River Edge Zone
The State of Illinois created the River Edge Redevelopment Zone Program to stimulate the safe and cost-effective development of environmentally challenged properties near rivers through the use of tax incentives and grants.
The River Edge Redevelopment Zone was setup to create and retain jobs and stimulate business and industrial retention and growth. What sets it apart from other such programs is an emphasis on returning environmentally challenged sites (“Brownfields”) to productive use. The Zone was approved August 27, 2007 and will be in effect for 30 years through the year 2037.
Zone Eligibility Requirements: State Legislature required the City of Rockford to show that the area it proposed to include in the Zone met the following criteria:
- Includes a single, contiguous area that is next to or near a river, the Rock River in our case;
- Covers between 1/2 and 12 square miles (Rockford’s is about 8 square miles);
- Exists entirely within the City of Rockford and has at least 100 acres of environmentally challenged land within 1,500 yards of the river (Rockford has about 425 acres); and
- Does not include any area included in an Enterprise Zone.
Rockford River Edge Redevelopment Zone Incentives
Investment Tax Credit
River Edge Zone businesses may claim an additional 0.5% credit on their Illinois Personal Property Tax Replacement Tax for the cost of qualified depreciable property placed in service in the zone. The Illinois Income Tax Act allows an additional credit equal to 0.5% of the basis of qualified property placed in service during the taxable year in a River Edge Redevelopment Zone, provided such property is placed in service on or after July 1, 2006, and the taxpayer’s base employment within Illinois has increased by 1% or more over the preceding year as determined by the taxpayer’s employment records filed with the Illinois Department of Employment Security. Taxpayers who are new to Illinois shall be deemed to have met the 1% growth in base employment for the first year in which they file employment records with the Illinois Department of Employment Security.
Building Material Sales Tax Exemption
Building Materials Sales Tax Exemption – Any building materials used in new construction or rehabilitation for non-residential projects located within Rockford’s River Edge Redevelopment Zone and permanently attached to the real estate may be sales tax exempt (8.25%) if a retailer is provided with a Certificate of Eligibility issued by the Illinois Department of Revenue. To document the exemption allowed under this Section, the retailer must obtain from the purchaser a copy of the Certificate of Eligibility for Sales Tax Exemption issued by IDOR. Purchasers whether contractor or owner must apply for the Certificate of Eligibility from the City of Rockford River Edge Redevelopment Zone Administrator.
Applications can be submitted to Susan Diehl by e-mail, email@example.com, in person or by mail, 425 E. State Street, 2nd Floor, Rockford, IL 61104.
*Project Completion Report must be complete & submitted within 30 days of project completion.
Individuals, corporations, partnerships, trusts or estates receiving dividends declared by corporations which are located exclusively in Illinois River Edge Zone and which conduct essentially all of their business in the River Edge Redevelopment Zone, may deduct such dividends on state income tax.
Interest Income Deduction
Allows financial corporations to deduct an amount equal to the interest received for a loan for development in an RERZ from their corporate State Income tax. The loan must be secured by property located within an RERZ.
Environmental Remediation Tax Credit
Allows for a credit against state income taxes for some non-reimbursed eligible costs for remediation work done on a site in the Zone resulting in a “No Further Remediation Letter” being issued and recorded. This requires a joint review by the Illinois Environmental Protection Agency (IEPA) and the IL DCEO. The property must be in IEPA’s Site Remediation Program to receive the NFR letter. The credit is 0.25 for each dollar spent for non-reimbursed remediation expenses. The credit can be transferred with the property and carried forward for 5 years.
State Historic Tax Credit
Historic Tax Credits (HTC) based on age of structure – Federal (20% HTC) and State (25% HTC). Tax credits are sold to investors as a source of funds for the project. A big benefit of these tax credit programs is that permanently affixed furniture, fixtures, and equipment are also eligible for the tax credits, further reducing the upfront capital costs for your Company.
Property Tax Abatement
The City portion of property taxes on a parcel may be abated for a period of three years unless the property is in a TIF district or an area designated as a Redevelopment Area under the Industrial Jobs Recovery Law. The amount of the abatement cannot exceed the amount attributable to the construction of improvements or the rehabilitation of existing improvements on the parcel. Applications and details for this abatement are available from the Community Development Department.