2013 Kentucky Revised Statutes CHAPTER 65 - GENERAL PROVISIONS APPLICABLE TO COUNTIES, CITIES, AND OTHER LOCAL UNITS 65.6972 Development area and related project -- Application -- Approval -- Requirements for project -- Independent consultant -- Approval by authority -- Ordinance -- Grant contracts -- Portion of increment due from each taxing district -- Financing account -- Reports -- Operating procedures -- Obligation of Department of Revenue and agency.
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65.6972 Development area and related project -- Application -- Approval -Requirements for project -- Independent consultant -- Approval by
authority -- Ordinance -- Grant contracts -- Portion of increment due from
each taxing district -- Financing account -- Reports -- Operating
procedures -- Obligation of Department of Revenue and agency.
(1)
(2)
(3)
A city, county, or agency shall submit an application to the Cabinet for
Economic Development for approval of a development area, which includes
revenues from the Commonwealth, and the related project, the standards for
which the Cabinet for Economic Development and the Tourism, Arts and
Heritage Cabinet shall establish through their operating procedures or by the
promulgation of administrative regulations in accordance with KRS Chapter
13A. The Cabinet for Economic Development shall determine whether the
development area and related project described in the application constitutes a
project of the type described in KRS Chapter 154 for which the economic
development authority shall have the right to approve the development area
and related project or KRS Chapter 148 for which the tourism development
authority shall have the right to approve the development area and related
project. The Cabinet for Economic Development, upon its determination, shall
assign the application to the economic development authority or the tourism
development authority, as appropriate, for further consideration and approval.
A project otherwise satisfying the requirements of the project as defined in
KRS 65.680, in order to qualify the project and related development area, in
addition shall satisfy all of the following requirements for a project:
(a) Represent new economic activity in the Commonwealth;
(b) Result in a minimum capital investment of ten million dollars
($10,000,000);
(c) Result in the creation of a minimum of twenty-five (25) new full-time jobs
for Kentucky residents to be held by persons subject to the personal
income tax of the Commonwealth within two (2) years of the date of the
final resolution authorizing the development area and the project;
(d) Result in a net positive economic impact to the economy of the
Commonwealth, taking into consideration any substantial adverse impact
on existing Commonwealth businesses;
(e) Generate a minimum of twenty-five percent (25%) of the total revenues
derived from the project attributable to sources outside of the
Commonwealth during each year a grant contract is in effect;
(f) Result in a unique contribution to or preservation of the economic vitality
and quality of life of a region of the Commonwealth; and
(g) Not be primarily devoted to the retail sale of goods.
After assignment of the application for the project and related development
area by the Cabinet for Economic Development:
(a) The economic development authority or the tourism development
authority, as appropriate, shall engage the services of a qualified
independent consultant to analyze data related to the project and the
development area, who shall prepare a report for the economic
development authority or the tourism development authority, as
(4)
appropriate, with the following findings:
1.
The percentage of revenues derived from the development area
which are generated from business not located in the
Commonwealth;
2.
The estimated amount of increment the development area is
expected to generate over a twenty (20) year period from the
projected activation date;
3.
The estimated amount of ad valorem taxes, other than the school or
fire district portion of ad valorem taxes, from real property, Kentucky
individual income tax, Kentucky sales and use taxes, local insurance
premium taxes, occupational license fees, or other such state taxes
which would be displaced within the Commonwealth, to reflect
economic activity which is being shifted over the twenty (20) year
period;
4.
The estimated increment the development area is expected to
generate over the twenty (20) year period, equal to the estimated
amount set forth in paragraph (a)2. of this subsection minus the
estimated amount set forth in paragraph (a)3. of this subsection; and
5.
The project or development area will not occur if not for the
designation of the development area and granting of increments by
the Commonwealth to the development area.
(b) The independent consultant shall consult with the economic development
authority or the tourism development authority, as appropriate, the Office
of State Budget Director and the Finance and Administration Cabinet in
the development of the report. The Office of State Budget Director and
the Finance and Administration Cabinet shall agree as to methodology to
be used and assumptions to be made by the independent consultant in
preparing its report. On the basis of the independent consultants report
and prior to any approval of a project by the economic development
authority or the tourism development authority, as appropriate, the Office
of State Budget Director and the Finance and Administration Cabinet shall
certify whether there is a projected net positive economic impact to the
Commonwealth and the expected amount of incremental state revenues
from the project to the economic development authority or tourism
development authority, as appropriate. Approval shall not be granted if it
is determined that there is no projected net positive economic impact to
the Commonwealth.
(c) The primary project entity shall pay all costs associated with the
independent consultants report.
With respect to each city, county, or agency that applies for approval of a
project and development area, the economic development authority or the
tourism development authority, as appropriate, shall request materials and
make all inquiries concerning the application the economic development
authority or the tourism development authority, as appropriate, deems
necessary. Upon review of the application and requested materials, and
completion of inquiries, the economic development authority or the tourism
development authority, as appropriate, may by resolution grant approval for:
(a)
(5)
(6)
(7)
(8)
(9)
The development area and project for which an application has been
submitted;
(b) The percentage of the Commonwealth's portion of the increment that the
Commonwealth agrees to have distributed to the agency each year during
the term of the grant contract;
(c) The maximum amount of costs for the project for which the increment
may be distributed to the agency; and
(d) The grant contract.
Prior to any approval by the economic development authority or the tourism
development authority, as appropriate, the economic development authority or
the tourism development authority shall have received an ordinance adopted
by the city or county creating the development area and approving the project
and establishing the percentage of increment that the city and county are
distributing each year to the agency to pay for the development area for which
economic development authority or tourism development authority approval is
sought. The economic development authority or the tourism development
authority, as appropriate, shall not approve a percentage of the
Commonwealth's portion of the increment to be distributed to the agency each
year with respect to a development area and project greater than the
percentage approved by the city or county creating the development area.
The amount of increment available for a development area shall be no more
than eighty percent (80%) per year, but shall in no case exceed twenty-five
percent (25%) of the project costs during the term of the grant agreement.
The terms and conditions of each grant contract are subject to negotiations
between the economic development authority or the tourism development
authority, as appropriate, and the other parties to the grant contract. The grant
contract shall include but not be limited to the following provisions: the
activation date, the agreed taxes to be included in the calculation of the
increment, the percentage increment to be contributed by the Commonwealth
and other taxing districts, the maximum amount of project costs, a description
of the development area and the project, the termination date, and the
requirement that the agency annually certify to the economic development
authority or tourism development authority, as appropriate, as to the use of the
increment for payment of project costs in the development area.
The agency responsible for the development area that enters into the grant
contract shall, after each year the grant contract is in effect, certify to the
economic development authority or the tourism development authority, as
appropriate:
(a) The amount of the increment used during the previous calendar year for
the project costs; and
(b) That more than twenty-five percent (25%) of the total revenues derived
from the project during the previous calendar year were attributable to
sources outside the Commonwealth.
(a) Any agency that enters into a grant contract for the release of any
increments that may arise during the period of a grant contract shall, after
each calendar year a grant contract is in effect, notify each taxing district
obligated under the grant contract that an increment is due. In
consultation with each taxing district, the agency shall determine the
respective portion of the total increment due from each taxing district, and
the determination of the agency shall be reviewed by an independent
certified public accountant. The agency shall submit to the Department of
Revenue for certification its determination with respect to the total
increment due together with the review of the certified public accountant
and detailed information concerning ad valorem taxes, Kentucky
individual income tax, Kentucky sales and use taxes, local insurance
premium taxes, occupational license fees, and other such state taxes as
may be determined by the Department of Revenue, including withholding
taxes of employees of each taxpayer located in the development area.
1.
Upon notification to the agency of the total increment by the
Department of Revenue and notice from the agency, each taxing
district obligated under the grant contract, other than the
Commonwealth, shall release to the agency the respective portion of
the total increment due under the grant contract. The agency shall
certify to the Department of Revenue on a calendar year basis the
amount of the increments collected.
2.
Upon certification of the total increment due from the
Commonwealth by the Department of Revenue, the department is
authorized and directed to transfer the increment to a tax increment
financing account established and administered by the Finance and
Administration Cabinet for payment of the Commonwealth's portion
of the increment. Prior to disbursement by the Finance and
Administration Cabinet of the funds from the tax increment financing
account, the economic development authority or the tourism
development authority, as appropriate, shall notify the Finance and
Administration Cabinet that the agency is in compliance with the
terms of the grant contract. Upon notification, the Finance and
Administration Cabinet is authorized and directed to release to the
agency the Commonwealths portion of the total increment due
under the grant contract.
(b) The Department of Revenue shall report to the economic development
authority or the tourism development authority, as appropriate, on a
calendar year basis the amount of the total increment released to an
agency.
(10) The Department of Revenue shall have the authority to establish operating
procedures for the administration and determination of the Commonwealth's
increment.
(11) The Department of Revenue or agency shall have no obligation to refund or
otherwise return any of the increment to the taxpayer from whom the increment
arose or is attributable. Further, no additional increment resulting from audit,
amended returns or other activity for any period shall be transferred to the trust
account established under subsection (9)(a)2. of this section and administered
by the Finance and Administration Cabinet after the initial release to the
agency of the Commonwealths increment for that period.
Effective:June 25, 2009
History: Amended 2009 Ky. Acts ch. 16, sec. 10, effective June 25, 2009. -Amended 2005 Ky. Acts ch. 85, sec. 91, effective June 20, 2005; and ch. 95,
sec. 13, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 338, sec. 15,
effective July 15, 2002.
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