Municipalities scrambling for enterprise zones

    A free-for-all is developing among Illinois communities vying to beat a year-end deadline for enterprise zone designations.
    Some 49 zones will be expiring within two years and every one will be up for grabs. Competition is likely to be fierce because the original zones were so successful.
    The River Bend Enterprise Zone in the Alton area, for example, has generated $450 million in new investment, created 2,800 jobs and retained more than 10,000 jobs, according to state records. The Southwestern Madison County zone in the Granite City area did even better. It generated more than $1.5 billion in new investment while creating 3,100 new jobs and retaining 10, 500.
    The Illinois General Assembly authorized the establishment of up to 97 enterprise zones by passage of the Enterprise Zone Act in 1982. Both individual municipalities and groups of municipalities submitted applications to the Illinois Department of Commerce and Community Affairs, the state’s economic development arm since renamed the Department of Commerce and Economic Opportunity, during the ensuing years.
    During the mid-’80s, Madison County teamed with the Tri-Cities and River Bend areas to create two enterprise zones. With the exception of two new zones created by the Southwestern Illinois Development Authority in the 1990s, no new zones have been available for nearly 30 years. Each had a 20-year life span and were extended by another 10 years.
    Now the oldest of the zones are expiring — 49 in all — within two years, and all 49 zones will be available through a competitive application process. Another 43 zones will expire and be up for grabs over the next four years.
    John Herzog, Madison County’s economic development coordinator, is working with the River Bend and Tri-Cities communities on new applications. He said that he expects the new boundaries to closely align with the existing boundaries, but it’s yet to be determined what local incentives will be included.
    Enterprise zones generally include some amount of property tax abatement and breaks on building permits as some of the local incentives. State incentives include abatement of sales taxes on building materials and utility taxes.
    Applications are due by the end of the year and will be scored by DCEO on a list of 10 criteria. Herzog said that the qualifying criteria have changed significantly since those first applications in the mid-’80s.
    “Out of the 10 criteria, eight of them are related to the labor market,” he said. “Each applicant has to identify its labor market, which is essentially the area that they expect the workforce to come from.”

    Each of these 10 criteria will be scored by DCEO staff, but a high score doesn’t guarantee success, according to Herzog. That’s because the applications and DCEO scores will be passed along to a yet-to-be-appointed Enterprise Zone Board that will have complete authority to pick winners and losers, regardless of the DCEO scores. In fact, under the law, the board will have the right to reject all applicants if it so chooses.
    Besides the Tri-Cities and River Bend groups, a new collection of communities is working on an application in conjunction with Madison County. It’s made up of Collinsville, Maryville, Glen Carbon, Troy, St. Jacob and Highland, stretching more than 20 miles. While enterprise zones are limited in geographic size, areas of the zone can be tied together by strips that are just 3 feet wide.
    Collinsville’s economic development director, Erika Kennett, said that the group is working with Moran Economic Development to work through all of the steps that need to be taken to complete an application. The cities and the county need to determine the boundaries and analyze the qualifications based on those boundaries and enter into intergovernmental agreements. One qualification that Kennett feels pretty confident about is if the area includes abandoned coal mines, brownfields or federal disaster areas.
    “You get 30 points if you have one of those,” Kennett said. “I would think that we’re going to be OK in that area. I bet we get all of those points.”
    Still, she acknowledges that points don’t necessarily spell success.
    “Just because you got 1600 on your SAT doesn’t mean that Harvard is going to take you,” Kennett said. “Even if we get the highest score they don’t have to give an enterprise zone to us.”
    Which means the makeup of the Enterprise Zone Board is a key feature of the revised law. At this point the board has not been appointed but the law sets up its makeup. The board will consist of five members: the director of DCEO or his/her designee; the director of the Illinois Department of Revenue or his/her designee; and, three members appointed by the governor, one of whom must live in Cook County; another must live in DuPage, Kane, Lake, McHenry or Will (the collar) counties; and one from outside that area.
    Generally speaking, the largest local incentive has been property tax abatement in many of the existing zones, but Kennett said she doesn’t think they will make it part of theirs. There are a number of tools in the economic development toolbox, she said, and sometimes tax increment financing might be a better fit.
    Kennett said she is excited about the group of governments working together rather than apart to foster economic development.
    “Collinsville wants to accomplish job growth,” Kennett said. “We would like to make sure that we’re providing good jobs with competitive wages and employment opportunities for our people as well as strengthening our tax base. The enterprise zone will make us more competitive with projects and make us a stronger regional partner, helping our area grow. We all benefit from the success of our neighbors so we want to do what we can to not only contribute to that, but strengthen our local economy as well.”