Administrators will work with other CEJA program grantees and the CEJA regional administrators to ensure that the CEJA programs across the State are consistent and coordinated, and to refer participants to other CEJA programs upon release, as needed. [20 ILCS 730/5-50(h)(2)(ii)]

2. Partner with community-based organizations approved to provide industry-recognized credentials or education institutions to deliver the Program elements.

3. Assist DCEO in creating and publishing a guidebook for implementing the Clean Jobs Curriculum Framework for Returning Residents in correctional facilities, including resources for Program graduates.

4. Assist Program participants in achieving employment and oversee transition services for program graduates, helping them attain and retain employment. To accomplish this goal, the Program Administrator shall organize at least one job fair at the relevant correctional institution or facility; engage in job placement discussions with clean energy employers, including those that have not formerly hired returning residents; establish partnerships with Illinois solar energy businesses and trade associations to identify solar employers that support and hire returning residents; and involve State agencies in finding employment in the clean energy and related sector industries for participants and graduates.

5. Assist DCEO in creating, publishing and updating, as required by DCEO, an employer "Hiring Returning Residents" handbook.

6. Assist the grantee team to engage with potential employers. The focus will be to:

A) promote company policies that support hiring and retaining returning residents; and

B) facilitate job placement.

7. Engage in Program data tracking and reporting to DCEO on performance measures. Program Administrators will also use this data to evaluate the Program and engage in continuous improvement.

g) Collaborate and coordinate with DCEO as well as the grantees and administrators of all programs created by CEJA, including, but not limited to, the following programs created by CEJA:

1. Energy Transition Navigators Program [20 ILCS 730/5-35];

2. Illinois Climate Works Pre-apprenticeship Program [20 ILCS 730/5-40];

3. Clean Jobs Workforce Network Program [20 ILCS 730/5-20];

4. Clean Energy Contractor Incubator Program [20 ILCS 730/5-45]; and

5. Clean Energy Primes Contractor Accelerator Program [20 ILCS 730/5-55].

6. Grantee teams may establish a shortened Program training, with prior approval from DCEO, to prepare and place Program graduates in the Clean Jobs Workforce Network Program or the Illinois Climate Works Pre-apprenticeship Program following the Program graduate's release from commitment. Returning residents who meet the eligibility criteria, shall be prioritized for placement in a Clean Jobs Workforce Network training program or the Illinois Climate Works Pre-apprenticeship Program in accordance with the requirements of these programs.

h) Coordinate with local and regional workforce entities, regional administrators and organizations delivering other CEJA workforce training to provide services to returning residents, as needed and to address any barriers that participants may encounter.

i) Use a program model that upholds the core values of diversity, inclusion, accessibility, and equity. These core values must inform all aspects of the program, including, but not limited to, recruitment, partnerships, training, transition services, and barrier reducing supportive services.

j) Follow the requirements and guidelines provided in the Clean Jobs Curriculum Framework for Returning Residents (incorporated by reference) ("Curriculum Framework"), developed by DCEO and its partners through a stakeholder process, to identify the career pathways and training curriculum needed for participants to be skilled, work ready, and able to enter clean energy jobs. The Curriculum Framework includes requirements for training and training instructors, certification preparation, job readiness, and skill development, including soft skills, math skills, technical skills, certification test preparation, and other development needed.

k) Work cooperatively with DOC, the entities administering other CEJA training programs and other local workforce training programs to implement a system to collect and track participant data elements required by DCEO and report this information to DCEO quarterly, or as requested by DCEO. Grantee teams shall collect and disaggregate data by race, ethnicity, gender, age, category of crime(s) of conviction, facility location and geographic location of residence returning to in order to evaluate and ensure Program and participant success. DCEO will publish an annual report containing these performance metrics. Published data may be disaggregated by institution, discharge or residence address of Program participants and other factors. The information collected will be shared with other State agencies and will include, but not be limited to, the following:

1. The number of returning residents who enroll in the Program;

2. The number of returning residents who were accepted for enrollment into the Program;

3. The number of returning residents who applied for and were denied enrollment into the Program;

4. The number of returning residents who complete the Program;

5. The number of returning residents who did not complete the Program;

6. The number of returning residents who enrolled in the Program and were removed;

7. The reasons for removal;

8. The total number of returning residents discharged;

9. The demographics of each entering and graduating class (e.g., age, race, ethnicity, gender and geographic residence returning to);

10. The percentage of graduates employed at 6 and 12 months after release;

11. The recidivism rate of Program participants at 1, 3, 5, 7 and 10 years after release;

12. Program graduates' interview and hiring statuses;

13. Continuing education and certifications gained by Program graduates;

14. Program graduates' employment status, such as hire date, pay rates, whether full-time, part-time, or seasonal, and separation date;

15. The number of returning residents who graduated from the Program and remained employed in the clean energy industry within 1 year and 3 years after release. If practicable, DCEO will consult with the Illinois Department of Employment Security to also provide this data for 5, 7, and 10 years after release;

16. The number of returning residents who graduated from the Program and changed employment in the clean energy industry within 1 year and 3 years after release. If practicable, DCEO will consult with the Illinois Department of Employment Security to also provide this data for 5, 7, and 10 years after release; and

17. The number of returning residents who graduated from the Program and separated from employment in the clean energy industry and received employment in another industry within 1 year and 3 years after release. If practicable, DCEO will consult with the Illinois Department of Employment Security to also provide this data for 5, 7, and 10 years after release.

l) Cooperate with external evaluation efforts, as directed by DCEO.

Chapter I Department of Commerce and Economic Opportunity

Part 830 Returning Residents Clean Jobs Training Program

14 Ill. Adm. Code 830.60 Eligible Grant Expenditures

Grant expenditures for Program projects must comply with GATA, the Uniform Guidance and the funding source, be reasonable and necessary, and support the allowable grant project activities set forth in Section 830.50. Eligible budget cost categories for this Program include the following:

a) Personnel;

b) Fringe benefits;

c) Travel;

d) Equipment;

e) Supplies;

f) Contractual services and subawards;

g) Consultant services and expenses;

h) Occupancy;

i) Research and development;

j) Telecommunications;

k) Staff training and education;

l) Direct administrative costs;

m) Miscellaneous costs;

n) Industry-focused training costs;

o) Supportive services (including wrap-around, student support and transition support); and

p) Indirect costs.

14 Ill. Adm. Code 830.70 Participant Eligibility

a) DOC shall have sole discretion to determine whether a committed person is eligible to participate in the Program and whether a committed person's participation in the Program poses a safety and security risk for the correctional facility or any person. DECO will request from DOC the reasons for ineligibility of each committed person who meets the requirements for subsections (a)(1) through (a)(3), and is denied participation. Grantee teams will work with DOC to determine eligibility for program participation, including verifying that individuals meet the following criteria after completing an application:

1. Are aged 17 or older;

2. Are in the physical custody of DOC;

3. Are within 36 months of release from a correctional institution or facility;

4. Consent in writing to Program participation;

5. Are willing to follow all Program requirements;

6. Meet all Program and testing requirements, including an initial interview and coaching session;

7. Do not pose a safety or security risk, and undergo and pass drug testing administered by DOC;

8. Achieve a score on the Test for Adult Basic Education (TABE) equivalent to 6th grade proficiency or higher on Reading, Mathematics, and Language; and

9. Participate in and successfully complete a pre-program orientation that ensures the candidates understand and are interested in continuing the Program.

b) DOC shall aim to include Program training in conjunction with other pre-release procedures and moves. Delays in a Program training shall not cause delays in discharge. DOC may remove a committed person enrolled in the Program for violation of institutional rules; failure to participate or meet expectations of the Program; failure of a drug test; disruptive behavior; or for reasons of safety, security, and order of the facility. [20 ILCS 730/5-50(e) and (h)(4)]

14 Ill. Adm. Code 830.80 Form of Grant Applications

a) DCEO will post one or more NOFOs on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible organizations contingent upon available funds. Applicants shall submit their application materials by the deadlines set by DCEO in the NOFO, which will be at least 30 days after the NOFO posting. DCEO also may accept applications on a rolling basis with no set deadline.

b) Applicants must submit an application package to DCEO, which will include the following:

1. Uniform grant application;

2. Uniform budget template;

3. Conflict of interest disclosure form;

4. Mandatory disclosures form;

5. Budget narrative (e.g., justification of the main budget expense items for the lead applicant and applicant's proposed partners or subcontractors, and an analysis of the cost-effectiveness of the proposed budget expense items);

6. Technical proposal, which describes the program activities and outcomes that the applicant will support if selected and must include the following information:

A) The applicant team's qualifications and capacity (e.g., identifying the correctional facility for the proposed program and the economic development regions where post-release services will be provided, the composition of the applicant team including the Program Administrator, the history and experience of the applicant team's work with incarcerated or justice-impacted individuals and in the clean energy industry that demonstrates the ability to provide all required Program activities).

B) The applicant team's documentation of need (e.g., identification of barriers that returning residents face inside correctional institutions and upon release and the challenges employers may face when hiring returning residents, and a description of the expected impact of the project on returning residents and communities).

C) A description of the applicant's proposed project plan (e.g., the plan for enrollment, the training program and use of a bridge program curriculum and the Curriculum Framework, the plan to provide participants support during and after completion of training, the plan for placement of participants and follow-up support after program completion, the plan to coordinate with DOC and other CEJA program grantees, the anticipated outcomes and how the applicant team will track them, and the plan to integrate core values into the program);

7. Resumes of the Program Administrator and existing key program staff and instructors that demonstrate capacity to complete the work outlined in the application. For key staff and instructor positions that will need to be filled using Program funds, include a job description for each position, including individual qualifications sought for each position;

8. Memorandums of Understanding (MOUs) from all partners and subcontractors who are part of the applicant team and who are proposed to receive funding to deliver Program elements;

9. Letters of support from clean energy employers or other organizations that have expressed a willingness to work with the applicant team to support the project; and

10. Any additional information required to demonstrate the applicant's ability to administer a Program or that further supports the information submitted by the applicant for the proposed project.

14 Ill. Adm. Code 830.90 Grant Award Selection

Grants will be awarded by DCEO to grantees following a merit review by an evaluation committee designated by DCEO and pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). DCEO will award one grant for each facility identified by DOC (see Section 830.40(b)) and set forth in the applicable NOFO. All applications will be sorted by each correctional facility location proposed for services. The highest scoring applications per facility will be prioritized for funding. The final grant awards will be negotiated by DCEO based on the applications' alignment with the requirements of the Program. The purpose of negotiations will be to arrive at acceptable grant terms, including budgetary and scope of work provisions, at which time the final decision to make a grant award will be made. In evaluating applications, DCEO will consider the criteria listed below:

a) Whether the applicant meets the eligibility criteria (Section 830.40).

b) The applicant team's qualifications and capacity, including:

1. The applicant team's history working with incarcerated people or justice-impacted people;

2. The applicant team's experience providing workforce training, certification, job readiness, and skill development, especially to justice-impacted people;

3. The applicant team's experience providing transition and follow-up services to help people, especially returning residents, gain and retain jobs;

4. The applicant team's knowledge and experience within the clean energy industry, including relationships with clean energy employers and qualifications to teach the Curriculum Framework;

5. The applicant team's capacity to provide Program elements in the correctional facility and follow-up services in identified economic development regions as evidenced through the staffing plan; and

6. The Program Administrator's capabilities and experience related to program development, financial management, cultural and language competency, working with committed and justice-involved persons, working with clean energy employers, awareness of clean energy trends, and workforce development best practices.

c) The applicant's documentation of need, including:

1. The quality of the plan to address barriers that returning residents face inside correctional facilities and upon release;

2. The quality of the plan to address the challenges and concerns that employers face when hiring returning residents; and

3. The expected impact of the project on returning residents and communities impacted by incarceration.

d) The quality of the applicant's proposed project plan, including:

1. The plan to provide recruitment, intake, and enrollment services;

2. The plan to deliver training, with clear integration of the Curriculum Framework, including the bridge program and job-specific training;

3. The plan to provide supportive services (student support services, transition services, and wrap-around support services) to participants before and after release, in coordination with other CEJA programs;

4. The plan to help participants transition to employment in the clean energy industry and provide credible, relevant partnership agreements with employers for job placement and work-based learning opportunities;

5. The plan to create a program culture that incorporates the core values of diversity, inclusion, accessibility, and equity in program design, recruitment, support services, training and transition services; and

6. The plan to track program outcomes, assess the program and use this information to improve program delivery.

e) The cost-effectiveness of the applicant's proposed program, including:

1. The thoroughness, reasonableness and necessity of the applicant's proposed program costs in relation to the planned activities and projected outcomes; and

2. The applicant's ability to leverage existing programs, services and partnerships to improve cost-effectiveness, return on investment, and long-term sustainability of the program.

Chapter I Department of Commerce and Economic Opportunity

Part 830 Returning Residents Clean Jobs Training Program

14 Ill. Adm. Code 830.100 Grant Administration

a) Grant Agreements and Payment Disbursements

1. Applicants selected to receive a grant will enter into a grant agreement with DCEO, which specifies the terms and conditions of the award. Grants will be awarded for an initial term between twelve and eighteen months with the option for DCEO to renew the awards for up to two additional years, with additional funding, based on the activities, outcomes and performance of the grantees as well as the availability of funds. The renewals, if granted, would occur after the initial period of programmatic performance and an evaluation of services and outcomes by DCEO and DOC.

2. Grant awards will be administered in a manner that complies with all applicable State and federal requirements including, but not limited to, GATA, the Uniform Guidance, the Program statute and this Part. DCEO reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with the provisions in the grant agreement or non-compliance with applicable State and federal laws and regulations.

3. DCEO will disburse grant funds in accordance with a schedule included in the grant agreement. The Department may disburse funds based on the outcomes outlined in the grant agreement.

b) Grant Performance, Monitoring and Reporting Requirements

Grantees shall comply with all GATA and Department requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly, and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement.

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Grantees must monitor their grant activities and those of any subrecipients and contractors to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. DCEO will monitor the activities of grantees to assure compliance with all requirements and performance expectations of the award. Grantees shall timely submit all required reports, and shall supply, upon the Department's request, documents and information relevant to the award. DCEO may monitor activities through site visits.

c) Records Retention

Grantees shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Grantees shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

Part 840 Clean Jobs Workforce Network Program

14 Ill. Adm. Code 840.10 Purpose

This Part implements the Clean Jobs Workforce Network Program to create a network of program hub sites with program elements delivered by community-based organizations and their subrecipients, geographically distributed across the State, including at least one hub site in or near each of the areas set forth in Subsections 840.40(b). The main objective of the Clean Jobs Workforce Network Program is to prepare participants for entry-level clean energy jobs. The following document is incorporated by reference in this Subpart and does not include any later amendments or editions:

"Clean Jobs Workforce Network Program, Clean Jobs Curriculum Framework,"

Published by the Department of Commerce and Economic Opportunity May 20, 2023, which may be obtained from the Department online at https://dceo.illinois.gov/content/dam/soi/en/web/dceo/ceja/documents/clean-jobs-curriculum-framework.pdf.

14 Ill. Adm. Code 840.20 Definitions

"Accessibility" means when a person with a disability is afforded the opportunity to acquire the same information, engage in the same interactions, and enjoy the same services as a person without a disability in an equally integrated and equally effective manner, with substantially equivalent ease of use.

"Bridge program" means assistance provided to Program participants with limited academic or limited English skills to bridge the gap between participants' initial skills and the skills necessary to enter and succeed in postsecondary education and career-path employment by obtaining the necessary academic, employability and technical skills through three required components:

Contextualized instruction that integrates basic reading, math and language skills and industry or occupation knowledge;

Career development that includes career exploration, career planning within a career area, and understanding the world of work; and

Transition services that provide participants with the information and assistance needed to successfully navigate the process of moving to credit or occupational programs.

"CEJA" means the Climate and Equitable Jobs Act (P.A. 102-0662).

"Clean energy jobs" means jobs in the solar energy, wind energy, energy efficiency, energy storage, solar thermal, green hydrogen, geothermal, electric vehicle industries, other renewable energy industries, industries achieving emission reductions, and other related sectors including related industries that manufacture, develop, build, maintain, or provide ancillary services to renewable energy resources or energy efficiency products or services, including the manufacture and installation of healthier building materials that contain fewer hazardous chemicals. "Clean energy jobs" includes administrative, sales, and other support functions within these industries and other related sector industries. [20 ILCS 730/5-25(a)]

"Clean Jobs Workforce Network Hubs" means the community-based organizations selected by the Department to provide the services and activities required by the Program.

"Community-based organization" means an organization that:

Provides employment, skill development, or related services to members of the community;

Includes community colleges, nonprofit organizations, and local governments;

Has at least one main operating office in the community or region it serves; and

Demonstrates relationships with local residents and other organizations serving the community. [20 ILCS 730/5-5]

"Core values" means the values of diversity, inclusion, accessibility and equity.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Displaced energy worker" means an energy worker who has lost employment, or is anticipated by the Department to lose employment within the next 5 years, due to the reduced operation or closure of a fossil fuel power plant, nuclear power plant, or coal mine. [20 ILCS 735/10-10]

"Diversity" means the representation of people from a variety of backgrounds and experiences.

"Eligible populations" means those individuals who meet the requirements to participate in the Program as set forth in Section 840.80.

"Energy worker" means a person who has been employed full-time for a period of one year or longer, and within the previous 5 years, at a fossil fuel power plant, a nuclear power plant, or a coal mine located within the State of Illinois, whether or not they are employed by the owner of the power plant or mine. Energy workers are considered to be full-time if they work at least 35 hours per week for 45 weeks a year or the 1,820 work-hour equivalent with vacations, paid holidays, and sick time, but not overtime, included in this computation. Classification of an individual as an energy worker continues for 5 years from the latest date of employment or the effective date of [the Energy Community Reinvestment Act, September 15, 2021], whichever is later. [20 ILCS 735/10-10]

"Environmental justice communities" means the definition of that term as defined by the Illinois Power Agency pursuant to the Illinois Power Agency Act [20 ILCS 3855], but excluding racial and ethnic indicators, where residents have historically been subject to disproportionate pollution burdens, including pollution from the energy sector. [20 ILCS 730/5-5] For a map that defines these areas in Illinois, refer to this website: Arcg.is/1Wvv4X.

"Equity" means the state, quality or ideal of being just, impartial and fair.

"Equity investment eligible communities" or "eligible communities" means the geographic areas throughout Illinois which would most benefit from equitable investments by the State designed to combat discrimination and foster sustainable economic growth. Specifically, the eligible community means the following areas:

Restore, Reinvest and Renew Areas (R3 Areas) as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705], where residents have historically been excluded from economic opportunities, including opportunities in the energy sector. Eligible R3 Areas are defined in the R3 service map (website at Arcg.is/1Wvv4X); and

Environmental justice communities. [20 ILCS 730/5-5] See the Equity Investment Eligible Community Map (website at: Arcg.is/1Wvv4X), which defines the areas that satisfy the criteria for both R3 Areas and environmental justice communities.

"Essential Employability Skills" means those general skills that are required to be successful in all sectors of the labor market and are separate from the technical skills attained in career pathways or academic skills such as math and reading. The essential employability skills, developed by various workforce development stakeholders in Illinois, include, but are not limited to, personal ethics, work ethics, communication skills, and teamwork.

"GATA" means the Grant Accountability and Transparency Act. [30 ILCS 708]

"GATA Rule" means the administrative rules of the Governor's Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Inclusion" means the action or state of including and feeling an empowered sense of belonging within a group or organization.

"Low-income person" means an individual whose income does not exceed 80% of the area median income, adjusted for family size, based on the data published most recently by the U.S. Department of Housing and Urban Development.

"Nonprofit organization" means a corporation organized under the General Not For Profit Corporation Act of 1986, in good standing to operate in the State of Illinois, that is representative of a community or a significant segment of a community.

"Program" means the Clean Jobs Workforce Network Program.

"State" means the State of Illinois.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200.

"Work-based learning" means opportunities for Program participants to practice and enhance the skills and knowledge gained in their program of study or industry training program, as well as to develop employability, and includes an assessment and recognition of acquired knowledge and skills. "Work-based learning" may include career awareness and exploration activities (e.g., guest speakers, job shadowing, mentorship) as well as workplace experience (e.g., internships, service learning, paid work experience, on-the-job training, incumbent worker training, transitional jobs, and apprenticeships).

14 Ill. Adm. Code 840.30 Funding Source

The grant awards described in this Part are contingent upon appropriation of funding from the Energy Transition Assistance Fund (See 20 ILCS 730/5-20(f); 20 ILCS 730/5-30(g); 20 ILCS 605/605-1075).

14 Ill. Adm. Code 840.40 Eligible Grant Applicants

A single organization may propose to deliver all required services, or may partner with other entities to provide certain elements of the Program. However, the lead applicant organization alone must meet all the requirements in subsections (a)(1) through (a)(3) and must be able to serve, with assistance from partner organizations as necessary, at least one region listed in subsection (b).

a) To be eligible to receive a grant, at a minimum, applicants must demonstrate the following:

1. Meet the definition of a community-based organization;

2. Have an active GATA registration at the time the application is submitted and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) by the time the application is reviewed by the Department;

3. Be a regarded entity by the Internal Revenue Service (26 CFR 301.7701-3(b)(ii)) for federal income tax purposes; and

4. Able to satisfy the required activities set forth in Section 840.50 and 840.60.

b) The Department will award grants to fund Clean Jobs Workforce Network Hubs that have a physical presence capable of serving and accessible to each of the following areas in Illinois, but the grants may serve an area larger than just the listed communities:

1. Chicago (South Side);

2. Chicago (Southwest and West Sides);

3. Waukegan;

4. Rockford;

5. Aurora;

6. Joliet;

7. Peoria;

8. Champaign;

9. Danville;

10. Decatur;

11. Carbondale;

12. East St. Louis;

13. Kankakee (starting July 1, 2025); and

14. Alton.

c) An eligible organization may serve as the designated Clean Jobs Workforce Network Hub for more than one designated area. However, the applicant's team must be able to serve program participants within all the designated areas and the surrounding vicinities for which they apply.

14 Ill. Adm. Code 840.50 Required Program Activities

The Clean Jobs Workforce Network Program creates 14 regional Clean Jobs Workforce Network Hubs throughout the State to provide clean energy and related workforce and training opportunities to participants, engage with potential employers, and form partnerships to ensure participants have dedicated and sustained support to build careers in clean energy and related sector jobs. The Clean Jobs Workforce Network Hubs must provide all of the following activities:

a) Outreach services, in coordination with Energy Transition Navigators [20 ILCS 730/5-35] and other community partners across the entirety of all regions the Clean Jobs Workforce Network Hub serves, to recruit and pre-screen eligible populations for the training program;

b) Training, certification preparation, job readiness, and skill development to program participants, utilizing the Clean Jobs Curriculum Framework (described in subsection (j)) to prepare participants for entry-level clean energy jobs. The training will consist of a bridge program (essential employability skills and clean energy basics) and job-specific training options, selected by each Clean Jobs Workforce Network Hub and based on local clean energy workforce needs. The entities providing the Program training must be approved to provide training services by all appropriate accrediting bodies;

c) Develop partnerships with entities that provide clean energy jobs, including businesses, nonprofit organizations, and worker-owned cooperatives, to ensure Program participants have priority access to employment training, work-based learning opportunities, and hiring activities;

d) Deliver or provide access through referrals for wrap-around and other supportive services to mitigate challenges participants may face in accessing and completing the training. Clean Jobs Workforce Network Hubs must offer to Program participants at a minimum access to all of the support and transition services detailed in this subsection (d), but may offer others as needed. The funding source for these services will either be through the Program funds or from the Energy Transition Barrier Reduction Program (see Section 840.60), which will be determined by the Department depending on the availability of funds and the needs of the participants See 20 ILCS 605/605-1075(b).

1. Wrap-around Support Services:

A) Transportation costs, including car repairs, gas cards, or bus passes;

B) Childcare or family care;

C) Driver's education and driver's license fees;

D) Personal health services, including dental, vision and mental health care;

E) Emergency bill payments, rental assistance or emergency housing;

F) Referrals for other services (e.g., food, housing, rental assistance, substance use treatment); and

G) Legal assistance, including record expungement.

2. Student Support Services:

A) Tutoring;

B) Make-up classes;

C) Re-testing;

D) Educational enrichment;

E) Technology assistance for virtual learning; and

F) Expenses related to certifications, testing or applications.

3. Transition Support Services:

A) Mentoring and coaching;

B) Job exploration, search and placement services;

C) Resume writing and mock interviews;

D) Job fairs with clean energy employers;

E) Follow-up support services for at least one year after job placement, as needed;

F) Education or training costs associated with entering an apprenticeship program or employment; and

G) Other wrap-around supportive services needed to obtain or retain employment;

e) Deliver transition services to participants following training completion to help participants find jobs, succeed in the workplace, and build their careers;

f) Collaborate and coordinate with the Department as well as the grantees and administrators of all programs created by CEJA, including the following:

1. Energy Transition Navigators Program [20 ILCS 730/5-35];

2. Illinois Climate Works Pre-apprenticeship Program [20 ILCS 730/5-40];

3. Clean Energy Contractor Incubator Program [20 ILCS 730/5-45];

4. Returning Residents Clean Jobs Training Program [20 ILCS 730/5-50]; and

5. Clean Energy Primes Contractor Accelerator Program [20 ILCS 730/5-55];

g) Coordinate with local and regional workforce entities, building trades, industry contractors, contractor associations, community colleges, community-based organizations, and secondary schools for Program elements and to develop structured pathways for Program graduates to transition successfully into clean energy jobs following Program completion;

h) Use a program model that upholds the core values of diversity, inclusion, accessibility, and equity. These core values should inform all aspects of the program, including, but not limited to, recruitment, partnerships, training, transition services, and barrier reducing supportive services;

i) Distribute stipends to Program participants to encourage participation and retention that are based on participant training attendance and performance;

j) Follow the requirements and guidelines provided in the Clean Jobs Curriculum Framework (incorporated by reference) ("Curriculum Framework"), developed by the Department and its partners through a stakeholder process, to identify the career pathways and training curriculum needed for participants to be skilled, work ready, and able to enter clean energy jobs. The Curriculum Framework includes requirements for training and training instructors, certification preparation, job readiness, and skill development, including soft skills, math skills, technical skills, certification test preparation, and other development needed;

k) Implement a system to track data elements required by the Department and report this information to the Department quarterly. The Department will publish an annual CEJA report for the workforce training programs that will include summaries of this data. The information that Clean Jobs Workforce Network Hubs will be required to track, includes, but is not limited to, the following:

1. Demographic data, including racial, gender, residency in eligible communities, and geographic distribution data, on participants who enter the Program and graduate from the Program;

2. Demographic data for Program participants who are placed in employment, including the percentages of participants by race, gender, and geographic categories in each individual job type or category and whether employment is union, non-union, or non-union via temporary agency;

3. Participant job acquisition and retention statistics, including the duration of employment (start and end dates of hires) by race, gender, and geography;

4. Hourly wages, including hourly overtime pay rate, and benefits of participants placed into employment by race, gender, and geography;

5. Percentage of jobs by race, gender, and geography held by Program participants or graduates that are full-time equivalent positions, meaning that the position held is full-time, direct, and permanent based on 2,080 hours worked per year (paid directly by the employer, whose activities, schedule, and manner of work the employer controls, and receives pay and benefits in the same manner as permanent employees);

6. Qualitative data, as needed by the Department, to determine program success, consisting of reporting on pertinent issues affecting the program including, but not limited to, qualitative descriptions accompanying metrics or identifying key successes and challenges;

7. Job retention rates of Program graduates for at least two years after job placement as required by the Department; and

8. Any additional information required by the Department;

l) Construct an assessment that will be used to evaluate the effectiveness of the Clean Jobs Workforce Network Hub's program and how this information will be used to improve program delivery and improve the training program in a continuous manner; and

m) Cooperate with external evaluation efforts, as directed by the Department.

Chapter I Department of Commerce and Economic Opportunity

Part 840 Clean Jobs Workforce Network Program

14 Ill. Adm. Code 840.60 Energy Transition Barrier Reduction Program

a) Subject to appropriation from the Energy Transition Assistance Fund and pursuant to the Energy Transition Act [20 ILCS 730/5-30], the Department will administer an Energy Transition Barrier Reduction Program, available to individuals who participate in the Clean Jobs Workforce Network Program. Barrier reduction services are intended to help individuals overcome financial and other barriers to participation in the Program.

b) The barrier reduction services for the Program are listed in Section 840.50(d) and the Clean Jobs Workforce Network Hubs must ensure timely services and funds to address the unique and often time-sensitive barriers that may arise during participants' training. The coordinators of barrier reduction services for the Clean Jobs Workforce Network Hubs must have strong connections to other agencies and community-based organizations to facilitate these services.

c) Community-based organizations or nonprofit organizations selected as either a Clean Jobs Workforce Network Hub or as a subrecipient of a Clean Jobs Workforce Network Hub shall provide barrier reduction services to Program participants in need of services. If barrier reduction services are provided by the Clean Jobs Workforce Network Hub, the Clean Jobs Workforce Network Hub also must meet all Program eligibility criteria (see Section 840.40). The provider of barrier reduction services must meet the following minimum requirements:

1. The ability to effectively serve diverse and underrepresented populations in the proposed region;

2. The capacity to provide individualized supportive services and distribute barrier reduction funds in an efficient and timely manner;

3. Strong connections to other community-based organizations and local agencies for referrals and hand-offs; and

4. Strong connections to and experience serving equity investment eligible communities within the service region.

d) Providers of barrier reduction services shall coordinate with Energy Transition Navigators (see 20 ILCS 730/5-35) to ensure eligible individuals have access to these services.

14 Ill. Adm. Code 840.70 Eligible Grant Expenditures

Grant expenditures for Program projects must comply with GATA, the Uniform Guidance and the funding source, be reasonable and necessary, and support the allowable grant project activities set forth in Section 840.50. Eligible budget cost categories for this Program include the following:

a) Personnel (Clean Jobs Workforce Network Hubs Program staff);

b) Personnel (Supportive services delivery staff);

c) Fringe benefits (Clean Jobs Workforce Network Hubs Program staff);

d) Fringe benefits (Supportive services delivery staff);

e) Travel;

f) Equipment;

g) Supplies;

h) Contractual services and subawards (Clean Jobs Workforce Network Program services);

i) Contractual services and subawards (Supportive services delivery);

j) Consultant services and expenses;

k) Occupancy;

l) Research and development;

m) Telecommunications;

n) Staff training and education;

o) Direct administrative costs;

p) Miscellaneous costs;

q) Industry-focused training costs;

r) Supportive services (including wrap-around, student support and transition support); and

s) Indirect costs.

14 Ill. Adm. Code 840.80 Participant Eligibility and Confidentiality

a) Eligible participants for the Program include Illinois residents who are at least 18 years of age and:

1. Reside in an area that is:

A) both an R3 Area as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705] and an environmental justice community; or

B) either an R3 Area as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705] or an environmental justice community; or

2. Qualify as eligible to participate as follows:

A) meets the definition of a displaced energy worker; or

B) is a person who faces barriers to employment, including, but not limited to, low educational attainment, prior involvement with the criminal legal system, language barriers, or is a person who is a graduate or current member of the foster care system.

b) Participant placement will be prioritized in each Clean Jobs Workforce Network Hub region where the applicant pool allows for the following:

1. Dedicate at least one-third of program placements to applicants who reside in an area that is both:

A) an R3 Area as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705]; and

B) an environmental justice community.

For participant applicants that satisfy the criteria in subsection (b)(1), preference will be given to applicants who face barriers to employment, such as low educational attainment, prior involvement with the criminal legal system, language barriers, and applicants that are graduates of or current members of the foster care system; and

2. Dedicate at least two-thirds of program placements to applicants who either:

A) reside in an area that is both an R3 Area as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705] and an environmental justice community; or

B) reside in either an R3 Area as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705] or an environmental justice community.

For participant applicants that satisfy the criteria in subsection (b)(2), preference will be given to applicants who face barriers to employment, such as low educational attainment, prior involvement with the criminal legal system, language barriers, and applicants that are graduates of or current members of the foster care system; and

3. Prioritize the remaining Program placements for applicants who are:

A) displaced energy workers; or

B) persons who face barriers to employment, including, but not limited to, low educational attainment, prior involvement with the criminal legal system, language barriers, and applicants that are graduates of or current members of the foster care system.

c) The Department will protect the confidentiality of personal information provided by Program participant applicants regarding an applicant's status as a formerly incarcerated person or foster care recipient; however, the Department may publish aggregated data on the number of participants that were formerly incarcerated or foster care recipients as long as that publication protects the individuals' identities. Program applicants may elect not to share with the Department whether the applicant is a graduate or currently enrolled in the foster care system or was formerly incarcerated.

Chapter I Department of Commerce and Economic Opportunity

Part 840 Clean Jobs Workforce Network Program

14 Ill. Adm. Code 840.90 Form of Grant Applications

a) The Department will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible organizations contingent upon available funds. Applicants shall submit their application materials by the deadlines set by the Department in the NOFO, which will be at least 30 days after the NOFO posting. The Department also may accept applications on a rolling basis with no set deadline. The Department will post NOFOs to select new Clean Jobs Workforce Network Hubs at least every three years.

b) The applicants will be required to submit an application package to the Department, which will include the following:

1. Uniform grant application;

2. Uniform budget template;

3. Conflict of interest disclosure form;

4. Mandatory disclosures form;

5. Executive summary or similar requirement, which describes the applicant team, geographic regions to be served, partnership organizations, if applicable, the services to be provided and eligible populations to be served, brief description of the training areas or topics that will be delivered, anticipated goals and outcomes of the project, and the grant amount requested;

6. Budget narrative;

7. Technical proposal, which describes the program activities and outcomes that the applicant will support if selected and must include the following information:

A) The applicant team's qualifications and capacity (e.g., capacity, experience and expertise of the applicant and applicant team to administer all elements of the Program).

B) The applicant organization's documentation of need (e.g., identification of the specific targeted equity investment eligible communities or populations and the barriers they may face, workforce needs in the target communities and expected impact of the proposed project).

C) A description of the applicant's proposed project plan (e.g., the training program's design and integration of the Curriculum Framework, plan for outreach and recruitment, program goals and anticipated outcomes, plan for delivering barrier reduction services, plan for transitions to employment, and the plan to create a program culture that incorporates core values).

D) Information demonstrating the cost-effectiveness of the applicant's proposed program (e.g., justification of the main budget expense items and cost per participant, including barrier reduction services, costs of subcontractors and other partners and the ability for the applicant to leverage existing programs to improve cost-effectiveness).

8. Resumes of existing key program staff and instructors that demonstrate capacity to complete the work outlined in the application. For key staff and instructor positions that will need to be filled using Program funds, include a job description for each position, including individual qualifications sought for each position;

9. Partnership agreements between the applicant and its partner organizations for the project. The agreements must detail the entity's information, key staff information, roles and responsibilities associated with the project and dollar amounts for specific services to be rendered;

10. Memorandums of Understanding from employers who agree to consider hiring program graduates or offer on-the-job training or work-based learning opportunities; and

11. Any additional information required to demonstrate the applicant's ability to administer a Program or that further supports the information submitted by the applicant for the proposed project.

14 Ill. Adm. Code 840.100 Grant Award Selection

Grants will be awarded by the Department to Clean Jobs Workforce Network Hubs following a merit review by the Department and pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). The Department will award grants for each round of funding, representing service to each of the regions identified in Section 840.40(b). All applications will be sorted by proposed region. The highest scoring applications per region will be prioritized. If the concentration of eligible participants justifies it, the Department may award grants to multiple applicants in a region. The final grant awards will be negotiated by the Department based on the applications' alignment with the requirements of the Program. The purpose of negotiations will be to arrive at acceptable grant terms, including budgetary and scope of work provisions, at which time the final decision to make a grant award will be made. In evaluating applications, the Department will consider the criteria listed below:

a) Whether the applicant meets the eligibility criteria (Section 840.40);

b) The applicant team's qualifications and capacity to administer the Program, meet Program requirements and use core values for Program operation, including:

1. Capacity to administer the Program and meet the proposed Program outcomes;

2. Expertise and capacity to deliver a wide variety of supportive services in a timely and efficient manner;

3. Relevant experience and qualifications of the applicant team's staff, including partners, subcontractors and subrecipients, to be assigned to recruit, enroll, train and provide supportive services to the identified target eligible populations;

4. The quality of the applicant's experience and ability to use core values for program operations; and

5. Relevant experience and qualifications of the applicant team's staff to work with and connect participants to clean energy jobs or advanced training programs.

c) The applicant organization's documentation of need in the community for the proposed project, including:

1. The applicant project's focus on specific equity investment eligible communities or populations; identification of barriers that these target communities or populations may face; and workforce needs in target communities;

2. Identification of the region or regions where this project will operate (see Section 840.40(b)) and the specific locations where the training will be offered;

3. The applicant project's identification of clean energy employment needs and targeted occupations in the proposed regions and how the applicant will address these needs through the Program, as supported by local and regional labor market information; and

4. The expected impact of the applicant's project on the identified target communities, populations, and job growth in target trades.

d) The quality of the applicant's proposed project plan and demonstrated ability to meet Program requirements and outcomes, including:

1. The applicant's training program design, curriculum and methods of delivery, including integration of the Curriculum Framework in training program design and how the Curriculum Framework will support the needs of program participants;

2. The applicant's plan for outreach and recruitment strategies to target populations specifically in equity investment eligible communities, in coordination with Energy Transition Navigators (see 20 ILCS 730/5-35);

3. Program goals and anticipated outcomes including number of participants served, industry-recognized skills, certifications, employment in clean energy jobs post-graduation or enrolled in other advanced training programs;

4. The applicant's plan for delivering Energy Transition Barrier Reduction Program services to facilitate access to and completion of the training program, including intake, distribution of funds, referrals and a list of services to be provided;

5. The applicant's plan to help participants transition to employment in the clean energy industries and the quality of the partnership agreements with employers for job placement and work-based learning opportunities;

6. The applicant's plan to create a program culture that incorporates the core values of diversity, inclusion, accessibility and equity in program design, recruitment, wrap-around supports and transition services; and

7. The applicants plan to track program outcomes, assess the program and use this information to improve program delivery.

e) The cost-effectiveness of the applicant's proposed program, including:

1. The cost efficiency and effectiveness of the planned activities and projected outcomes;

2. The cost efficiency and effectiveness of the proposed supportive services, including those funded by the Energy Transition Barrier Reduction Program, that will be offered to program participants; and

3. The applicant's ability to leverage existing programs, services and partnership to improve cost-effectiveness, return on investment, and long-term sustainability of the program.

14 Ill. Adm. Code 840.110 Grant Administration

a) Grant Agreements and Payment Disbursements

1. Applicants selected to receive a grant will enter into a grant agreement with the Department, which specifies the terms and conditions of the award. Grants will be awarded for an initial term of twelve to fifteen months with the option for the Department to renew the awards for up to two additional years, with additional funding, based on the activities, outcomes and performance of the Clean Jobs Workforce Network Hubs

as well as the availability of funds. The renewals, if granted, would occur after the initial period of programmatic performance and an evaluation of services and outcomes by the Department.

2. Grant awards will be administered in a manner that complies with all applicable State and federal requirements including, but not limited to, GATA, the Uniform Guidance, the Program statute and this Part. The Department reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with the provisions in the grant agreement or non-compliance with applicable State and federal laws and regulations.

3. The Department will disburse grant funds in accordance with a schedule included in the grant agreement. The Department may disburse funds based on the outcomes outlined in the grant agreement.

b) Grant Performance, Monitoring and Reporting Requirements

Clean Jobs Workforce Network Hubs shall comply with all GATA and Department requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly, and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement.

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Clean Jobs Workforce Network Hubs must monitor their grant activities and those of any subrecipients and contractors to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. The Department will monitor the activities of Clean Jobs Workforce Network Hubs to assure compliance with all requirements and performance expectations of the award. Clean Jobs Workforce Network Hubs shall timely submit all required reports, and shall supply, upon the Department's request, documents and information relevant to the award. The Department may monitor activities through site visits.

c) Records Retention

Clean Jobs Workforce Network Hubs shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Clean Jobs Workforce Network Hubs shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

Part 850 Illinois Climate Works Pre-Apprenticeship Program

14 Ill. Adm. Code 850.10 Purpose

Subject to appropriation, the Department shall develop, and through Regional Administrators administer, the Illinois Climate Works Preapprenticeship Program. The purpose of the Illinois Climate Works Pre-apprenticeship Program is to create a network of hubs throughout the State that will recruit, prescreen, and provide preapprenticeship skills training, for which participants may attend free of charge and receive a stipend, to create a qualified, diverse pipeline of workers who are prepared for careers in the construction and building trades and clean energy jobs opportunities therein. Upon completion of the Illinois Climate Works Preapprenticeship Program, the candidates will be connected to and prepared to successfully complete an apprenticeship program. [20 ILCS 730/5-40(a)]

14 Ill. Adm. Code 850.20 Definitions

"Accessibility" means when a person with a disability is afforded the opportunity to acquire the same information, engage in the same interactions, and enjoy the same services as a person without a disability in an equally integrated and equally effective manner, with substantially equivalent ease of use.

"CEJA" means the Climate and Equitable Jobs Act (P.A. 102-0662).

"Climate Works Hub" means a nonprofit organization selected by the Department to act as a workforce intermediary and to participate in the Illinois Climate Works Pre-apprenticeship Program. [20 ILCS 730/5-5]

"Community-based organization" means an organization that:

Provides employment, skill development, or related services to members of the community;

Includes community colleges, nonprofit organizations, and local governments;

Has at least one main operating office in the community or region it serves; and

Demonstrates relationships with local residents and other organizations serving the community. [20 ILCS 730/5-5]

"Core values" means the values of diversity, inclusion, accessibility and equity.

"Department" means the Illinois Department of Commerce and Economic Opportunity.

"Diversity" means the representation of people from a variety of backgrounds and experiences.

"Environmental justice communities" means the definition of that term as defined by the Illinois Power Agency pursuant to the Illinois Power Agency Act [20 ILCS 3855], but excluding racial and ethnic indicators, where residents have historically been subject to disproportionate pollution burdens, including pollution from the energy sector. [20 ILCS 730/5-5] For a map that defines these areas in Illinois, refer to this website: Arcg.is/1Wvv4X.

"Equity" means the state, quality or ideal of being just, impartial and fair.

"Equity focused populations" means:

low-income persons;

persons residing in equity investment eligible communities;

persons who identify as black, indigenous, and people of color;

formerly convicted persons;

persons who are or were in the child welfare system;

energy workers;

dependents of displaced energy workers;

women;

LGBTQ+, transgender, or gender nonconforming persons;

persons with disabilities; and

members of any of these groups who are also youth. [20 ILCS 730/5-5]

"Equity investment eligible community" and "eligible community" mean the geographic areas throughout Illinois which would most benefit from equitable investments by the State designed to combat discrimination and foster sustainable economic growth. Specifically, the eligible community means the following areas:

Restore, Reinvest and Renew Areas (R3 Areas) as established pursuant to Section 10-40 of the Cannabis Regulation and Tax Act [410 ILCS 705], where residents have historically been excluded from economic opportunities, including opportunities in the energy sector. Eligible R3 Areas are defined in the R3 service map (website at Arcg.is/1Wvv4X); and

Environmental justice communities. [20 ILCS 730/5-5] See The Equity Investment Eligible Community Map (website at: Arcg.is/1Wvv4X), which defines the areas that satisfy the criteria for both R3 Areas and environmental justice communities.

"Equity investment eligible person" or "eligible person" means the persons who would most benefit from equitable investments by the State designed to combat discrimination and foster sustainable economic growth. Specifically, eligible persons means:

Persons whose primary residence is in an equity investment eligible community;

Persons who are graduates of or currently enrolled in the foster care system; or

Persons who were formerly incarcerated. [20 ILCS 730/5-5]

"Essential Employability Skills" means those general skills that are required to be successful in all sectors of the labor market and are separate from the technical skills attained in career pathways or academic skills such as math and reading. The essential employability skills, developed by various workforce development stakeholders in Illinois, include, but are not limited to, personal ethics, work ethics, communication skills, and teamwork.

"GATA" means the Grant Accountability and Transparency Act [30 ILCS 708].

"GATA Rule" means the administrative rules of the Governor's Office of Management and Budget found at 44 Ill. Adm. Code 7000.

"Inclusion" means the action or state of including and feeling an empowered sense of belonging within a group or organization.

"Nonprofit organization" means a corporation organized under the General Not For Profit Corporation Act of 1986, in good standing to operate in the State of Illinois, that is representative of a community or a significant segment of a community.

"Pre-apprenticeship program" means a training program designed to prepare individuals to enter and succeed in apprenticeship programs or in another career pathway approach. Pre-apprenticeship programs have the following core elements:

Inclusive recruitment of equity focused populations;

Industry-focused curriculum and training;

Hands-on learning or work-based learning;

Retention services for successful participation and completion;

Partnerships with contractors and connections to apprenticeship programs; and

Strive for credential acquisition.

"Program" means the Illinois Climate Works Pre-apprenticeship Program.

"Registered apprenticeship" means an industry-driven, high-quality career pathway where employers can develop and prepare their future workforce, and individuals can obtain paid work experience, receive progressive wage increases, classroom instruction, and a portable, nationally-recognized credential. Registered Apprenticeships are industry-vetted and approved and validated by the U.S. Department of Labor or a State apprenticeship agency.

"State" means the State of Illinois.

"Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2 CFR Part 200.

14 Ill. Adm. Code 850.30 Funding Source

The grant awards described in this Part are contingent upon appropriation of funding from the Energy Transition Assistance Fund (See 20 ILCS 730/5-40(e); 20 ILCS 730/5-30(g); 20 ILCS 605/605-1075).

14 Ill. Adm. Code 850.40 Eligible Grant Applicants

a) To be eligible to receive a grant, at a minimum, applicants must demonstrate the following:

1. Be a nonprofit organization;

2. Have an active GATA registration at the time the application is submitted and be qualified on the GATA Grantee Portal (https://grants.illinois.gov/portal/) by the time the application is reviewed by the Department.

3. Be a regarded entity by the Internal Revenue Service (26 CFR 301.7701-3(b)(1)(ii)) for federal income tax purposes;

4. Be able to effectively serve diverse and underrepresented populations, including low-wage or low-skilled workers from economically disadvantaged communities within the proposed service regions, by providing employment services to such populations;

5. Have experience with the construction and building trades, including demonstrated relationships with construction and building trades registered apprenticeship programs, industry contractors and contractor associations;

6. Be able to recruit, prescreen, and provide pre-apprenticeship training to prepare workers for employment in the construction and building trades;

7. Have a plan to provide the following:

A) Preparatory classes;

B) Workplace readiness skills, such as resume preparation and interviewing techniques;

C) Strategies for overcoming barriers to entry and completion of an apprenticeship program; and

D) All prerequisites for acceptance into an apprenticeship program;

8. Have relationships with local residents and other organizations serving the communities in the proposed region; and

9. Able to satisfy the required activities set forth in Section 850.50 and 850.60.

b) The Department will award grants to fund one Climate Works Hub in each of the following three designated areas:

1. Illinois Department of Transportation Region 1;

2. Illinois Department of Transportation Regions 2 and 3; and

3. Illinois Department of Transportation Regions 4 and 5.

c) An eligible organization may serve as the designated Climate Works Hub for more than one designated hub area. However, the applicant must be able to serve program participants for all regions for which they apply.

14 Ill. Adm. Code 850.50 Required Program Activities

The focus of the Climate Works Pre-apprenticeship Program is to help equity investment eligible persons successfully transition from the pre-apprenticeship program into registered apprenticeship programs in construction and building trades with a need for clean energy workforce expansion (primary outcome) or other advanced training programs or employment (secondary outcome). Climate Works Hubs must:

a) Design, develop and implement a Climate Works Pre-apprenticeship center to serve participants across a large geographic area and to provide equitable access to pre-apprenticeship training, academic support and supportive services. The entities providing the Program training must be approved to provide training services by all appropriate accrediting bodies.

b) Utilize proactive recruitment and outreach strategies to enroll participants in a manner that upholds the core values of diversity, inclusion, accessibility, and equity for all populations, including equity focused populations. Climate Works Hubs will collaborate with Energy Transition Navigators selected by the Department (see 20 ILCS 730/5-35) to complete community education, outreach and recruitment.

c) Create an application process to review potential participants' eligibility for the Program.

d) Prepare Program participants for registered apprenticeship programs by:

1. Recruiting, prescreening, and providing pre-apprenticeship skills training, free of charge, using the following curricula:

A) The North American Building Trades Unions (NABTU) Apprenticeship Readiness Program (ARPS) Multi-craft Core Curriculum (MC3) or the National Center for Construction Education and Research (NCCER) Core Curriculum, including any successor curriculum;

B) Workplace readiness skills training using the Illinois Essential Employability Skills Framework or a similar framework; and

C) Training to prevent discrimination, sexism, bullying and harassment within workplaces and that teaches conflict management skills and strategies;

2. Providing flexible program delivery to improve accessibility and assist participants in overcoming barriers in the way of their Program participation or success. Programs must include work-based learning and practicum opportunities for participants to perform construction work at job sites either while taking pre-apprenticeship instruction or immediately after completing instruction. If a program, for technical or regulatory reasons, cannot provide hands-on learning experiences, job site visits and tours of U.S. Department of Labor registered apprenticeship programs may be permitted with approval from the Department;

3. Distributing stipends to program participants that are based on training attendance and performance;

4. Communicating information to program participants on opportunities and certifications relevant to safety training and clean energy jobs in construction and building trades; and

5. Connecting program completers to a registered apprenticeship program.

e) Deliver or provide access through referrals for wrap-around and other supportive services that help eligible individuals overcome financial and other barriers to participation in the Program. Climate Works Hubs must offer to Program participants at a minimum access to all of the following support and transition services detailed in this subsection (e), but may offer others as needed. The funding source for these services will either be through the Program funds or from the Energy Transition Barrier Reduction Program (see Section 850.60), which will be determined by the Department depending on the availability of funds and the needs of the participants. See 20 ILCS 605/605-1075(b).

1. Wrap-around Support Services:

A) Transportation costs, including car repairs, gas cards, or bus passes;

B) Childcare or family care;

C) Driver's education and driver's license fees;

D) Personal health services, including dental, vision and mental health care;

E) Emergency bill payments, rental assistance or emergency housing;

F) Referrals for other services (e.g., food, housing, rental assistance, substance use treatment); and

G) Legal assistance, including record expungement.

2. Student Support Services:

A) Tutoring;

B) Make-up classes;

C) Re-testing;

D) Educational enrichment;

E) Technology assistance for virtual learning; and

F) Expenses related to certifications, testing or applications.

3. Transition Support Services:

A) Mentoring and coaching;

B) Job exploration, search and placement services;

C) Resume writing and mock interviews;

D) Job fairs with clean energy employers;

E) Follow-up support services for at least one year after job placement or graduation, whichever comes first, as needed;

F) Education or training costs associated with entering an apprenticeship program; and

G) Other wrap-around supportive services needed to obtain or retain an apprenticeship or employment.

f) Provide case management assistance to participants transitioning to registered apprenticeship programs in construction and building trades with a need for clean energy workforce expansion. Climate Works Hubs also must have a plan for students not enrolling in apprenticeship programs for referrals to advanced construction education and training programs or to employment.

g) Assist the Department as needed to implement a system to track demographic information for program participants, including:

1. The number of applicants, participants and program completers broken down by race, gender, age, geography and veteran status;

2. The number of individuals accepted and placed into apprenticeship programs in the construction and building trades broken down by race, gender, age, geography and veteran status; and

3. The number of individuals who remain in apprenticeship programs in the construction and building trades or have become journeymen after their placements broken down by race, gender, age, geography and veteran status.

h) Develop an assessment plan to improve program delivery. This assessment may include surveys of program graduates regarding overall satisfaction with the training activities delivered and appropriateness to the targeted job opportunities and surveys of employers concerning the comprehensiveness of coverage of required job skills. In addition, the assessment plan should indicate how the results of the assessment activities will be used to improve the training program in a continuous manner.

i) Cooperate with external evaluation efforts, as directed by the Department.

j) Assist the Department to provide an annual report to the Illinois Works Review Panel by April 1 of each calendar year, which the Department will publish on its website. The annual report shall include the following information:

1. A description of the Climate Works Hub's recruitment, screening, and training efforts, including a description of training related to construction and building trades opportunities in clean energy jobs;

2. The number of individuals who apply to, participate in, and complete the Climate Works Hub's program, broken down by race, gender, age, geography and veteran status;

3. The number of the individuals referenced in subsection (j)(2) who are initially accepted and placed into apprenticeship programs in the construction and building trades broken down by race, gender, age, geography and veteran status; and

4. The number of individuals referenced in subsection (j)(2) who remain in apprenticeship programs in the construction and building trades or have become journeymen one calendar year after their placement broken down by race, gender, age, geography and veteran status, as referenced in subsection (j)(3). [20 ILCS 730/5-40(b)]

k) Collaborate and coordinate with the Department as well as the grantees and administrators of all programs created by CEJA, including the following:

1. Clean Jobs Workforce Network Program [20 ILCS 730/5-20];

2. Energy Transition Barrier Reduction Program [20 ILCS 730/5-30];

3. Energy Transition Navigators Program [20 ILCS 730/5-35];

4. Clean Energy Contractor Incubator Program [20 ILCS 730/5-45];

5. Returning Residents Clean Jobs Training Program [20 ILCS 730/5-50];

6. Clean Energy Primes Contractor Accelerator Program [20 ILCS 730/5-55]; and

7. Jobs and Environmental Justice Grant Program [20 ILCS 730/5-60].

14 Ill. Adm. Code 850.60 Energy Transition Barrier Reduction Program

a) Subject to appropriation from the Energy Transition Assistance Fund and pursuant to the Energy Transition Act [20 ILCS 730/5-30], the Department will administer an Energy Transition Barrier Reduction Program, available to individuals who participate in the Illinois Climate Works Pre-apprenticeship Program. Barrier reduction services are intended to help individuals overcome financial and other barriers to participation in the Program.

b) The barrier reduction services for the Program are listed in Section 850.50(e) and the Climate Works Hubs must ensure timely services and funds to address the unique and often time-sensitive barriers that may arise during participants' training. The coordinators of barrier reduction services for the Climate Works Hubs must have strong connections to other agencies and community-based organizations to facilitate these services.

c) Community-based organizations or nonprofit organizations selected as either a Climate Works Hub or as a subrecipient of a Climate Works Hub shall provide barrier reduction services to Program participants in need of services. If barrier reduction services are provided by the Climate Works Hub, the Climate Work Hub must meet all Program eligibility criteria (see Section 850.40). The provider of barrier reduction services must meet the following minimum requirements:

1. The ability to effectively serve diverse and underrepresented populations in the proposed region;

2. The capacity to provide individualized supportive services and distribute barrier reduction funds in an efficient and timely manner;

3. Strong connections to other community-based organizations and local agencies for referrals and hand-offs; and

4. Strong connections to and experience serving equity investment eligible communities within the service region.

d) Providers of barrier reduction services shall coordinate with Energy Transition Navigators (see 20 ILCS 730/5-35) to ensure eligible individuals have access to these services.

14 Ill. Adm. Code 850.70 Eligible Grant Expenditures

Grant expenditures for Program projects must comply with GATA, the Uniform Guidance and the funding source, be reasonable and necessary, and support the allowable grant project activities set forth in Section 850.50. Eligible budget cost categories for this Program include the following:

a) Personnel;

b) Fringe benefits;

c) Travel;

d) Equipment;

e) Supplies;

f) Contractual services and subawards;

g) Consultant services and expenses;

h) Occupancy;

i) Research and development;

j) Telecommunications;

k) Staff training and education;

l) Direct administrative costs;

m) Miscellaneous costs;

n) Participant direct training costs;

o) Participant work-based training costs;

p) Barrier reduction costs;

q) Supportive services;

r) Other program costs; and

s) Indirect costs.

14 Ill. Adm. Code 850.80 Participant Eligibility

Eligible participants for the Program include Illinois residents who are aged 16 or above and that meet the definition of an equity investment eligible person. To be eligible, participants also must have either a high school diploma or passed the GED or High School Equivalency Test or be currently enrolled in a program preparing them for a high school diploma or equivalent. However, the Department will make an exception to this requirement if a selected Climate Works Hub program utilizes an integrated career and academic preparation system (ICAPS) framework that combines the pre-apprenticeship curriculum with completion of high school equivalency or English language training.

14 Ill. Adm. Code 850.90 Form of Grant Applications

a) The Department will post one or more Notices of Funding Opportunity (NOFO) on the GATA Grantee Portal (https://grants.illinois.gov/portal/) seeking applications from eligible organizations contingent upon available funds. Applicants shall submit their application materials by the deadlines set by the Department in the NOFO, which will be at least 30 days after the NOFO posting. If, on or near the application deadline, it appears that the Department will receive an insufficient number of applications for grants in one or more areas, to ensure a competitive selection process (a minimum of two applications per area), the Department may extend the NOFO posting deadline and allow by the extended deadline both new applications and application supplementation for those applicants who have already submitted applications. The Department also may accept applications on a rolling basis with no set deadline.

b) Applicants must submit:

1. Uniform grant application;

2. Uniform budget template;

3. Conflict of interest disclosure form;

4. Mandatory disclosures form;

5. Executive summary or similar requirement, which describes the applicant team, pre-apprenticeship geographic area and communities to be served, partnership organizations for program delivery, the services to be provided, the equity investment eligible populations to be served, anticipated goals and outcomes of the project, and the grant amount requested;

6. Budget narrative;

7. Technical proposal, which describes the program activities and outcomes that the applicant will support if selected and must include the following information:

A) The applicant organization's capacity and qualifications (e.g., capacity and expertise of the applicant team to timely deliver all Program requirements, experience with similar grants and projects and working with the identified target populations, and experience connecting participants to registered apprenticeships and contractors).

B) The applicant organization's documentation of need (e.g., identification of the project's focus on specific equity investment eligible communities or populations, the barriers they may face and workforce needs of the target communities, the target construction and building trades and clean energy jobs as identified through local and regional market information, and the expected impact of the project on the identified communities and populations).

C) A description of the applicant's proposed project plan (e.g., program design, curriculum, and method of delivery, plan to recruit participants and assist with enrollment, anticipated goals and outcomes and plan to track outcomes, plan to deliver Energy Transition Barrier Reduction Program services, and the plan to address core values).

D) Information demonstrating the cost-effectiveness of the applicant's proposed program (e.g., justification of the main budget expense items and cost per participant, including barrier reduction services, costs of subcontractors and other partners and the ability for the applicant to leverage existing programs to improve cost-effectiveness).

8. Resumes of existing key Program staff and instructors that demonstrate capacity to complete the work outlined in the application, including the curricula chosen. For key staff and instructor positions that will need to be filled using Program funds, include a job description for each position, including individual qualifications sought for each position;

9. Partnership agreements between the applicant and its partner organizations for the project. The agreements must detail the entity's information, key staff information, roles and responsibilities associated with the project and dollar amounts for specific services to be rendered;

10. Memorandums of Understanding from registered apprenticeship programs in the construction and building trades, including for direct matriculation of Program graduates;

11. Letters from contractors agreeing to hire Program graduates; and

12. Any additional information required to demonstrate the applicant's ability to administer a Program or that further supports the information submitted by the applicant for the proposed project.

14 Ill. Adm. Code 850.100 Grant Award Selection

Grants will be awarded by the Department to Climate Works Hubs following a merit review by the Department and pursuant to GATA requirements (44 Ill. Adm. Code 7000.350). The Department will award up to three total grants for each round of funding, representing each of the three areas identified in Section 850.40(b). All applications will be sorted by proposed region. The highest scoring applications per region will be prioritized. The final grant awards will be negotiated by the Department based on the applications' alignment with the requirements of the Program. The purpose of negotiations will be to arrive at acceptable grant terms, including budgetary and scope of work provisions, at which time the final decision to make a grant award will be made. In evaluating applications, the Department will consider the criteria listed below:

a) Whether the applicant meets the eligibility criteria (Section 850.40).

b) The applicant team's qualifications and capacity, including:

1. Capacity and expertise for successful and timely completion of pre-apprenticeship training and administration tasks;

2. Expertise and capacity to deliver a wide variety of wrap-around services (barrier reduction) in a timely and efficient manner;

3. Relevant experience and administrative performance on similar grants and projects (workforce training and support service administration);

4. Relevant experience working with and the capacity to recruit from the identified target populations;

5. Relevant experience and qualifications of the applicant team's staff, including partners, subcontractors and subrecipients, to be assigned to deliver training and support services; and

6. Relevant experience and qualifications of the applicant team's staff to work with and connect participants to registered apprenticeship programs and contractors.

c) The applicant organization's documentation of need, including:

1. The applicant project's focus on specific equity investment eligible communities or populations, identification of barriers that these target communities or populations may face, and workforce needs in target communities;

2. Identification of the region or regions where this project will operate (see Section 850.40(b)) and the specific locations where the training will be offered;

3. The applicant project's target construction and building trades and the need for expansion of clean energy jobs and apprenticeship programs in these trades, as demonstrated through local and regional labor market information; and

4. The expected impact of the applicant's project on the identified target communities, populations, and job growth in target trades.

d) The quality of the proposed project; including:

1. The applicant's pre-apprenticeship training program design, curriculum and methods of delivery, including clean energy topics. Additional scoring credit will be given to applicant programs that have an agreement with the North American Building Trades Unions (NABTU) to utilize the Multi-Craft Core Curriculum or successor curriculums [20 ILCS 730/5-40(d-5)];

2. The applicant's plan to recruit participants and assist with enrollment;

3. Program goals and outcomes including number of students served, industry recognized skills, certifications, apprenticeship placements, other advanced training and employment;

4. The applicant's plan for delivering Energy Transition Barrier Reduction Program Services (wrap-around services) to facilitate access to and completion of training program, including a list of services to be provided;

5. The applicant's plan to help participants transition to registered apprenticeship programs and the partnership agreements with registered apprenticeship programs or contractors;

6. The applicant's plan to address equity in program design, recruitment, wrap-around supports and apprenticeship transition services; and

7. The applicant's plan to track program outcomes, assess the program and use this information to improve program delivery.

e) The cost-effectiveness of the applicant's proposed program; including:

1. The reasonableness of the proposed project costs in relation to the planned outcomes (cost per participant) and the proposed activities;

2. The reasonableness of the proposed costs per eligible participant for Energy Transition Barrier Reduction wrap-around services in relation to proposed services; and

3. The applicant's ability to leverage existing programs, services and partnerships to improve cost-effectiveness, return on investment, and long-term sustainability of the program.

14 Ill. Adm. Code 850.110 Grant Administration

a) Grant Agreements and Payment Disbursements

1. Applicants selected to receive a grant will enter into a grant agreement with the Department, which specifies the terms and conditions of the award. Grants will be awarded for an initial one-year term with the option for the Department to renew the awards annually for up to two additional years, with additional funding, based on the activities, outcomes and performance of the Climate Works Hubs as well as the availability of funds. The renewal, if granted, would occur after one year of programmatic performance and an evaluation of services and outcomes by the Department.

2. Grant awards will be administered in a manner that complies with all applicable State and federal requirements including, but not limited to, GATA, the Uniform Guidance, the Program statute and this Part. The Department reserves the right to suspend or terminate a grant agreement, recoup grant funds received under this Part or withhold any future year funding for non-compliance with the provisions in the grant agreement or non-compliance with applicable State and federal laws and regulations.

3. The Department will disburse Grant funds in accordance with a schedule included in the grant agreement. The Department may disburse funds based on the outcomes outlined in the grant agreement.

b) Grant Performance, Monitoring and Reporting Requirements

Climate Works Hubs shall comply with all GATA and Department requirements set forth in the grant agreement for grant performance, administration, audits, monitoring and reporting.

1. Grant performance goals and performance and expenditure reporting will be based on the specific grant project activities of each grant award and will follow GATA requirements (44 Ill. Adm. Code 7000.410), which include periodic financial and performance reports at least quarterly, and financial and performance close-out reports after the end of the grant term (see 44 Ill. Adm. Code 7000.440). The deadlines for all required reports will be set forth in the grant agreement. In addition to the performance and financial reports, Climate Works Hubs will be required to assist the Department, as needed, in the submission of an annual report to the Illinois Works Review Panel. See Section 850.50(j).

2. Grant audits shall be based on the standards set forth in the GATA requirements (44 Ill. Adm. Code 7000.90).

3. Climate Works Hubs must monitor their grant activities and those of any subrecipients and contractors to assure compliance with applicable State and federal requirements and to assure their performance expectations are being achieved. The Department will monitor the activities of Climate Works Hubs to assure compliance with all requirements and performance expectations of the award. Climate Works Hubs shall timely submit all required reports, and shall supply, upon the Department's request, documents and information relevant to the award. The Department may monitor activities through site visits.

c) Records Retention

Climate Works Hubs shall maintain, for the period of time set forth in the GATA rules (44 Ill. Adm. Code 7000.430(a) and (b)) adequate books, all financial records and supporting documents, statistical records, and all other records pertinent to the program. If any litigation, claim or audit is started before the expiration of the retention period, the records must be retained until all litigation, claims or audit exceptions involving the records have been resolved and final action taken. Climate Works Hubs shall be responsible for ensuring that contractors and subrecipients comply with the retention requirements.

Chapter II Illinois Export Development Authority

Part 900 Programs

14 Ill. Adm. Code 900.10 Definitions

As used in this Part, the following words or terms mean:

a) "Act": The Illinois Export Development Act of 1983, Ill. Rev. Stat. 1985 ch. 127, pars. 2501 et seq., as now or hereafter amended.

b) "Authority": The Illinois Export Development Authority.

c) "banking organization": Any organization defined in Section 2 of the Illinois Banking Act., 1985 Ill. Rev. Stat., ch. 17, par. 302, any agency or branch of a foreign banking corporation licensed by the Illinois Commissioner of Banks and Trust Companies, any national bank, federal savings and loan association, or any federal credit union located within the State.

d) "Board of Directors", or "Board": The Board of Directors of the Authority.

e) "commitment": A writing issued by the Authority to a financial intermediary approving an application for a guaranteed participating loan and committing the Authority to make such guaranteed participating loan to the financial intermediary.

f) "comprehensive export credit insurance": An insurance policy obtained by the Authority providing insurance to an eligible exporter for an eligible export transaction insuring against political and commercial risks of loss as defined in Section 2.1 of the Act.

g) "contract of sale": A writing or group of writings setting forth an agreement between an eligible exporter and a buyer regarding the purchase and sale of one or more eligible exports.

h) "director": A member of the Board of Directors of the Authority.

i) "eligible export": Goods sold or services rendered pursuant to a contract of sale for delivery or performance outside the United States and its possessions or territories, where:

1. the final manufacturing of the goods, or final performance of the services, occurs in Illinois; and

2. at least twenty-five percent (25%) of the total value of the goods sold, or services rendered, exclusive of price markup thereof, has been added by labor or materials exclusively in Illinois; and

3. the making of the guaranteed participating loan in connection with such contract of sale will create or maintain employment within the State of Illinois. Such eligible exports may include, without limitation, semi-finished materials, components, spare parts, and other goods which will be subject to further manufacturing or incorporation into a finished product outside of the United States, its possessions and territories.

j) "eligible exporter": A manufacturer, trader, export management company, export trading company, or other organization, incorporated, or having offices and being authorized to transact business, in the State of Illinois, which sells Illinois goods or services for delivery to locations outside the United States and its possessions or territories, and meets the requirement of this Part.

k) "executive director": The individual appointed to the position of executive director by the Board.

l) "financial intermediary": A participating bank which applies for, and upon approval of its application, obtains a guaranteed participating loan from the Authority.

m) "gross invoice amount": The invoice amount in United States dollars of the eligible export, plus any insurance, freight, or other charges paid or to be paid in the United States in United States dollars by the eligible exporter on behalf of the buyer of the eligible export.

n) "guaranteed participating loan": A loan from the Authority to a financial intermediary the proceeds of which are used exclusively to support an on-loan, which on-loan is secured under a policy or policies of comprehensive export credit insurance.

o) "insurer": The entity providing the comprehensive export credit insurance.

p) "net borrowing rate": The cost of funds to the Authority at any given time, including, without limitation, the costs of issuance, credit enhancements (e.g., letter of credit), fees of any nature (including legal fees), premiums, discounts, and any other costs to the Authority associated with obtaining funds used to make a guaranteed participating loan.

q) "on-loan": Any pre-shipment on-loan or post-shipment on-loan from a financial intermediary to an eligible exporter which is, or will be, supported by, or funded in whole or in part with, the proceeds of a guaranteed participating loan.

r) "outstanding on-loan": Any on-loan which has not been repaid in full by the eligible exporter.

s) "participating bank": Any banking organization which is approved pursuant to Section 900.20 of this Part.

t) "post-shipment on-loan": A loan from a financial intermediary to an eligible exporter secured by the eligible exporter's right to payment pursuant to a contract of sale and by an assignment of the proceeds of a comprehensive export credit insurance policy where:

1. the goods or services are to be delivered to a place outside of the United States of America or its possessions or territories;

2. the eligible exporter has sold the goods or services pursuant to a contract of sale;

3. the proceeds of the loan are used exclusively to finance an eligible export; and

4. the loan is supported by a guaranteed participating loan.

u) "pre-export": The act, or acts, of creating, developing, or producing goods or services pursuant to a contract of sale which, when completed, will be:

1. an eligible export; and

2. exported from Illinois by the person or entity creating, developing, or producing the goods or services.

v) "pre-shipment on-loan": A loan from a financial intermediary to an eligible exporter the proceeds of which are used by the eligible exporter exclusively to finance a pre-export, and which:

1. is supported by a guaranteed participating loan; and

2. is secured by an assignment of the proceeds of the comprehensive export credit insurance policy.

w) "Staff": The employees of the Authority.

x) "total value":

1. When used with reference to the monetary worth of an eligible export, the unit price of each item of eligible export as stated in the contract of sale times the number of units sold.

2. When used in reference to the monetary worth of a pre-export, the sales price as set forth in the contract of sale (in United States dollars) at the time and place intended for delivery, exclusive of all shipping and insurance costs.

3. When used with reference to the Illinois value added component of the definition of "eligible export," the unit price as stated in the contract of sale exclusive of all shipping and insurance costs times the number of units sold.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.20 Designation of Participating Banks

a) Qualification Procedure

1. To become eligible to participate in the programs of the Authority, a banking organization shall submit to the Authority an application to be designated as a participating bank, accompanied by such organization's latest audited financial statements, and including the designation of one or more individuals employed by the organization who will be responsible for working with the Authority.

2. The Authority will endeavor to process all complete applications for designation as a participating bank within thirty (30) days of receipt thereof. Incomplete applications will not be processed, and the applicant will be notified of any deficiencies in its application. Approval of complete applications shall be based upon the applicant's present financial condition. In evaluating an applicant banking organization, the following factors will be considered:

A) Capitalization (adequacy and ratios);

B) Profitability (adequacy and ratios);

C) Asset risk indicators and ratios;

D) Management (qualifications and experience);

E) Lending practices; and

F) Regulatory compliance status and history.

3. If, based upon its consideration of the factors set out in Section 900.20(a)(2), the Authority determines that the applicant banking organization is qualified to become eligible to participate in the programs of the Authority, it shall designate such organization as a participating bank, and communicate such decision to the applicant banking organization.

4. At least annually, participating banks shall submit to the Authority financial statements prepared by certified public accountants. Staff will review each such statement to determine that the participating bank remains qualified to be eligible to participate in the Authority's programs. If Staff determines that the participating bank is no longer qualified to be eligible, it shall issue to such bank a notice of intent to revoke such bank's eligibility.

5. If it is determined by Staff that, based upon its initial application, an applicant banking organization is ineligible to participate in the programs of the Authority, or that, subsequently, the eligibility of a participating bank should be revoked because of the failure of the participating bank to comply with the standards set forth in this Part, Staff will communicate the decision to the applicant or participating bank. The notice of denial of eligibility, or intent to revoke eligibility, shall specify the basis for the denial or revocation.

6. A notice of denial or intent to revoke of eligibility may be appealed to the Board. If it so desires to appeal, the applicant or participating bank, as the case may be, shall deliver a notice of appeal to the Authority within 15 business days of its receipt of the notice of denial or intent to revoke eligibility. The notice of appeal shall specify the basis for the appeal.

7. The Board shall designate one director, or a member of the Staff, as a hearing officer to conduct a hearing to consider the basis for the denial of eligibility or notice of intent to revoke eligibility, and any response thereto made by the applicant or participating bank. The hearing officer shall thereupon submit a written recommendation to the Board which will render a decision at one of the next two regularly scheduled meetings as to whether or not to sustain or overturn the notice of denial or intent to revoke eligibility, based upon the standards set forth in Section 900.20(a) and Section 900.200.

14 Ill. Adm. Code 900.100 General

The Authority will offer to participating banks two programs of guaranteed participating loans. The first program will be offered to support pre-shipment on-loans, and the second to support post-shipment on-loans. All on-loans shall be secured by a policy or policies of comprehensive export credit insurance, the proceeds of which shall have been assigned by the eligible exporter to the financial intermediary, and by the financial intermediary to the Authority, all on a form or forms the substance and content of which have been agreed to by the Authority and the insurer. Additionally, all guaranteed participating loans shall be collateralized as set forth in Section 900.115(k) of this Part, and further secured by an assignment of a general comprehensive fire, casualty, theft and cargo insurance policy or policies insuring the eligible exporter for the full amount of the eligible export, and such other insurance as the Authority deems shall be necessary based upon the type of goods or services being exported, the mode of transportation, and the country of their destination.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.110 Purpose of Guaranteed Participating Loans

Guaranteed Participating Loans made to financial intermediaries shall be solely for the purpose of supporting on-loans to eligible exporters to finance either pre-exports or eligible exports. At any one time, each eligible exporter may only have a maximum of $500,000, in the aggregate, of outstanding on-loans or commitments for on-loans. The maximum on-loans, or commitments for on-loans, for each eligible exporter shall be measured by the principal amount of all outstanding on-loans, and all unexpired on-loan commitments for the eligible exporter as of the date the application for a guaranteed participating loan is received by the Authority. A guaranteed participating loan shall be available only where the financial intermediary demonstrates that it is necessary to stimulate or facilitate the making of an on-loan at terms that are reasonably competitive with similar loans available in other states or countries, and where the granting of such guaranteed participating loan would be in accordance with the Act and this Part.

14 Ill. Adm. Code 900.115 Requirements of Guaranteed Participating Loans

Guaranteed participating loans, or commitments for guaranteed participating loans, shall be make by the Authority when:

a) The participating bank has committed to make an on-loan to an eligible exporter, or has made an on-loan to an eligible exporter, in an amount which does not exceed 90% of the total value of the pre-export or eligible export, and which on-loan shall be equal to or greater than 111.1111% of the guaranteed participating loan;

b) The eligible exporter, as part of its application for the on-loan to be supported by the guaranteed participating loan, or for the comprehensive export credit insurance, has certified that the purpose of the on-loan is to finance an eligible export or pre-export, and that the goods or services to be so financed are eligible exports or pre-exports, as defined in this Part.

c) Certificates of insurance, under policies of comprehensive export credit insurance, of fire, casualty, theft and cargo loss, and of other coverages required hereunder, have been issued to the eligible exporter, and 100% of the right, title and interest in and to the proceeds of such insurance policies have been assigned to the Authority and the financial intermediary, as their interests may appear;

d) The Authority has determined:

1. that the making of the guaranteed participating loan will create or maintain employment in Illinois; and

2. the financial intermediary will use 100% of the proceeds of the guaranteed participating loan to support an on-loan which will be used exclusively to finance eligible exports or pre-exports;

e) The financial intermediary has covenanted to suspend its right to payment from the eligible exporter pursuant to any post-shipment on-loan for the period of any moratorium on payment of the guaranteed participating loan granted by the Authority pursuant to Section 900.176 of this Part;

f) The financial intermediary has covenanted to reduce the principal obligation of the eligible exporter to the financial intermediary by a percentage equal to the Authority's percentage reduction, if any, of the financial intermediary's obligation to it under the guaranteed participating loan, as may be required by law;

g) The contract of sale:

1. Describes the goods or services sold;

2. Establishes the price in United States dollars and provides that payment will be made in United States dollars;

3. Specifies the time, mode and place of delivery;

4. Specifies the time, mode, and place for payment;

5. Specifies the interest rate, if any, to be applied to any late payment;

6. States any and all quality requirements in terms capable of objective measurement; and

7. Provides for payment within a term which corresponds to the term of the guaranteed participating loan, as set forth in Section 900.118 of this Part;

h) The on-loan has been collateralized in accordance with Section 900.140 of this Part;

i) The guaranteed participating loan and the on-loan conform to the provisions and purposes of the Act and this Part, and comply with the requirements of any applicable policy or policies of comprehensive export credit or other insurance;

j) All documents required by the Authority to be executed in connection with both the guaranteed participating loan and the on-loan have been so executed, including an agency and security agreement as specified in Section 900.115(k) of this Part, and such other security agreements as are specified in the commitment, copies of same have been delivered to the Authority, and all fees required to be paid to the Authority pursuant to the Act and this Part, have been paid; and

k) The financial intermediary shall have assigned to the Authority or its designee the first security interest described in Section 900.140(a) of this Part, and shall also have entered into an agency and security agreement with the Authority and its designee pursuant to which such designee shall be authorized and empowered to distribute the proceeds of the comprehensive export credit insurance after first having applied a portion thereof (which would otherwise have been payable to the financial intermediary) to pay the then remaining outstanding principal and interest on the financial intermediary's guaranteed participating loan in connection with which such proceeds are paid.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.118 Terms of Guaranteed Participating Loans

All guaranteed participating loans shall:

a) Have a repayment term of 24 months or less, including any extensions or renewals thereof;

b) Set forth the number and timing of principal and interest installments;

c) Bear interest at the rate stated by the Authority in its commitment, which rate may fluctuate during the life of the commitment, as set forth therein, but which rate shall in no event be less than a rate equal to the net borrowing rate of the Authority;

d) Have a principal amount which is equal to or less than 81% of the total value of the pre-export or the eligible export;

e) Contain an affirmative covenant that the on-loan to be supported by the guaranteed participating loan is collateralized as set forth in Section 900.140 of this Part;

f) Contain an affirmative covenant that the eligible exporter's financial risk in the pre-export or eligible export is at least 10% of the total value of the pre-export or eligible export;

g) Contain an affirmative covenant that, within three (3) business days of receipt by the financial intermediary from the eligible exporter of collected funds constituting any payment of the eligible exporter's obligations to the financial intermediary pursuant to an on-loan, the financial intermediary will pay to the Authority an amount equal to

1. the amount of collected funds so received, times

2. an amount equal to the initial principal of the guaranteed participating loan divided by the initial principal of the on-loan;

h) Contain an affirmative covenant that the rate of interest charged the eligible exporter in the on-loan does not exceed the rate set forth in the Authority's commitment;

i) Contain an affirmative covenant that the terms of the on-loan conform to the requirements of the guaranteed participating loan, the Act, this Part, and the comprehensive export credit insurance policy;

j) State that the financial intermediary is unconditionally liable to the Authority for the repayment of the full amount of the principal, interest and other sums due under and in connection with the guaranteed participating loan; and

k) Be collateralized in accordance with Sections 900.115(c) and (k) of this Part.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.119 Fees

a) In granting an on-loan, the financial intermediary may charge the eligible exporter a loan origination fee of up to the equivalent of 1% per annum of the principal amount of the on-loan. This fee shall be paid prior to, or concurrent with, the disbursement of the proceeds of the guaranteed participating loan.

b) The Authority shall charge the financial intermediary a commitment fee of 1/10 of 1% of the amount of the guaranteed participating loan. The commitment fee shall be payable on or before the 5th business day after the date of the commitment. The commitment will be valid and enforceable against the Authority only for a period of no more than 30 calendar days after the date of the commitment.

c) The Authority shall charge the financial intermediary a guarantee fee in an amount equal to the cost of any policy or policies of comprehensive export credit insurance applicable to the transaction, plus any administrative or other costs of the Authority applicable to the transaction. The guarantee fee shall be paid either prior to, or concurrent with, the disbursement of the guaranteed participating loan.

d) If the Authority requires any legal services with respect to a guaranteed participating loan, the financial intermediary shall pay all fees and costs connected therewith.

14 Ill. Adm. Code 900.120 Applications for Guaranteed Participating Loans

a) Applications for on-loans shall be made by the eligible exporter to the participating bank. Each application for a guaranteed participating loan shall be accompanied by the participating bank's binding agreement to make the on-loan subject only to the granting by the Authority of the guaranteed participating loan, and all supporting documents used by the participating bank to determine that the granting of such on-loan would be consistent with the Act and this Part.

b) An application for a guaranteed participating loan shall be filed with the Authority by a participating bank on such forms as the Authority shall provide.

c) Staff shall review all applications for guaranteed participating loans to determine

1. whether the location of the buyer identified in the contract of sale complies with the country limitations, if any, contained in the applicable policy or policies of comprehensive export credit insurance;

2. whether the participating bank's on-loan will meet all of the underwriting requirements imposed by the Authority's insurers; and

3. whether the on-loan complies with all of the requirements of the Act and this Part. Before any guaranteed participating loan may be granted, each eligible exporter must have submitted to the Authority a complete application for comprehensive export credit insurance, and both the eligible exporter and its buyer under the contract of sale must have been approved by the insurer.

d) The Authority will endeavor to process all complete applications for guaranteed participating loans within 30 business days of receipt thereof. Incomplete applications will not be processed, and the applicant will be notified of such deficiencies.

e) At the request of a participating bank, informal statements of the probabilities of approval of a guaranteed participating loan in accordance with Section 900.115 may be obtained from the Staff following submission of a completed application therefor. Any such informal statement will not bind the Authority to make a guaranteed participating loan.

14 Ill. Adm. Code 900.130 Approval and Notification

a) General

1. The Authority's decision with respect to any completed application for a guaranteed participating loan shall be made either by the Board or the Executive Director pursuant to Section 900.130(b) of this Part. Applicants will be notified in writing of the decision. If the application is approved, the notification to the financial intermediary shall constitute the Authority's commitment to make the guaranteed participating loan in the amount, at the interest rate, and pursuant to all the terms and conditions therein set forth.

2. An approved guaranteed participating loan shall be disbursed upon request of the financial intermediary but only during a period of 30 calendar days after the date of the commitment. If not so disbursed during such time, the commitment shall be null and void.

3. Approved applications for guaranteed participating loans may be accepted by a financial intermediary, and disbursements thereof may only be make after the financial intermediary has paid all fees and costs incurred or imposed pursuant to Section 900.119 of this Part, within the time therein set forth.

b) Approval Process

1. An initial review of each application for a guaranteed participating loan shall be under-taken by a member of the Staff of the Authority designated by the Authority as a loan officer. The loan officer shall verify all facts presented in the application and any credit information available to the Authority concerning the applicant. The loan officer shall then complete a credit and loan report, and submit the application and such report, together with a written recommendation, to the Executive Director. Where the guaranteed participating loan application is in the amount of $50,000 or more, the Executive Director shall present the application, report, and recommendation to the Board for final action.

2. Upon the favorable recommendation by a loan officer for a guaranteed participating loan in an amount which is less than $50,000 the Executive Director shall have the authority to approve or disapprove such loans without further action of the Board. The Executive Director shall not approve any guaranteed participating loan to any financial intermediary which has outstanding on-loans or commitments of $500,000 or more. An application for a guaranteed participating loan to any financial intermediary in an amount in excess fo $500,000 may only be approved or disapproved by the Board.

3. Upon the favorable recommendation of a loan officer for a guaranteed participating loan in the amount of $50,000 or more, the Board shall have the exclusive authority to grant or deny the same.

4. Upon review of the loan officer's report, the Board, or the Executive Director, as the case may be, may seek additional information from the applicant, and shall thereupon approve or deny the application based upon Section 900.115.

5. Approval of any application for a guaranteed participating loan of $50,000 or more shall require the affirmative vote of at least five members of the Board present and voting. All decisions and votes pertaining to an application for a guaranteed participating loan shall be reduced to writing, together with reasons for any denial of an application, and entered into the minutes of the Board, or for guaranteed participating loans approved by the Executive Director, the records of the Authority.

14 Ill. Adm. Code 900.135 Amendments to Guaranteed Participating Loan Agreements

Requests for amendments to guaranteed participating loan agreements shall be made in writing by the financial intermediary. Requests for non-substantive changes in a guaranteed participating loan agreement shall be acted on by the Executive Director within 30 days. All other changes may only be made upon approval of the Board, which approval shall be granted, if at all, as expeditiously as possible but in no event later than 6 months from the date of the request. The Board shall grant such request if and only if the guaranteed participating loan agreement, as so changed, would still comply with Section 900.115. For purposes of this Section 900.135, a substantive change shall be any change in the obligations or duties of the parties under the agreement. All other changes are non-substantive.

14 Ill. Adm. Code 900.139 Review of Denial of Guaranteed Participating Loans

a) Where a guaranteed participating loan has been denied, the financial intermediary may petition the Board to review such denial. Such petition will be reviewed by the Board at one of the Board's next two regularly scheduled meetings.

b) The petition must be delivered by the financial intermediary to the Authority within 15 business days of the date of the notice of denial.

c) The Board's decision on the petition shall be based upon Section 900.115.

14 Ill. Adm. Code 900.140 Collateralization

All on-loans supported by guaranteed participating loans must be collateralized as follows:

a) The financial intermediary must have obtained a security agreement from the eligible exporter granting a first security interest in the collateral specified in the commitment, and assigned such interest to the Authority or its designee as set forth in Section 900.115(k) of this Part. Such collateral may be the export receivable or other security acceptable to the Authority. If the collateral consists of the export receivable, then the gross invoice amount of such collateral must equal at all times at least 111.1111% of the outstanding amount of the on-loan; and if, the collateral consists of security other than the export receivable, the value thereof, measured at the lesser of cost or market, must be equal at all times at least 111.1111% of the outstanding amount of the on-loan; and

b) The eligible exporter must have assigned to the Authority and the financial intermediary, as their interests may appear, 100% of its right, title and interest in and to the proceeds of each and every policy or policies of insurance required by this Part.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.145 Responsibilities of Financial Intermediaries

Each financial intermediary shall be responsible for:

a) Receiving on-loan applications from eligible exporters and making on-loan credit judgments;

b) Arranging for, and perfecting a security interest in, necessary collateral;

c) Disbursing and monitoring on-loans;

d) Collecting repayments of on-loans; and

e) Remitting payments to the Authority pursuant to the provisions of the guaranteed participating loan, the Act, and this Part.

14 Ill. Adm. Code 900.150 Disbursements

a) A financial intermediary shall disburse its on-loan to the eligible exporter in full either prior to, or concurrently with, the disbursement by the Authority of the proceeds of the guaranteed participating loan. The financial intermediary's on-loan may be disbursed in multiple disbursements, however the Authority's guaranteed participating loan shall be disbursed in only one lump sum.

b) The individual designated by the financial intermediary as set forth in Section 900.20(a)(1) of this Part shall certify in writing to the Authority that disbursements on pre-shipment on-loans are being made to finance pre-export activity; and, for post-shipment on-loans, that disbursements are being, or have been, made in relation to the particular export receivable being financed, and that the term of the guaranteed participating loan corresponds to the term of the related on-loan. In all cases, such certification shall include a warranty that collateral meeting the requirements of Section 900.140 has been or will be secured by the financial intermediary prior to or concurrently with the disbursement of the proceeds of a guaranteed participating loan.

c) The financial intermediary shall keep accurate and complete records of all disbursements and collateral. These records shall be held by the financial intermediary for examination, inspection, review, audit and copying if and when requested by the Authority, its Staff, authorized agents or auditors, as specified in Section 900.250 of this Part.

d) The financial intermediary shall deliver to the Authority, prior to or concurrently with the disbursement of the guaranteed participating loan, a duplicate copy of the properly executed promissory note made by the eligible exporter to the financial intermediary, the security agreement, and any fees specified in Section 900.119 of this Part not yet paid.

14 Ill. Adm. Code 900.170 Loan Repayment

a) The financial intermediary shall be responsible for all servicing of its on-loan including, without limitation, notifying the eligible exporter of payments due, receiving all on-loan repayments, processing, crediting, and remitting such repayments, and enforcing any and all rights and remedies applicable thereto.

b) The financial intermediary shall, within 3 business days of its receipt from the eligible exporter of collected funds constituting payment of any obligation under an on-loan, pay to the Authority, as payments against the financial intermediary's obligations to the Authority under a guaranteed participating loan, a portion thereof as set forth in Section 900.118(g) of this Part.

c) If default in any of the terms of an on-loan occurs based upon any risk defined under the policy of comprehensive export credit insurance, the financial intermediary may make claim to the Authority and request that it be excused from payment or to recover a payment made by the financial intermediary to the Authority.

d) The financial intermediary's obligation to pay under the guaranteed participating loan agreement associated with the claim will be excused to the extent of, a payment of a claim from the insurer to the Authority.

14 Ill. Adm. Code 900.174 Prepayments

Prepayments on any guaranteed participating loan may be made at any time or from time to time without penalty of fee.

14 Ill. Adm. Code 900.176 Moratorium

a) At the time that a claim is made for a loss under the terms of the comprehensive export credit insurance policy, the financial intermediary may request a moratorium on the payment of principal sums due under its guaranteed participating loan. The Authority, based upon a review of the provisions of the comprehensive export credit insurance policy, shall determine whether the basis asserted in the claim appears to be for a covered loss. If the Authority determines that the basis asserted in the claim appears to be for a covered loss, then the Authority may, under the standards set forth in Section 900.200 of this Part, grant a moratorium on payments under the associated guaranteed participating loan. The moratorium shall expire at the earlier of:

1. 180 days after the date that the moratorium is granted; or

2. Five (5) business days after the making of an offer of payment as settlement of the claim by the insurer.

b) The moratorium will be evidenced by a written agreement between the Authority and the financial intermediary. The financial intermediary will continue to be liable for interest on the guaranteed participating loan during the period of the moratorium. A moratorium will not be effective until the financial intermediary has granted the eligible exporter a moratorium on the payment of the on-loan supported by the guaranteed participating loan on terms no less favorable than the terms of the moratorium offered by the Authority.

14 Ill. Adm. Code 900.178 Defaults

a) If the financial intermediary is late in any payment to the Authority of any sum due under a guaranteed participating loan, the financial intermediary shall be in default. All sums due the Authority under the guaranteed participating loan shall then be immediately due and payable, and the Authority shall have available to it all rights and remedies available in law or equity and under the guaranteed participating loan note and loan agreement. The Authority shall suspend any further disbursements to the defaulting financial intermediary and may declare all other guaranteed participating loans to the financial intermediary immediately due and payable.

b) Except as specifically set forth in Sections 900.170 and 900.176 of this Part, the financial intermediary's obligation to the Authority under the guaranteed participating loan is absolute and unconditional. The failure of the eligible exporter to fulfill its obligations under any on-loan, the failure of the insurer to honor or pay any claim under the policy of comprehensive export credit insurance, or any other event will not relieve the financial intermediary of its obligations under the guaranteed participating loan.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.180 Claim Payment

a) Within 5 business days of such time as a financial intermediary has actual knowledge of the happening of any event likely to cause a loss covered under the terms of the policy or policies of comprehensive export credit insurance, the financial intermediary shall notify the Authority of such event in writing. Failure to do so shall constitute a default under the guaranteed participating loan agreement and give the Authority any and all rights and remedies available to it thereunder.

b) The financial intermediary shall include with its notification, as required in Section 900.180(a) of this Part, Notice of Claim and Proof of Loss full information regarding the basis for the claim, including copies of correspondence with the eligible exporter, a record of all attempts to collect the on-loan, and proof that the financial intermediary has taken all legal steps necessary to preserve the interest in the collateral, and such other documents as may be required by the insurer.

History

• Source: Amended at 11 Ill. Reg. 3100, effective February 3, 1987

14 Ill. Adm. Code 900.200 Standards

In administering its programs, the Authority shall, in those instances where the Act or this Part require or permit the making of any findings, determinations, or the exercise of discretion, in addition to any criteria specifically set forth in the Act or in this Part, consider the following factors:

a) The purpose of the Act;

b) The current financial condition of a particular financial intermediary, and the Authority's experience with loans to such financial intermediary;

c) The experience of a financial intermediary in making any on-loan to a particular eligible exporter;

d) The Authority's ability to borrow;

e) The Authority's ability to meet its financial obligations;

f) The Authority's obligations under the terms of any trust agreement or indenture;

g) The financial integrity of the Authority; and,

h) The standards of a prudent investor or prudent lender.

14 Ill. Adm. Code 900.210 Forms

The Authority may adopt, prepare, use, supplement and amend such forms, agreements, and other documents as may be necessary to implement the Authority's programs. The authority to approve the form of agreements and other documents is delegated to the Executive Director.

14 Ill. Adm. Code 900.230 Severability

If any clause, sentence, paragraph, Subsection, Section, or Subpart of this Part shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, Subsection, Section, or Subpart thereof as to which such judgment is rendered.

14 Ill. Adm. Code 900.240 Equal Opportunity Lending

A financial intermediary shall not deny an on-loan to any eligible exporter or discriminate against any eligible exporter in fixing the amount, interest rate, duration, or other terms and conditions thereof on account of race, color, religion, age, sex, marital status, handicap, or national origin.

14 Ill. Adm. Code 900.250 Inspection of Books and Records

The Authority, its Staff, authorized agents or auditors, may inspect, audit, examine, review, or copy the books, records, accounts, and loan documentation of any financial intermediary or any eligible exporter during normal business hours for the purpose of determining compliance with this Part, the Act, any contract or agreement between the Authority and such financial intermediary relating to the Authority's programs, or any contract or agreement between a financial intermediary and any eligible exporter relating, directly or indirectly, to the Authority's programs. Every financial intermediary and every eligible exporter shall maintain such books, records, accounts, and loan documentation for at least three years after the date on which the financial intermediary's obligation to the Authority under the terms of a guaranteed participating loan have been paid in full.

Part 910 Hearings

14 Ill. Adm. Code 910.10 Applicability

This Part shall apply to administrative hearings conducted by the Illinois Export Development Authority pursuant to the provisions of the Illinois Export Development Act of 1983 (Ill. Rev. Stat. 1985, ch. 127, pars. 2501 et seq., as now or hereafter amended), and 14 Ill. Adm. Code 900.20(a)(7).

14 Ill. Adm. Code 910.20 Definitions

As used in this Part, the following words or terms mean:

a) "Act", "Authority", "banking organization", "Board", "executive director", "participating bank", and "Staff" shall have the same meaning as set forth in 14 Ill. Adm. Code 900.10.

b) "Appellant": A banking organization, which, pursuant to 14 Ill. Adm. Code 900.20(a)(5), has received a notice of denial of eligibility to participate in the programs of the Authority, or a participating bank which, pursuant to 14 Ill. Adm. Code 900.20(a)(5), has received a notice of intent to revoke eligibility, and which banking organization or participating bank has delivered a notice of appeal to the Authority in manner and within the time set forth in 14 Ill. Adm. Code 900.20(a)(6).

c) "hearing": The proceeding conducted by a hearing officer pursuant to 14 Ill. Adm. Code 900.20(a)(7).

d) "hearing officer": The person appointed by the Board to conduct a hearing officer pursuant to 14 Ill. Adm. Code 900.20(a)(7).

e) "Party": The Appellant and the Staff.

14 Ill. Adm. Code 910.30 Hearings: Purpose; Notice; Location; Procedures

a) Subsequent to the timely delivery by the Appellant to the Authority of the notice of appeal pursuant to 14 Ill. Adm. Code 900.20(a)(6), and the designation of the hearing officer by the Board pursuant to 14 Ill. Adm. Code 900.20(a)(7), a hearing shall be conducted for the purpose of reviewing the basis for the Staff's denial of eligibility of an applicant banking organization to participate in the programs of the Authority, or the basis for the Staff's issuance to a participating bank of the notice of intent to revoke such eligibility, and the basis for the appeal as set forth by the Appellant.

b) The hearing shall be initiated by the issuance of a notice of hearing by the hearing officer. Said notice shall be given to the Appellant and the executive director not less than five (5) days prior to the scheduled date of the hearing.

c) The notice of hearing shall be a written statement setting forth, but not limited to, the following information:

1. The name and address of the Appellant;

2. The date, time and place of the hearing;

3. A clear and concise statement of the matters to be addressed at the hearing, along with a reference to the section of the Act and the Authority's rules involved; and

4. The name and address of the hearing officer.

d) The hearing officer shall establish the date, time and place of the hearing and shall endeavor to do so upon consultation with Appellant and the executive director. The hearing shall commence within ninety (90) days after receipt by the Authority of the notice of appeal, unless continued to a later date pursuant to Section 910.60 of this Part. If the hearing is not so commenced by such date, the appeal shall be deemed denied as of the last date such hearing could have been conducted hereunder.

e) The hearing shall be presided over and conducted by the hearing officer. The executive director, or his designee, shall be the representative of the Staff at the hearing and shall appear and participate at the hearing in such capacity.

f) Appearances by and participation of Appellants at the hearing shall be subject to the following:

1. An Appellant who files a notice of appeal need not be represented by an attorney at the hearing;

2. No one may appear and participate at the hearing in a representative capacity on behalf of the Appellant unless licensed to practice law;

3. A partnership Appellant may appear and participate at the hearing pro se by a partner; and

4. A corporate Appellant may appear and participate at the hearing pro se by an officer or director.

g) If a partnership or corporate Appellant does not offer the testimony of a partner, officer or director at the hearing, the representative or the Staff may call such partner, officer or director of such Appellant who may be examined as if under cross-examination.

h) The hearing shall be recorded by a suitable electronic method, unless Appellant furnishes, at its own expense, a certified shorthand or court reporter.

i) Within ninety (90) days of the completion of the hearing, the hearing officer shall submit a written recommendation, together with proposed findings of fact and conclusions of law, to the Board pursuant to 14 Ill. Adm. code 900.20(a)(7), and the Board shall thereupon render a decision in the manner and within the time set forth in 14 Ill. Adm. Code 900.20(a)(7). Such decision shall constitute the final administrative decision of the Authority for purposes of judicial review as set forth in Section 910.70 of this Part.

14 Ill. Adm. Code 910.40 Powers of Hearing Officer

The hearing officer shall have, but not be limited to, the following powers:

a) The authority to administer oaths;

b) The authority to examine witnesses; and

c) The authority to rule upon the admissibility of evidence.

Chapter II Illinois Export Development Authority

Part 910 Hearings

14 Ill. Adm. Code 910.50 Rules of Evidence

The hearing need not be conducted according to the technical rules of evidence. However, notwithstanding the foregoing, Section 12 of the Illinois Administrative Procedure Act (Ill. Rev. Stat. 1985, ch. 127, par. 1012) will apply. Any relevant evidence may be admitted in a hearing held pursuant hereto if it is of the type relied upon by reasonable, prudent persons in the conduct of their affairs, regardless of the existence of any common law or statutory rule which would render it inadmissable over objection in civil actions. The rules pertaining to privileged communications shall be recognized in these hearings to the same extent as they are recognized in civil actions. Irrelevant and unduly repetitious evidence shall be excluded.

14 Ill. Adm. Code 910.60 Continuances

a) The Appellant may, for good cause, request a continuance of the hearing. Said request shall be in writing and shall set forth the grounds alleged therefore. Oral requests will not be considered, unless made at the hearing for good cause shown.

b) If good cause is shown, the hearing will be rescheduled and all parties notified by the hearing officer.

c) Good cause is shown when it is demonstrated that a party or party's attorney has a real and compelling need for additional time; for example, in the case of serious illness or family death.

14 Ill. Adm. Code 910.70 Judicial Review

The provisions of the Administrative Review Law (Ill. Rev. Stat. 1985, ch. 110, pars. 3-101 et seq.) and all amendments thereto, shall apply to and govern the judicial review of the final administrative decision of the Board entered hereunder.

14 Ill. Adm. Code 910.80 Invalidity

If any part of these rules shall be held by a court of competent jurisdiction to be invalid, such holding shall not affect the remaining parts hereof.

14 Ill. Adm. Code 1400.10 Definitions

For purposes of this Part, the following definitions shall apply:

"County Recorder" or "Recorder" − the county land records official, who is the County Recorder, County Clerk and Recorder or land records official designated by the County Board.

"Data Fields" − the discreet pieces of information contained in a document that are transcribed into the corresponding County Recorder's electronic document index. Examples are document type, consideration, grantee, grantor, legal description, street address, city, state and zip code.

"Document Rejection" − the act of the County Recorder refusing to accept a document for recording, based on the submitter having not met some statutory or county requirement.

"Document Submission" − the act of submitting a document to the County Recorder for recording.

"Document Type Definition" or "DTD" − a document created using the Standard Generalized Markup Language (SGML) that defines a unique markup language (such as XML or XHTML). A DTD includes a list of tags, attributes and rules of usage.

"Electronic Acceptance" − the act of the County Recorder accepting a submitted document for recording through electronic means.

"Electronic Delivery Process" − the process that begins with preparing the document for transmission to the Recorder, the transmission and reception at the County Recorder's office.

"Electronic Document" − a document that is received by a County Recorder, in an electronic form, meeting the document standards of this Part and the county.

"Electronic Notary" − a notary acknowledgement of a document, by means of an electronic notary signature and stamp.

"Electronic Recording" or "E-recording" − the process of a County Recorder accepting, recording and indexing a document in an electronic form instead of by paper submission.

"Electronic Recording Submission" − the act of submitting a document to the County Recorder via electronic means.

"Electronic Recording System" − the computer program, and the hardware components that host it, that receives electronic documents for recording.

"Electronic Signature" − an electronic sound, symbol or process attached to or logically associated with a document and executed or adopted by a person with the intent to sign the document. Electronic signatures must meet any statutory requirement of the State of Illinois for such signatures.

"E-Recording Submitter" − the party sending a document to the County Recorder using electronic means. The submitter may be the same entity as the E-Recording Submitting Vendor.

"E-Recording Submitting Vendor" – the entity that offers the service to an E-Recording Submitter, providing the software and/or electronic system to transmit a document, via electronic means, to the County Recorder.

"Formatting" − the appearance attributes of the document.

"Index" − the electronic catalog of information about documents in the Recorder's office.

"Land Records System" − the computer software or electronic system used by a Recorder's office to index and store both document images and searchable attributes that identify the document.

"Land Records System Vendor" − an entity outside the Recorder's office that programs or produces the Land Records System for the Recorder. This entity can be a state, county or private enterprise.

"Metadata" − commonly described as "data about data". Metadata is used to locate and manage information resources by classifying those resources and by capturing information not inherent in the resource.

"Open Architecture" − the attributes of the reception software that are public and discernable by the submitting software vendor.

"Paper Submissions" – the documents submitted to the County Recorder printed on paper or other physical media.

"Portable Document Format" or "PDF" − a file format created by Adobe Systems, Inc. that uses the PostScript printer description language to create documents. PDF files capture the appearance of the original document, can store both text and images, are difficult to modify and can be rendered with free, cross-platform viewer software.

"Portal" – a website considered as an entry point to other websites, often by being or providing access to useful content and/or functioning as a gateway to other web locations.

"PRIA" − the Property Records Industry Association.

"Receiving Party" – The County Recorder's office that receives the e-recording document for recording and the entity that receives the electronic document as recorded or rejected from the County Recorder.

"Reception" − the receiving of the document in the County Recorder's office.

"Recording Fee" − any fee imposed by statute or county ordinance, charged by the County Recorder for recording a document.

"Submitter" or "Submitting Party" − the entity that originates the e-recording document or delivers it to the Transmitting Party for transmission to the County Recorder.

"Tagged Image File Format" or "TIFF" − a non-proprietary, defined format for storing images.

"Transfer Declaration" or "Form PTAX-203" – the sales disclosure document required by Illinois statute to accompany the recording of a deed.

"Transfer Tax" − a tax imposed on the privilege of transferring title to real estate located in Illinois, on the privilege of transferring a beneficial interest in real property located in Illinois, and on the privilege of transferring a controlling interest in a real estate entity owning property in Illinois, pursuant to Section 31-10 of the Real Estate Transfer Tax Law.

"Transmitting Party" − the entity that transmits the document to the County Recorder. This can be the submitter, but is usually a service that specializes in transmitting electronic documents to a County Recorder.

14 Ill. Adm. Code 1400.20 Incorporated and Referenced Materials

a) Incorporations by Reference

The following materials are incorporated by reference in this Part:

Property Records Industry Association (PRIA)

2501 Aerial Center Parkway, Ste. 103

Morrisville NC 27560

Telephone: 919.459.2081; FAX: 919.459.2075

eRecording XML Implementation Guide for Version 2.4.1 DTD, Revision 2 (3/05/07);

URPERA Enactment and eRecording Standards Implementation Guide (1/4/06), sections 2.3.1, 2.3.2 and 2.3.3.

b) All incorporations by reference listed in this Section are as of the date specified and include no later amendments or editions.

c) Referenced Statutes

1. Uniform Real Property Electronic Recording Act [765 ILCS 33].

2. Real Estate Transfer Tax Law [35 ILCS 200].

3. Counties Code [55 ILCS 5].

4. Local Records Act [50 ILCS 205].

5. Electronic Commerce Security Act [5 ILCS 175].

6. Illinois Notary Public Act [5 ILCS 312].

7. Electronic Signatures in Global and National Commerce Act (15 USC 96).

14 Ill. Adm. Code 1400.30 Electronic Recording

a) Electronic recording is a delivery method for submitting documents to the County Recorder. This Part applies to the handling of the document in that electronic delivery process, its security and storage of the image and indexing information by the Recorder. This Part does not override any Illinois statute.

b) For electronic document submission, reception, formatting and data fields, the State of Illinois adopts PRIA standard 2.4.1, which is comprised of the following: Document Version 2.4.1 DTD, Notary Version 2.4.1, PRIA Request Version 2.4.2, and PRIA Response Version 2.4.2.

c) The County Recorder may determine which of the three types of e-recording the county will accept, model one, two or three, as described in PRIA URPERA Enactment and eRecording Standards Implementation Guide, sections 2.3.1, 2.3.2 and 2.3.3.

1. If a County Recorder utilizes model three to accept e-recording, the Recorder must also accept documents filed in accordance with models one and two.

2. If a County Recorder utilizes model two to accept e-recording, the Recorder must also accept documents filed in accordance with model one.

d) Each county that accepts e-recording shall provide open architecture for reception of electronic documents and shall issue such technical specifications as are necessary for an e-recording submitter to conform document transmissions to the county land indexing and/or e-recording system software. The technical specifications shall be published on the County Recorder's website or made available on request. If the technical specifications for acceptance of a document have been developed by a land records system vendor, those specifications shall be provided to the County Recorder upon request to meet these provisions. The electronic document submissions of any entity meeting the reception standards of the county shall be accepted for e-recording.

e) Application to become an e-recording submitting vendor, with any county, shall be directed to the County Recorder via an application that is published on the Recorder's website or made available at no charge upon request.

f) Fees for documents e-recorded shall be the same as for paper documents, in conformance with Section 3-5018 of the Counties Code, to the extent applicable to documents submitted electronically. No additional fee for e-recording access to the county, or fee per document, shall be charged by the county or any county land records system vendor, provider, programmer or computer system host. This subsection shall not be interpreted to apply to the services or fees of the e-recording submitting vendor.

g) No county shall be required to enter into any mandatory portal requirement. Individual counties may enter into portal agreements with the provider of their choice and with other counties, at the discretion of the County Recorder. Any web portal used shall meet all the requirements of this Part for each participating individual county.

h) Each County Recorder shall establish and publish on his or her website or by hard copy, available by request, business rules for electronic recording in the county. Business rules shall include, but are not limited to, the following topics:

1. defined technical specifications, which may be incorporated by reference to sources cited in this Part;

2. document and indexing specifications;

3. hours during which electronic submissions will be accepted and processing schedules that affect order of acceptance;

4. payment options for all recording fees and applicable transfer taxes;

5. terms under which an entity may submit documents for e-recording and specified reasons for which a County Recorder may terminate submissions;

6. document rejection rights and procedure;

7. adequate notice before changes to business or technical rules takes effect; and

8. identification of the venue of any litigation arising between the parties.

i) All electronic documents shall be secured in such a way that both the transmitting and receiving parties are assured of each other's identity and that no unauthorized party can view or alter the electronic document during transmission, processing and delivery. If the electronic document has been subject to those security measures identified in Chapter 6 of the PRIA eRecording XML Implementation Guide For Version 2.4.1, Revision 2 throughout the entire electronic submission, the security obligations under PRIA standards have been satisfied.

j) County Recorders are only required to record documents containing electronic signatures and notary acknowledgements that they have the technology to support. Recorders have no responsibility to authenticate electronic signatures or notary acknowledgement stamps embedded within the body of the document. Any electronic signature or notarization submitted to a County Recorder shall comply with the Electronic Commerce Security Act and the Electronic Signatures in Global and National Commerce Act insofar as the Illinois Uniform Real Property Electronic Recording Act does not supercede those laws, the Illinois Notary Public Act and any other laws governing that signature or notarization, as applicable.

k) If necessary, images of e-recordings will be converted to, and preserved under, the electronic file format established by the county. If the county has no previously established file format, images will be stored as either TIFF or PDF files, along with their associated metadata. Any document submitted under model three of PRIA 2.4.1 DTD submissions shall be converted to TIFF or PDF for archiving.

l) The County Recorder shall only accept e-recording submissions during open office hours approved by the County Board in conformance with Section 3-5017 of the Counties Code. The Recorder shall publish criteria on his or her website, or make the criteria available by request, setting forth provisions to preserve the time of recording in the order of reception with paper documents, in conformance with Section 3-5010 of the Counties Code.

m) County Recorders shall retain all records of e-submissions in accordance with the storage of paper submissions described in Section 3-5010 of the Counties Code and Section 1-15 of the Local Records Act.

n) Effective August 1, 2010, contracts entered into between any Illinois county and any software provider hosting or programming a county land records system or any contract and agreement affecting electronic recording of documents in a County Recorder's office shall comply with this Part.