A bill passed by Illinois lawmakers includes the creation of sales tax and revenue bonds in the state — designed to lure major developers that will do at least $60 million in gross sales annually.
The legislation would let local governments issue STAR bonds to help finance developments that would create at least 300 new jobs and use the state’s portion of sales tax revenue generated from the development to repay those bonds. Eligible projects would need to come with a capital investment of $30 million and be “in the public interest.”
Gov. JB Pritzker signed off on the bill, SB 1911, earlier this month. An amendment that would create STAR bonds was sponsored by Rep. Jay Hoffman, D-Swansea.
“I wanted to make sure that it was competitive in nature, create jobs and economic opportunity, that we had project labor agreements and that we have more than one project in our region,” Hoffman said.
According to the legislation, the Illinois Department of Commerce and Economic Opportunity, the Department of Revenue and the Governor’s Office of Management and Budget would have the final determination on the project.
As part of that decision, the state government would also need to evaluate potential negative consequences on existing businesses in the area “to make sure we're not just displacing or creating a job and displacing another,” Hoffman said.
The state’s 10 economic development regions would all have different limits on the number of eligible projects based on population:
- Less than 600,000: one project.
- Between 600,000 and 999,999: three projects.
- More than 1 million: four projects.
For example, the Southwest Region — home to the Metro East and surrounding counties — could have three developments eligible for STAR bonds with a population of 700,000.
This legislation explicitly outlines that professional sports teams, like the Chicago Bears, are not eligible for such financing. Municipalities with a population over 2 million, Chicago being the only one, are also not eligible.
Illinoisans may know STAR bonds for their role in southern Illinois development. The state General Assembly created a district in the city of Marion in 2010. That’s been used for a 550,000-square-foot retail, entertainment and hospitality development announced earlier this year — which has since hit a speed bump with one of the project's financiers.
Missourians may be familiar with the bonds because Kansas lawmakers used STAR bonds to lure the Kansas City Chiefs to their state.
Hoffman said he’s unaware if specific developers have definitive plans for the Southwest Region, but there have been some looking at “several parts of the state,” he said.
“I think we'll hear more as people start filing and communities begin to develop the STAR bonds projects,” Hoffman said.
The legislation would also create a “super” STAR bonds district called a New Opportunities for Vacation and Adventure District. These would have even higher requirements — like a capital investment of $500 million, annual gross sales of $300 million and 1,500 new jobs created.
The bonds, basically a government loan, will not exceed 50% of the total development costs or $75 million, whichever is less. They will reach maturity at 23 years but can be extended to 35 years.
Municipalities, counties and developers will have a tight window to take advantage of these funds. Local governments will have until June 1, 2026, to notify the state that it wants to create a district. A public hearing will be required to consider the district. All proposals need to be submitted by Jan. 1, 2027.
“Hopefully we'll have all three STAR bond projects in our region, creating thousands of jobs,” Hoffman said.
