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Monday, October 17, 2011

New Economic Development Financing Authority

The Illinois General Assembly recently enacted Public Act 97-0094, authorizing municipalities to appropriate and spend public money for economic development purposes.  The new statute is set out below:
65 ILCS 5/8-1-2.5.  Expenses for economic development.  The corporate authorities may appropriate and expend funds for economic purposes, including, without limitation, the making of grants to any other governmental entity or commercial enterprise that are deemed necessary or desirable for the promotion of economic development within the municipality. 
The Illinois Municipal League supported the legislation, which the League described as a necessary tool for municipalities in attracting businesses given the current economic climate.  This new authorization is particularly important for non-home rule municipalities who have been limited in their ability to expend public funds for economic development.  This new statute will allow municipalities to be more creative in incentivizing economic development beyond what is currently authorized in the Illinois TIF and business district statutes, as well as existing statutory authority to rebate sales and property taxes. 
The statute is too new to determine what limitations an Illinois court might place on the use of public funds for private development.  At the very least, when a municipality approves a grant or other economic incentive for a development or project, it should consider adopting specific findings that the development or project is necessary or desirable to the promotion of economic development within the municipality. 


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