Local Government Vendor Information Reporting Requirements - Public Act 102-265

The Illinois General Assembly enacted Public Act 102-265 (the “Public Act”) which amended the Illinois Property Tax Code. The Public Act adds Section 50.2 (415 ILCS 5/17.12) to the Illinois Property Tax Code. The Public Act, which was effective August 6, 2021, applies to the 2022 and subsequent tax levies. The Public Act applies to both home-rule and non-home-rule taxing districts which have an aggregate property tax levy of more than $5,000,000 for the applicable levy year. The Public Act requires that all such taxing districts make a good faith effort to collect and electronically publish data from all vendors and subcontractors doing business with the taxing district as to: (1) whether the vendor or subcontractor is a minority-owned, women-owned or veteran-owned business; and (2) whether the vendor or subcontractor holds any certifications for those categories.

The Public Act states that the definitions of “minority-owned,” “women-owned” or “veteran-owned” businesses are as defined in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, 30 ILCS 575/0.01 et seq.  Unfortunately, the Business Enterprise for Minorities, Women, and Persons with Disabilities Act does not define a veteran-owned business. The definitions related to minority-owned and women-owned businesses are:

• “Minority owned business” means 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; 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.

• “Minority person” shall mean a person who is a citizen or lawful permanent resident of the United States and who is any of the following:

(a)       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).

(b)       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).

(c)       Black or African American (a person having origins in any of the black racial groups of Africa). Terms such as “Haitian” or “Negro” can be used in addition to “Black or African American.”

(d)      Hispanic or Latino (a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race).

(e)       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)

• “Women-owned business” means 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. 30 ILCS 575/2(A)(4)

• “Woman” shall mean 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)

• “Business” means a business that has annual gross sales of less than $75,000,000 as evidenced by the federal income tax return of the business.[1] 30 ILCS 575/2(A)(10)

 While the definition of a veteran-owned business is not contained in the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, it is reasonable to assume that a court would interpret the definition to be similar to that of minority-owned and women-owned businesses. Therefore, the resulting definition would be:

• “Veteran-owned business” means a business which is at least 51% owned by one or more veterans, or, in the case of a corporation, at least 51% of the stock in which is owned by one or more veterans; and the management and daily business operations of which are controlled by one or more of the veterans who own it.

The definition section of the Business Enterprise for Minorities, Women, and Persons with Disabilities Act further provides that:

When a business is owned at least 51% by any combination of minority persons, women, or persons with disabilities, even though none of the 3 classes alone holds at least a 51% interest, the ownership requirement for purposes of this Act is considered to be met. The certification category for the business is that of the class holding the largest ownership interest in the business. If 2 or more classes have equal ownership interests, the certification category shall be determined by the business. 30 ILCS 575/2(B)

When interpreting the Public Act, it is likely that a court would interpret the above subsection to read:

When a business is owned at least 51% by any combination of minority persons, women or veterans, even though none of the 3 classes alone holds at least a 51% interest, the ownership requirement for purposes of this Act is considered to be met. The certification category for the business is that of the class holding the largest ownership interest in the business. If 2 or more classes have equal ownership interests, the certification category shall be determined by the business.

 In order for a vendor or subcontractor to become a minority-owned, women-owned or veteran-owned business under the Business Enterprise for Minorities, Women, and Persons with Disabilities Act, the business must be certified as such by the Business Enterprise Council for Minorities, Women, and Persons with Disabilities; the City of Chicago; Cook County or other jurisdictional programs with requirements and procedures equaling or exceeding those in the Act. A vendor or subcontractor may be automatically certified if the business holds a certification from at least one of the following entities: (i) the Illinois Unified Certification Program, (ii) the Women’s Business Development Center in Chicago, (iii) the Chicago Minority Supplier Development Council, or (iv) any other similar entity offering such certification to businesses.

In addition, a vendor or subcontractor may self-certify. If the vendor self-certifies, then the taxing district must publish whether the vendor qualifies as a small business under federal Small Business Administration standards.

 The Public Act expressly exempted itself from the State Mandates Act for any reimbursement of the costs associated with implementing any mandate created by the Public Act.

To comply with the Public Act, the taxing district should revise its purchase orders, bidding documents, requests for proposals and contract templates to require the vendors and their subcontractors to certify whether they are a minority-owned, women-owned or veteran-owned business; (2) whether the vendor or subcontractor holds any certifications for those categories; and (3) whether the business has annual gross sales of less than $75,000,000 as evidenced by the federal income tax return of the business. In addition, the taxing district should collect and tabulate the information reported from all vendors and subcontractors with whom it does business and publish the tabulated information on its website.

  [1]             A firm with gross sales in excess of this cap may apply to the [Business Enterprise Council for Minorities, Women, and Persons with Disabilities] for certification for a particular contract if the firm can demonstrate that the contract would have significant impact on businesses owned by minorities, women or persons with disabilities as suppliers or subcontractors or in employment of minorities, women or persons with disabilities. 30 ILCS 575/2(A)(10)