Kentucky Revised Statutes, Chapter 154 — Development

Title XII — Conservation and State Development

Includes enactments through the 2026 Regular Session.

The KRS database was last updated on 2026-08-31.

Title XII Conservation and State Development

Chapter 154 Development

154.001 Renumbered as KRS 154.20-029.

[Renumbered as KRS 154.20-029.]

154.005 Renumbered as KRS 154.20-030.

[Renumbered as KRS 154.20-030.]

154.010 Repealed, 1992.

[Repealed]

154.020 Repealed, 1992.

[Repealed]

154.022 Repealed, 1992.

[Repealed]

154.023 Repealed, 1988.

[Repealed]

154.025 Repealed, 1992.

[Repealed]

154.030 Repealed, 1992.

[Repealed]

154.035 Repealed, 1992.

[Repealed]

154.040 Repealed, 1988.

[Repealed]

154.041 Repealed, 1992.

[Repealed]

154.043 Renumbered as KRS 154.20-035.

[Renumbered as KRS 154.20-035.]

154.045 Renumbered as KRS 154.20-040.

[Renumbered as KRS 154.20-040.]

154.047 Renumbered as KRS 154.20-045.

[Renumbered as KRS 154.20-045.]

154.049 Renumbered as KRS 154.20-050.

[Renumbered as KRS 154.20-050.]

154.050 Repealed, 1988.

[Repealed]

154.051 Renumbered as KRS 154.20-060.

[Renumbered as KRS 154.20-060.]

154.053 Renumbered as KRS 154.20-070.

[Renumbered as KRS 154.20-070.]

154.055 Renumbered as KRS 154.20-080.

[Renumbered as KRS 154.20-080.]

154.057 Renumbered as KRS 154.20-090.

[Renumbered as KRS 154.20-090.]

154.059 Renumbered as KRS 154.20-100.

[Renumbered as KRS 154.20-100.]

154.060 Repealed, 1988.

[Repealed]

154.061 Renumbered as KRS 154.20-105.

[Renumbered as KRS 154.20-105.]

154.065 Renumbered as KRS 154.20-110.

[Renumbered as KRS 154.20-110.]

154.070 Repealed, 1988.

[Repealed]

154.080 Repealed, 1986.

[Repealed]

154.090 Repealed, 1980.

[Repealed]

154.100 Repealed, 1962.

[Repealed]

154.110 Repealed, 1986.

[Repealed]

154.120 Repealed, 1980.

[Repealed]

154.125 Repealed, 1980.

[Repealed]

154.127 Repealed, 1986.

[Repealed]

154.130 Repealed, 1988.

[Repealed]

154.135 Renumbered as KRS 154.20-120.

[Renumbered as KRS 154.20-120.]

154.140 Repealed, 1986.

[Repealed]

154.143 Repealed, 1980.

[Repealed]

154.146 Repealed, 1986.

[Repealed]

154.150 Repealed, 1980.

[Repealed]

154.160 Renumbered as KRS 154.20-130.

[Renumbered as KRS 154.20-130.]

154.170 Renumbered as KRS 154.20-140.

[Renumbered as KRS 154.20-140.]

154.180 Renumbered as KRS 154.20-150.

[Renumbered as KRS 154.20-150.]

154.210 Repealed, 1968.

[Repealed]

154.220 Repealed, 1968.

[Repealed]

154.230 Repealed, 1968.

[Repealed]

154.240 Repealed, 1968.

[Repealed]

154.250 Repealed, 1968.

[Repealed]

154.260 Repealed, 1968.

[Repealed]

154.270 Repealed, 1968.

[Repealed]

154.310 Repealed, 1992.

[Repealed]

154.315 Renumbered as KRS 154.80-100.

[Renumbered as KRS 154.80-100.]

154.320 Repealed, 1992.

[Repealed]

154.321 Repealed, 1992.

[Repealed]

154.325 Repealed, 1992.

[Repealed]

154.330 Renumbered as KRS 154.80-110.

[Renumbered as KRS 154.80-110.]

154.335 Renumbered as KRS 154.80-120.

[Renumbered as KRS 154.80-120.]

154.340 Renumbered as KRS 154.80-130.

[Renumbered as KRS 154.80-130.]

154.345 Repealed, 1992.

[Repealed]

154.360 Renumbered as KRS 154.80-310.

[Renumbered as KRS 154.80-310.]

154.365 Repealed, 1992.

[Repealed]

154.370 Repealed, 1992.

[Repealed]

154.375 Repealed, 1992.

[Repealed]

154.380 Repealed, 1992.

[Repealed]

154.385 Repealed, 1992.

[Repealed]

154.410 Repealed, 1986.

[Repealed]

154.420 Repealed, 1986.

[Repealed]

154.550 Renumbered as KRS 154.20-520.

[Renumbered as KRS 154.20-520.]

154.555 Renumbered as KRS 154.20-530.

[Renumbered as KRS 154.20-530.]

154.560 Renumbered as KRS 154.20-540.

[Renumbered as KRS 154.20-540.]

154.565 Renumbered as KRS 154.20-550.

[Renumbered as KRS 154.20-550.]

154.570 Renumbered as KRS 154.20-560.

[Renumbered as KRS 154.20-560.]

154.575 Renumbered as KRS 154.20-570.

[Renumbered as KRS 154.20-570.]

154.580 Repealed, 1992.

[Repealed]

154.600 Renumbered as KRS 154.33-020.

[Renumbered as KRS 154.33-020.]

154.650 Renumbered as KRS 154.45-001.

[Renumbered as KRS 154.45-001.]

154.655 Renumbered as KRS 154.45-010.

[Renumbered as KRS 154.45-010.]

154.660 Renumbered as KRS 154.45-020.

[Renumbered as KRS 154.45-020.]

154.662 Renumbered as KRS 154.45-030.

[Renumbered as KRS 154.45-030.]

154.665 Renumbered as KRS 154.45-040.

[Renumbered as KRS 154.45-040.]

154.670 Renumbered as KRS 154.45-050.

[Renumbered as KRS 154.45-050.]

154.675 Renumbered as KRS 154.45-060.

[Renumbered as KRS 154.45-060.]

154.680 Renumbered as KRS 154.45-070.

[Renumbered as KRS 154.45-070.]

154.685 Renumbered as KRS 154.45-080.

[Renumbered as KRS 154.45-080.]

154.690 Renumbered as KRS 154.45-090.

[Renumbered as KRS 154.45-090.]

154.695 Repealed, 1992.

[Repealed]

154.700 Renumbered as KRS 154.45-100.

[Renumbered as KRS 154.45-100.]

154.705 Renumbered as KRS 154.45-110.

[Renumbered as KRS 154.45-110.]

154.750 Renumbered as KRS 154.54-020.

[Renumbered as KRS 154.54-020.]

154.755 Renumbered as KRS 154.54-030.

[Renumbered as KRS 154.54-030.]

154.770 Renumbered as KRS 154.50-020.

[Renumbered as KRS 154.50-020.]

154.780 Renumbered as KRS 154.50-030.

[Renumbered as KRS 154.50-030.]

Subchapter 01 Generalities Subchapter 01 Generalities

154.01-010 Renumbered as KRS 154.1-010.

[Renumbered as KRS 154.1-010.]

154.01-020 Renumbered as KRS 154.1-020.

[Renumbered as KRS 154.1-020.]

154.01-700 Renumbered as KRS 154.1-700.

[Renumbered as KRS 154.1-700.]

154.01-705 Renumbered as KRS 154.1-705.

[Renumbered as KRS 154.1-705.]

154.01-710 Renumbered as KRS 154.1-710.

[Renumbered as KRS 154.1-710.]

154.01-715 Renumbered as KRS 154.1-715.

[Renumbered as KRS 154.1-715.]

154.01-720 Renumbered as KRS 154.1-720.

[Renumbered as KRS 154.1-720.]

154.01-725 Renumbered as KRS 154.1-725.

[Renumbered as KRS 154.1-725.]

154.01-730 Renumbered as KRS 154.1-730.

[Renumbered as KRS 154.1-730.]

154.01-735 Renumbered as KRS 154.1-735.

[Renumbered as KRS 154.1-735.]

154.01-740 Renumbered as KRS 154.1-740.

[Renumbered as KRS 154.1-740.]

154.01-745 Renumbered as KRS 154.1-745.

[Renumbered as KRS 154.1-745.]

154.01-750 Renumbered as KRS 154.1-750.

[Renumbered as KRS 154.1-750.]

Subchapter 1 Generalities Subchapter 1 Generalities

154.1-010 Definitions for chapter.

As used in this chapter, unless the context indicates otherwise:

(1) "Agribusiness" or "agricultural business entity" means any person, partnership, limited partnership, corporation, limited liability company, or any other entity engaged in a business that processes raw agricultural products, including timber, or provides value-added functions with regard to raw agricultural products;

(2) "Approved business network" or "approved flexible industrial network" means a business network comprising three (3) or more business firms or industries which have been identified as key industries and targeted by the state's strategic economic development plan for special consideration and assistance by the agencies of the Commonwealth;

(3) "Authority" means the Kentucky Economic Development Finance Authority, consisting of a committee as set forth in KRS 154.20-010;

(4) "Board" means the Kentucky Economic Development Partnership, an administrative body within the meaning of KRS 12.010, and the governing body of the Cabinet for Economic Development, as created and established in KRS 154.10- 010;

(5) "Business network" or "flexible industrial network" means a formalized, collaborative mechanism organized by and operating among three (3) or more industrial entities, business enterprises, or private sector firms for the purposes of, but not limited to: pooling expertise; improving responses to changing technology or markets; lowering the risks to individual entities of accelerated modernization; encouraging new technology investments, new market development, and employee skills improvement; and developing a system of collective intelligence among participating entities;

(6) "Cabinet" means the Cabinet for Economic Development as established under KRS 12.250, and governed by the Kentucky Economic Development Partnership;

(7) "Commonwealth" means the Commonwealth of Kentucky;

(8) "Cost of a project" means the cost of the acquisition, construction, reconstruction, conversion, or leasing of any industrial, commercial, health care, agricultural, or forestry enterprise, or any part thereof, to carry out the purposes and objectives of this chapter, including but not limited to acquisition of land or interest in land, buildings, structures, or other planned or existing planned improvements to land, including leasehold improvements, machinery, equipment, or furnishings; working capital; and administrative costs, including but not limited to engineering, architectural, legal, and accounting fees which are necessary for the project;

(9) "Local and regional economic development interest" means any local business or economic development interest, including but not limited to chambers of commerce, business development associations, industrial development organizations, area development districts, and public economic development entities;

(10) "Industrial entity" means any corporation, limited liability company, partnership, limited partnership, person, or any other legal entity, domestic or foreign, which will itself or through its subsidiaries or affiliates, engage in an industrial improvement project in the Commonwealth;

(11) "Industrial improvement project" means and includes the acquisition, construction, or implementation of new manufacturing, processing, or assembling facilities, equipment, methods or processes, or improvements to or repair of existing manufacturing, processing, or assembling facilities, equipment, methods, or processes, including repair, restoration, or conversion of tobacco warehouses, as well as improvements to the real estate upon which the facilities are located, and includes any capital improvement to any existing facility, including any restructuring, retooling, rebuilding, reequipping, or any other form of upgrading such existing facility and equipment and any other improvements to such real estate, existing facility, or manufacturing, processing, or assembling equipment, method, or process;

(12) "Key industry" means an industry or business within an industrial sector which has been identified in and targeted by the state's economic development strategic plan as having major importance to the sustained economic growth of the Commonwealth and in which member firms sell goods or services into markets for which national or international competition exists, including but not limited to secondary forest products manufacturing, agribusiness, and high technology and biotechnology manufacturing and services;

(13) "Military" and "defense" mean all military and defense installations, entities, activities, and personnel located, operating, or living in Kentucky;

(14) "Municipality" means a county, city, development organization, an institution of higher education, a community or junior college, a subdivision or instrumentality of any of the foregoing, or any entity created by two (2) or more municipalities pursuant to the Interlocal Cooperation Act, KRS 65.210 to 65.300;

(15) "Network broker" means a person who is trained to assist private sector firms to form business networks and make other similar efforts to provide for joint manufacturing, marketing, technology development, information dissemination, and other activities;

(16) "Non-appropriation-supported bond" means any long-term financial borrowing instrument for which regular debt service does not originate from an appropriation of the General Assembly;

(17) "Non-appropriation-supported note" means any short-term financial borrowing instrument for which loan payments do not originate from an appropriation of the General Assembly;

(18) "Person" means an individual, partnership, joint venture, military facility operated by a department or agency of the United States, profit or nonprofit corporation including a public or private college or university, limited liability company, or other entity or association of persons organized for agricultural, commercial, health care, or industrial purposes; or a public utility or local industrial development corporation;

(19) "Private sector" means any source other than the authority, a state or federal entity, or an agency thereof;

(20) (a) "Project" means an endeavor approved by the cabinet or authority and related to industrial, manufacturing, mining, mining reclamation for economic development, commercial, health care, or agricultural enterprise.

(b) "Project" includes but is not limited to agribusiness, agricultural or forestry production, harvesting, storage, or processing facilities or equipment; equipment or facilities designed to produce energy from renewable resources; research parks; office facilities; engineering facilities; research and development laboratories; repair, restoration, or conversion of tobacco warehouses for an economic development or commercial use; warehousing facilities; parts distribution facilities; depots or storage facilities; port facilities; railroad facilities, including trackage, right-of-way, and appurtenances; airports and airport renovation; water and air pollution control equipment or waste disposal facilities; tourist facilities; theme or recreational parks; health care and health related facilities; farms, ranches, forests, and other agricultural or forestry commodity producers; agricultural harvesting, storage, transportation, or processing facilities or equipment; grain elevators; shipping heads and livestock pens; livestock; wharves and dock facilities; water, electricity, hydroelectric, coal, petroleum, or natural gas provision facilities; dams and irrigation facilities; sewage, liquid, and solid waste collection, disposal treatment, and drainage services and facilities. For purposes of this paragraph, "livestock" means cattle, sheep, swine, goats, horses, alpacas, llamas, buffaloes, and any other animals of the bovine, ovine, porcine, caprine, equine, or camelid species.

(c) Except for airport-related facilities and tax increment financing projects approved under Subchapter 30 of this chapter, "project" does not include that portion of an endeavor devoted to the sale of goods at retail or that portion of an endeavor devoted to housing which does not consist of the manufacture of housing;

(21) "Reclamation development fund" means the fund administered by the Kentucky Economic Development Finance Authority to foster economic development on surface mining land;

(22) "Reclamation development project" means only that reconditioning of land affected by surface mining, which will directly promote and benefit an economic undertaking which constitutes a project under subsection (20) of this section;

(23) "Reclamation development plan" means a plan submitted to the Energy and Environment Cabinet to show compliance with reclamation standards, and submitted to the Kentucky Economic Development Finance Authority to seek moneys from the reclamation development fund for a reclamation development project;

(24) "Secretary" means the chief executive officer and secretary of the Cabinet for Economic Development;

(25) "State" means the Commonwealth of Kentucky; and

(26) "Tax revenues" means any revenues received by the Commonwealth directly or indirectly as a result of the industrial improvement project, including state corporate income taxes, the limited liability entity tax imposed by KRS 141.0401, state income taxes paid by employees who work in the project, state property taxes, state corporation license taxes, or state sales and use taxes.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 44, sec. 22, effective June 27, 2019. -- Amended 2017 Ky. Acts ch. 129, sec. 6, effective June 29, 2017. -- Amended 2010 Ky. Acts ch. 24, sec. 191, effective July 15, 2010. -- Amended 2008 Ky. Acts ch. 178, sec. 24, effective July 15, 2008. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 39, effective June 28, 2006. -- Amended 2006 Ky. Acts Ch. 84, sec. 1, effective July 12, 2006; and ch. 149, sec. 207, effective July 12, 2006. -- Amended 1996 Ky. Acts ch. 113, sec. 6, effective July 15, 1996; and ch. 194, sec. 13, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 1, effective July 15, 1994. – Created 1992 Ky. Acts ch. 105, sec. 2, effective July 14, 1992. Formerly codified as KRS 154.01-010.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

Legislative Research Commission Note (7/15/96). Under KRS 7.136(1)(e), the prior reference to "subsection (14)" in what is now subsection (22) of this statute has been changed to "subsection 20" because of renumberings of the referenced subsection in 1994 Ky. Acts ch. 390, sec. 1, and 1996 Ky. Acts ch. 113, sec. 6.

154.1-020 Mission and goals of Commonwealth's economic development system.

(1) The mission of the Commonwealth's economic development system shall be to achieve the best quality of life for all Kentuckians through long-term strategic planning and implementation that fosters sustainable growth in jobs and incomes and enables communities, businesses, governments, and individuals to compete in the global marketplace.

(2) The goals for the Commonwealth's economic development system shall be as follows:

(a) By the year 1993, Kentucky will have an economic development partnership of government, business, education, communities, and individuals that provides a coordinated planning and implementation process which establishes government priorities for action and accountability, supports rural and urban communities to invest in their own futures, assists businesses to acquire the resources to compete, and prepares individuals for work in high quality jobs; and

(b) By the year 2000, Kentucky will have people and institutions with the capacity to adapt to future change; a skilled, competitive workforce; thriving and healthy communities throughout the state; and increased wealth and high quality jobs with greater opportunities to compete for them.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 1, effective July 14, 1992. Formerly codified as KRS 154.01-020.

Kentucky Peace Corps Kentucky Peace Corps

154.1-700 Definitions for KRS 154.1-700 to 154.1-745.

As used in KRS 154.1-700 to 154.1-745, unless the context indicates otherwise:

(1) "Allowance" means a twice-monthly payment granted volunteers during the term of their service. For the purposes of KRS 154.1-700 to 154.1-745, an allowance shall not be considered a salary or a wage.

(2) "Board" means the Kentucky Peace Corps Governing Board created by KRS 154.1- 705.

(3) "Community/user" means the nonprofit entity or entities for which a task is being performed by a volunteer or volunteers.

(4) "Corps" means Kentucky Peace Corps created by KRS 154.1-715.

(5) "Director" means the chief administrative officer of the corps appointed pursuant to the provisions of KRS 154.1-715.

(6) "Employee" means "employee" as defined by KRS 18A.005.

(7) "Volunteer" means Kentucky Peace Corps volunteers selected pursuant to the provisions of KRS 154.1-710.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 1, effective July 14, 1992. Formerly codified as KRS 154.01-700.

154.1-705 Kentucky Peace Corps Governing Board.

(1) There shall be created by KRS 154.1-700 to 154.1-745 the Kentucky Peace Corps Governing Board consisting of nine (9) members appointed by the Governor to staggered terms not to exceed four (4) years. Three (3) of these appointees shall be from 501c charitable corporations; one (1) shall represent local government; one (1) shall represent labor; one (1) shall represent the business community; and three (3) shall be employed by state agencies performing work related to the corps' purposes.

(2) At least one (1) member of the board appointed pursuant to the provisions of subsection (1) of this section shall be from each congressional district. No more than two (2) members shall be from the same congressional district.

(3) The board shall annually elect one (1) of its members chairman and one (1) of its members vice chairman.

(4) The board shall meet at such time and place as shall be specified by the call of its chairman. At least one (1) meeting shall be held each month.

(5) All meetings of the board shall be open to the public as provided in KRS 61.810 to 61.850.

(6) At least seven (7) days in advance of each regular meeting of the board, notice shall be given in writing to each member by the director, which shall include, at the least, a tentative agenda. Five (5) members shall constitute a quorum for the transaction of business. The board shall keep records and minutes of its business and official actions.

(7) All records of the board shall be public records and open to public inspection as provided in KRS 61.872 to 61.884.

(8) Board members shall not receive any compensation for their services, but may be reimbursed in accordance with the provisions of KRS Chapters 44 and 45 and KRS 18A.200 for actual and necessary expenses incurred in the performance of their duties as prescribed by KRS 154.1-710 and 154.1-715.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 2, effective July 14, 1992. Formerly codified as KRS 154.01-705.

154.1-710 Duties of board.

Subject to the provisions of KRS 154.1-700 to 154.1-745, and KRS Chapter 13A, it shall be the duty of the board to:

(1) Promulgate administrative regulations to establish a selection process for:

(a) Volunteers which shall include, but not be limited to, the testing of applicants for emotional stability by a mental health professional licensed in Kentucky for independent practice;

(b) Projects to be undertaken and completed by volunteers and a method of applying for these projects. The specific purpose or goal of the corps outlined in KRS 154.1-720 shall be taken into consideration when applying this methodology.

(2) Initial administrative regulations promulgated under the provisions of KRS 154.1- 700 to 154.1-745 shall be filed with the Legislative Research Commission within ninety (90) days of July 14, 1992.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 3, effective July 14, 1992. Formerly codified as KRS 154.01-710.

154.1-715 Additional duties of board.

Among its other duties, the board shall also be required to:

(1) Govern, or exercise authority, over the corps;

(2) Appoint a director to function as chief administrative officer of the corps;

(3) Make annual reports to the Governor and the Legislative Research Commission, and biennial reports to the Kentucky General Assembly;

(4) Advise the Governor and the director with respect to projects assigned to and undertaken by the corps;

(5) Consider and act on any and all matters referred to it by the director; and

(6) Investigate any irregularities reported by the public.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 4, effective July 14, 1992. Formerly codified as KRS 154.01-715.

154.1-720 Kentucky Peace Corps -- Purpose -- Director.

(1) A Kentucky Peace Corps, headed by a director appointed by the board created by KRS 154.1-705, is hereby created.

(2) The purpose of the corps is to:

(a) Create a volunteer, domestic service corps to promote a mechanism for selfless service for those who wish to improve the lives of other Kentuckians, raise the standard of living, enhance self actualization, and create a more conducive environment for future generations of Kentuckians.

(b) Assist the Commonwealth of Kentucky through targeted activities which promote the public good and achieve measurable or visible improvement in the environment, public service, individual productivity, education, health, and humanitarian endeavors.

(c) Identify and utilize the skills, knowledge, and expertise of dedicated, well- trained volunteers who have met stringent selection criteria and have effectively demonstrated their commitment to the Kentucky Peace Corps.

(d) Promote a cross-fertilization of ideas, skills, and concepts.

(3) The director, authorized by subsection (1) of this section, shall be a graduate of an accredited college or university and have at least five (5) years' experience in administration or in related fields. Additional education may be substituted for the required experience on a year-to-year basis. Additional experience may be substituted for the required education on a year-to-year basis, provided the experience level is deemed appropriate by the board.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 5, effective July 14, 1992. Formerly codified as KRS 154.01-720.

154.1-725 Duties of director.

(1) It shall be the duty of the director to:

(a) Serve as chief administrative officer to the corps and secretary to the board, and to provide whatever help and technical assistance as deemed necessary by the board to the board.

(b) Hire, as provided in the budget enacted by the Kentucky General Assembly and other state and federal laws applicable to state personnel, whatever employees are deemed necessary by the board to carry out the provisions of KRS 154.1-700 to 154.1-745, provided the number of employees does not exceed twelve (12).

(c) Prepare the budget request for approval by the board in the form and manner required by applicable state law. For the purposes of KRS Chapter 48, the board and the corps shall be considered a budget unit.

(d) Develop a handbook for volunteers for submission to and approval of the board prior to printing and distribution.

(e) Develop a handbook for community/users for submission to and approval of the board prior to printing and distribution.

(f) Prepare program status reports on a monthly basis.

(2) The director, on behalf of the corps, and with the permission of the board, may join or subscribe to any association or service having as its purpose the interchange of information relating to the improvement of the corps, or volunteer organizations.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 6, effective July 14, 1992 Formerly codified as KRS 154.01-725.

154.1-730 Salaries of director and employees -- Unclassified status of employees.

(1) Notwithstanding the provisions of KRS 64.610 through 64.470, the salaries of the director and other employees of the corps, shall be determined by order of the board, provided these salaries do not exceed the limitations established by the Constitution of the Commonwealth of Kentucky, and limitations established by the Executive Budget enacted by the Kentucky General Assembly.

(2) All employees of the corps, including its director, shall be deemed unclassified employees of the Executive Department, covered by the provisions of KRS Chapter 18A relating to unclassified employees.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 7, effective July 14, 1992. Formerly codified as KRS 154.01-730.

154.1-735 Qualifications, benefits, and requirements for volunteers.

(1) Volunteers shall be at least eighteen (18) years of age.

(2) Volunteers shall not serve within a seventy-five mile radius of their legal or voting residence.

(3) Volunteers shall not be considered employees of the board or the Commonwealth of Kentucky; however, they shall be granted:

(a) An allowance which, at a minimum, shall equal the federal minimum wage;

(b) Appeal rights pursuant to the provisions of KRS 154.1-740;

(c) Relocation benefits;

(d) Health benefits;

(e) Social security benefits;

(f) Free tuition for one full-time semester at a state-supported Kentucky college or university for every twelve (12) months' service completed in the corps; and

(g) Workers' compensation.

(4) Volunteers may receive reimbursement for travel, provided the reimbursement does not exceed the limitations established for Executive Department employees either by law or administrative regulation.

(5) Notwithstanding other provisions of the Kentucky Revised Statutes, volunteers shall not be eligible to receive:

(a) Dental benefits;

(b) Disability insurance;

(c) Life insurance;

(d) Reimbursement for meals; or

(e) Unemployment insurance.

(6) All volunteers shall be expected to bring with them a minimum amount of tools to perform their tasks, but the community/user is expected to supply all other items, exclusive of clothing and other personal hygiene and grooming items.

(7) Volunteers shall agree in writing to:

(a) Cooperate with corps personnel with whom he is working in their common effort, and to abide by the policies and procedures set forth in the handbook and administrative regulations required by KRS 154.1-710, and other applicable state and federal laws.

(b) Hold the Kentucky Peace Corps harmless and to release it from any and all claims arising out of or in connection with any agreement he signs upon volunteering, excepting only that the corps shall remain liable for any harm directly attributable to its gross negligence.

(c) Perform the work assigned to him in an acceptable manner to the corps, or its representatives.

(d) Not engage in any regular work which carries monetary compensation and which falls outside the scope of the assigned corps duties. Any exceptions to this provision shall be authorized in writing by the director, and approved by the board.

(e) Serve the number of months, not to exceed two (2) years, deemed appropriate by the board and director to complete the task assigned. The board may extend the volunteer's contract an additional two (2) years, provided the volunteer is willing, and provided the volunteer has a special skill or expertise needed by the corps. Conversely, the board may reduce the number of months of the contract in the event of hardship.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 8, effective July 14, 1992. Formerly codified as KRS 154.01-735.

154.1-740 Discipline of volunteers.

(1) Volunteers shall be disciplined or dismissed for cause only.

(2) In the event any volunteer is disciplined or dismissed for cause, he may appeal, within thirty (30) days, to Franklin Circuit Court for reinstatement.

(3) If reinstatement is ordered by the Franklin Circuit Court, the volunteer shall be returned to his job immediately and made whole, provided the order is not appealed to a higher court.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 9, effective July 14, 1992. Formerly codified as KRS 154.01-740.

154.1-745 Purchase of retirement credit by volunteers.

Volunteers who become contributing members of any state administered retirement system may purchase service credit for time served in the corps as provided in KRS 61.552 and 161.515.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 100, sec. 10, effective July 14, 1992. Formerly codified as KRS 154.01-745.

Small Business Development Centers Small Business Development Centers

154.1-750 Kentucky Small Business Development Center Network -- Programs and services -- Report to Legislative Research Commission.

(1) It is the intention of the General Assembly to generate a substantial increase in the number of new and expanding small businesses in the Kentucky workforce, to foster economic growth in the business sector, and to provide high-quality jobs for Kentuckians. The Kentucky Small Business Development Center Network, part of the National Small Business Development Center Network, is encouraged to extend its wide range of workshops, seminars, and courses for entrepreneurs in cooperation with the public and private sector. Expert instruction shall range from introductory classes designed for start-up businesses to advanced presentations aimed at assisting established companies.

(2) As used in this section:

(a) "Expanded staff" means consultants to be used exclusively in the small business development centers. All new personnel in the field shall be fully dedicated to consulting and training, with the goal of increasing clients' revenues and job creation capabilities, as well as increasing Kentucky Small Business Development Center Network market penetration by twenty-five percent (25%) over the two (2) year appropriation.

(b) "Expanded equipment" means support for these consultants and includes computers and printers, fax machines, and copiers.

(c) "Expanded operation" means support for new personnel and includes office furniture, phone and fax expenses, and travel costs for consultants.

(d) "Expanded professional development" means the training to ensure that Kentucky small business development center consultants have up-to-date knowledge and information to positively impact new and existing small businesses.

(3) Expanded staff, expanded equipment, expanded operation, and expanded professional development shall be used to assist the Kentucky Small Business Development Center Network to increase entrepreneurial training and consulting services, with the goal of increasing the center's impact upon Kentucky's economy.

(4) Entrepreneurial training topics include, but are not limited to:

(a) Starting a business;

(b) Business plan preparation;

(c) Marketing, including advertising and public relations;

(d) Financial analysis;

(e) Tax regulation;

(f) Human resource management;

(g) Capital management;

(h) Global readiness;

(i) Marketing plan preparation;

(j) Young entrepreneurship;

(k) Target market analysis;

(l) Quality management; and

(m) Production management.

(5) The Kentucky Small Business Development Center Network may solicit, accept, receive, invest, and expend moneys from any public or private source for the purpose of implementing this section.

(6) The Kentucky Small Business Development Center Network's central office shall present a written report to the Legislative Research Commission in November 1998, setting out its progress towards achieving the goals set out in subsection (1) of this section.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 293, sec. 1, effective July 15, 1996. Formerly codified as KRS 154.01-750.

Subchapter 10 Kentucky Economic Development Partnership Subchapter 10 Kentucky Economic Development Partnership

154.10-010 Kentucky Economic Development Partnership -- Membership -- Vacancies -- Meetings.

(1) (a) The Kentucky Economic Development Partnership, a board governing the Cabinet for Economic Development, is created and established, performing essential governmental and public functions and purposes essential to improving and promoting the health and general welfare of the people of the Commonwealth through sustainable economic development, as prescribed in KRS 154.1-020.

(b) The board shall have reorganization powers and authority as prescribed in KRS 12.028 and shall constitute an administrative body as defined in KRS 12.010, but it and the cabinet shall not be subject to reorganization by the Governor, KRS Chapter 12 notwithstanding.

(c) The board shall serve as the governing body of the cabinet and shall exercise all powers and authorities conferred upon it by statute, including, but not limited to, the following functions:

1. Strategic planning;

2. Finance;

3. Business assistance;

4. Marketing and promotion;

5. Community development;

6. Workforce development;

7. Innovation; and

8. All economic development powers and authorities not specifically conferred by statute to another agency or authority of state government.

(2) The board shall consist of fourteen (14) voting members and two (2) nonvoting members. The fourteen (14) voting members shall consist of the Governor, the secretary of the Finance and Administration Cabinet, the secretary of the Public Protection Cabinet, the secretary of the Energy and Environment Cabinet, the secretary of the Education and Labor Cabinet, the Commissioner of Agriculture or his or her designee, and eight (8) private sector members who shall be appointed by the Governor. The secretary of the Governor's Executive Cabinet shall serve as a voting member upon the absence of the Governor. The secretary of the Education and Cabinet for Economic Development and the secretary of the Tourism, Arts and Heritage Cabinet shall serve as nonvoting members.

(3) The governing bodies of each of the following organizations shall nominate two (2) persons from each of the six (6) Congressional districts of the Commonwealth and two (2) persons from the state at large, as candidates for appointment as private sector members to the board:

(a) The Kentucky Association for Economic Development;

(b) The Kentucky Association of Manufacturers;

(c) The Kentucky State AFL-CIO;

(d) The Kentucky Farm Bureau Federation;

(e) The Kentucky Chamber of Commerce; and

(f) The National Federation of Independent Businesses/Kentucky.

(4) The Governor shall select the original eight (8) private sector members from the aggregation of the lists provided pursuant to subsection (3) of this section, with at least one (1) appointment being chosen from each organization's list and at least one

(1) appointment being chosen from each Congressional district. Appointments to vacancies shall be made in the same manner as prescribed in this subsection and subsection (3) of this section, except that there is no requirement that the vacancy be filled from the same organization's list as the original appointment.

(5) All appointments shall be for four (4) years.

(6) In making appointments to the board, the Governor shall assure broad geographical representation, as well as representation from the major sectors of Kentucky's economy by leading executives with a knowledge of the problems of large and small businesses, local economic development, and the transfer of research and development from the laboratory to the marketplace. In filling vacancies, the Governor shall assure the continuous representation on the board of broad constituencies of Kentucky's economy, including manufacturing and agriculture.

(7) Vacancies on the board which may occur from time to time shall be filled as follows:

(a) Any vacancy which occurs shall be filled for the unexpired term in accordance with the procedures established in subsections (3) and (4) of this section.

(b) If any private sector member misses more than two (2) consecutive meetings of the board, then that position shall be declared vacant and filled in accordance with this section.

(8) The board shall meet semiannually and at other times upon call of the chairman or a majority of the board.

(9) A quorum shall be a majority of the voting membership of the board.

(10) A quorum shall be required to organize and conduct the business of the board, except that an affirmative vote of eight (8) or more members of the entire board shall be required to terminate the employment of the cabinet's secretary, and to adopt or amend the strategic plan.

(11) Private sector members shall serve without compensation but shall be reimbursed for all reasonable, necessary, and actual expenses.

(12) All existing duties, responsibilities, functions, personnel, programs, funds, obligations, records, and real and personal property of the Cabinet for Economic Development, as of July 14, 1992, shall be under the authority and control of the board.

(13) The Cabinet for Economic Development shall give prompt notice to the Commissioner of Agriculture when the cabinet receives information about an agriculture-related economic development opportunity, including but not limited to the following:

(a) Agricultural production;

(b) Food or beverage processing; or

(c) An economic activity that uses agricultural products as inputs.

Effective: July 14, 2022

History: Amended 2022 Ky. Acts ch. 206, sec. 1, effective July 14, 2022; and ch. 236, sec. 43, effective July 1, 2022. -- Amended 2016 Ky. Acts ch. 123, sec. 1, effective July 15, 2016. -- Amended 2010 Ky. Acts ch. 24, sec. 192, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 16, sec. 38, effective June 25, 2009. -- Amended 2005 Ky. Acts ch. 95, sec. 32, effective June 20, 2005. -- Amended 1998 Ky. Acts ch. 48, sec. 10, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 194, sec. 14, effective July 15, 1996. -- Created 1992 Ky. Acts ch. 105, sec. 3, effective July 14, 1992.

Legislative Research Commission Note (7/14/2022). This statute was amended by 2022 Ky. Acts chs. 206 and 236, which do not appear to be in conflict and have been codified together.

154.10-020 Officers -- Executive committee.

(1) The Governor shall be the chairman of the board and upon his absence the secretary of the Governor's Executive Cabinet shall serve as chairman.

(2) The board shall elect from among the private sector members a vice chairman of the board. The initial term of office for the vice chairman shall expire December 31, 1994, and the subsequent terms of office of the vice chairman shall be for a period of two (2) years.

(3) Upon the absence of both the Governor and the secretary of the Governor's Executive Cabinet, the vice chairman shall serve as chairman.

(4) The board may establish an executive committee consisting of the chairman, the vice chairman, the secretary of the cabinet, and not more than three (3) additional board members selected jointly by the chairman and vice chairman. The executive committee shall have such authority as the board delegates to it, except that the board shall not delegate to the executive committee the authority to take actions requiring approval by a majority of the entire board under KRS 154.10-010(10).

(5) The secretary and other officers and employees of the cabinet shall not be required to disclose confidential information concerning existing businesses or business prospects with which the board or cabinet is dealing, including the identity of the businesses, to members of the board other than the executive committee. The executive committee shall provide advice and assistance to the secretary in negotiations with existing and prospective businesses. In the event the cabinet enters into an agreement with a business entity which requires approval by the General Assembly, the agreement shall be presented by the secretary to the board, which shall make a recommendation of approval or disapproval of the agreement to the General Assembly.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 4, effective July 14, 1992.

154.10-030 Powers and authority.

The board shall have all the powers and authority, not explicitly prohibited by statute, necessary or convenient to carry out and effectuate the functions, duties, and responsibilities of the board and the cabinet, including, but not limited to, the following:

(1) Serving as the governing body of the Cabinet for Economic Development;

(2) Suing and being sued;

(3) Adopting, using, and altering at will a corporate seal;

(4) Approving economic development programs and projects;

(5) Discharging the secretary of the Cabinet for Economic Development;

(6) Approving the state's strategic economic development plan and subsequent implementation plans;

(7) Providing for and directing the state's economic development strategic planning process;

(8) Evaluating the performance and effectiveness of the Commonwealth's economic development systems, including:

(a) The establishment of benchmarks; and

(b) Program review;

(9) Reporting to the Governor, the General Assembly, and the people of the Commonwealth regarding its functions, duties, and responsibilities, including, but not limited to:

(a) The Commonwealth's strategic economic development plan;

(b) Program initiatives and implementation plans;

(c) Systems evaluations;

(d) Benchmarks;

(e) Program evaluation; and

(f) Activities of the cabinet;

(10) Soliciting, borrowing, accepting, receiving, investing, and expending funds from any public or private source;

(11) Making grants, loans, and investments; guaranteeing and insuring loans, leases, bonds, notes, or other indebtedness, whether public or private; issuing letters of credit; and making loans to financial institutions to facilitate financing of all or part of an export-related transaction including, but not limited to, pre-export working capital financing and post-export receivable financing;

(12) Constructing, acquiring by gift, purchase, installment purchase, or lease, and reconstructing, improving, repairing, or equipping any project or any part of a project; and entering into a lease for the use or sale of a project;

(13) Making loans and participating in the making of loans; undertaking commitments to make loans and mortgages; buying and selling loans and mortgages at public or private sale; rewriting loans and mortgages; discharging loans and mortgages; foreclosing on mortgages and commencing any action to protect or enforce a right conferred upon the cabinet or placed within the control, authority, and responsibility of the cabinet under the provisions of this chapter; bidding for and purchasing property which was the subject of the mortgage at a foreclosure or other sale, and acquiring or taking possession of the property and, in that event, completing, administering, paying the principal and interest on obligations incurred in connection with the property; and disposing of and otherwise dealing with the property in a manner as may be necessary or desirable to protect the interests of the cabinet;

(14) Entering into a lease for the use or sale of a project; acquiring or contracting from any person, public entity, corporation, limited liability company, partnership, limited partnership, or entity, leaseholds, real or personal property, or any interest in real or personal property; owning, holding, clearing, improving, and rehabilitating and selling, assigning, exchanging, transferring, conveying, leasing, mortgaging, or otherwise disposing of or encumbering leaseholds, real or personal property, or any interest in real or personal property as is convenient for the accomplishment of the purposes of this chapter;

(15) Procuring insurance against any loss in connection with the cabinet's property, assets, or activities;

(16) Charging, imposing and collecting fees and charges in connection with any transaction, and providing for reasonable penalties for delinquent payment of fees or charges;

(17) Indemnifying and procuring insurance indemnifying members and officers of the board, and the cabinet and members and officers of the finance committee of the Kentucky Economic Development Finance Authority as provided in KRS 154.20- 010, from personal loss or accountability from liability asserted by any person on the bonds or notes of the cabinet or authority, or any personal liability or accountability by reason of the issuance of bonds, notes, insurance, or guarantees; or by reason of acquisition, construction, ownership, or operation of any project funded in whole or part by the cabinet or authority; or by reason of any other action taken or the failure to act by the cabinet or authority;

(18) Mortgaging or creating security interests in a project or any part of a project, or in a lease or loan, or in the rents, revenues, or sums to be paid in favor of the holders of the bonds or notes issued by the cabinet;

(19) Conveying or releasing a project or any part of a project to a lessee, purchaser, or borrower under any agreement after provision has been made for the retirement in full of the bonds or notes issued for that project under the terms and conditions provided in the agreement, or as may be agreed with the holders of the bonds or notes, or as may otherwise be agreed with the holders of the bonds or notes;

(20) Issuing non-appropriation-supported bonds and notes including, but not limited to, commercial paper, refund bonds, and notes; paying the costs of issuance of bonds and notes; paying interest on bonds and notes;

(21) Making and entering into contracts and agreements necessary or incidental to the performance of its duties and execution of its powers;

(22) Employing consultants and other persons and employees as may be required in the judgment of the board, essential to the cabinet's operations, functions, and responsibilities;

(23) Providing technical assistance regarding any economic or job development project, program, or activity;

(24) Delegating any powers, duties, responsibilities, and authority to any division, agency, or authority under its control and administration;

(25) Reorganizing, pursuant to KRS 12.028, any organizational unit or administrative body under its control and jurisdiction;

(26) Promulgating administrative regulations, in accordance with KRS Chapter 13A, governing its powers, duties, and responsibilities as prescribed in this chapter and governing the powers, duties, and responsibilities delegated to any administrative body transferred to the cabinet by law or otherwise placed within its control and responsibility; and

(27) Doing all other things necessary or convenient to achieve its objectives and purposes which are not explicitly prohibited by statute.

Effective: July 12, 2006

History: Amended 2006 Ky. Acts ch. 149, sec. 208, effective July 12, 2006. -- Amended 1996 Ky. Acts ch. 194, sec. 15, effective July 15, 1996. -- Created 1992 Ky. Acts ch. 105, sec. 5, effective July 14, 1992.

154.10-035 Issuance of economic development revenue bonds and anticipation notes -- Uses -- Treatment.

(1) Notwithstanding any other provisions of the Kentucky Revised Statutes, the board is authorized to exercise the following power:

(a) The board may provide for the issuance of economic development revenue bonds by the cabinet, for the purpose of providing funds and moneys to enable the cabinet to exercise and fulfill the powers and authority set forth in KRS 154.10-030, to enter into agreements with governmental agencies and private companies, corporations, partnerships, and other such entities, acquire and lease projects to governmental agencies and private companies, corporations, cabinets, and other such entities, purchase obligations of governmental agencies issued for economic development projects, and make loans or grants for economic development projects, and to enable the cabinet generally to carry out and effectuate its proper purposes under this chapter. In anticipation of the issuance of the revenue bonds, the board may provide for the issuance at one (1) time, or from time to time, of revenue bond anticipation notes pursuant to the general laws of the state. The principal of and the interest on the revenue bonds or notes shall be payable solely from revenues made available to the cabinet for bond purposes. Any such notes may be made payable from the proceeds of bonds or renewal notes, or in the event bond or renewal note proceeds are not available, or should the board deem it financially practicable to pay the notes directly from revenues made available to the cabinet for bond purposes, the notes may be paid from any revenues made available to the cabinet for bond purposes. Prior to the issuance of the bonds or notes, the cabinet shall submit any proposed issue to the Capital Projects and Bond Oversight Committee for its review and determination in accordance with provisions of KRS 45.810.

(b) The revenue bonds or notes of the cabinet shall be dated and may be redeemable prior to maturity at the option of the board at prices and under terms and conditions determined by the board. Any bonds or notes shall bear interest at the rate or rates, shall be payable annually or at shorter intervals, and may bear conversion privileges determined by the board. Notes shall mature at the time or times not exceeding five (5) years from their date or dates, and revenue bonds shall mature at the time or times not exceeding forty

(40) years from their date or dates as may be determined by the board. The board shall determine the form and manner of execution of the bonds or notes, and shall fix the denomination or denominations and the place or places of payment of principal and interest, which may be any bank or trust company within or without the state. In case any officer of the board whose signature or facsimile of whose signature shall appear on any revenue bonds or notes shall cease to be such officer before the delivery thereof, the signature of the facsimile shall be valid and sufficient for all purposes, the same as if the officer had remained in office until the delivery. At the time of issuance of variable rate revenue bonds, the board may designate individuals or institutions which, in the sole judgment of the board, have financial market expertise to serve as agent for the board for establishing and changing from time to time, while the variable rate revenue bonds remain outstanding, the rate of interest to be borne by and the price to be paid for the revenue bonds. The rate-setting procedures and authority of each agent shall be set forth in writing, and may include a formula or an index or indices based upon market factors, and shall be established by the board at the time of issuance of the revenue bonds. At the time of the issuance of the revenue bonds, the board shall establish the maximum interest rate to be borne by the revenue bonds. The board shall retain the right to remove or replace any agent at any time and for any reason. The board may provide that said bonds or notes may be executed only with the facsimile signatures of its officers, but said bonds or notes shall be executed with the manual signature of a bank or trust company designated by the board as registrar and paying agent.

(c) All revenue bonds or notes issued under the provisions of this chapter shall have and are hereby declared to possess all of the qualities and incidents of negotiable instruments under the laws of the state. The board may sell the revenue bonds or notes in the manner, either at public or private negotiated sale, and for the price, as it may determine will best effect the purpose of this chapter. If revenue bonds are sold at public, competitive sale, the revenue bonds shall be sold after newspaper advertising conforming to the requirements of KRS Chapter 424 and competitive bids for the sale of the revenue bonds shall be opened and read publicly by the board at a designated place, day and hour, all of which shall be announced in the advertising made relative thereto.

(d) In its proceedings authorizing the issuance of revenue bonds or notes, the board shall fix and determine contractual provisions with the bondholders relating to the receipt, allocation, pledging, and disbursement of revenues made available to the cabinet for bond purposes, and may enact and determine terms, conditions, and restrictions pursuant to which additional revenue bonds of the cabinet may be authorized and issued from time to time. The proceedings, determinations, and enactments of the board shall specify that the payment of principal of and interest on all cabinet revenue bonds and notes shall constitute a first charge and lien against all revenues made available to the cabinet for bond purposes before any such revenues are used, applied, and disbursed for any other valid purposes of the cabinet, including the payment of operation and maintenance costs incident to the operation of the cabinet.

(e) The proceeds of all revenue bonds or notes shall be used solely for the purpose of enabling the cabinet to enter into agreements or interim financing agreements with governmental agencies and private companies, corporations, partnerships, and other entities, to acquire and lease projects to governmental agencies, private companies, corporations, partnerships and other entities, to purchase obligations of governmental agencies issued for economic development projects, to make loans or grants to governmental agencies, private companies, corporations, partnerships, and other such entities for economic development projects, or for any purpose authorized in this chapter. Revenue bond or note proceeds may also be used and applied for the payment of ordinary and necessary expenses in connection with issuance of the revenue bonds or notes, including, but not by way of limitation, a sum equal to any discount in the sale thereof, if discount bids are authorized and permitted by the board, administrative expenses, including the preparation of revenue bonds or notes, publication of notices, printing and other costs, attorneys' fees, and other ordinary and necessary costs of financing, including the payment of fees to fiscal agents for advice and assistance in the preparation and marketing of revenue bonds or notes.

(f) Prior to the preparation of definitive revenue bonds or notes, the board may, under like restrictions, issue interim receipts or temporary bonds, exchangeable for definitive revenue bonds or notes when the revenue bonds or notes shall have been executed, and are available for delivery. The board shall also provide for the replacement of any revenue bonds or notes that shall have become mutilated or shall have been destroyed or lost. Revenue bonds or notes may be issued under the provisions of this chapter directly by the board without obtaining the consent or acquiescence of any cabinet, division, commission, board, department, or agency of the state other than the Finance and Administration Cabinet, and as provided in KRS 42.420, and without any other proceedings or the happening of any other conditions or things except as specifically required by this chapter and the provisions of the resolution or resolutions of the board authorizing the issuance of the revenue bonds or notes.

(2) The board shall assume all bond issuance and refunding authority, power, duties, and obligations as existed on July 14, 1992, for the Kentucky Development Finance Authority, and the Kentucky Rural Economic Development Authority; the ability of any of the foregoing organizations to issue industrial revenue bonds under KRS Chapter 103; and the ability of any of the foregoing authorities to issue economic development revenue bonds as provided in this chapter. The board shall also have the authority and power to issue revenue bonds for any other economic development activity as set forth in this chapter.

(3) The board shall for purposes of the Kentucky Revised Statutes be deemed to be the successor issuer for all of the currently issued and outstanding bond issues by the organizations set forth in subsection (2) of this section. The board shall have the authority and the power to reaffirm all existing bond obligations of the organizations in subsection (2) of this section and shall perform all duties, obligations, and requirements as may be necessary and required under the bond documents relating to each and every such issue. The board shall also, in regard to each and every such issue, exercise its authority and power as set forth in this chapter.

(4) In the discretion of the board, any revenue bonds or notes issued under the provisions of this chapter may be secured by a trust indenture by and between the cabinet and corporate trustee which may be any trust company or bank having the powers of a trust company within or without the Commonwealth. A trust indenture, or the resolution of the board providing for the issuance of revenue bonds or notes, may pledge or assign for the security of the revenue bonds or notes, all or any part of the totality of revenues made available to the cabinet for bond purposes received and to be received. The trust indenture or resolution of the board may contain provisions for protecting and enforcing the rights and remedies of the bondholders which may be reasonable and proper, and not in violation of law, including, but not limited to, covenants and provisions setting forth the duties of the cabinet in relation to the purposes to which revenue bonds and note proceeds may be applied; the disposition or pledging of assets and revenues made available to the cabinet for bond purposes; and the custody, safeguarding, and application of all such revenues. It shall be lawful for any bank or trust company incorporated under the laws of the Commonwealth which may act as depository of the proceeds of revenue bonds, notes, or revenues made available to the cabinet for bond purposes, to furnish such indemnifying bonds, or to pledge such securities as may be required by a trust indenture or resolution of the board. Any trust indenture or board resolution may set forth the rights and remedies of the bondholders and of the trustee, and may restrict the individual right of action by bondholders, where a trust indenture has been entered into. In addition to the foregoing, any trust indenture or board resolution may contain other provisions which the board determines to be reasonable and proper for the further security of the holders of any revenue bonds or notes. All expenses incurred in carrying out the provisions of a trust indenture or bond proceedings may be treated as a part of the cost of operating the cabinet, and may be paid from revenues pledged or assigned to the payment of the principal of and the interest on revenue bonds or notes, or from any other funds properly available to the cabinet for bond purposes. However, the payment of operational costs from revenues made available to the cabinet for bond purposes shall, as provided in subsection (1) of this section, be subordinate to the payment of principal of and interest on cabinet revenue bonds or notes from revenues made available to the cabinet for bond purposes, it being intended that these principal and interest requirements shall be secured by a prior and paramount lien on gross revenues made available to the cabinet for bond purposes.

(5) Notwithstanding any other provision to the contrary, any trust indenture or board resolution shall provide that, except to the extent the rights afforded to bondholders by this section shall be enforceable and enforced by a trustee under a trust indenture rather than by the bondholders, any holder of revenue bonds or notes issued by the cabinet or any of the coupons appurtenant thereto, may, either at law or in equity, by suit, action, mandamus, or other proceedings, protect and enforce any and all rights generally arising under the laws of the Commonwealth, or granted under this chapter, or under a trust indenture, or by the resolution of the board authorizing the issuance of revenue bonds or notes, and may specifically enforce and compel by mandamus the performance of all duties required by this chapter, or by trust indenture, or board resolution, to be performed by the cabinet or by any officer or employee thereof, including, but not limited to, the prompt and full enforcement of the terms and conditions of all assistance agreements to which the cabinet is a party.

(6) The cabinet is hereby authorized to provide for the issuance of refunding revenue bonds or notes for the purpose of refunding any revenue bonds or notes then outstanding, whether issued by the cabinet under the provisions of this chapter or one (1) of the agencies, authorities or organizations referenced in subsections (2) and (3) of this section, including the payment of any redemption premium thereon and any interest accrued or to accrue to the date of redemption of these revenue bonds or notes, and, if determined advisable by the board, for the additional purpose of providing further funds for the carrying out of the proper public and governmental purposes of the cabinet. The issuance and sale of the refunding revenue bonds or notes, the maturities and other details thereof, the rights of the holders thereof, and the rights, duties, and obligations of the cabinet in respect of the same, shall be governed by the provisions of this chapter which relate to the issuance of revenue bonds or notes, insofar as these provisions may be applicable.

(7) Refunding revenue bonds or notes may be sold or exchanged directly for outstanding revenue bonds or notes of the cabinet, and if sold, the proceeds thereof shall be applied, in addition to any other authorized purposes, to the purchase, redemption, or payment of these outstanding revenue bonds or notes. Pending the application of the proceeds of any refunding revenue bonds, with any other available funds, to the payment of the principal, accrued interest, and any redemption premium on the revenue bonds or notes being refunded (and if so provided or permitted in the board resolution authorizing the issuance of the refunding revenue bonds or notes, or in the trust indenture securing the same, to the payment of any interest on the refunding revenue bonds or notes and any expenses in connection with the refunding), the proceeds may be invested in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America which shall mature or which shall be subject to redemption by the holders thereof at the option of such holders not later than the respective dates when the proceeds, together with the interest accruing thereon, will be required for the purposes intended.

(8) Revenue bonds and notes issued by the cabinet under the provisions of this chapter are hereby declared and deemed to be securities in which all public officers and public bodies of the Commonwealth and its political subdivisions, all insurance companies, trust companies, banking associations, investment companies, executors, administrators, trustees, and other fiduciaries may properly and legally invest funds, including capital in their control or belonging to them. These obligations of the cabinet are hereby declared and determined to be securities which may properly and legally be deposited with and received by any state or municipal officer or any agency or political subdivision of the Commonwealth, for the purpose for which the deposit of bonds, notes, or obligations of the Commonwealth is now, or may hereafter be, authorized by law.

(9) Revenue bonds or notes issued by the cabinet under the provisions of this chapter shall not be deemed to constitute a debt of the Commonwealth or of any political subdivision thereof, or a pledge of the faith and credit of the Commonwealth or of any political subdivision thereof; but the bonds shall be payable as to principal and interest solely from revenues made available to the cabinet for bond purposes provided therefor under the provisions of this chapter. All such revenue bonds or notes shall contain on the face thereof a statement to the effect that neither the Commonwealth nor the cabinet shall be obligated to pay the same, or the interest thereon, except from revenues made available to the cabinet for bond purposes, as defined in this chapter; and that neither the faith and credit, nor the taxing power of the Commonwealth or any political subdivision thereof is pledged to the payment of the principal of and interest on such revenue bonds or notes.

(10) The Commonwealth, for the specific use and benefit of the cabinet, may cause to be submitted to the voters of the state in a manner provided by Sections 49 and 50 of the Constitution of Kentucky, from time to time, propositions for the incurring of state indebtedness represented by general obligation bonds of the Commonwealth, the proceeds of which are to be made available to the cabinet and used and employed by the cabinet for all proper purposes.

(11) Subject to the provisions of KRS 56.870 to 56.873, the State Property and Buildings Commission or the Kentucky Turnpike Authority may issue bonds for which debt service originates with an appropriation of the General Assembly, and may make the proceeds available to the cabinet for all proper purposes.

(12) Funds appropriated to the cabinet by the General Assembly, including but not limited to repayments of revolving funds established with appropriations of the General Assembly or established with bond issues for which the debt service, issuance costs, reserve fund requirements, insurance premiums or any other expenditures associated with bond issuance are appropriated by the General Assembly, shall not be commingled with other funds made available to the cabinet and shall only be expended for the purposes specified by the General Assembly when the appropriation is made or as approved in subsequent actions of the General Assembly.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 30, effective July 14, 1992.

154.10-040 Selection and appointment of secretary of the Cabinet for Economic Development.

(1) In the selection and appointment of the secretary, the board shall set the qualifications for the position of the secretary, employ a national search firm and conduct a nationwide search for candidates, and select from that list three (3) candidates for secretary of the Cabinet for Economic Development. The names of the three (3) candidates shall be submitted to the Governor who shall choose one of them as secretary, except that, if the Governor so chooses, he may reject the first list of names and direct the board to submit a list of three (3) additional names, from which he shall appoint the secretary. Once appointed, the secretary shall serve at the pleasure of the board.

(2) The secretary shall be a person with significant experience and established reputation as an economic development professional.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 6, effective July 14, 1992.

154.10-050 Secretary as chief executive officer -- Duties and responsibilities.

(1) The secretary shall be the chief executive officer of the Cabinet for Economic Development and shall possess the professional qualifications appropriate for that office as determined by the board.

(2) The board shall set the salary of the secretary and up to two (2) additional executive officers of the cabinet as determined by the board, which shall be exempt from state employee salary limitations as set forth in KRS 64.640. No executive officer of the cabinet shall be paid a salary greater than that of the secretary.

(3) The secretary shall be responsible for the day-to-day operations of the cabinet and shall report and submit on an annual basis implementation plans to the board as provided in KRS 154.10-060; carry out policy and program directives of the board; coordinate programs of the cabinet with all other agencies of state government having economic development responsibilities; hire all other personnel of the cabinet consistent with state law; and carry out all other duties and responsibilities assigned by state law.

(4) The secretary shall prepare and submit the proposed budget of the cabinet to the chairman who shall present it to the board for final approval. Upon approval, the board shall submit the proposed budget to the Governor's Office for Policy and Management.

(5) The secretary shall be reimbursed for all actual and necessary expenses incurred in the performance of all assigned duties and responsibilities.

(6) The secretary shall give highest priority consideration in marketing, targeting, and recruiting new businesses, in expanding existing businesses, and in recommending state economic development loans, grants, and incentive programs administered by the authority, to Kentucky counties which have had an average countywide rate of unemployment of fifteen percent (15%) or greater in the most recent twelve (12) consecutive months for which unemployment figures are available, on the basis of the final unemployment figures calculated by the Department of Workforce Development within the Education and Labor Cabinet.

Effective: July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 44, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 15, effective June 27, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 8, effective July 14, 2018. -- Amended 2017 Ky. Acts ch. 166, sec. 1, effective April 10, 2017. -- Amended 2014 Ky. Acts ch. 89, sec. 3, effective July 15, 2014. -- Amended 2009 Ky. Acts ch. 11, sec. 31, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 211, sec. 62, effective July 12, 2006. -- Amended 2002 Ky. Acts ch. 65, sec. 1, effective July 15, 2002. -- Created 1992 Ky. Acts ch. 105, sec. 7, effective July 14, 1992. 2026-2028 Budget Reference. See State/Executive Branch Budget, 2026 Ky. Acts ch. 168, Pt. I, B, 1, (5) at 2069.

154.10-060 Submission of implementation plans to board.

(1) The secretary shall present annually to the board for its review and approval implementation plans for the approved strategies as set forth in the Commonwealth's approved strategic economic development plan for which funds will be expended by the cabinet or other agencies receiving funds from the cabinet.

(2) Any agency receiving funds from or through the cabinet shall submit annually implementation plans to the board for its review and approval.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 8, effective July 14, 1992.

154.10-070 Initiation of new programs.

(1) The board shall have authority to direct the cabinet to initiate any new programs that it deems appropriate, including, but not limited to:

(a) A seed-stage financing program to provide seed-stage financing to innovative growth-oriented, emerging, and small Kentucky firms as distinguished from seed-capital financing by the level of risk and return associated with the investment;

(b) An applied research and development finance program to provide matching grants to Kentucky's industries and universities to conduct applied research of strategic importance to Kentucky's economy. If this program is created, the cabinet may contract for its administration with the Kentucky Science and Technology Council, Inc.;

(c) A government permitting and expediting program to assist businesses in expediting government permits and regulatory requirements;

(d) A surety bonding program to provide bonding assistance for small businesses in the form of education of the bonding process, bond waivers, and the creation of a bond fund;

(e) A Kentucky export authority to utilize the services of the Kentucky World Trade Center, university export trade programs, and export programs provided by other agencies within a context to provide financial assistance to Kentucky exporters through the financing of accounts receivable, letters of credit, and loan guarantees, and the use of commissioned sales agents in foreign countries;

(f) A flexible enterprise networks program to encourage and enable Kentucky firms to apply competitive management practices, modernize, and effectively compete in national and international markets;

(g) An economic response network to collect data on the needs of existing businesses in order to determine if a particular business or business sector is in trouble and about to fail or relocate, or is contemplating major expansion within Kentucky. The purpose of the program would be to assist the cabinet in developing responses to suit specific needs of Kentucky businesses and industries;

(h) A Kentucky technology service to integrate, broker, and deliver technology and related business services primarily to small- and medium-sized Kentucky firms. The service would fulfill its mission by brokering firms to the best possible existing public, private or university expert, by consulting directly with firms when no expert is available, and by coordinating seminars on technologies, management practices, and issues of competitive importance to Kentucky firms;

(i) A multimedia center to develop teleconference capabilities and other specialized marketing presentations for the use of state agencies and regional economic development centers and communities. The center would support Kentucky's marketing efforts, enhance the state's image of being progressive, and provide marketing and informational support to communities throughout the state;

(j) A community preparedness program to develop a list of criteria to identify those communities which are prepared to accommodate significant new or expanding businesses, to identify deficiencies of those communities which do not meet the criteria, and to provide assistance to those communities to eliminate their economic development deficiencies.

1. Areas in which criteria would be developed to identify communities' preparedness, would include, but not be limited to: infrastructure, site availability and conditions, environmental conditions, workforce, education, business and community support, housing, and health care.

2. Communities having deficiencies should meet the stated criteria through assistance from readily available regional and local facilities and institutions; and

(k) A marketing assistance program to assess the resources of communities and to assist them in marketing and promotional efforts.

Effective: July 15, 1998

History: Amended 1998 Ky. Acts ch. 414, sec. 21, effective July 15, 1998. -- Created 1992 Ky. Acts ch. 105, sec. 9, effective July 14, 1992.

154.10-080 Regional offices and advisory boards.

(1) The board may establish one or more regional offices and provide staff as necessary to perform functions as prescribed by the board.

(2) The board may establish regional advisory boards consisting of representatives of government, private business, communities, and higher education; and prescribe their functions and responsibilities.

(3) The board may contract with existing economic development agencies as necessary to perform functions as prescribed by the board.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 15, effective July 14, 1992.

154.10-090 Cooperation among state agencies and coordination of programs.

(1) The secretary and the directors of other state agencies and entities receiving state funds for programs and activities which may affect state economic development shall cooperate in the coordination of those programs and activities to achieve the successful implementation of the state's strategic economic development plan.

(2) The board shall compile a list of state agencies and the extent to which they have direct programmatic involvement in Kentucky's economic development systems. This information shall be presented to the General Assembly before each even- numbered-year regular session for the purpose of considering programmatic and budget adjustments.

(3) Nothing in this chapter shall be construed as modifying, superseding, or repealing any provisions of KRS Chapter 146, 151, 224, or 350, or the obligations of the Energy and Environment Cabinet under those chapters.

Effective: July 15, 2010

History: Amended 2010 Ky. Acts ch. 24, sec. 193, effective July 15, 2010. -- Amended 2001 Ky. Acts ch. 58, sec. 20, effective June 21, 2001. -- Created 1992 Ky. Acts ch. 105, sec. 16, effective July 14, 1992.

Strategic Planning Strategic Planning

154.10-100 Repealed, 2018.

[Repealed]

154.10-120 Repealed, 2018.

[Repealed]

154.10-125 Repealed, 2018.

[Repealed]

154.10-140 Repealed, 2018.

[Repealed]

Subchapter 12 Cabinet for Economic Development Subchapter 12 Cabinet for Economic Development

Powers and Duties Powers and Duties

154.12-050 Contracting of functions and services.

(1) The cabinet shall have the authority to contract for the provision of any economic development function or service with private firms or public institutions provided that such contracts meet the following conditions:

(a) They are based on competitive requests for proposals;

(b) They incorporate strict performance standards and accountability criteria;

(c) They require periodic audit;

(d) They are subject to regular rebidding; and

(e) Where appropriate, they leverage other private and public funds.

(2) Wherever feasible, the cabinet shall contract for the provision of functions and services rather than establishing new governmental structures.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 105, sec. 10, effective July 14, 1992.

154.12-100 Economic development fund -- Project selection criteria -- Written commitment -- Approval -- Report.

(1) "Economic development fund" means the fund authorized by the General Assembly for the purpose of promoting economic development within the state.

(2) The economic development fund shall be funded through the issuance of bonds by the State Property and Buildings Commission or other appropriation by the General Assembly.

(3) The economic development fund shall be administered by the secretary of the Cabinet for Economic Development. The authority shall promulgate administrative regulations in accordance with KRS Chapter 13A for project selection criteria and administration of the economic development fund. The project selection criteria shall include but not be limited to the following:

(a) Potential job creation or job retention;

(b) Degree of public or private and local involvement;

(c) Degree and conditions of project payback; and

(d) Amount of investment.

(4) Prior to submission of an economic development fund project to the authority, the secretary of the Cabinet for Economic Development shall receive a written commitment from the public or private organization which has requested funds outlining projected job creation and retention, an investment breakdown, and overall project description. This shall be submitted by the secretary to the authority. Subsequently, the secretary of the Cabinet for Economic Development shall execute a written agreement with the public or private organizations involved expressing in detail the respective obligations on the parties.

(5) Projects of state agencies as defined in KRS 42.005 shall not be eligible for funding from the economic development fund program, unless expressly provided in a branch budget bill. Airport construction and renovation projects shall be eligible for funding under this section. The secretary of the Cabinet for Economic Development shall consult with the secretary of the Finance and Administration Cabinet on the terms and conditions relating to the use of funds pursuant to this section before any commitment is made on any project to any public or private organization.

(6) Following the approval by the authority, the project shall be presented by the secretary of the Cabinet for Economic Development or his or her designee with supporting documentation for review and approval at the next regularly scheduled meeting of the Capital Projects and Bond Oversight Committee pursuant to KRS 45.810 and at the next regularly scheduled meeting of the State Property and Buildings Commission pursuant to KRS 56.450.

(7) Notwithstanding the provisions of KRS 56.872(3), the amount of economic development funds issued during any biennium shall not exceed the balance of the fund, and any funds authorized in the biennial budget shall carry forward and shall not lapse.

(8) By November 1 of each year, the Cabinet for Economic Development shall prepare and post an annual report to the cabinet's Web site as required in KRS 154.12-2035, showing the economic development funds issued during the previous fiscal year, funds disbursed, the amounts paid back, and the balance still owing with respect to grants or loans made by the Cabinet for Economic Development with proceeds of economic development funds during the previous five (5) fiscal years.

Effective: March 26, 2019

History: Amended 2019 Ky. Acts ch. 172, sec. 1, effective March 26, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 10, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 134, sec. 4, effective July 15, 2014. -- Amended 1996 Ky. Acts ch. 194, sec. 16, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 387, sec. 26, effective July 15, 1994. -- Repealed, reenacted, and amended as KRS 154.12-100, 1992 Ky. Acts ch. 105, sec. 29, effective July 14, 1992. -- Amended 1991 (1st Extra. Sess.) Ky. Acts ch. 12, sec. 51, effective February 26, 1991. -- Amended 1990 Ky. Acts ch. 195, sec. 1, effective July 13, 1990; and ch. 267, sec. 1, effective July 13, 1990. -- Created 1988 Ky. Acts ch. 145, sec. 2, effective July 15, 1988. Formerly codified as KRS 152.052. 2026-2028 Budget Reference. See State/Executive Branch Budget, 2026 Ky. Acts ch. 168, Pt. II, B, 1, (2) at 2118.

154.12-201 Repealed, 1994.

[Repealed]

154.12-202 Renumbered as KRS 224.01-500.

[Renumbered as KRS 224.01-500.]

154.12-203 Kentucky Commission on Military Affairs -- Purposes -- Powers -- Executive committee -- Executive director.

(1) There is created the Kentucky Commission on Military Affairs. The commission shall be a separate administrative body of state government within the meaning of KRS Chapter 12.

(2) It shall be the purpose of the Kentucky Commission on Military Affairs to:

(a) Address matters of military significance to Kentucky;

(b) Maintain a cooperative and constructive relationship between state agencies and the military entities in Kentucky, as necessary to ensure coordination and implementation of unified, comprehensive, statewide strategies involved with, or affected by, the military;

(c) Advise the Governor, the General Assembly, the Kentucky congressional delegation, and other appropriate government officials on all matters in which the military services and the Commonwealth have mutual interests, needs, and concerns;

(d) Take action to promote and optimize state and Department of Defense initiatives that will improve the military value of Kentucky's National Guard, active, and reserve military force structure and installations, and improve the quality of life for military personnel residing in the Commonwealth;

(e) Coordinate, as necessary, the state's interest in future Department of Defense base closure and restructuring activities;

(f) Recommend state, federal, and local economic development projects which would promote, foster, and support economic progress through military presence in the Commonwealth;

(g) Promote and assist the private sector in developing spin-off investments, employment, and educational opportunities associated with high-technology programs and activities at Kentucky's military installations;

(h) Recommend to the Kentucky Economic Development Partnership the long- range options and potential for the defense facilities located in Kentucky;

(i) Develop strategies to encourage military personnel to retire and relocate in Kentucky and promote those leaving the military as a viable quality workforce for economic development and industrial recruitment; and

(j) Allocate available grant money to qualified applicants to further the purposes of paragraphs (a) to (i) of this subsection.

(3) The Kentucky Commission on Military Affairs shall consist of:

(a) The Governor or a designated representative;

(b) The secretary of the Cabinet for Economic Development or a designated representative;

(c) The adjutant general of the Commonwealth or a designated representative;

(d) The executive director of the Office of Homeland Security or a designated representative;

(e) The secretaries of the following cabinets or their designees:

1. Finance and Administration;

2. Justice and Public Safety;

3. Energy and Environment;

4. Transportation;

5. Health and Family Services;

6. Personnel;

7. Education and Labor;

8. Public Protection; and

9. Tourism, Arts and Heritage;

(f) The Attorney General or a designated representative;

(g) The commissioner of the Department of Veterans' Affairs or a designated representative;

(h) The executive director of the Kentucky Commission on Military Affairs or a designated representative;

(i) The chairperson of the Kentucky Committee for Employer Support of the Guard and Reserve;

(j) Kentucky's Civilian Aides to the Secretary of the United States Army;

(k) The chairperson of the Senate Veterans, Military Affairs, and Public Protection Committee and the chairperson of the House of Representatives Veterans, Military Affairs, and Public Safety Committee;

(l) The Chief Justice or a designated representative;

(m) The commander or the designee of the commander of each of the following as nonvoting, ex officio members:

1. U.S. Army Cadet Command;

2. U.S. Army Human Resources Command;

3. U.S. Army Recruiting Command;

4. 84th Training Command;

5. One Hundredth Division (Institutional Training);

6. 101st Airborne Division;

7. Blue Grass Army Depot;

8. Fort Campbell Garrison;

9. Fort Knox Garrison;

10. U.S. Army Reserve Aviation Command;

11. U.S. Army Corps of Engineers, Louisville District;

12. Adjutant General of the U.S. Army;

13. U.S. Coast Guard Sector Ohio Valley;

14. First Army Division East;

15. 1st Theater Sustainment Command; and

16. Fifth (V) Corps; and

(n) Five (5) at-large members appointed by the Governor, who shall be residents of counties significantly impacted by military installations.

(4) The terms of the five (5) at-large members shall be staggered so that two (2) appointments shall expire at two (2) years, one (1) appointment shall expire at three

(3) years, and two (2) appointments shall expire at four (4) years, from the dates of initial appointment.

(5) (a) The commission shall establish an executive committee consisting of the secretary of the Cabinet for Economic Development, the adjutant general of the Commonwealth, the commissioner of the Department of Veterans' Affairs, the executive director of the Kentucky Commission on Military Affairs, and the five (5) at-large members. The chair and vice chair of the Kentucky Commission on Military Affairs shall be appointed by the Governor from among the members of the executive committee.

(b) The chair and vice chair of the commission shall also serve as chair and vice chair of the executive committee.

(c) The executive committee shall serve as the search committee for an executive director of the commission and shall have any other authority the commission delegates to it.

(6) The commission shall meet one (1) time each year, and may meet at other times on call of the chair, to establish the commission's goals and to review issues identified and recommendations made by the executive committee. A majority of the members shall constitute a quorum for the transaction of the commission's business. Members' designees shall have voting privileges at commission meetings.

(7) Members of the commission shall serve without compensation, but shall be reimbursed for their necessary travel expenses actually incurred in the discharge of their duties on the commission, subject to Finance and Administration Cabinet administrative regulations.

(8) The commission may establish committees or work groups composed of commission members and citizens as necessary to advise the commission in carrying out its responsibilities, duties, and powers. Citizen members of committees or work groups shall not have a vote.

(9) The commission may promulgate necessary administrative regulations as prescribed by KRS Chapter 13A.

(10) The commission may adopt bylaws and operating policies necessary for its efficient and effective operation.

(11) There shall be an executive director, who shall be the administrative head and chief executive officer of the commission, recommended by the executive committee, approved by the commission, and appointed by the Governor. The executive director shall have authority to hire staff, contract for services, expend funds, and operate the normal business activities of the commission.

(12) The Kentucky Commission on Military Affairs and its executive committee shall be an independent agency attached to the Office of the Governor.

Effective: July 15, 2024

History: Amended 2024 Ky. Acts ch. 100, sec. 5, effective July 15, 2024. -- Amended 2022 Ky. Acts ch. 236, sec. 45, effective July 1, 2022. -- Amended 2020 Ky. Acts ch. 43, sec. 1, effective July 15, 2020. -- Amended 2015 Ky. Acts ch. 93, sec. 1, effective June 24, 2015. -- Amended 2014 Ky. Acts ch. 57, sec. 1, effective July 15, 2014. -- Amended 2011 Ky. Acts ch. 11, sec. 1, effective June 8, 2011. -- Amended 2010 Ky. Acts ch. 16, sec. 1, effective July 15, 2010; and ch. 24, sec. 194, effective July 15, 2010. -- Amended 2006 Ky. Acts ch. 211, sec. 63, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 33, sec. 1, effective June 20, 2005; and ch.99, sec. 22, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 228, sec. 1, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 199, sec. 1, effective March 27, 1998; and ch. 426, sec. 108, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 113, sec. 3, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 486, sec. 24, effective July 15, 1994. – Created 1992 Ky. Acts ch. 176, sec. 1, effective July 14, 1992.

154.12-2033 Eligibility of endorsed capital construction projects for state economic development incentives.

(1) Any capital construction project endorsed by the Kentucky Commission on Military Affairs as preserving or creating jobs at military facilities located in Kentucky shall be eligible for state economic development incentives prescribed in this chapter, including but not limited to those provided in KRS 154.22-010 to 154.22-070, KRS 154.24-010 to 154.24-150, KRS 154.26-010 to 154.26-100, KRS 154.28-010 to 154.28-090 and KRS 141.400, and KRS 154.33-501 to 154.33-585; however, no project shall receive state financial assistance unless first approved by the Kentucky Economic Development Finance Authority. No project shall be located on federally owned or leased property.

(2) All standards, procedures, and requirements applicable to projects approved by the Kentucky Economic Development Finance Authority for state economic development incentives pursuant to the provisions of this chapter shall be applicable to all economic development projects submitted by the commission and approved by the authority for assistance.

(3) Notwithstanding any laws of the Commonwealth to the contrary, costs of highway and other transportation related construction and other infrastructure facilities improvements associated with a project endorsed by the commission may be eligible for state funding under programs administered by the Transportation Cabinet and the Kentucky Infrastructure Authority.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 113, sec. 5, effective July 15, 1996.

154.12-2035 Electronic database of approved program projects -- Annual report -- Programs included -- Coordination with other agencies.

(1) The cabinet shall maintain a searchable electronic database on its website containing information on the cost and status of the programs listed in subsection (3)(a) of this section. The database shall include all projects approved at any time in the last five (5) years and shall include for each, where applicable, the following information:

(a) The name of the program, the recipient or participant, the type of project, and its location by county;

(b) Total and approved costs of the project or investment, and the amount of incentives or other benefits authorized;

(c) For the Kentucky Business Investment Program and the Kentucky Enterprise Initiative Act, the amount of incentives or other benefits actually recovered as self-reported by the recipient;

(d) The number of new jobs estimated and, for the Kentucky Business Investment Program, actually created, along with wage information for those jobs;

(e) Project status and the date and nature of the most recent activity; and

(f) Any other comparable data or information necessary to achieve transparency and accountability for the specified programs.

(2) In addition to the electronic database required in subsection (1) of this section, the cabinet shall prepare an annual report on the programs listed in subsection (3) of this section and make it available on the Cabinet for Economic Development website by November 1 of each year. The report shall include all projects approved in the preceding fiscal year and shall provide for these projects the information specified in subsection (1) of this section plus aggregate data for each program, summary evaluations of program activity and effectiveness, and anything required by statute to be reported for any particular program. The report shall also list all projects that were approved in prior years but active at any time in the preceding fiscal year, although for these projects the report need not provide further data.

(3) The following programs shall be subject to the reporting requirements of this section:

(a) The electronic database required in subsection (1) of this section shall include the Bluegrass State Skills Corporation, grants-in-aid and skills training investment credit; Kentucky Business Investment Program; Kentucky Enterprise Initiative Act; Office of Entrepreneurship and Innovation programs; Incentives for Energy-related Business Act; Kentucky Economic Development Finance Authority small business and direct loan programs; Kentucky Industrial Revitalization Act; Kentucky Reinvestment Act; Kentucky Small Business Tax Credit; economic development bonds; Kentucky Industrial Development Act; Kentucky Jobs Development Act; Kentucky Jobs Retention Act; the Kentucky Rural Economic Development Act; and

(b) The annual report required by subsection (2) of this section shall include all programs listed in paragraph (a) of this subsection plus the Kentucky Investment Fund Act, and tax increment financing, state participation projects.

(4) The cabinet shall coordinate with any other agency necessary to supply the information required by this section.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 6, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 141, sec. 5, effective July 1, 2021; and ch. 185, sec. 108, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 18, effective July 14, 2018. - - Created 2014 Ky. Acts ch. 134, sec. 1; and ch. 185 sec. 108, effective July 15, 2014.

Legislative Research Commission Note (7/15/2014). 2014 Ky. Acts ch. 89, sec. 13, instructs the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in the Act, as it confirms the reorganization of the Cabinet for Economic Development. Such a correction has been made in subsection (3)(a) of this statute.

154.12-204 Definitions for KRS 154.12-205 to 154.12-208.

As used in KRS 154.12-205 to 154.12-208, unless the context requires otherwise:

(1) "Agribusiness" has the same meaning as in KRS 154.32-010;

(2) "Alternative fuel production" has the same meaning as in KRS 154.32-010;

(3) "Applicant" means a business or industry that has made application for a grant-in- aid or skills training investment credit as authorized by KRS 154.12-205 to 154.12- 208;

(4) "Approved company" means any qualified company seeking to sponsor an occupational upgrade training program or skills upgrade training program for the benefit of one (1) or more of its employees, which is approved by the corporation to receive grant-in-aid or skills training investment credits as provided by KRS 154.12-205 to 154.12-208;

(5) "Approved costs" means costs confirmed as eligible by the corporation, including:

(a) Fees or salaries required to be paid to instructors who are employees of the approved company, instructors who are full-time, part-time, or adjunct instructors with an educational institution, and instructors who are consultants on contract with an approved company in connection with an occupational upgrade training program or skills upgrade training program sponsored by an approved company;

(b) The cost of supplies, equipment, and materials used exclusively in an occupational upgrade training program or skills upgrade training program sponsored by an approved company;

(c) Employee wages to be paid in connection with an occupational upgrade training program or skills upgrade training program sponsored by an approved company; and

(d) All other costs of a nature comparable to those described in this subsection;

(6) "Board" means the board of directors of the Bluegrass State Skills Corporation;

(7) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in KRS 154.32-010;

(8) "Coal severing and processing" has the same meaning as in KRS 154.32-010;

(9) "Corporation" means the Bluegrass State Skills Corporation, or BSSC;

(10) "Educational institution" means a public or nonpublic secondary or postsecondary institution or an independent provider within the Commonwealth authorized by law to provide a program of skills training or education beyond the secondary school level or to adult persons without a high school diploma or its equivalent;

(11) "Employee" means any person who is:

(a) Currently a permanent full-time employee of the qualified company;

(b) Subject to the tax imposed by KRS 141.020; and

(c) Paid the minimum base hourly wage plus employee benefits equal to or greater than fifteen percent (15%) of the minimum base hourly wage. If the qualified company does not provide employee benefits equal to at least fifteen percent (15%) of the minimum base hourly wage, the qualified company may still qualify if it provides the full-time employee total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the minimum base hourly wage through increased hourly wages combined with at least one

(1) company-paid employee benefit;

(12) "Energy-efficient alternative fuel production" has the same meaning as in KRS 154.32-010;

(13) "Gasification production" has the same meaning as in KRS 154.32-010;

(14) "Grant-in-aid" means funding that is provided to qualified companies by the BSSC for the development or expansion of a program as provided in this chapter;

(15) "Headquarters" has the same meaning as in KRS 154.32-010;

(16) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(17) "Hospital" has the same meaning as in KRS 154.32-010;

(18) "Manufacturing" has the same meaning as in KRS 154.32-010;

(19) "Minimum base hourly wage" means the minimum wage amount paid to an employee by a qualified company, which shall not be less than:

(a) Two hundred percent (200%) of the federal minimum wage for a company located in a heritage county; or

(b) Three hundred percent (300%) of the federal minimum wage for a company located in any other county;

(20) "Nonretail service or technology" has the same meaning as in KRS 154.32-010;

(21) "Occupational upgrade training" means employee training sponsored by a qualified company that is designed to qualify the employee for a promotional opportunity with the qualified company;

(22) "Program" or "program of skills training or education consistent with employment needs" means a coordinated course of instruction which is designed to prepare individuals for employment in a specific trade, occupation, or profession. Such instruction may include:

(a) Classroom instruction;

(b) Classroom-related field, shop, factory, office, or laboratory work; and

(c) Basic skills, entry level training, job upgrading, retraining, and advance training;

(23) (a) "Qualified company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other legal entity through which business is conducted that is engaged in or is planning to be engaged in one (1) or more of the following activities within the Commonwealth:

1. Manufacturing;

2. Agribusiness;

3. Nonretail service or technology;

4. Headquarter operations, regardless of the underlying business activity of the company;

5. Alternative fuel, gasification, energy-efficient alternative fuel, or renewable energy production;

6. Carbon dioxide or hydrogen transmission pipeline;

7. Coal severing and processing; or

8. Hospital operations.

(b) "Qualified company" does not include companies where the primary activity to be conducted within the Commonwealth is forestry, fishing, the provision of utilities, construction, wholesale trade, retail trade, real estate, rental and leasing, accommodation and food services, or public administration services;

(24) "Renewable energy production" means the same as in KRS 154.32-010;

(25) "Skills training investment credit" means the credit against Kentucky income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, as provided in this subchapter;

(26) "Skills upgrade training" means employee training sponsored by a qualified company that is designed to provide the employee with new skills necessary to enhance productivity, improve performance, or retain employment, including but not limited to technical and interpersonal skills, and training that is designed to enhance computer skills, communication skills, problem solving, reading, writing, or math skills of employees who are unable to function effectively on the job due to deficiencies in these areas, are unable to advance on the job, or who risk displacement because their skill deficiencies inhibit their training potential for new technology; and

(27) "Technical assistance" means professional and any other assistance provided by qualified companies to an educational institution, which is reasonably calculated to support directly the development and expansion of a particular program as defined herein.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 4, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 7, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 102, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 11, effective July 14, 2018. -- Amended 2006 Ky. Acts ch. 149, sec. 209, effective July 12, 2006. -- Amended 2000 Ky. Acts ch. 300, sec. 5, effective July 14, 2000; and ch. 526, sec. 13, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 17, effective July 15, 1996. -- Repealed and reenacted 1990 Ky. Acts ch. 476, Pt. V., sec. 391, effective July 13, 1990. -- Created 1984 Ky. Acts ch. 211, sec. 1, effective July 13, 1984. Formerly codified as KRS 157.710.

Legislative Research Commission Note (4/27/2026). Under the authority of KRS 7.136(1), the reviser of statutes has altered the internal numbering of this statute during codification to place the terms in alphabetical order. The words in the text were not changed.

154.12-205 Bluegrass State Skills Corporation -- Board.

(1) There is hereby created an independent, de jure corporation of the Commonwealth with all the general corporate powers incidental thereto which shall be known as the "Bluegrass State Skills Corporation." The corporation shall be a political subdivision of the state and shall be attached to the Cabinet for Economic Development.

(2) The corporation is created and established to improve and promote the employment opportunities of the citizens of the Commonwealth by creating and expanding programs of skills training and education which meet the needs of qualified companies.

(3) The corporation shall be governed by a board of directors consisting of seventeen (17) members, including the following five (5) ex officio members: the commissioner of the Department of Workforce Development or his or her designee, the secretary of the Cabinet for Economic Development, the secretary of the Education and Labor Cabinet, the president of the Council on Postsecondary Education, and the president of the Kentucky Community and Technical College System. The twelve (12) other members shall be appointed by the Governor, including persons having knowledge and experience in business and industry, skills training, education, and minority employment; and at least one (1) of the twelve (12) members shall be appointed to represent labor organizations. Each member appointed by the Governor shall serve for a term of four (4) years, except that in making the initial appointments, the Governor shall appoint three (3) members to serve for one (1) year, three (3) members to serve for two (2) years, three (3) members to serve for three (3) years, and three (3) members to serve for four (4) years. All succeeding appointments shall be for a term of four (4) years.

(4) In the event of a vacancy, the Governor may appoint a replacement member who shall hold office during the remainder of the term so vacated.

(5) Any member may be removed from his appointment by the Governor for cause.

(6) The Governor shall designate a member of the board as its chairman.

(7) Members of the board of directors of the corporation, except for ex officio members, shall be entitled to compensation for their services in the amount of one hundred dollars ($100) for each regular or special called meeting of the corporation, and all members shall be entitled to reimbursement for any actual and necessary expenses incurred in the performance of their duties.

(8) The board of directors of the corporation shall annually elect a vice chairman, a secretary, and a treasurer. The secretary shall keep a record of the proceedings of the corporation and shall be custodian of all books, documents, and papers filed with the corporation, and its official seal.

(9) The Cabinet for Economic Development shall provide staff and support services to the corporation and shall direct and supervise its administrative affairs and general management subject to the policies, control, and direction of the board.

(10) All officers and employees of the corporation having access to its funding shall give bond to the corporation, at its expense, in the amount and with the surety as the board may prescribe.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 46, effective July 1, 2022. -- Amended 2018 Ky. Acts ch. 199, sec. 12, effective July 14, 2018. -- Amended 2010 Ky. Acts ch. 24, sec. 195, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 11, sec. 32, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 211, sec. 64, effective July 12, 2006. -- Amended 1997 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 55, effective May 30, 1997. -- Amended 1996 Ky. Acts ch. 194, sec. 18, effective July 15, 1996. -- Amended 1992 Ky. Acts ch. 105, sec. 52, effective July 14, 1992; and ch. 417, sec. 10, effective July 14, 1992. -- Amended 1990 Ky. Acts ch. 476, Pt. IV, sec. 195, effective July 13, 1990. -- Amended 1988 Ky. Acts ch. 199, sec. 1, effective July 15, 1988; and ch. 205, sec. 8, effective July 15, 1988. -- Created 1984 Ky. Acts ch. 211, sec. 2, effective July 13, 1984. Formerly codified as KRS 157.720

154.12-206 Duties of corporation.

The corporation shall have all of the powers necessary or convenient to carry out and effectuate the purposes and provisions of this chapter, including, but not limited to the following:

(1) To adopt bylaws for the regulation of its affairs and the conduct of its business and to prescribe rules, regulations, and policies in connection with the performance of its function and duties;

(2) To adopt an official seal;

(3) To sue and be sued in its own name;

(4) To make contracts and execute all instruments necessary or convenient for the conduct of its business;

(5) To make, execute, and effectuate all agreements with any federal or state agency or any person, corporation, association, partnership, or other organization or entity necessary to accomplish the purposes of this chapter;

(6) To procure sufficient insurance coverage against any losses in connection with its property;

(7) To accept any and all donations, grants, bequests, and devices, conditional or otherwise, of money, property, service, or other things of value which may be received from the United States, or any agency thereof, any governmental agency, an institution, person, firm, or corporation, public and private, to be held, used, or applied solely for the purposes specified in KRS 154.12-204 to 154.12-208. Receipt of each donation or grant shall be detailed in the annual report of the corporation. Such reports shall include the identity of the donor and the nature of the transaction;

(8) To collect and disseminate to interested individuals, in cooperation with and through any agencies of federal, state, and municipal government, information concerning areas of present and projected employment need, programs of skills training and education consistent therewith, and any other relevant information;

(9) To provide grants-in-aid to educational institutions and approved companies to encourage and facilitate the formation of comprehensive cooperative relationships between the public and private sectors which secure for such institutions the information, technical assistance, and financial support necessary for the development and significant expansion of programs of skills training and education consistent with employment need;

(10) To prepare, publish, and distribute, with or without charge as the corporation may determine, such technical studies, reports, bulletins, and other materials as it deems appropriate; and

(11) To organize, conduct, or sponsor special institutes, conferences, demonstrations, and studies to effectuate the purposes of KRS 154.12-204 to 154.12-208.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 103, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 13, effective July 14, 2018. -- Amended 1996 Ky. Acts ch. 194, sec. 19, effective July 15, 1996. -- Repealed and reenacted 1990 Ky. Acts ch. 476, Pt. V, sec. 392, effective July 13,1990. -- Created 1984 Ky. Acts ch. 211, sec. 3, effective July 13, 1984. Formerly codified as KRS 157.730

154.12-207 Grants-in-aid -- Skills training investment credit -- Maximum amount -

• Application -- Approval -- Training.

(1) The corporation may, subject to appropriation from the General Assembly or from funds made available to the corporation from any other public or private source, provide grants-in-aid to qualified companies, not in excess of five hundred thousand dollars ($500,000) per grant-in-aid. Such grants-in-aid shall be used exclusively for programs which are consistent with the provisions of this chapter.

(2) The corporation may, in accordance with KRS 154.12-204 to 154.12-208, award a skills training investment credit to an approved company. The amount of the skills training investment credit awarded by the corporation shall be an amount not to exceed fifty percent (50%) of the amount of approved costs incurred by the approved company in connection with its program of occupational upgrade training or skills upgrade training, the credit amount not to exceed four thousand five hundred dollars ($4,500) per trainee for an approved company in a heritage county and three thousand five hundred dollars ($3,500) per trainee for an approved company located in any other county, and, in the aggregate, not to exceed five hundred thousand dollars ($500,000) for each approved company per fiscal year. The corporation shall only approve one (1) application per fiscal year for each approved company.

(3) To apply for a grant-in-aid or a skills training investment credit, a qualified company shall submit an application to the Bluegrass State Skills Corporation before commencing its program of skills upgrade or occupational upgrade training. Each application shall contain information the corporation requires, including but not limited to:

(a) A proposal for a program of skills upgrade training, occupational upgrade training, and education;

(b) A description of each component of the proposed training program and the number of employee training hours requested; and

(c) A statement of the total anticipated costs and expenses of the program, including a breakdown of the costs associated with equipment, personnel, facilities, and materials.

(4) Approval of the grant-in-aid and skills training investment credit application by the board shall be based upon the following criteria:

(a) The program must be within the scope of KRS 154.12-204 to 154.12-208;

(b) Participants in the program must qualify as an employee as defined by KRS 154.12-204;

(c) The program must involve an area of skills upgrade training, occupational upgrade training, and education which is needed by a qualified company and for which a shortage of qualified individuals exists within the Commonwealth; and

(d) The grant-in-aid and skills training investment credit must be essential to the success of the program as the resources are inadequate to attract the technical assistance and financial support necessary from a qualified company.

(5) After a review of applications for grant-in-aid and skills training investment credits, the corporation may designate the qualified company as an approved company and approve the maximum amount of grants and skills training investment credits the approved company is eligible to receive. The maximum amount of skills training investment credits approved for all qualified companies by the corporation shall not exceed two million five hundred thousand dollars ($2,500,000) for each fiscal year. Skills training investment credits that remain unallocated by the corporation at the end of its fiscal year shall lapse and shall not be carried forward to a new fiscal year.

(6) The approved company shall complete all programs of skills upgrade training or occupational upgrade training within three (3) years from the date of approval by the corporation and shall certify the completion of these programs to the corporation. Once they are completed and certified and all required documentation is provided and received by the corporation, the corporation shall disburse the grant funds or notify the approved company of the final authorized skills training investment credit.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 5, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 8, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 104, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 14, effective July 14, 2018. -- Amended 2009 Ky. Acts ch. 11, sec. 33, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 211, sec. 65, effective July 12, 2006. -- Amended 2002 Ky. Acts ch. 65, sec. 2, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 6, effective July 14, 2000; and ch. 466, sec. 1, effective April 21, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 20, effective July 15, 1996. -- Repealed and reenacted 1990 Ky. Acts ch. 476, Pt. V, sec. 393, effective July 13, 1990. -- 1988 Ky. Acts ch. 437, Part XI, sec. 1, effective April 15, 1988. -- Created 1984 Ky. Acts ch. 211, sec. 4, effective July 13, 1984. Formerly codified as KRS 157.740.

154.12-208 Annual report.

By November 1 of each year, the corporation shall prepare an annual report of its activities and make it available on the Cabinet for Economic Development Web page as required in KRS 154.12-2035. The annual report shall include, but not be limited to, descriptions of all programs funded, an evaluation of the performance of each program, a summary of expenditures, and a detailed description of the participants.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 15, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 134, sec. 5, effective July 15, 2014. -- Amended 1996 Ky. Acts ch. 194, sec. 21, effective July 15, 1996. -- Repealed and reenacted 1990 Ky. Acts ch. 476, Pt. V, sec. 394, effective July 13, 1990. -- 1988 Ky. Acts ch. 437, Part XI, sec. 1, effective April 15, 1988. -- Created 1984 Ky. Acts ch. 211, sec. 5, effective July 13, 1984. Formerly codified as KRS 157.750

154.12-2084 Definitions for KRS 154.12-2084 to 154.12-2089.

As used in KRS 154.12-2084 to 154.12-2089, unless the context requires otherwise:

(1) "Approved company" means any qualified company seeking to sponsor an occupational upgrade training program or skills upgrade training program for the benefit of one (1) or more of its employees, which is approved by the authority to receive skills training investment credits in accordance with KRS 154.12-2084 to 154.12-2089;

(2) "Approved costs" means:

(a) Fees or salaries required to be paid to instructors who are employees of the approved company, instructors who are full-time, part-time, or adjunct instructors with an educational institution, and instructors who are consultants on contract with an approved company in connection with an occupational upgrade training program or skills upgrade training program sponsored by an approved company;

(b) Administrative fees charged by educational institutions in connection with an occupational upgrade training program or skills upgrade training program sponsored by an approved company and specifically approved by the Bluegrass State Skills Corporation;

(c) The cost of supplies, materials, and equipment used exclusively in an occupational upgrade training program or skills upgrade training program sponsored by an approved company;

(d) The cost of leasing a training facility where space is unavailable at an educational institution or at the premises of an approved company in connection with an occupational upgrade training program or skills upgrade training program sponsored by an approved company;

(e) Employee wages to be paid in connection with an occupational upgrade training program or skills upgrade training program sponsored by an approved company; and

(f) All other costs of a nature comparable to those described in this subsection;

(3) "Bluegrass State Skills Corporation" means the Bluegrass State Skills Corporation created by KRS 154.12-205;

(4) "Commonwealth" means the Commonwealth of Kentucky;

(5) "Educational institution" means a public or nonpublic secondary or postsecondary institution or an independent provider within the Commonwealth authorized by law to provide a program of skills training or education beyond the secondary school level or to adult persons without a high school diploma or its equivalent;

(6) "Employee" means any person:

(a) Who is currently a permanent full-time employee of the qualified company;

(b) Who has been employed by the qualified company for the last twelve (12) calendar months immediately preceding the filing of the application for skills training investment credits by the qualified company;

(c) Who is a Kentucky resident, as that term is defined in KRS 141.010; and

(d) Who receives a base hourly wage which is one hundred fifty percent (150%) of the federal minimum wage plus employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage, if the qualified company is located in a county of Kentucky which has had an average countywide rate of unemployment of fifteen percent (15%) or greater in the most recent twelve (12) consecutive months for which unemployment figures are available, on the basis of the final unemployment figures calculated by the Department of Workforce Development in the Education and Labor Cabinet. For purposes of this subsection, a "full-time employee" means an employee who has been employed by the qualified company for a minimum of thirty-five

(35) hours per week for more than two hundred fifty (250) work days during the most recently ended calendar year and is subject to the tax imposed by KRS 141.020;

(7) "Occupational upgrade training" means employee training sponsored by a qualified company that is designed to qualify the employee for a promotional opportunity with the qualified company;

(8) "Preliminarily approved company" means a qualified company seeking to sponsor an occupational upgrade training program or skills upgrade training program, which has received preliminarily approval from the authority under KRS 154.12-2088 to receive a certain maximum amount of skills training investment credits;

(9) "Qualified company" means any person, corporation, limited liability company, partnership, limited partnership, sole proprietorship, firm, enterprise, franchise, association, organization, holding company, joint stock company, professional service corporation, or any other legal entity through which business is conducted that has been actively engaged in any of the following qualified activities within the Commonwealth for not less than three (3) consecutive years: manufacturing, including the processing, assembling, production, or warehousing of any property; processing of agricultural and forestry products; telecommunications; health care; product research and engineering; tool and die and machine technology; mining; tourism and operation of facilities to be used in the entertainment, recreation, and convention industry; and transportation in support of manufacturing. Notwithstanding the provisions of this subsection, any company whose primary purpose is the sale of goods at retail shall not constitute a qualified company;

(10) "Skills upgrade training" means employee training sponsored by a qualified company that is designed to provide the employee with new skills necessary to enhance productivity, improve performance, or retain employment, including but not limited to technical and interpersonal skills training, and training that is designed to enhance the computer skills, communication skills, problem solving, reading, writing, or math skills of employees who are unable to function effectively on the job due to deficiencies in these areas, are unable to advance on the job, or who risk displacement because their skill deficiencies inhibit their training potential for new technology; and

(11) "Skills training investment credit" means the credit against Kentucky income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, as provided in KRS 154.12-2086(1).

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 47, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 16, effective June 27, 2019. -- Amended 2009 Ky. Acts ch. 11, sec. 34, effective June 25, 2009. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 40, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 210, effective July 12, 2006; and ch. 211, sec. 66, effective July 12, 2006. -- Amended 2002 Ky. Acts ch. 65, sec. 3, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 466, sec. 2, effective April 21, 2000; and ch. 526, sec. 14, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 499, sec. 1, effective July 15, 1998.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.12-2086 Skills training investment credit -- Department of Revenue certification.

(1) The Bluegrass State Skills Corporation may, in accordance with KRS 154.12-2084 to 154.12-2089, award a credit against the Kentucky tax imposed by KRS 141.020 or 141.040, and KRS 141.0401, to an approved company. The amount of the skills training investment credit awarded by the Bluegrass State Skills Corporation shall be an amount equal to fifty percent (50%) of the amount of approved costs incurred by the approved company in connection with its program of occupational upgrade training or skills upgrade training, the credit amount not to exceed five hundred dollars ($500) per employee and, in the aggregate, not to exceed one hundred thousand dollars ($100,000) for each approved company per biennium. The Bluegrass State Skills Corporation shall only approve one (1) application per biennium for each qualified company.

(2) The skills training investment credit shall be credited on the tax return of the approved company filed for the fiscal year during which the final authorizing resolution is adopted by the Bluegrass State Skills Corporation in accordance with KRS 154.12-2088(6). The skill training investment credits allowed under KRS 154.12-2084 to 154.12-2089 shall only be used by the approved company that has been awarded the credits in accordance with KRS 154.12-2084 to 154.12-2089. The skills training investment credits provided for in this section shall be applied to both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with the ordering of the credits as provided in KRS 141.0205. These credits shall be in addition to all other tax credits granted under the laws of the Commonwealth.

(3) The skills training investment credits may be carried forward for three (3) successive fiscal years of the approved company if the amount allowable as credits exceeds the income tax liability of the approved company in the tax year during which the final authorizing resolution is adopted by the Bluegrass State Skills Corporation; however, thereafter, if the amount allowable as credits exceeds the income tax liability of the approved company, the excess credits shall not be refundable or carried forward to any other fiscal year of the approved company for which a tax return of the approved company is to be filed.

(4) A qualified company shall not be entitled to receive the skills training investment credits if the qualified company requires that the employee reimburse the employer or otherwise pay for any costs or expenses incurred in connection with the occupational upgrade training or skills upgrade training.

(5) To the extent that any expenditures of a qualified company constitute approved costs and are the basis for the skills training investment credits under KRS 154.12- 2084 to 154.12-2089, these expenditures shall not be eligible as the basis for grants- in-aid under Bluegrass State Skills Corporation provisions in KRS 154.12-204 to 154.12-208 or the Local Government Economic Development Program under the provisions of KRS 42.4588 to 42.4595.

(6) Priority consideration for preliminary approval under KRS 154.12-2088 shall be given to qualified companies that the Bluegrass State Skills Corporation determines to be high performance companies. A minimum of thirty percent (30%) of the total skills training investment credits authorized by the Bluegrass State Skills Corporation during any fiscal year shall be awarded to qualified companies that have been designated as high performance companies by the Bluegrass State Skills Corporation. The Bluegrass State Skills Corporation shall establish guidelines and standards for the designation of high performance companies.

(7) By October 1 of each year, the Department of Revenue shall certify to the Bluegrass State Skills Corporation the amount of any skills training investment credits taken pursuant to KRS 154.12-2084 to 154.12-2089 on tax returns filed during the fiscal year ending June 30 of that year.

Effective: June 28, 2006

History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 41, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 569, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 300, sec. 7, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 499, sec. 2, effective July 15, 1998.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.12-2087 Skills training investment credits -- Applications not accepted after July 14, 2018 -- Projects approved and outstanding as of July 14, 2018, continue to be governed by KRS 154.12-2084 to 154.12-2089.

The Bluegrass State Skills Corporation shall not accept applications for skills training investment credits described in KRS 154.12-2084 to 154.12-2089 after July 14, 2018. All outstanding projects with preliminary or final approval under KRS 154.12-2084 to 154.12-2089 as of July 14, 2018, shall continue to be governed by those provisions.

Effective: July 14, 2018

History: Created 2018 Ky. Acts ch. 199, sec. 9, effective July 14, 2018.

154.12-2088 Guidelines -- Application -- Preliminary approval -- Final authorizing resolution.

(1) The Bluegrass State Skills Corporation shall establish guidelines and standards for approving skills training investment credits for occupational upgrade training and skills upgrade training. The guidelines and standards may include, but are not limited to: required hours of classroom instruction; required courses; certification of teachers or instructors, whether independent contractors or employees of a qualified company; certification of providers; progressive levels of instruction; and standardized measures of employee evaluation to determine successful completion of a course of study.

(2) To apply for skills training investment credits under KRS 154.12-2084 to 154.12- 2089, a qualified company shall submit an application to the Bluegrass State Skills Corporation before commencing its program of occupational upgrade training or skills upgrade training. The application submitted by the qualified company shall contain information the Bluegrass State Skills Corporation requires including, but not limited to:

(a) A proposal for a program of occupational upgrade training or skills upgrade training;

(b) A description of each component of the proposed training program and the number of employee training hours requested;

(c) A statement of all anticipated costs and expenses of the training program, including the costs and expenses associated with employee wages, equipment, personnel, facilities, and materials; and

(d) Auditing procedures and reporting methods for the submission of information and data to the Bluegrass State Skills Corporation.

(3) After a review of applications for skills training investment credits, the Bluegrass State Skills Corporation may designate the qualified company as a preliminarily approved company and preliminarily approve the amount of skills training investment credits that the qualified company shall be eligible to receive. The maximum amount of skills training investment credits preliminarily approved for all qualified companies by the Bluegrass State Skills Corporation for fiscal year 1998-1999 and fiscal year 1999-2000 shall not exceed one million dollars ($1,000,000) and shall not exceed two million five hundred thousand dollars ($2,500,000) for each fiscal year thereafter. Skills training investment credits shall be allocated to qualified companies in the same order preliminary approval is granted by the Bluegrass State Skills Corporation. Skills training investment credits that remain unallocated by the Bluegrass State Skills Corporation at the end of its fiscal year shall lapse and shall not be carried forward to a new fiscal year.

(4) The preliminarily approved company shall complete all programs of occupational upgrade training or skills upgrade training within one (1) year from the date of the preliminary approval of the skills training investment credits by the Bluegrass State Skills Corporation and shall certify the completion of these programs to the Bluegrass State Skills Corporation.

(5) The preliminarily approved company shall maintain in its employment the employees receiving occupational upgrade or skills upgrade training for a minimum of ninety (90) days following the completion of the program of occupational upgrade training or skills upgrade training and shall certify to the Bluegrass State Skills Corporation the number of employees who remained in the employment of the preliminarily approved company for the full ninety (90) day period.

(6) If a qualified company concludes its training program within the prescribed one (1) year and receives the required certifications described in subsections (4) and (5) of this section, then the Bluegrass State Skills Corporation shall adopt a final authorizing resolution approving the amount of skills training investment credits awarded to the preliminarily approved company in accordance with KRS 154.12- 2084 to 154.12-2089. The adoption of a final authorizing resolution shall be contingent upon the Bluegrass State Skills Corporation's approval of documentation submitted by the preliminarily approved company supporting all incurred approved costs. If one (1) or more of the employees of the preliminarily approved company failed to continue in the employment of the company for ninety (90) days following the completion of the prescribed one (1) year, then the amount of the skills training investment credits preliminarily approved for a qualified company shall be reduced on a pro rata basis for each employee who failed to continue employment with the preliminarily approved company through the ninety (90) day period. The final amount of the skills training investment credits awarded to the approved company shall not exceed the amount of skills training investment credits that the approved company was preliminarily approved for by the Bluegrass State Skills Corporation prior to commencement of the training program.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 300, sec. 8, effective July 14, 2000. -- Created 1998 Ky. Acts ch. 499, sec. 3, effective July 15, 1998.

154.12-2089 Short title for KRS 154.12-2084 to 154.12-2089.

KRS 154.12-2084 to 154.12-2089 may be cited as the "Skills Training Investment Credit Act."

Effective: July 15, 1998

History: Created 1998 Ky. Acts ch. 499, sec. 4, effective July 15, 1998.

154.12-209 Repealed, 1994.

[Repealed]

154.12-210 Cabinet's duties in assembling and disseminating information about economic development.

(1) The cabinet shall assemble and keep in the offices of the cabinet information relating to natural resources, industrial sites, labor supply, water, fuel, power, wage rates, taxation and assessments, transportation and communication facilities, and any other information that may be useful in executing the provisions of KRS 154.12-210 to 154.12-212. This information shall be made available to any enterprise which, in the discretion of the secretary, is legitimate and which contemplates location or operation within the Commonwealth. The information shall, in the discretion of the secretary, be made available to any governmental or private agency interested in securing the location or operation of any legitimate enterprise within the Commonwealth.

(2) The cabinet shall obtain from enterprises interested in locating and operating within the Commonwealth information relating to the nature of the enterprise, its financial responsibility, manpower requirements, probable consumption of raw materials, and any other information that may be useful in securing the location of such enterprise in the Commonwealth.

(3) The cabinet shall be the primary industrial and commercial development agency of the Commonwealth of Kentucky in matters relating to the private sector of the state's economy. The cabinet shall carry out programs relating to industrial and commercial development, research and planning, community and industrial services, marketing development, small and minority business enterprise, international trade and reverse investment, and other programs designated by the board.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 499, sec. 13, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.12-210, 1992 Ky. Acts ch. 105, sec. 33, effective July 14, 1992. -- Amended 1980 Ky. Acts ch. 295, sec. 28, effective July 15, 1980. -- Amended 1978 Ky. Acts ch. 94, sec. 2, effective March 28, 1978; and ch. 155, sec. 77, effective June 17, 1978. -- Amended 1976 Ky. Acts ch. 312, sec. 2. - - Amended 1970 Ky. Acts ch. 111, sec. 2. -- -- Amended 1962 Ky. Acts ch. 106, Art. VI, sec. 4. -- Created 1956 (1st Extra. Sess.) Ky. Acts ch. 7, Art. IX, sec. 7. Formerly codified as KRS 152.060

154.12-211 Cabinet to prepare and publish maps, surveys, directories, and studies.

The cabinet shall prepare and publish, or cause to be prepared and published, maps, economic and industrial resources surveys of the state and of individual communities and areas, directories of manufacturers, exporters, and industrial services, surveys as related to natural resources and industrial and commercial needs, studies of agri-business opportunities, surveys of forestry industries potential, studies of industrial site characteristics, and other matters relating to the economic development of the Commonwealth as it shall deem necessary and advisable.

Effective: July 15, 1992

History: Repealed, reenacted, and amended as KRS 154.12-211, 1992 Ky. Acts ch. 105, sec. 34, effective July 14, 1992. -- Amended 1976 Ky. Acts ch. 312, sec. 3. -- Amended 1970 Ky. Acts ch. 111, sec. 3. -- Created 1956 (1st Extra. Sess.) Ky. Acts ch. 7, Art. IX. sec. 4. Formerly codified as KRS 152.070

Legislative Research Commission Note (10/29/96). Under KRS 7.136(2), a reference to the Department for Existing Business and Industry in this statute has been changed to the cabinet (i.e., the Cabinet for Economic Development). This department was eliminated by the repeal of KRS 154.12-209 by 1994 Ky. Acts ch. 499, sec. 28, and the duties and functions of the department were reassigned to the cabinet, see 1994 Ky. Acts ch. 499, secs. 13, 14, and 15.

154.12-212 Energy resource information.

The cabinet shall be responsible for energy resource information. The secretary of the Cabinet for Economic Development may enter into a contractual agreement between the cabinet and the Kentucky Geological Survey and any other organizations deemed necessary in order to perform this function.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 499, sec. 14, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.12-212, 1992 Ky. Acts ch. 105, sec. 35, effective July 14, 1992 -- Renumbered as KRS 152.075 on July 10, 1991. -- Repealed, reenacted, and amended as KRS 224.0334, 1990 Ky. Acts ch. 325, sec. 17, effective July 13, 1990. -- Amended 1982 Ky. Acts ch. 345, sec. 7, effective July 15, 1982. -- Amended 1980 Ky. Acts ch. 295, sec. 36, effective July 15, 1980. -- Created 1978 Ky. Acts ch. 186, sec. 11, effective March 29, 1978.

Legislative Research Commission Note (11/21/96). In renumbering this statute in 1991, the prior reference to the Commerce Cabinet was changed to the Cabinet for Economic Development (see 1988 Ky. Acts Ch. 205, § 9). This change was made pursuant to KRS 7.136. Formerly codified as KRS 152.075 and also previously codified as KRS 224.0334, and 152A.120.

154.12-213 Consultation with governmental agencies, studies and projections, development offices, and promotional advertising by cabinet -- Coordination with Commissioner of Agriculture regarding agricultural economic development and alternative fuels.

(1) The cabinet, as it deems necessary and advisable, may:

(a) Consult with agencies of the state, federal, and local government in order to coordinate development programs and plans and to articulate agriculture, industry, and commerce in the light of the needs of particular localities;

(b) Make studies of land utilization so as to determine areas suitable for industrial and commercial development;

(c) Make studies and projections and publish information relating to the economic development of the Commonwealth and make appropriate recommendations to the board and the General Assembly;

(d) Establish and maintain development offices in out-of-state centers of industrial and commercial management; and

(e) Place advertising in appropriate media promoting Kentucky's resources and locational advantages for industrial and commercial enterprises.

(2) The cabinet shall coordinate with and seek guidance from the Commissioner of Agriculture in considering any projects for economic incentives related to agricultural economic development, agribusiness, or production facilities for alternative fuels including sustainable aviation fuels, including providing to the Commissioner of Agriculture:

(a) Names of applicants;

(b) Details of proposed projects, including the proposed activity and the location of the proposed activity;

(c) Estimates of capital investment and jobs to be created; and

(d) Any other information requested by the Commissioner of Agriculture.

Effective: March 27, 2025

History: Amended 2025 Ky. Acts ch. 118, sec. 2, effective March 27, 2025. -- Amended 1994 Ky. Acts ch. 499, sec. 15, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.12-213, 1992 Ky. Acts ch. 105, sec. 69, effective July 14, 1992. -- Amended 1976 Ky. Acts ch. 312, sec. 4. -- Amended 1970 Ky. Acts ch. 111, sec. 4. -- Created 1956 (1st Extra. Sess.) Ky. Acts ch. 7, Art. IX, sec. 9. Formerly codified as KRS 152.080

154.12-214 Repealed, 2014.

[Repealed]

154.12-215 Repealed, 2014.

[Repealed]

154.12-216 Repealed, 2014.

[Repealed]

154.12-217 Repealed, 2014.

[Repealed]

154.12-218 Repealed, 2014.

[Repealed]

154.12-219 Repealed, 2004.

[Repealed]

154.12-220 Repealed, 2014.

[Repealed]

154.12-221 Repealed, 1996.

[Repealed]

154.12-222 Repealed, 2014.

[Repealed]

154.12-223 Department for Business and Community Development.

(1) There is created within the Cabinet for Economic Development the Department for Business and Community Development, which shall be headed by a commissioner appointed by the Governor. The department shall work with each Kentucky county and community in:

(a) Providing customer service and project management with new and existing industries;

(b) Overseeing programs and initiatives designed to support new investment, job creation, and retention across the state;

(c) Providing sufficient technical resources to create and maintain a database to facilitate sales transactions between Kentucky businesses;

(d) Administering activities related to business site selection; and

(e) Collaborating with community partners and other agencies on workforce and economic development opportunities.

(2) The department shall include the following divisions, each of which shall be headed by a director appointed by the secretary pursuant to KRS 12.050:

(a) The Development and Retention Division – West Kentucky;

(b) The Development, Retention, and Administrative Division – Central and East Kentucky; and

(c) The Community and Workforce Development Division.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 9, effective June 29, 2023. -- Amended 2018 Ky. Acts ch. 37, sec. 3, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 89, sec. 4, effective July 15, 2014. -- Amended 2005 Ky. Acts ch. 181, sec. 6, effective June 20, 2005; and ch. 158, sec. 4, effective June 20, 2005. -- Amended 1998 Ky. Acts ch. 133, sec. 1, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 113, sec. 4, effective July 15, 1996; ch. 209, sec. 2, effective July 15, 1996; and ch. 262, sec. 1, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 499, sec. 2, effective July 15, 1994.

Legislative Research Commission Note (6/20/2005). The Reviser of Statutes has renumbered the subparagraphs of subsection (2)(a) of this statute under the authority of KRS 7.136(1)(a).

154.12-224 Department for Financial Services.

(1) There is created in the Cabinet for Economic Development the Department for Financial Services. The department shall be headed by a commissioner appointed by the secretary pursuant to KRS 154.10-050. The department shall coordinate administration and monitoring of all financial assistance, tax credit, and related programs available for business and industry and shall provide all budgeting, accounting, personnel services, and information technology necessary for proper administration of the cabinet and cabinet programs.

(2) The department shall include the following divisions, each of which shall be headed by a director appointed by the secretary pursuant to KRS 12.050:

(a) The Finance and Personnel Division, which shall provide financial, personnel, facility, and contract administration services;

(b) The Compliance Division, which shall monitor incentives and collect and maintain data on incentives after they are awarded;

(c) The Program Administration Division, which shall coordinate necessary documentation and assist the Department for Business and Community Development in preparing recommendations and finalizing documents for presentation to the authority or other body for consideration and approval; and

(d) The IT and Resource Management Division, which shall coordinate facility services and internal information technology needs.

(3) The department shall include the Kentucky Economic Development Finance Authority.

(4) The department shall include the Bluegrass State Skills Corporation established by KRS 154.12-205.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 10, effective June 29, 2023. -- Amended 2018 Ky. Acts ch. 37, sec. 4, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 89, sec. 5, effective July 15, 2014. -- Amended 2005 Ky. Acts ch. 168, sec. 47, effective March 18, 2005. -- Amended 2002 Ky. Acts ch. 230, sec. 14, effective July 15, 2002. -- Amended 1998 Ky. Acts ch. 414, sec. 17, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 263, sec. 1, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 499, sec. 3, effective July 15, 1994.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

Legislative Research Commission Note (7/15/2002). Although this section is included in 2002 Ky. Acts ch. 230, the proposed change was deleted by Senate committee substitute.

154.12-225 Repealed, 2014.

[Repealed]

154.12-230 Any cabinet program to support flexible networks to include workforce training.

Any Cabinet for Economic Development program or initiative to support flexible networks shall include workforce training as an eligible flexible networks activity.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 487, sec. 4, effective July 15, 1994.

154.12-2333 Repealed, 2014.

[Repealed]

154.12-240 Regulatory Expediting Center.

(1) The Regulatory Expediting Center is established within the cabinet to assist industries and businesses proposing to locate or expand existing operations in Kentucky with applications for permits, licenses, certificates, registration, and any other form of authorization or permit required by a state, federal, or local agency to engage in a particular business activity or act.

(2) The center shall train and deploy persons with knowledge and skills essential to expediting a request for assistance by a prospective or expanding business or industry with applications for permits, licenses, certificates, registration, and any other form of authorization required by a state, federal, or local governmental agency to engage in a particular business activity or act.

(3) Assistance given by the center regarding federal and local regulations and requirements necessary to engage in the proposed business activity or act shall be limited to providing the business or industrial entity with copies of application forms and other written information provided by the appropriate federal and local agencies.

(4) Priority shall be given to business or industrial development or expansion proposals by businesses or industrial entities participating in an approved business network.

Effective: July 15, 2014

History: Amended 2014 Ky. Acts ch. 89, sec. 7, effective July 15, 2014. -- Created 1994 Ky. Acts ch. 390, sec. 12, effective July 15, 1994.

154.12-250 Repealed, 2006.

[Repealed]

154.12-252 Repealed, 2006.

[Repealed]

154.12-255 Repealed, 2006.

[Repealed]

154.12-260 Repealed, 2002.

[Repealed]

154.12-265 Repealed, 2006.

[Repealed]

154.12-270 Repealed, 2002.

[Repealed]

154.12-272 Cabinet to work with Kentucky Community and Technical College System.

(1) The cabinet shall work closely with the workforce liaison appointed by the president of the Kentucky Community and Technical College System to:

(a) Promote jobs created in the Commonwealth as a result of economic development incentive programs; and

(b) Provide support with the goal of recruitment and placement of system students and graduates into new job and workforce training opportunities as they are made available within the Commonwealth.

(2) The cabinet shall work closely with the system and involve it in policy discussions and planning that may have an effect on community members, system staff, and students.

Effective: April 27, 2026

History: Created 2026 Ky. Acts ch. 198, sec. 20, effective April 27, 2026.

154.12-274 Legislative intent -- Requirement that cabinet support modernization, increase, and improvement in the Commonwealth's production process -- Cabinet to contract with Kentucky Manufacturing Assistance Center.

(1) As used in this section, "cluster" shall have the same meaning as in KRS 164.6011.

(2) It is the intention of the General Assembly to recognize that a strong manufacturing base for the economy of the Commonwealth requires not only modernization of the production process but also an increase in the number of products developed, so that through the creation of new product lines, additional value-added products, and new manufacturing methods the economy will grow and quality job opportunities will increase. The Cabinet for Economic Development shall support this intention through its authority in KRS 154.12-050.

(3) The Cabinet for Economic Development shall enter into contracts or agreements with the Kentucky Manufacturing Assistance Center, a nonprofit organization with the mission to assist Kentucky small and medium-size manufacturers to become more competitive in the global marketplace. The contracts or agreements shall require the Kentucky Manufacturing Assistance Center to undertake the following activities:

(a) Negotiate contractual agreements with existing manufacturers to deliver modernization services that are likely to lead to the creation of new product lines, additional value-added products, and new manufacturing methods;

(b) Deliver engineering, technical, and business improvement services in Kentucky manufacturing facilities, through the network of Kentucky Technology Service locations in the state, that lead to the development of new product lines, additional value-added products, and new manufacturing methods;

(c) Coordinate services for and support the activities of Kentucky manufacturers that need additional projects, activities, and expertise beyond those available through the Kentucky Manufacturing Assistance Center;

(d) Promote, along with other economic development entities, the development of supplier chains, the linkages among suppliers, and the growth of clusters within the Commonwealth; and

(e) Provide to the Cabinet for Economic Development a report of the advances made in the manufacturing modernization projects initiated.

Effective:June 29, 2017

History: Amended 2017 Ky. Acts ch. 80, sec. 6, effective June 29, 2017. -- Amended 2002 Ky. Acts ch. 230, sec. 15, effective July 15, 2002. -- Created 2000 Ky. Acts ch. 522, sec. 19, effective July 14, 2000.

154.12-275 Office of Strategy and Public Affairs -- Executive director -- Duties of office -- Marketing and Communications Division -- Research and Strategy Division.

(1) There is created in the Cabinet for Economic Development the Office of Strategy and Public Affairs. The office shall be headed by an executive director appointed by the secretary pursuant to KRS 154.10-050. The office shall administer activities related to research, strategy, communications, and marketing services.

(2) The office shall include the following divisions, each of which shall be headed by a director appointed by the secretary pursuant to KRS 12.050:

(a) The Marketing and Communications Division; and

(b) The Research and Strategy Division.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 11, effective June 29, 2023. -- Created 2018 Ky. Acts ch. 37, sec. 5, effective July 14, 2018.

154.12-276 Repealed, 2023.

[Repealed]

154.12-277 Office of Entrepreneurship and Innovation -- Executive director -- Duties of office -- Inclusion of Commission on Small Business Innovation and Advocacy.

(1) There is created in the Cabinet for Economic Development the Office of Entrepreneurship and Innovation. The office shall be headed by an executive director appointed by the secretary pursuant to KRS 154.10-050. The office shall be responsible for various forms of entrepreneurship and innovation assistance, including but not limited to providing customer service and project management with small and minority businesses, assisting export development, administering the innovation assistance set forth in KRS 154.12-278, introducing entrepreneurs to individual investors and to investment capital firms interested in start-up and early- stage financing, and collecting, summarizing, and disseminating information helpful to businesses, including information on market research, federal, state, and local minority business programs, government procurement opportunities, and the availability of managerial assistance.

(2) The office shall include the Commission on Small Business Innovation and Advocacy established in KRS 11.200.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 12, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 105, effective June 29, 2021. -- Created 2018 Ky. Acts ch. 37, sec. 7, effective July 14, 2018.

154.12-278 Office of Entrepreneurship and Innovation -- Duties of office and executive director -- High-tech construction pool and high-tech investment pool -- Duties of Kentucky Economic Development Finance Authority.

(1) As used in this section, "cluster" and "knowledge-based" shall have the same meaning as in KRS 164.6011.

(2) The Office of Entrepreneurship and Innovation shall:

(a) Implement the Kentucky Innovation and Commercialization Center Program as set forth in KRS 154.12-300 to 154.12-310;

(b) Monitor the return on investments and effectiveness of the Kentucky Innovation Act initiatives as set forth in the Strategic Plan for the New Economy and prepare an annual report by November 1 of each year. The report shall be available on the Cabinet for Economic Development web page as required by KRS 154.12-2035;

(c) Oversee the modernization initiative in KRS 154.12-274;

(d) Assist the cabinet in the recruitment of research and development companies;

(e) Assist the cabinet in the attraction of high-technology research and development centers;

(f) Support growth and creation of knowledge-based, innovative companies;

(g) Build the infrastructure for innovative businesses and promote networks of technology-driven clusters and research intensive industries;

(h) Administer the high-tech construction pool and the high-tech investment pool;

(i) Recommend projects to the Kentucky Economic Development Finance Authority for funding through the high-tech construction pool and high-tech investment pool; and

(j) Review and approve the annual plan which details the annual allocation of funds from the Science and Technology Funding Program. As used in this paragraph, the Science and Technology Funding Program means the Kentucky enterprise fund, the Rural Innovation Program, the Kentucky Commercialization Program, the Regional Technology Corporations/Innovation and Commercialization Center Satellites, the Experimental Program to Stimulate Competitive Research/Kentucky Science and Engineering Foundation, Small Business Innovation Research and Small Business Technology Transfer grants, and other government grant programs and funding programs as determined by the executive director of the Office of Entrepreneurship and Innovation.

(3) The high-tech construction pool shall be used for projects with a special emphasis on the creation of high-technology jobs and knowledge-based companies. The executive director, in administering the high-tech construction pool, shall recommend distribution of funds and projects to the Kentucky Economic Development Finance Authority for its approval. The executive director shall recommend any designated amount of pool funds to be set aside for any match requirements. Any funds used for matching purposes may include public and private funds.

(4) The high-tech investment pool shall be used to build and promote technology- driven industries and research-intensive industries, as well as their related suppliers, with the goal of creating clusters of innovation-driven industries in Kentucky. The executive director, in administering the high-tech investment pool, shall be authorized to recommend funds to be used to support loans and grants, or to secure an equity or related position.

(5) The Kentucky Economic Development Finance Authority shall ensure in their approval of funding of projects that the highest priority is given to knowledge-based companies in fulfillment of the purposes and intentions of the purposes of this section.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 13, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 106, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 16, effective July 14, 2018. -- Amended 2017 Ky. Acts ch. 80, sec. 7, effective June 29, 2017. -- Amended 2014 Ky. Acts ch. 89, sec. 6, effective July 15, 2014; and ch. 134, sec. 6, effective July 15, 2014. -- Amended 2008 Ky. Acts ch. 98, sec. 1, effective July 15, 2008. -- Amended 2006 Ky. Acts ch. 210, sec. 6, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 181, sec. 10, effective June 20, 2005. - - Amended 2002 Ky. Acts ch. 230, sec. 16, effective July 15, 2002. -- Created 2000 Ky. Acts ch. 522, sec. 20, effective July 14, 2000. 2026-2028 Budget Reference. See State/Executive Branch Budget, 2026 Ky. Acts ch. 168, Pt. I, B, 1, (1) at 2068. 2026-2028 Budget Reference. See State/Executive Branch Budget, 2026 Ky. Acts ch. 168, Pt. I, B, 1, (2) at 2069. 2026-2028 Budget Reference. See State/Executive Branch Budget, 2026 Ky. Acts ch. 168, Pt. II, B, (2) at 2118.

Legislative Research Commission Note (7/15/2014). This statute was amended by 2014 Ky. Acts chs. 89 and 134. Where these Acts are not in conflict, they have been codified together. Where a conflict exists, Acts ch. 134, which was last enacted by the General Assembly, prevails under KRS 446.250.

Film Industry Development Film Industry Development

154.12-280 Kentucky Film Office -- Duties -- Application fee -- Funds received -- Transient room tax.

(1) There is created the Kentucky Film Office, which shall be attached to the Cabinet for Economic Development for administrative purposes only. The office shall be headed by an executive director selected and compensated as provided in KRS 154.12-282(2)(g). The executive director shall have the authority to hire staff, including a marketing and development director, contract for services, expend funds, and operate the normal business activities of the council.

(2) The duties of the office shall include but not be limited to:

(a) Reviewing all applications submitted for tax incentives in accordance with KRS 154.61-030;

(b) Notifying the applicant within thirty (30) days of receipt and that:

1. The application is complete; or

2. Additional information is required;

(c) Forwarding each eligible application to the cabinet for an economic analysis of the project;

(d) Submitting the application and all related documents to the Kentucky Film Leadership Council for a final decision, if the analysis supports the project;

(e) Coordinating with local and regional film offices or local tourism commissions on issues impacting the film industry in Kentucky, including streamlining local permitting processes;

(f) Marketing Kentucky as a location for film production;

(g) Providing assistance to production companies for compliance with Subchapter 61 of KRS Chapter 154;

(h) Assisting film studios and workforce training programs to increase the film production workforce;

(i) Coordinating with the Kentucky Film Leadership Council established in KRS 154.12-282 to develop marketing strategies to promote and grow the film production industry in Kentucky;

(j) Creating a website and a one-stop portal to provide information to film producers regarding studios, local and regional commissions, personnel, filming locations, permitting, and other matters relevant to the film industry; and

(k) Adopting the recommendations of the council created pursuant to KRS 154.12-282 and promulgating regulations in accordance with KRS Chapter 13A necessary to conduct the operations of the office.

(3) The office shall receive and retain all tax incentive application fees collected pursuant to KRS 154.61-030. The nonrefundable application fee that is currently payable to the office upon submission of a tax incentive application shall be determined by the total amount of qualifying expenditures and qualifying payroll expenditures, as defined in KRS 154.61-010. If the total is:

(a) Less than fifty thousand dollars ($50,000), the application fee shall be two hundred fifty dollars ($250);

(b) Between fifty thousand dollars ($50,000) and one hundred thousand dollars ($100,000), the application fee shall be five hundred dollars ($500); or

(c) More than one hundred thousand dollars ($100,000), the application fee shall be one thousand dollars ($1,000).

(4) The office may accept contributions, grants, and other property of value to hold and apply to projects for which the office is created. Any funds not expended at the close of a fiscal year shall not lapse but shall be carried forward into the next fiscal

year. Notwithstanding KRS 142.406, for the period beginning July 1, 2025, and ending June 30, 2028, two and one-half percent (2.5%) of the transient room tax collected pursuant to KRS 142.400, up to the maximum amount of five hundred thousand dollars ($500,000) in each fiscal year, shall be transferred to the office and dedicated to staff and operational costs.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 194, sec. 2, effective July 15, 2026. -- Created 2025 Ky. Acts ch. 91, sec. 1, effective July 1, 2025.

154.12-282 Kentucky Film Leadership Council -- Purpose -- Membership.

(1) There is hereby established the Kentucky Film Leadership Council. The council shall be administratively attached to the Kentucky Film Office established in KRS 154.12-280.

(2) The functions and purposes of the council shall be to:

(a) Review all applications for tax incentives under KRS 141.383 and Subchapter 61 of KRS Chapter 154;

(b) Review all related documents presented by the office;

(c) Make a final decision at a meeting held at the call of the chair regarding whether to authorize a tax incentive agreement if the cabinet's economic analysis supports the project. The cabinet shall be responsible for negotiating, preparing, and executing tax incentive agreements under this section;

(d) Recommend policies and standards for the Kentucky Film Office;

(e) Develop comprehensive film industry strategies in partnership with the Cabinet for Economic Development, the Tourism, Arts and Heritage Cabinet, and the Education and Labor Cabinet;

(f) Partner with local and regional film offices, production studios, and relevant workforce training programs in Kentucky; and

(g) Conduct a nationwide search for the executive director of the Kentucky Film Office and make decisions regarding hiring and compensation. The salary of the executive director of the office shall not exceed two hundred twenty-five thousand dollars ($225,000) and shall be exempt from KRS 64.640.

(3) (a) The council shall consist of the following seven (7) voting members:

1. The secretary of the Cabinet for Economic Development or his or her designee;

2. The secretary of the Tourism, Arts and Heritage Cabinet or his or her designee;

3. The secretary of the Education and Labor Cabinet or his or her designee; and

4. Four (4) members who shall be appointed by the Governor as follows:

a. Two (2) representatives from Kentucky film production companies;

b. One (1) representative from a film profession, including but not limited to producers, actors, production accountants with film industry experience, or film financiers; and

c. One (1) representative who is the head of a local or regional film commission.

(b) All members appointed by the Governor under this subsection shall have knowledge of or experience in the Kentucky film industry. After the expiration of their initial terms, the appointed members shall serve a term of four (4) years and until a successor is appointed and qualified. Any vacancy that occurs shall be filled for the unexpired term in the same manner as the original appointment. All members appointed by the Governor shall be subject to confirmation by the Senate as provided in KRS 11.160.

(c) A majority of the members shall appoint the chair from among the members of the council.

(d) Members shall serve without compensation but shall be reimbursed for necessary travel expenses.

(e) The council shall meet at the call of the chair, but not less than quarterly.

(f) A quorum shall be a majority of the membership of the council.

(g) A member of the council shall not be subject to any personal liability or accountability by reason of the execution of any obligation duly authorized by the council.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 194, sec. 3, effective July 15, 2026. -- Created 2025 Ky. Acts ch. 91, sec. 2, effective July 1, 2025.

Legislative Research Commission Note (7/1/2025). 2025 Ky. Acts ch. 91, sec. 8, reads as follows: "Notwithstanding subsection (3)(b) of Section 2 of this Act [this statute], the initial terms of the Kentucky Film Leadership Council members appointed by the Governor shall be staggered as follows: (1) One representative of a Kentucky film production company shall serve a one- year term; (2) The other representative of a Kentucky film production company shall serve a two-year term; (3) The representative of a film profession shall serve a three-year term; and (4) The representative who is the head of a local or regional film commission shall serve a four-year term."

Kentucky Entrepreneurship and Innovation Hub Program Kentucky Entrepreneurship and Innovation Hub Program

154.12-300 Definitions for KRS 154.12-300 to 154.12-310.

As used in KRS 154.12-300 to 154.12-310, unless the context indicates otherwise:

(1) "Early-stage company" means a company that is:

(a) A small or medium-size company in its initial stages of operation;

(b) Characterized by new or evolving product or service development; and

(c) Establishing initial customer or market validation with potential material growth in employment or revenue;

(2) "Entrepreneur-led economic development" means a strategy in which successful entrepreneurs contribute to regional growth by mentoring new founders, strengthening local support networks, and helping guide collaborative efforts that foster the development and scaling of innovative early-stage and high-growth companies;

(3) "Executive director" means the executive director of the Office of Entrepreneurship and Innovation;

(4) "High-growth company" means a company that is:

(a) A small or medium-size company; and

(b) Demonstrating or has demonstrated potential for rapid and sustained expansion in employment, revenue, or market share with potential for continued material growth;

(5) "Hub" means a location identified as the headquarters for program activity in a region or subregion;

(6) "Medium-size company" means a business with fifty-one (51) to one hundred fifty

(150) employees;

(7) "Program" means the Kentucky Entrepreneurship and Innovation Hub Program;

(8) "Region" means a geographic area of Kentucky designated as having a unique innovation strategic plan by the Office of Entrepreneurship and Innovation; and

(9) "Small company" means a business with fifty (50) or fewer employees.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 114, sec. 1, effective July 15, 2026. -- Amended 2008 Ky. Acts ch. 98, sec. 8, effective July 15, 2008. -- Amended 2006 Ky. Acts ch. 210, sec. 7, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 181, sec. 11, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 9, effective July 15, 2002.

154.12-305 Kentucky Entrepreneurship and Innovation Hub Program.

(1) There is established the Kentucky Entrepreneurship and Innovation Hub Program within the Office of Entrepreneurship and Innovation. The goal of the program is to create products, new companies, and value-added jobs in communities throughout the Commonwealth. Strategies to achieve this goal include:

(a) Increasing quality deal flow of knowledge-based, technology-intensive companies in Kentucky;

(b) Increasing understanding of start-up process and investment practices;

(c) Providing value-added services to the start-up and investment community;

(d) Supporting entrepreneur-led economic development; and

(e) Attracting workforce talent, investors, and start-up companies to Kentucky.

(2) The duties of the hubs shall include but not be limited to:

(a) Identifying and linking entrepreneurs, faculty, subject-matter experts, scientists, venture capitalists, and other key individuals from the business sector, universities, community and technical colleges, local leaders, and government for the creation and expansion of knowledge-based, technology- intensive companies;

(b) Establishing a uniform protocol for assembling and communicating project concepts and opportunities;

(c) Supporting high-quality projects through the concept and development phases including services such as market research, prototype development, business plan and strategies development, grant and contract capabilities, and capital and management resource identification; and

(d) Identifying, in the area of technology development, potential partners, strategic opportunities, training and educational needs, and issues that inhibit the growth of technology sectors and business clusters in the state.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 114, sec. 2, effective July 15, 2026. -- Amended 2006 Ky. Acts ch. 210, sec. 8, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 181, sec. 12, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 10, effective July 15, 2002.

154.12-310 Kentucky Entrepreneurship and Innovation Hub Program hubs -- Organization powers and duties of executive director of Office of Entrepreneurship and Innovation.

(1) The program hubs are private-public partnerships, operating as a cohesive statewide infrastructure to support the implementation of key Kentucky Innovation Act initiatives.

(2) The organization of the hubs shall be a statewide network, with the location and services provided for each hub determined by the executive director in accordance with the following:

(a) The Office of Entrepreneurship and Innovation shall be the central headquarters for the program hubs and has primary responsibility for the following:

1. Managing and administering the program;

2. Establishing uniform program application, protocol, and operating guidelines when appropriate;

3. Supporting the protocol by creating and funding centralized services to be distributed throughout the network; and

4. Identifying those issues, opportunities, and challenges that have statewide implications;

(b) The hubs are responsible for fulfilling the duties as set forth in KRS 154.12- 305 relating to the implementation of the region's innovation strategic plan and supporting the implementation of the Kentucky Innovation Act initiatives in the region or subregion; and

(c) The hubs are responsible for generating technology business development in their assigned geographic area, acting as a bridge between individuals and companies needing critical early state concept and development work and the hubs that can provide this support. The hubs provide a valuable assurance for equal access to the Kentucky Innovation Act initiatives and funding, and provide an opportunity for full participation in rural and remote, as well as metropolitan, areas of the state.

(3) The executive director shall have all the powers and authority, not explicitly prohibited by statute, necessary and convenient to carry out and effectuate the purposes of KRS 154.12-300 to 154.12-310.

(4) The executive director may, in effectuating the provisions of KRS 154.12-300 to 154.12-310, contract with a science and technology organization as defined in KRS 164.6011 to administer and manage the program.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 114, sec. 3, effective July 15, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 14, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 107, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 17, effective July 14, 2018. -- Amended 2008 Ky. Acts ch. 98, sec. 9, effective July 15, 2008. -- Created 2002 Ky. Acts ch. 230, sec. 11, effective July 15, 2002.

154.12-315 Repealed, 2008.

[Repealed]

Kentucky Science and Engineering Foundation Kentucky Science and Engineering Foundation

154.12-320 Kentucky Science and Engineering Foundation.

The Kentucky Science and Technology Corporation shall administer and manage the Kentucky Science and Engineering Foundation as a means to increase Kentucky's capacity to become a leader state in competitive research by attracting more research funding from all sources to the Commonwealth. The Kentucky Science and Engineering Foundation shall be modeled in part on the National Science Foundation and shall make its own investments in peer-reviewed science and engineering research, to accelerate the rate of research and development funds and work to increase the amount of federal and private sector funds for this work in Kentucky.

Effective: July 15, 2002

History: Created 2002 Ky. Acts ch. 230, sec. 13, effective July 15, 2002.

Small Business Loan Program Small Business Loan Program

154.12-325 Definitions for KRS 154.12-325 and 154.12-330.

As used in KRS 154.12-325 and 154.12-330:

(1) "Affiliate" has the same meaning as provided in KRS 154.22-010(2);

(2) "Full-time employee" means a person employed for a minimum of thirty-five (35) hours per week and subject to the tax imposed by KRS 141.020;

(3) "Service or technology" has the same meaning as provided in KRS 154.24-010(19) and shall include regional or headquarters operations of an entity engaged in the defined activities, but shall not include work involving direct service to the public pursuant to a license issued by the state or an association that issues licenses in lieu of the state; and

(4) "Small business" means any business entity organized for profit, including a sole proprietorship, partnership, limited partnership, corporation, limited liability company, joint venture, association, or cooperative, that has fifty (50) or fewer full- time employees at the time it applies for a loan under KRS 154.12-330 and is not an affiliate or subsidiary of a larger corporate structure, unless the total number of employees of all the affiliates and subsidiaries within that structure is fifty (50) or fewer.

Effective: July 12, 2006

History: Amended 2006 Ky. Acts ch. 149, sec. 212, effective July 12, 2006. -- Created 2005 Ky. Acts ch. 158, sec. 1, effective June 20, 2005.

154.12-330 Authorization to develop and fund small business loan program -- $100,000 limit -- Requirements.

(1) The Kentucky Economic Development Finance Authority is hereby authorized to develop and fund a small business loan program to assist new or existing small businesses operating in the Commonwealth. The authority may lend up to one hundred thousand dollars ($100,000) to any eligible small business for acquisition, construction, expansion, working capital, or any other business expense the authority deems reasonable to approve.

(2) The authority shall determine the terms, conditions, and requirements for loans issued under this section, including collateral requirements when deemed reasonable and appropriate. Recognizing that small businesses, while essential for the economic vitality of the Commonwealth, may have difficulty obtaining conventional loans, the authority may provide terms that are more lenient, high-risk, less secure, or otherwise less stringent than industry standards.

(3) To be eligible for a loan under this section, a small business shall be engaged in manufacturing, agribusiness, or service or technology, shall not be engaged primarily in retail, and shall commit to creating and maintaining at least one (1) new full-time job above the number existing on the date of application.

Effective: June 20, 2005

History: Created 2005 Ky. Acts ch. 158, sec. 2, effective June 20, 2005.

154.12-340 Repealed, 2025.

[Repealed]

154.12-342 Definitions for KRS 154.12-342 to 154.12-348.

As used in KRS 154.12-342 to 154.12-348:

(1) "Authority" means the Kentucky Economic Development Finance Authority;

(2) "Cabinet" means the Cabinet for Economic Development;

(3) "Eligible grant applicant" means a county or city governing body, or entity organized under Kentucky law providing public services or a nonprofit charitable organization organized under 26 U.S.C. sec. 501(c)(3) or (6) engaged in economic development, workforce investment, talent development, or community development;

(4) "Eligible project" means a talent investment initiative established by an eligible grant applicant and approved by the authority, which may include one (1) or more of the following:

(a) A plan to relocate employees or households from outside Kentucky;

(b) A plan to retain Kentucky students; or

(c) A targeted marketing campaign to engage potential new residents;

(5) "Fund" means the Kentucky Talent Recruitment Grant Program fund established in KRS 154.12-348;

(6) "Household goal" means the total number of households that a talent recruitment program seeks to incentivize for relocating or committing to relocate from outside Kentucky to a Kentucky locality;

(7) "Program" means the Kentucky Talent Recruitment Grant Program;

(8) "Regional project" means an eligible project that is proposed by eligible grant applicants residing or having a primary business address in different counties in this Commonwealth; and

(9) "Retention goal" means the total number of Kentucky students an eligible project seeks to retain.

Effective: July 15, 2026

History: Created 2026 Ky. Acts ch. 82, sec. 1, effective July 15, 2026.

154.12-344 Kentucky Talent Recruitment Grant Program.

(1) The Kentucky Talent Recruitment Grant Program is hereby established under the cabinet. The cabinet's administration of the program includes but is not limited to the following:

(a) Creating and making available a grant application for eligible grant applicants to apply for program grant funds;

(b) Reviewing and processing applications submitted to the cabinet by eligible grant applicants; and

(c) Submitting grant applications to the authority for approval.

(2) The maximum amount of funding for each eligible grant applicant is five hundred thousand dollars ($500,000).

(3) If a grant application is approved by the authority as an eligible project under KRS 154.12-342(4)(a) or (b), the cabinet shall disburse fifty percent (50%) of the total grant award to the eligible grant applicant upon execution of the grant agreement. The remaining fifty percent (50%) of the grant award shall be disbursed upon the eligible grant applicant demonstrating to the authority, subject to its approval, that fifty percent (50%) of the household goal or the retention goal has been met based on the reported metrics set forth in KRS 154.12-346(4)(a).

(4) The cabinet shall determine the terms, conditions, and requirements of grant awards from the fund. The cabinet may establish procedures and standards for the review and approval of the obligation of grant funds through the administrative regulations promulgated in accordance with KRS Chapter 13A.

(5) The secretary of the cabinet shall have the authority to hire staff, contract for services, expend funds, and operate the normal business activities of the program.

Effective: July 15, 2026

History: Created 2026 Ky. Acts ch. 82, sec. 2, effective July 15, 2026.

154.12-346 Applications -- Contributions -- Report.

(1) Applications for the program shall include:

(a) At least one (1) eligible project;

(b) The total estimated cost of the program; and

(c) The individual estimated costs associated with the program design, administration, marketing, and relocation efforts.

(2) Eligible grant applicants shall contribute twenty percent (20%) of total project costs. Applicant contributions may include local investments and in-kind donations. For regional projects, one (1) or more of the eligible grant applicants may combine to meet the twenty percent (20%) local match.

(3) Previous applicants may present a subsequent application if they met the household goal in their previous application.

(4) Each approved eligible grant applicant shall report semiannually to the cabinet the following:

(a) The reported metrics from the initial application as provided under KRS 154.12-344(1)(c). Metrics may include:

1. Household recruitment targets;

2. Engagement rates;

3. Qualified interest metrics;

4. Documented perception shifts;

5. Student job placement connections;

6. Graduate retention rates;

7. The household goal and the grant amount per household;

8. The program's estimated state and local tax impact; and

9. The program's estimated total economic impact;

(b) A summary of the grant applications received from eligible grant applicants and submitted to the cabinet, including the grant amounts awarded to eligible households;

(c) The current balance of the program funds awarded to eligible grant applicants; and

(d) Recommendations for legislation or policy actions needed to facilitate greater receipt of grant funding to eligible grant applicants.

(5) If a grant recipient fails to comply with this section or uses the awarded funds for any purpose other than an eligible project, the grant recipient shall forfeit and be liable to the cabinet for the full award amount.

Effective: July 15, 2026

History: Created 2026 Ky. Acts ch. 82, sec. 3, effective July 15, 2026.

154.12-348 Kentucky Talent Recruitment Grant Program fund.

(1) There is hereby established in the State Treasury a trust and agency account to be known as the Kentucky Talent Recruitment Grant Program fund.

(2) The fund shall consist of moneys appropriated by the General Assembly, gifts, grants, federal funds, or other funds made available to the cabinet.

(3) The fund shall be administered by the cabinet.

(4) Amounts deposited in the fund shall be used for awarding eligible grant applicants funding for eligible projects. The fund shall be distributed as follows:

(a) Fifty percent (50%) shall be used for relocation efforts pursuant to KRS 154.12-342(4)(a);

(b) Twenty-five percent (25%) shall be used for retention of Kentucky students pursuant to KRS 154.12-342(4)(b); and

(c) Twenty-five percent (25%) shall be used for targeted marketing campaigns pursuant to KRS 154.12-342(4)(c).

(5) The cabinet may use up to five percent (5%) of the fund annually for costs and services for the administration of the program.

(6) Notwithstanding KRS 45.229, moneys remaining in the fund at the close of a fiscal year shall not lapse but shall be carried forward into the next fiscal year.

Effective: July 15, 2026

History: Created 2026 Ky. Acts ch. 82, sec. 4, effective July 15, 2026.

Subchapter 14 GRANT Program Subchapter 14 GRANT Program

154.14-010 Repealed, 2025.

[Repealed]

154.14-020 Definitions for subchapter.

As used in this subchapter:

(1) "Cabinet" means the Cabinet for Economic Development;

(2) "County population ranking" means the score of each county determined by the cabinet under KRS 154.14-050(7);

(3) "Eligible grant applicant" means a county or city governing body, any entity organized in Kentucky providing public services through law enforcement, fire, emergency medical, rescue, waterfront development, a water utility, or a waste water utility to persons domiciled in Kentucky, or a nonprofit charitable organization organized under 26 U.S.C. sec. 501(c)(3) and engaged in public benefit improvements;

(4) "Eligible project" means a project that:

(a) Meets the requirements for a federal grant offered or administered by a qualifying federal entity that:

1. Requires a local match; or

2. Is a Delta Regional Authority project that includes language explicitly stating that a local match will make an application more competitive;

(b) Benefits the public or substantially benefits the public and satisfies the evaluation criteria in KRS 154.14-050 and that is initiated on:

1. Publicly owned property;

2. Property to be acquired, which comes with either a:

a. Legally binding letter of intent or option for the sale to an eligible grant applicant; or

b. Legally binding sale agreement for the sale to an eligible grant applicant; or

3. Private property on which a project is located that is in the public interest and for a public purpose and that benefits an eligible community; and

(c) Requires local matching funds based on the county population ranking as provided in KRS 154.14-050;

(5) "Eligible use" means the authorized purpose for which an awarded grant may be used depending on the source of funds from the federal government;

(6) "GRANT Program" means the Government Resources Accelerating Needed Transformation Program established in KRS 154.14-030;

(7) "GRANT Program fund" means the fund established in KRS 154.14-060;

(8) "Population density":

(a) Means the number of persons per square mile of a county;

(b) Is calculated by dividing the total county population by the square miles in the county;

(c) Is determined by using the population estimate from the most recent available five (5) year American Community Survey as published by the United States Census Bureau; and

(d) Is used to rank each county in descending order, with the county having the largest population density receiving a rank of one (1) and the county with the smallest population density receiving a rank of one hundred twenty (120);

(9) "Qualifying federal entity" includes the following:

(a) The Domestic Policy Council;

(b) The Office of Management and Budget;

(c) The United States Department of Energy;

(d) The United States Department of the Treasury;

(e) The United States Department of the Interior;

(f) The United States Department of Agriculture;

(g) The United States Department of Commerce;

(h) The United States Department of Labor;

(i) The United States Department of Health and Human Services;

(j) The United States Department of Housing and Urban Development;

(k) The United States Department of Transportation;

(l) The United States Department of Education;

(m) The United States Department of Homeland Security;

(n) The United States Department of Justice;

(o) The United States Department of Defense;

(p) The United States Environmental Protection Agency;

(q) The Appalachian Regional Commission;

(r) The Delta Regional Authority;

(s) The National Science Foundation; and

(t) Any federal agency, department, or entity that is the successor of an entity listed in paragraphs (a) to (s) of this subsection;

(10) "Regional project" means an eligible project that is proposed by eligible grant applicants residing or having a primary business address in different counties in this Commonwealth or by eligible grant subrecipients as part of a multistate project who submit a regional grant application; and

(11) "Ten (10) year percentage change in population":

(a) Means the percentage change in population within a county;

(b) Is determined by comparing the population estimate from the most recent available five (5) year American Community Survey as published by the United States Census Bureau to the same survey ten (10) years prior to the most recent available survey; and

(c) Is used to rank each county in descending order, with the county having the largest positive percentage change in population receiving a rank of one (1) and the county with the largest negative percentage change receiving a rank of one hundred twenty (120).

Effective: April 13, 2026

History: Amended 2026 Ky. Acts ch. 115, sec. 1, effective April 13, 2026. -- Amended 2025 Ky. Acts ch. 71, sec. 1, effective March 24, 2025. -- Created 2024 Ky. Acts ch. 188, sec. 2, effective April 12, 2024.

154.14-030 Government Resources Accelerating Needed Transformation (GRANT) Program -- Administration -- Administrative regulations -- Operation -- Sunset -- Assistance by area development districts and state universities -- Identification of and application for available federal grants.

(1) The Government Resources Accelerating Needed Transformation Program is hereby established under the cabinet. The cabinet's administration of the program includes but is not limited to the following:

(a) Creating and making available a standardized grant application and a regional grant application for the obligation of state funds under this subchapter to apply for matching federal funds;

(b) Developing a standardized scoring system pursuant to this section and KRS 154.14-050;

(c) Reviewing and processing applications submitted to the cabinet by eligible grant applicants;

(d) Verifying that an eligible grant applicant is seeking a federal grant for an eligible project;

(e) Evaluating the project proposed by the match application in accordance with the evaluation criteria set forth in this section and KRS 154.14-050;

(f) Scoring each application pursuant to the scoring system described in KRS 154.14-050;

(g) Ranking each match application:

1. To prioritize the greatest return on investment and relative positive impact of the eligible project; and

2. Based on the project evaluation and the project score described in this section and KRS 154.14-050;

(h) Identifying eligible grant applicants whose eligible project demonstrates a high level of investment potential if a match is provided, as revealed by the evaluation, scoring, and county population ranking process described in this section and KRS 154.14-050;

(i) Providing detailed feedback to the eligible grant applicants after the project evaluation and project score are completed and the application is approved or denied by the cabinet, unless otherwise prohibited by federal or state law;

(j) Obligating matching funds to selected eligible grant applicants; and

(k) Compiling the monthly and annual reports to be submitted under KRS 154.14- 070.

(2) The cabinet shall determine the terms, conditions, and requirements of grant awards from the GRANT Program fund. The cabinet may establish procedures and standards for the review and approval of the obligation of match funds through the promulgation of administrative regulations in accordance with KRS Chapter 13A.

(3) The secretary of the cabinet shall have the authority to hire staff, contract for services, expend funds, and operate the normal business activities of the GRANT Program. Notwithstanding KRS Chapter 45A, the cabinet may contract with a third party for implementation and administration of the program.

(4) The GRANT Program shall sunset on December 31, 2028, unless authorized by the General Assembly to continue its work for a specified period of time.

(5) The Kentucky Council of Area Development Districts and local area development districts shall assist eligible grant applicants in identifying available federal grant opportunities and preparing federal grant applications and GRANT Program applications. This subsection shall not prevent any public agency or nonprofit entity from assisting eligible grant applicants in identifying available federal grant opportunities and preparing federal grant applications and GRANT Program applications.

(6) Upon request of the local area development districts, a local public institution in the postsecondary education system as defined in KRS 164.001 shall assist the eligible grant applicants in their area by including but not limited to:

(a) Identifying opportunities for federal grants;

(b) Rendering supplemental support for federal grant applications on behalf of the communities including but not limited to providing data and analysis for the federal grant application; or

(c) Acting as the contact person for the local public institution to the Kentucky Council of Area Development Districts and to the area development district in which the local public institution is located and updating the contact person information.

Effective: April 13, 2026

History: Amended 2026 Ky. Acts ch. 115, sec. 2, effective April 13, 2026. -- Amended 2025 Ky. Acts ch. 71, sec. 2, effective March 24, 2025. -- Created 2024 Ky. Acts ch. 188, sec. 3, effective April 12, 2024.

154.14-040 Standardized or regional grant application -- Cabinet to review applications monthly and provide final decision -- Compliance with match and reporting requirements -- Length of obligation -- Repercussion for noncompliance.

(1) (a) To participate in the GRANT Program, eligible grant applicants shall submit either a standardized or a regional grant application to the cabinet no later than ninety (90) days from the eligible grant applicant's submission for a federal grant offered or administered by a qualifying federal entity.

(b) The cabinet shall review applications monthly. Each monthly review shall include all applications submitted but not yet reviewed by the first day of each month.

(c) The cabinet shall provide a preliminary evaluation of each application submitted by the first day of the month within fourteen (14) calendar days of the first day of the month. As part of the preliminary evaluation, the cabinet shall consider the applicant's eligibility and the application completeness when evaluated against the requirements of the federal grant.

(d) The cabinet shall provide a final decision of approval or denial on the application by the last day of the month in which the application was preliminarily reviewed. If an application is denied, the cabinet may provide feedback about any possible corrective action, in which case the applicant may resubmit the application for reconsideration after taking the recommended corrective action.

(2) If a grant application is approved, the recipient shall comply with any match and reporting requirements established by the cabinet to verify that the awarded funds will be or have been expended on an eligible use.

(3) The obligation of funds for an approved project shall not remain obligated longer than twelve (12) months for that project. An approved project may receive a twelve

(12) month extension of this deadline from the cabinet.

(4) If the grant recipient fails to comply with subsection (2) of this section or uses the awarded funds for any purpose other than an eligible use, the grant recipient shall forfeit and be liable to the cabinet for the full award amount.

Effective: April 13, 2026

History: Amended 2026 Ky. Acts ch. 115, sec. 3, effective April 13, 2026. -- Amended 2025 Ky. Acts ch. 71, sec. 3, effective March 24, 2025. -- Created 2024 Ky. Acts ch. 188, sec. 4, effective April 12, 2024.

154.14-050 Project to be in public interest -- Evaluation of grant application -- Scoring system -- County population ranking -- Regional projects.

(1) The cabinet shall not approve a project unless it finds that the project is in the public interest and the grant funds will be used for a public purpose. For purposes of this subsection, projects that are in the public interest and for a public purpose can include a derivative private benefit, if the cabinet finds the following:

(a) The project will enhance a community or region;

(b) The granting entity for which the cabinet's matching grant is being used requires a public purpose for grant eligibility; or

(c) The cabinet in its judgment concludes the proposal will enhance the quality of life or services in a community or region.

(2) The cabinet shall evaluate each applicant's eligible project according to the criteria described in this section for the purpose of compiling a score for the eligible project pursuant to this section.

(3) If a match applicant is selected as an eligible grant applicant approved under the GRANT Program, it shall comply with any incentive agreements and reporting requirements deemed necessary by the cabinet to verify that the awarded grant shall go toward an eligible use.

(4) In the administration of the GRANT Program, the cabinet shall develop a scoring system for eligible grant applications based on the total projected return on investment and the relative positive impact in the community.

(5) The scoring system shall include a:

(a) Score in each category as specified in subsection (6) of this section; and

(b) Total weighted score, which is the average of the scores in each category.

(6) The scoring categories shall include but are not limited to:

(a) Projected return on investment the project will yield, which includes an assessment of the:

1. Likelihood of project completion both with the match funding and without;

2. Application content when evaluated against the federal grant program's publicly available scoring rubric or evaluation criteria, if any;

3. Projected gross economic impact of the proposed project on the community;

4. Projected number of jobs created by the proposed project and subsequent impact on the community;

5. Determination of the cost of the project based on the amount expended by the cabinet if it obligates the requested grant amount to the applicant;

6. Evidence of community support for the project submitted by:

a. The eligible grant applicant; or

b. A majority of eligible grant applicants for a regional project;

7. Likelihood that the applicant can successfully manage the federal grant's administration requirements; and

8. Likelihood of success based on a federal agency prioritization of a particular applicant; and

(b) Overall positive impact the project will have on the surrounding community as evidenced by clear and feasible projected outcomes of the grant-funded project.

(7) (a) On or before May 1, 2024, and not later than May 1 every two (2) years thereafter, the cabinet shall determine a county population ranking for each county by adding the following two (2) factors:

1. The population density ranking; and

2. The ten (10) year percentage change in population ranking.

(b) For applications submitted on or after July 1, 2026, the required local match for each county shall be as follows:

1. Eligible projects in counties where the county population ranking is greater than or equal to one hundred ninety-three (193) shall provide a minimum amount of local matching funds equal to two percent (2%) of the state match;

2. Eligible projects in counties where the county population ranking is less than one hundred ninety-three (193) but greater than or equal to one hundred forty-five (145) shall provide a minimum amount of local matching funds equal to four percent (4%) of the state match;

3. Eligible projects in counties where the county population ranking is less than one hundred forty-five (145) but greater than or equal to ninety- seven (97) shall provide a minimum amount of local matching funds equal to six percent (6%) of the state match;

4. Eligible projects in counties where the county population ranking is less than ninety-seven (97) but greater than or equal to forty-nine (49) shall provide a minimum amount of local matching funds equal to eight percent (8%) of the state match; and

5. Eligible projects in counties where the county population ranking is less than forty-nine (49) shall provide a minimum amount of local matching funds equal to ten percent (10%) of the state match.

(c) On or before November 1, 2024, and no later than November 1 every two (2) years thereafter, the cabinet shall report to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue the following information for each county:

1. The county name;

2. The population density ranking for that county;

3. The ten (10) year percentage change in population ranking for that county; and

4. The county population ranking for that county.

(8) (a) For selected eligible grant applicants that are involved in a regional project, the cabinet may pool the potential allocation of funds available for each county represented by the eligible grant applicants for the grant amount awarded.

(b) A county that is an eligible grant applicant involved in a regional project shall provide that county's local matching funds based on the county population ranking determined under subsection (7) of this section and each county's local matching funds may be pooled as described in paragraph (a) of this subsection.

Effective: April 13, 2026

History: Amended 2026 Ky. Acts ch. 115, sec. 4, effective April 13, 2026. -- Amended 2025 Ky. Acts ch. 71, sec. 4, effective March 24, 2025. -- Created 2024 Ky. Acts ch. 188, sec. 5, effective April 12, 2024.

154.14-060 GRANT Program fund -- Administration -- Use of funds -- Transfer.

(1) There is hereby established in the State Treasury a trust and agency account to be known as the GRANT Program fund. The fund shall consist of moneys received from state appropriations, gifts, grants, and federal funds.

(2) The fund shall be administered and maintained by the cabinet.

(3) (a) Amounts deposited in the fund shall be used for awarding:

1. Matching funds to successful applicants of the GRANT Program upon notification of award of the federal grant requiring matching funds. Except as provided in paragraph (b) of this subsection, up to twenty percent (20%) of the amounts deposited in the fund shall be used for match awards for nonprofit charitable organizations organized under 26 U.S.C. sec. 501(c)(3); and

2. Matching funds to successful applicants of the GRANT Program upon notification of award of the federal grant requiring matching funds. Except as provided in paragraph (b) of this subsection, up to eighty percent (80%) of the amounts deposited in the fund shall be used for match awards to county or city governing bodies.

(b) The cabinet may transfer up to ten percent (10%) of funds remaining in one

(1) of the categories listed in paragraph (a)1. or 2. of this subsection to the other category in that paragraph if:

1. The upper limit established is reached within a category;

2. There are eligible projects to be funded from the category that has reached the limit; and

3. Funds remain available in the other category. If a transfer is made, the cabinet shall provide notice in writing to the Interim Joint Committee on Appropriations and Revenue if the transfer is made during an interim between legislative sessions, or the Senate Standing Committee on Appropriations and Revenue and the House Standing Committee on Appropriations and Revenue if the transfer is made during a legislative session.

(4) Notwithstanding KRS 45.229, moneys in the account not expended at the close of a fiscal year shall not lapse but shall be carried forward into the next fiscal year.

(5) Any interest earnings of the fund shall become a part of the fund and shall not lapse.

(6) Any match funds awarded under subsection (3) of this section shall be canceled upon denial of the federal award.

Effective: March 24, 2025

History: Amended 2025 Ky. Acts ch. 71, sec. 5, effective March 24, 2025. -- Created 2024 Ky. Acts ch. 188, sec. 6, effective April 12, 2024.

154.14-070 Monthly report on eligible project applications -- Annual report.

(1) (a) By June 1, 2024, and the first day of each month thereafter, the cabinet shall submit a report on eligible project applications to the Governor and the Senate Standing Committee on Appropriations and Revenue and the House Standing Committee on Appropriations and Revenue, or the Interim Joint Committee on Appropriations and Revenue, and make the reports available on the cabinet's website.

(b) The monthly report shall be a summary of the eligible project applications and shall include but not be limited to the following:

1. A list of all eligible grant applications received;

2. The identity of applicants who were not selected for the obligation of funds;

3. Trends found in feedback given to applicants who were not selected for the obligation of funds; and

4. For each submitted eligible grant application:

a. The eligible use of funds and project for which funds are requested;

b. The date of submission;

c. A description of the federal grant funds applied for by the applicant;

d. A description of the title, subject matter, preliminary evaluation, and scoring tally of the eligible grant application;

e. The date of the cabinet's preliminary evaluation;

f. The amount requested, and the amount approved or denied; and

g. The date of the cabinet's final decision on obligation of the match funds, the date of the federal grant approval or denial, and whether the eligible project was approved or denied.

(2) By November 1, 2024, and annually thereafter until November 1, 2028, the cabinet shall prepare an annual report of the GRANT Program to be submitted to the Governor and the Interim Joint Committee on Appropriations and Revenue and made available on the cabinet's website. The annual report shall include but not be limited to the following:

(a) A summary of the monthly reports and the eligible grant applications received and relevant statistics relating to actions taken by the cabinet and grants awarded, including the applicant, award amount, and the purpose of the funding;

(b) The current balance of the GRANT Program fund;

(c) Recommendations regarding appropriations to the GRANT Program fund for the upcoming fiscal year; and

(d) Recommendations for legislation or policy actions needed to facilitate greater receipt of grant funding to eligible grant applicants.

Effective: April 13, 2026

History: Amended 2026 Ky. Acts ch. 115, sec. 5, effective April 13, 2026. -- Amended 2025 Ky. Acts ch. 71, sec. 6, effective March 24, 2025. -- Created 2024 Ky. Acts ch. 188, sec. 7, effective April 12, 2024.

154.14-080 Repealed, 2025.

[Repealed]

Subchapter 15 Kentucky Communications Network Authority Subchapter 15 Kentucky Communications Network Authority

154.15-010 Definitions for subchapter.

As used in this subchapter:

(1) "Authority" means the Kentucky Communications Network Authority;

(2) "Board" means the Board of the Kentucky Communications Network Authority;

(3) "Network" or "KentuckyWired" means the Commonwealth's open-access broadband network; and

(4) "Partnership" means the public-private partnership entered into between the Commonwealth and a private entity or entities for the purpose of creating, running, and maintaining the network.

Effective: March 10, 2026

History: Amended 2026 Ky. Acts ch. 2, sec. 1, effective March 10, 2026. -- Created 2017 Ky. Acts ch. 89, sec. 3, effective June 29, 2017.

154.15-020 Kentucky Communications Network Authority -- Duties -- Personnel -- Powers.

(1) The Kentucky Communications Network Authority is established and shall be attached to the Finance and Administration Cabinet for administrative purposes.

(2) The duties of the authority shall be to:

(a) Oversee and maintain KentuckyWired, the Commonwealth's open-access broadband network;

(b) Manage the master agreement establishing the public-private partnership between the Commonwealth and its private industry partner or partners. The purpose of the agreement is to design, engineer, build, operate, maintain, and upgrade the network;

(c) Provide network connectivity to public agencies;

(d) Offer access to entities eligible to utilize excess capacity on the network;

(e) Manage other aspects of the network and its utilization with oversight and input from the board established in KRS 154.15-030;

(f) Promulgate administrative regulations in accordance with KRS Chapter 13A necessary to implement the purposes of this subchapter;

(g) Enter into contracts with public and private entities to carry out its duties and responsibilities. A contract or other agreement involving the acquisition or disposition of a property interest by the Commonwealth shall be signed by the secretary of the Finance and Administration Cabinet. KRS Chapters 45A and 56 may require the secretary's signature on other contracts or agreements;

(h) Provide program management services ensuring the financial viability of the master agreement and related contracts and agreements, including grant administration, contract compliance and oversight, community planning support, and constituent services; and

(i) Seek out, secure, and manage funding sources for the network.

(3) The executive director of the Commonwealth Office of Technology established in KRS 42.724 shall assign personnel employed with the Commonwealth Office of Technology to carry out the functions and responsibilities of the authority.

(4) (a) With the approval of the board, the executive director of the Commonwealth Office of Technology may make, execute, and effectuate contracts, leveraging future revenues from provision of government-to-government services and sale or lease of excess capacity, to incur debt in the name of the authority and enter into financing agreements with the Commonwealth, agencies of the Commonwealth, lending institutions, investors, or investing entities.

(b) The total amount of debt or financing under this subsection shall not exceed one hundred ten million dollars ($110,000,000), and shall not leverage any future revenues committed to the repayment of any other debt, or expected to be used for the repayment of any other debt, as of the time the debt or financing is entered into.

(c) Any proposed debt or financing under this subsection shall be submitted to the Capital Projects and Bond Oversight Committee for review at least fourteen

(14) days prior to the committee meeting.

(d) If any debt or financing is incurred under this subsection, the authority shall provide to the Legislative Research Commission:

1. Within thirty (30) days of entering into a debt or financing agreement, a copy of the agreement; and

2. On January 1, April 1, July 1, and October 1 of each year that the debt or financing is outstanding:

a. The amount of principal and interest remaining on the debt or financing;

b. The use to which the capital gained from the debt or financing has been put; and

c. Any amendments, if any, to the original debt or financing instruments or agreements.

Effective: March 10, 2026

History: Amended 2026 Ky. Acts ch. 2, sec. 2, effective March 10, 2026. -- Amended 2018 Ky. Acts ch. 201, sec. 1, effective April 26, 2018. -- Created 2017 Ky. Acts ch. 89, sec. 4, effective June 29, 2017.

154.15-030 Board of the Kentucky Communications Network Authority -- Membership -- Duties -- Meetings -- Committees.

(1) The Board of the Kentucky Communications Network Authority is established. The board shall be attached administratively to the Finance and Administration Cabinet.

(2) The board shall consist of:

(a) The chief information officer of the Department of Education or designee, who shall serve as chair of the board;

(b) Two (2) members designated by the Governor as follows:

1. One (1) member selected from a list of three (3) nominees submitted by the Kentucky League of Cities; and

2. One (1) member selected from a list of three (3) nominees submitted by the Kentucky Association of Counties;

(c) The Commissioner of Agriculture or designee;

(d) The Secretary of State or designee;

(e) The Treasurer or designee; and

(f) A representative designated by the Center for Rural Development.

(3) The duties of the board shall be to:

(a) Develop and implement a strategic plan for and provide policy direction to the authority;

(b) Review performance reports from the partners named in the master agreement regarding deployment, operations, and administration of the network and its compliance with service level agreements with the Commonwealth;

(c) Monitor the results achieved through the partnership's strategy to develop new revenue streams and expand network usage through marketing and awareness programs;

(d) Approve fiscal planning for the authority including budget development, state appropriations management, cost-recovery schedules, grant administration, and billing services;

(e) Establish rates for services offered through the network and establish methods for customer account management; and

(f) Direct upgrades to technology as necessary.

(4) The board shall meet at least semiannually and at other times upon the call of the chair.

(5) The board may form committees or other subgroups as necessary to accomplish its duties and functions.

Effective: March 10, 2026

History: Amended 2026 Ky. Acts ch. 2, sec. 3, effective March 10, 2026. -- Created 2017 Ky. Acts ch. 89, sec. 5, effective June 29, 2017.

Subchapter 20 Financing of Development Generally Subchapter 20 Financing of Development Generally

Kentucky Economic Development Finance Authority Kentucky Economic Development Finance Authority

154.20-010 Kentucky Economic Development Finance Authority -- Members -- Officers.

(1) There is created and established within the cabinet, subject to the authority of the board, the Kentucky Economic Development Finance Authority as an agency, instrumentality, and political subdivision of the Commonwealth and a public body corporate and politic with all powers, duties, and responsibilities delegated to it by the board or as otherwise provided by law, including all programs, powers, duties, rights, and obligations of the Kentucky Development Finance Authority and the Kentucky Rural Economic Development Authority.

(2) Any interest, right, or cause of action held in whole or in part by any person, corporation, limited liability company, partnership, limited partnership, government agency, or other entity under any agreement, contract, lease, mortgage, guarantee, bond, note, refund bond, or other financial transaction or obligation, made, issued, or otherwise entered into by any of the authorities, programs, or funds specified in subsection (1) of this section or that may be delegated to the authority by the board, shall not be impaired or otherwise diminished.

(3) Any interest, right, or cause of action held in whole or in part by any of the authorities, programs, or funds specified in subsection (1) of this section shall not be impaired or otherwise diminished, but shall be assumed by the authority, for and on behalf of the cabinet.

(4) The authority shall consist of a committee of seven (7) persons, including six (6) persons appointed by the board who shall be private citizens of the Commonwealth, and the secretary of the Finance and Administration Cabinet who shall serve ex officio. Any person appointed to the committee shall have experience and expertise in business or finance, and at least one (1) appointee shall have experience and expertise in agriculture.

(5) Two (2) members initially appointed to the committee shall have a term of one (1) year each, two (2) members initially appointed to the committee shall have a term of two (2) years each, and two (2) members initially appointed to the committee shall have a term of three (3) years each, except that any person appointed to fill a vacancy shall serve only for the remainder of the unexpired term. All subsequent appointments shall be for a term of three (3) years.

(6) Any person appointed to the committee shall be eligible for reappointment, including any member of the committee appointed prior to July 15, 1994.

(7) The members of the committee shall elect biennially from the committee's private citizen membership the following officers: chairman, vice chairman, secretary- treasurer, and any assistant secretaries and assistant treasurers the committee deems necessary.

(8) A majority of the members of the committee, determined by excluding any existing vacancies from the total number of members, shall constitute a quorum. A majority vote of the members present at a duly called meeting of the committee shall be required for the purposes of conducting its business and exercising its powers and for all other purposes.

(9) The committee shall prepare bylaws and procedures applicable to the operations of the authority and submit them to the board to be promulgated as administrative regulations in accordance with KRS Chapter 13A.

(10) Members of the committee shall be entitled to compensation for their services in an amount of one hundred dollars ($100) for each regular meeting of the committee and shall be entitled to reimbursement for all necessary expenses in connection with the performance of their duties.

Effective: July 14, 2022

History: Amended 2022 Ky. Acts ch. 206, sec. 2, effective July 14, 2022. -- Amended 2006 Ky. Acts ch. 149, sec. 213, effective July 12, 2006. -- Amended 2002 Ky. Acts ch. 338, sec. 18, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 25, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 1, effective July 15, 1994. – Created 1992 Ky. Acts ch. 105, sec. 17, effective July 14, 1992.

154.20-020 Authority to commit cabinet to projects -- Exceptions.

(1) The secretary shall be authorized to commit the cabinet to any project or proposal, subject to approval of the committee as necessary except that any state incentive agreement requiring the participation of other agencies of state government shall require the concurrence of the board.

(2) No project shall be funded in whole or part by the authority unless first approved by its committee pursuant to administrative regulations promulgated by the board in accordance with KRS Chapter 13A.

(3) Lending decisions made by the authority shall be based, if possible, feasible, and not otherwise precluded by federal or state law, on utilizing state funds to leverage private sector investment.

Effective: July 15, 2020

History: Amended 2020 Ky. Acts ch. 36, sec. 6, effective July 15, 2020. -- Amended 2005 Ky. Acts ch. 99, sec. 123, effective June 20, 2005. -- Amended 2000 Ky. Acts ch. 330, sec. 2, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 426, sec. 109, effective July 15, 1998. -- Created 1992 Ky. Acts ch. 105, sec. 18, effective July 14, 1992.

154.20-025 Resident of bordering state may be considered qualified employee during review of applications.

During the review of applications under Subchapter 12, 22, 23, 24, 25, 26, 27, 28, 32, or 34 of KRS Chapter 154, the secretary of the Cabinet for Economic Development shall have the authority to consider a resident of one (1) of Kentucky's seven (7) contiguous bordering states as a qualified employee for a new, full-time position essential to an approved economic development project, as long as the development for the approved project is no more than twenty-five (25) miles from the boundary line of the bordering state.

Effective: June 29, 2021

History: Created 2021 Ky. Acts ch. 156, sec. 13, effective June 29, 2021.

154.20-029 Short title for KRS 154.20-030 to 154.20-150.

KRS 154.20-030 to 154.20-150 shall be known as the Kentucky Development Finance Act.

Effective: July 1, 1978

History: Amended 1978 Ky. Acts ch. 96, sec. 1, effective July 1, 1978. -- Created 1958 Ky. Acts ch. 152, sec. 1. Formerly codified as KRS 154.001

154.20-030 Purpose of authority.

It shall be the purpose of the Kentucky Economic Development Finance Authority to develop and expand existing and alternative sources of energy and the conservation of energy, to assist business enterprise in obtaining additional sources of financing to aid this state in achieving the goal of long-term economic growth and full employment, to meet the growing competition for business enterprises, to preserve existing jobs, to create new jobs, to reduce the cost of business and production, to reduce the costs and liabilities by encouraging and financing efforts to reduce and avoid the generation of hazardous waste and toxic by-products, to foster export activity, to foster economic development on surface mining land, and to alleviate and prevent unemployment through the retention, promotion, and development of agriculture and agricultural facilities, agribusiness, forestry and forestry facilities, commerce and commercial facilities, health care and health related facilities, export markets and export activities, industry and industrial buildings and facilities, riverport facilities, tourism and tourist facilities, including the sites therefor, and agricultural, forestry, commercial, and industrial machinery and equipment, water and air pollution control equipment, and solid waste disposal facilities with respect thereto or for use by individuals for private sector employment. Such purposes shall be public purposes for which public money may be spent.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 371, sec. 1, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 390, sec. 2, effective July 15, 1994. – Amended 1992 Ky. Acts ch. 105, sec. 19, effective July 14, 1992; and ch. 107, sec. 12, effective July 1, 1992. -- Amended 1988 Ky. Acts ch. 383, sec. 1, effective July 15, 1988. -- Amended 1980 Ky. Acts ch. 340, sec. 1, effective July 15, 1980. -- Amended 1978 Ky. Acts ch. 96, sec. 2, effective July 1, 1978. -- Created 1958 Ky. Acts ch. 152, sec. 2. Formerly codified as KRS 154.005

Legislative Research Commission Note (7/14/92). This section was amended by 1992 Acts ch. 105 and ch. 107 which are in conflict. Acts ch. 105 prevails pursuant to sec. 79 of that Act.

154.20-033 Powers of authority -- Limitation of liability -- Payment of administrative and operational expenses.

(1) The authority shall have all the powers necessary or convenient to carry out and effectuate the purposes and provisions of Subchapters 20 to 28, 30 to 34, and 60 of this chapter, including but not limited to:

(a) Employing fiscal consultants, attorneys, appraisers, and other agents on behalf of the authority whom the authority deems necessary or convenient for the preparation and administration of agreements and documents necessary or incident to any project. The fees for the services provided by persons employed on behalf of the authority shall be paid by the beneficiary of a loan, grant, assessment, incentive, inducement, or tax credit under this chapter directly to the person providing consultation, advisory, legal or other services; and

(b) Imposing and collecting fees and charges in connection with any transaction and providing for reasonable penalties for delinquent payment of fees and charges.

(2) A director or officer of the authority shall not be subject to any personal liability or accountability by reason of the execution of any obligation duly authorized by the authority.

(3) The authority may accept and expend moneys which may be appropriated from time to time by the General Assembly, or moneys which may be received from any source, including income from the authority's operations for effectuating its purpose, including without limitation the payment of the expenses of administration and operation.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 19, effective July 14, 2018. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 29, effective June 26, 2009. -- Amended 2008 Ky. Acts ch. 178, sec. 25, effective July 15, 2008. -- Created 1996 Ky. Acts ch. 194, sec. 26, effective July 15, 1996.

154.20-035 Purposes for borrowing money or issuing bonds or notes -- Sale of bonds or notes -- Terms -- Tax exemption.

(1) The authority may, upon approval of the board, borrow money and issue bonds or notes in accordance with KRS 154.10-035 and other provisions of this chapter appertaining, subject to KRS 42.420, for the following purposes:

(a) To provide sufficient funds for achieving the authority's purposes and objectives, including but not limited to, amounts necessary to pay the costs of acquiring projects or any part thereof; to make loans for the maintenance, operation, expansion, or development of riverport facilities that are under the authority of a developmental riverport authority established under KRS 65.520; to make loans for the cost of a project or any part thereof; to make loans pursuant to KRS 154.10-030(11) for an export-related transaction; to make grants; to provide money to guarantee or insure loans, leases, bonds, notes, or other indebtedness; to make working capital loans; for all other expenditures of the authority incident to and necessary or convenient to carry out the authority's purposes, objectives, and powers; or for any combination of the foregoing;

(b) To refund bonds or notes of the authority issued under this chapter, by the issuance of new bonds, whether or not the bonds or notes to be refunded have matured or are subject to prior redemption or are to be paid, redeemed, or surrendered at the time of issuance of the refunding bonds or notes; and to issue bonds or notes partly to refund such bonds or notes and partly for any other purpose provided for by this section; or

(c) To pay the costs of issuance of bonds or notes under this chapter; to pay interest on bonds or notes becoming payable prior to the receipt of the first revenues available for payment thereof as determined by the board; and to establish, in full or in part, a reserve for the payment of the principal and interest on the bonds or notes in such amount as shall be determined by the board.

(2) The bonds and notes, including, but not limited to, commercial paper, shall be authorized by resolution adopted by the authority, shall bear the date or dates, and shall mature at the time or times, not exceeding fifty (50) years from the date of issuance, as the resolution provides. The bonds and notes shall bear interest at the rate or rates set, reset, or calculated from time to time as provided in the resolution. The bonds and notes shall be in the denominations; be in the form, either coupon or registered; carry the registration privileges; be transferable; be executed in the manner; be payable in the medium of payment, at the place or places; and be subject to the terms of prior redemption at the option of the authority or the holders thereof as the resolution or resolutions provide. The bonds and notes of the authority may be sold at public or private, negotiated sale, at the price or prices the authority determines. Bonds and notes may be sold at a discount.

(3) Bonds or notes may be:

(a) Made the subject of a put or agreement to repurchase by the authority or others;

(b) Secured by a letter of credit or by any other collateral which the resolution may authorize;

(c) Resold by the authority, once acquired by the authority, pursuant to any put or repurchase agreement without the acquisition being considered the extinguishment of the bond or note.

(4) The authority may authorize its chairman or other officer to, by order:

(a) Sell and deliver, and receive payment for notes or bonds;

(b) Refund notes or bonds by the delivery of new notes or bonds, whether or not the notes or bonds to be refunded have matured, are subject to prior redemption, or are to be paid, redeemed, or surrendered at the time of the issuance of refunding bonds or notes;

(c) Deliver notes or bonds, partly to refund notes or bonds and partly for any other authorized purposes;

(d) Buy notes or bonds so issued at not more than the face value of the notes or bonds; or

(e) Approve interest rates or methods for fixing interest rates, prices, discounts, maturities, principal amounts, denominations, dates of issuance, interest payment dates, redemption rights at the option of the authority or the holder, the place of delivery and payment, and other matters and procedures necessary to complete the transactions authorized.

(5) Except as provided by the authority, every issue of its notes or bonds shall be general obligations of the authority payable out of revenues, properties, or money of the authority, subject only to agreements with the holders of particular notes or bonds pledging particular receipts, revenues, properties, or money as security therefor.

(6) The notes or bonds of the authority shall be and are hereby made negotiable instruments within the meaning of and for all purposes of the Uniform Commercial Code, subject only to the provisions of the notes or bonds for registration.

(7) A resolution authorizing notes or bonds may contain any or all of the following covenants which shall be a part of the contract with the holders thereof:

(a) A pledge of all or a part of the fees, charges, and revenues made or received by the authority, or all or a part of the money received in payment of lease rentals, or loans and interest thereon, and other money received or to be received to secure the payment of the notes or bonds or an issue thereof, subject to agreements with bondholders or noteholders as may then exist;

(b) A pledge of all or a part of the assets of the authority, including leases, or notes or mortgages and obligations securing the same to secure the payment of the notes or bonds or of an issue of notes or bonds, subject to agreements with noteholders or bondholders as may then exist;

(c) A pledge of a loan, grant, or contribution from the federal, state, or municipality, or source in aid of a project as provided for in this chapter;

(d) A provision as to the use and disposition of the revenues and income from leases, or from loans, notes, and mortgages owned by the authority;

(e) A provision as to the establishment and setting aside of reserves or sinking funds and the regulation and disposition thereof subject to this chapter;

(f) Limitations on the purpose to which the proceeds of sale of the notes or bonds may be applied and limitations on pledging those proceeds to secure the payment of other bonds or notes;

(g) Authority for and limitations on the issuance of additional notes or bonds for the purposes provided for in the resolution and the terms upon which additional notes or bonds may be issued and secured;

(h) A provision for the procedure, if any, by which the terms of a contract with noteholders or bondholders may be amended or abrogated, the number of noteholders or bondholders who are required to consent thereto, and the manner in which the consent may be given;

(i) Vesting in a trustee, or a secured party, such property, income, revenues, receipts, rights, remedies, powers, and duties in trust or otherwise as the authority may determine necessary to appropriate to adequately secure and protect noteholders and bondholders or to limit or abrogate the rights of the noteholders and bondholders. A trust agreement may be executed by the authority with any trustee who may be located inside or outside this state to accomplish any of the foregoing;

(j) Providing for the payment of maintenance and repair costs of a project;

(k) Establishing the insurance to be carried on a project and the use and disposition of insurance money and condemnation awards;

(l) Establishing the terms, conditions, and agreements upon which the holder of the bonds, or a portion thereof, shall be entitled to the appointment of a receiver by the Circuit Court. A receiver may enter and take possession of the project and maintain it or lease or sell it for cash or on an installment sales contract and prescribe rentals and payments therefor and collect, receive, and apply all income and revenues thereafter arising in the same manner and to the same extent as the authority; and

(m) Providing for any other matters, of like or different character, which in any way affect the security or protection of the notes or bonds.

(8) A pledge made by the authority shall be valid and binding from the time the pledge is made. The money or property pledged and received by the authority shall immediately be subject to the lien of the pledge without a physical delivery or further act. The lien of the pledge shall be valid and binding as against parties having claims of any kind in tort, contract, or otherwise against the authority and shall be valid and binding against the transfer of the money or property pledged, irrespective of whether the parties have notice. It shall not be necessary to record the resolution, the trust agreement, or any other instrument by which a pledge is created.

(9) Neither the members of the authority nor any person executing the notes or bonds shall be liable personally on the notes or bonds or be subject to personal liability or accountability by reason of the issuance thereof.

(10) The state shall not be liable for any financial obligations of the authority nor shall any such obligations or bonds be considered a debt of the state. The obligations shall contain on the face thereof a statement indicating this fact.

(11) The notes and bonds of the authority shall be securities in which the public officers and bodies of this state and municipalities and municipal subdivisions, insurance companies, associations, and other persons carrying on an insurance business, banks, trust companies, savings banks and savings associations, savings and loan associations, investment companies, and administrators, guardians, executors, trustees, and other fiduciaries, and all other persons who are authorized to invest in bonds or other obligations of the state, may properly and legally invest funds.

(12) The property of the authority and its income and operation shall be exempt from all taxation by this state or any of its political subdivisions. All bonds and notes of the authority, the interest thereon, and their transfer shall be exempt from all taxation by this state or any of its political subdivisions, except for estate, gift, and inheritance taxes, notwithstanding that interest on bonds or notes of the authority may be or become subject to federal income taxation as a result of legislative action by the federal government. The state covenants with the purchasers and all subsequent holders and transferees of notes and bonds issued by the authority under this chapter, in consideration of the acceptance of and payment for the notes and bonds, that the notes and bonds of the authority, issued pursuant to this chapter, the interest thereon, the transfer thereof, and all its fees, charges, gifts, grants, revenues, receipts, and other money received or to be received and pledged to pay or secure the payment of the notes or bonds shall at all times be free and exempt from all state or local taxation provided by the laws of this state, except for estate, gift, and inheritance taxes.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 371, sec. 2, effective July 14, 2000. -- Amended 1992 Ky. Acts ch. 105, sec. 20, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 383, sec. 7, effective July 15, 1988. Formerly codified as KRS 154.043 2026-2028 Budget Reference. See State/Executive Branch Budget, 2026 Ky. Acts ch. 168, Pt. II, B, 1, (2) at 2118.

154.20-040 Loan insurance account -- Deposits -- Money transferred.

(1) Loan insurance shall be funded by an account, which shall be established and managed by the authority, to be known as the loan insurance account.

(2) The authority shall pay into the account any money appropriated or otherwise provided by this state for that purpose; any money which the authority receives as fees or premiums for its provision of loan, lease, or debenture insurance; loan, lease, or debenture guarantees; or letters of credit; and any other money made available to the authority for the purpose of loan insurance from any other source, public or private.

(3) Money in the loan insurance account may be transferred into any other account established by the authority, unless the authority is otherwise obligated to retain the money in the loan insurance account or if the money was appropriated by this state solely for that purpose.

Effective: July 15, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 8, effective July 15, 1988. Formerly codified as KRS 154.045

154.20-045 Insurance or guarantee by authority.

(1) The authority may insure, guarantee, or issue letters of credit for all or a part of a loan or debenture of others, public or private.

(2) The authority may insure, guarantee, or issue letters of credit for all or a part of a lease entered into by others, public or private.

(3) The authority may procure insurance, a guarantee, or a letter of credit from any source for all or a part of a loan, debenture, or lease of others, public or private. The authority may procure insurance, a guarantee, or a letter of credit for either a single loan, debenture, or lease or for any combination of loans, debentures, or leases.

(4) The authority may insure, guarantee, or issue letters of credit for all or a part of a revenue bond issued by the authority, another state agency or authority, or another entity or authority authorized by law to issue revenue bonds.

(5) The authority may procure insurance, a guarantee, or a letter of credit for all or a part of a revenue bond issue of the authority, another state agency or authority, or another entity or authority authorized by law to issue revenue bonds. The authority may procure insurance, a guarantee, or a letter of credit for either all or part of a single revenue bond issue or for all or a part of any combination of revenue bond issues.

Effective: July 15, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 9, effective July 15, 1988. Formerly codified as KRS 154.047

154.20-050 Contract of insurance by authority -- Authority not an insurer.

To provide loan insurance pursuant to KRS 154.20-040 and 154.20-045, the authority may enter into a contract of insurance. The Kentucky Insurance Code shall not apply to the insurance contract, and the authority shall not be considered an insurer subject to the Kentucky Insurance Code by virtue of entering into the contract.

Effective: July 15, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 10, effective July 15, 1988. Formerly codified as KRS 154.049

154.20-060 Projects eligible for insurance by authority -- Priority given to certain projects.

(1) Insurance, guarantees, or letters of credit provided or procured pursuant to KRS 154.20-040 and 154.20-045 shall be provided or procured only for projects within this state which are consistent with the purposes and objectives of the authority and this chapter.

(2) The authority shall give paramount priority in providing or procuring insurance, guarantees, and letters of credit to projects which have the greatest potential for creating new jobs or retaining current jobs within this state.

(3) Notwithstanding the provisions of subsection (2) of this section, when considering project applications from a riverport facility established under KRS 65.520, the authority shall not give priority to regulatory criteria pertaining to direct employment at these facilities and shall instead give priority to the indirect employment maintained or created.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 371, sec. 3, effective July 14, 2000. -- Created 1988 Ky. Acts ch. 383, sec. 11, effective July 15, 1988. Formerly codified as KRS 154.051

154.20-070 Authority backing limited to projects with significant private sector financial support -- Terms and conditions determined by authority.

(1) Insurance, guarantees, or letters of credit shall not be provided or procured unless the authority shall be legally assured that the loans, debentures, or leases insured, or guaranteed, or for which letters of credit are issued, will be used to assist projects which also have significant private sector financial support.

(2) Insurance, guarantees, or letters of credit may be provided or procured on the terms and conditions the authority, in its sole discretion, shall determine to be reasonable, appropriate, and consistent with the purposes and objectives of the authority and this chapter.

(3) The authority may charge the lender or the borrower, or both, a fee or premium for loan, debenture, or lease insurance, guarantee, or letter of credit. Guidelines for premiums or fees charged by the authority for loan, debenture, or lease insurance, guarantees, or letters of credit shall be established by the authority.

Effective: July 15, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 12, effective July 15, 1988. Formerly codified as KRS 154.053

154.20-080 Agreements with lenders -- Provisions included.

The authority may enter into agreements with lenders for participation in loan insurance. The agreements may include, but need not be limited to:

(1) Authorization for the lender to determine, collect, and transmit to the authority a fee or premium charge within a specified range established consistent with the purposes and objectives of the authority;

(2) Specification of whether the premium charge shall be paid by the lender, the borrower, the authority, or by a combination thereof in specified proportions;

(3) The procedure by which a lender may make a claim upon the authority upon default by the borrower and the conditions under which a claim may be made;

(4) The maximum amount of claims a lender may make upon the authority, which amount may be equal to, greater than, or less than the proportion of the total premiums collected by the authority which is accounted for by premiums collected by the lender.

Effective: July 5, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 13, effective July 15, 1988. Formerly codified as KRS 154.055

154.20-090 Special fund to secure loan insurance account obligations.

The authority may establish a special fund or funds solely to secure some or all of its obligations within the loan insurance account into which fees or premiums collected by the authority for loan, debenture, or lease insurance, guarantees, or letters of credit may be deposited.

Effective: July 15, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 14, effective July 15, 1988. Formerly codified as KRS 154.057

154.20-100 Reclamation development fund -- Deposits.

(1) Assistance for reclamation development projects shall be provided by a fund, which shall be established and managed by the authority, to be known as the reclamation development fund.

(2) The authority shall pay into the fund any money appropriated or otherwise provided by the state for that purpose and any other money available to the authority for assistance for reclamation development projects, including funds from public or private sources.

Effective: July 15, 1988

History: Created 1988 Ky. Acts ch. 383, sec. 15, effective July 15, 1988. Formerly codified as KRS 154.059.

154.20-105 Use of reclamation development fund.

Moneys in the reclamation development fund:

(1) Shall be used to foster reclamation development projects described in a reclamation development plan submitted to the authority as part of the application for reclamation development fund moneys, except that no money in the reclamation development fund shall be used for any reclamation development project until the reclamation development plan with respect to that project has been approved by the Energy and Environment Cabinet pursuant to KRS Chapter 350; and

(2) May be made available to any person or entity, public or private, organized for profit or not for profit; and

(3) Shall be made on the terms and conditions the authority, in its sole discretion, determines to be reasonable, appropriate, and consistent with the purposes and objectives of the authority and this chapter, which may include, but not be limited to, the pledging of adequate security.

Effective: July 15, 2010

History: Amended 2010 Ky. Acts ch. 24, sec. 196, effective July 15, 2010. -- Created 1988 Ky. Acts ch. 383, sec. 16, effective July 15, 1988. Formerly codified as KRS 154.061

154.20-110 Written approval of application by local agency.

All applications made to the authority shall be subject to written approval by a local development corporation, local development agency, or in the absence thereof, approval by a local governmental body.

Effective: July 15, 1986

History: Amended 1986 Ky. Acts ch. 201, sec. 4, effective July 15, 1986. -- Created 1980 Ky. Acts ch. 340, sec. 22, effective July 15, 1980. Formerly codified as KRS 154.065

154.20-120 Attorney's fees as part of judgment.

In any legal action brought by the authority or the insurance corporation to obtain the collection or repayment of a defaulted loan, as part of a successful judgment against the debtor or guarantor, the authority or insurance corporation shall be entitled to an award of reasonable attorney's fees, provided that provision therefor is contained in the agreements signed by the debtor as part of a loan or other debt transaction between the debtor and the authority or insurance corporation.

Effective: July 15, 1980

History: Created 1980 Ky. Acts ch. 340, sec. 21, effective July 15, 1980. Formerly codified as KRS 154.135

154.20-130 Financial interests of authority members.

(1) No member of the authority or officer or employee thereof shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the authority for any matter, cause, or thing whatsoever by reason whereof any liability or indebtedness shall in any way be created against such authority.

(2) Should a member, officer, or employee of the authority have such an interest, then the member, officer, or employee of the authority shall:

(a) Disclose the interest;

(b) Refrain from participating in discussions relating to any such contract or agreement with the authority; and

(c) Refrain from voting or otherwise taking action on any such contract or agreement of the authority.

(3) If any contract or agreement shall be made in violation of the provisions of this section the same shall be null and void and no action shall be maintained thereon against such authority.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 450, sec. 2, effective July 15, 1994. -- Created 1958 Ky. Acts ch. 152, sec. 18. Formerly codified as KRS 154.160

154.20-140 Negotiations with other agencies -- Construction of authority's powers and obligations.

(1) The authority may negotiate with other agencies of the state government to obtain the use of moneys which such agencies are authorized to invest in government obligations. Funds so negotiated shall be transferred on an inter-account basis to the appropriate fund of the authority. The authority may also negotiate with the State Property and Buildings Commission for the issuance and sale of revenue or other authorized bonds in accordance with the methods prescribed in KRS 56.520 for the purposes of this chapter.

(2) Nothing in this chapter shall be construed to give the authority power to pledge the credit or taxing power of the Commonwealth or any of its political subdivisions.

Effective: July 15, 1980

History: Amended 1980 Ky. Acts ch. 340, sec. 15, effective July 15, 1980. -- Amended 1978 Ky. Acts ch. 96, sec. 13, effective July 1, 1978. -- Created 1958 Ky. Acts ch. 152, sec. 19. Formerly codified as KRS 154.170

154.20-150 Project status reports by authority -- Annual report -- Construction activity report.

(1) On or before October 1, 1992, and on or before the first day of every third month thereafter, the authority shall provide a written project status report to the Legislative Research Commission, and the authority shall be compelled to send a representative to testify on the project status report and the authority shall provide additional information on any projects upon request by the Legislative Research Commission. The written project status report shall include but is not limited to:

(a) The current status of each project under consideration by the authority, the proposed cost of a project, for each project under consideration, including any proposed financial obligations of the authority, the number of jobs to be created or retained by each project under consideration, and a description of the applicants with respect to each project under consideration; and

(b) The current status of each project, along with an updated cost for each project in progress, including any financial obligations of the authority and a description of the principals with respect to each project in progress.

(2) On or before November 1 of each year, the authority shall prepare an annual report and make it available on the Cabinet for Economic Development Web site as required by KRS 154.12-2035. The report shall include information about the success or failure of each completed project, in order to determine the effectiveness of the Kentucky Economic Development Finance Authority.

(3) In addition to the project status report, all construction, reconstruction, or alteration, financed or facilitated in whole or in part by the authority shall be reported to the Department of Workforce Development in the Education and Labor Cabinet and to the Kentucky Legislative Research Commission not later than fifteen (15) days following the end of the month in which the agreement or contract facilitating or permitting such activity was executed. This construction activity report shall be subject to public information requests as provided by KRS 61.878. Reports shall list subject construction activity by location of project site, and shall specify the type of construction, project owner, estimated cost of project, and estimated starting and completion dates if known.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 48, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 17, effective June 27, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 20, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 134, sec. 7, effective July 15, 2014. -- Amended 2009 Ky. Acts ch. 11, sec. 35, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 211, sec. 67, effective July 12, 2006. -- Amended 1996 Ky. Acts ch. 271, sec. 7, effective July 15, 1996. -- Amended 1992 Ky. Acts ch. 105, sec. 21, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 383, sec. 20, effective July 15, 1988. Formerly codified as KRS 154.180

154.20-160 Development of criteria for productivity gains to be used in considering requests for financial assistance.

(1) The Kentucky Economic Development Finance Authority, or its successor, shall develop, pursuant to KRS 154.20-030 to 154.20-150, criteria which may be used by the authority in considering the requests by industrial entities for financial assistance for proposed industrial development projects. The authority, or its successor, may develop criteria which shall include, but not be limited to, potential productivity gains due to the funding of the proposed technological investment.

(2) In developing criteria as prescribed in subsection (1) of this section, the authority shall consider the following:

(a) For existing firms, past productivity trends and potential productivity gains due to the funding of technological investments; and

(b) For new firms, the degree to which the proposed technological investment will be expected to cause the firm's productivity to be higher than the average for firms in the industry it represents.

(3) When considering productivity gains, the authority shall consider the following:

(a) 1. Total real value of output defined as the total sales in real dollars in the calendar year adjusted by the producer price index for the standard industrial classification of that business; or

2. Potential total real value of output defined as the forecasted total sales in real dollars as measured in the current period; and

(b) 1. Productivity measure defined as the total real value of output for a calendar year divided by total employment for that calendar year; or

2. Potential productivity measure defined as the potential total real value of output divided by the total forecasted employment.

(4) Productivity trends of a business shall be evaluated by comparing the annual rate of change in the productivity measure for an individual business to the annual rate of change in productivity measure for businesses engaged in a similar economic activity. The recommended source for industry productivity measures is the rate of change in industry labor productivity indexes published by the United States Bureau of Labor Statistics.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 499, sec. 20, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 19, effective July 14, 1992. Formerly codified as KRS 154.24-160

154.20-170 Priority consideration for certain businesses.

(1) Industrial entities, agricultural business entities, business enterprises, or private sector firms which are members of a business network within the meaning of KRS 154.1-010 and businesses that compose the secondary wood products industry as defined in KRS 154.47-005(5), shall be given priority consideration under state economic development loan, grant, and incentive programs administered by the Kentucky Economic Development Finance Authority.

(2) Notwithstanding the provisions of subsection (1) of this section, highest priority consideration under state economic development loan, grant, and incentive programs administered by the authority shall be given to those projects that are located in counties of Kentucky which have had an average countywide rate of unemployment of fifteen percent (15%) or greater in the most recent twelve (12) consecutive months for which unemployment figures are available, on the basis of the final unemployment figures calculated by the Department of Workforce Development in the Education and Labor Cabinet.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 38, effective June 29, 2023. -- Amended 2022 Ky. Acts ch. 236, sec. 49, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 18, effective June 27, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 21, effective July 14, 2018. -- Amended 2017 Ky. Acts ch. 117, sec. 17, effective June 29, 2017. -- Amended 2013 Ky. Acts ch. 49, sec. 2, effective June 25, 2013. -- Amended 2009 Ky. Acts ch. 11, sec. 36, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 211, sec. 68, effective July 12, 2006. -- Amended 2002 Ky. Acts ch. 65, sec. 4, effective July 15, 2002. -- Amended 2001 Ky. Acts ch. 133, sec. 1, effective June 21, 2001. -- Created 1994 Ky. Acts ch. 390, sec. 11, effective July 15, 1994.

154.20-180 Business networks revolving loan fund -- Eligibility for assistance -- Administration of fund.

(1) Any business firm that is a member of an approved business network comprising individual firms, companies, agricultural business entities, or industrial entities that have been identified as key industries and that have been targeted by the state's economic development strategic plan as eligible for priority consideration for state assistance shall also be eligible for state assistance under the provisions of this section.

(2) A business networks revolving loan fund shall be established and shall be administered by the Kentucky Economic Development Finance Authority. The fund shall be maintained and credited with repayments and the fund balance shall be available in perpetuity to provide loans at or below market rates at terms not to exceed thirty (30) years to members of approved business networks to support the development and production of new and expanded products and production facilities, including, but not limited to, financing development and construction of value-added food and fiber production facilities, accelerating modernization of production systems, and making of new technology investments. The maximum amount of loans made available to any member of an approved business network shall not exceed ten percent (10%) of the total amount of available funds.

(3) The Kentucky Economic Development Finance Authority shall cause to be established and implemented fiscal controls and accounting procedures sufficient to assure proper accounting during appropriate accounting periods for payments and disbursements received and made by the fund and for fund balances at the beginning and end of each accounting period.

(4) In addition to powers and authorities otherwise granted the Kentucky Economic Development Finance Authority, the authority may:

(a) Make and condition loans from the fund as required by state or federal law;

(b) Enter into any necessary or required agreement and give or make any necessary or required assurance or certification with any person or entity to receive payments or to make or to provide loans;

(c) Guarantee or purchase insurance for obligations of the fund where the action would improve credit market access or reduce interest rates;

(d) Receive money from any public or private source to implement the purposes of this section;

(e) Approve or reject applications made to it for loans from the fund, and establish standards applicable thereto;

(f) Provide for the issuance of revenue bonds and bond anticipation notes as prescribed by KRS 154.10-035 for the purposes as set forth in this section;

(g) Promulgate administrative regulations implementing the purposes of this section in accordance with KRS Chapter 13A; and

(h) Do all things necessary and convenient to achieve the objectives and purposes of this section which are not otherwise prohibited by state law.

(5) In carrying out the objectives and purposes of this section, the authority shall consult with the Kentucky Department of Agriculture regarding development of standards and conditions applicable to agribusiness and agriculture related loan applications.

(6) Nothing contained herein shall preclude the authority from contracting with or acquiring services from any state agency or institution regarding implementation of this section.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 390, sec. 14, effective July 15, 1994.

154.20-190 Rural hospital operations and facilities revolving loan fund.

(1) As used in this section:

(a) "Authority" means the Kentucky Economic Development Finance Authority;

(b) "Qualifying former hospital" means a hospital facility:

1. At a location that closed within thirty-six (36) months prior to an application for a loan; and

2. For which the former owner or new owner has obtained a certificate of need to open a new hospital or other health facility as defined in KRS 216B.015 that provides inpatient care at the closed location; and

(c) "Rural hospital" means any hospital or qualifying former hospital located within a county of the Commonwealth having a population of less than fifty thousand (50,000) according to the most recent annual estimates of the resident population issued by the United States Census Bureau.

(2) (a) The rural hospital operations and facilities revolving loan fund is established. The authority shall provide loans to a rural hospital not to exceed one million dollars ($1,000,000) for any project within a rural hospital and shall not exceed more than two million dollars ($2,000,000) every five (5) years.

(b) Any loan issued by the authority shall not exceed a twenty (20) year term and shall be utilized by the Cabinet for Economic Development to assist a rural hospital in providing needed direct health care services for the citizens of the Commonwealth by:

1. Maintaining or upgrading the hospital's facilities;

2. Maintaining or increasing the current staff of the rural hospital;

3. Reopening a qualifying former hospital; or

4. Providing health care services that are not currently available to citizens.

(c) The authority shall consider a group with multiple locations eligible under this section as if each separate location is a separate entity for purposes of determining eligibility and applicable loan limits.

(3) The Cabinet for Economic Development shall:

(a) Determine the terms and conditions of each loan, including the repayment to be deposited back in the revolving loan fund for issuance of future loans to other rural hospitals;

(b) Monitor the performance of the rural hospital; and

(c) By November 1, 2023, and by each November 1 thereafter, report to the Interim Joint Committee on Appropriations and Revenue information about each outstanding loan issued, including:

1. The name and location of the rural hospital;

2. The amount of principal originally loaned;

3. The terms of the loan and whether the rural hospital is currently meeting those terms; and

4. How the rural hospital used the loan related to facilities, staff, or additional services.

(4) (a) The fund created in subsection (2) of this section shall be a trust and agency account.

(b) The Cabinet for Economic Development shall administer the fund.

(c) The fund shall consist of appropriations, contributions, donations, gifts, or federal funds.

(d) Notwithstanding KRS 45.229, any moneys remaining in the fund at the close of the fiscal year shall not lapse but shall be carried forward into the succeeding fiscal year.

(e) Any interest earnings of the fund shall become a part of the fund and shall not lapse.

(f) Moneys deposited in the fund are hereby appropriated for the sole purpose of providing loans to rural hospitals.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 15, effective June 29, 2023. -- Amended 2022 Ky. Acts ch. 134, sec. 1, effective April 8, 2022. -- Created 2020 Ky. Acts ch. 128, sec. 1, effective April 24, 2020.

154.20-195 Certified mixed-use rehabilitation tax credit -- Definitions for section -- Application -- Approval -- Notification of department. (Effective July 1, 2027)

(1) As used in this section:

(a) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010;

(b) "Certified mixed-use rehabilitation" means the development, rehabilitation, renovation, and improvement of a qualified abandoned building that will serve at least two (2) of the following purposes, in its finished, rehabilitated state:

1. Commercial;

2. Residential; or

3. Retail;

(c) "Department" means the Department of Revenue;

(d) "Eligible rehabilitation expenses" means all costs incurred in association with the certified mixed-use rehabilitation of a qualified abandoned building and includes:

1. Building and construction materials;

2. The costs of fixture installation; and

3. Labor and mechanics costs;

(e) "Qualified abandoned building" means a vacant structure that:

1. Contains a minimum of two hundred twenty-five thousand (225,000) square feet of gross leasable area;

2. Is located within an urban core area;

3. Has a minimum vacancy rate by square footage of at least fifty percent (50%) for a continuous period of at least six (6) months immediately prior to the certified mixed-use rehabilitation; and

4. Is not a project that has been awarded the certified rehabilitation credit under KRS 171.397;

(f) "Taxpayer" means any person or entity who:

1. a. Incurs eligible rehabilitation expenses for a certified mixed-use rehabilitation; or

b. Is the recipient of a certified mixed-use rehabilitation credit which is transferred as provided in subsection (7)(b) of this section; and

2. Is subject to the taxes imposed by KRS 136.320, 136.330, 136.340, 136.350, 136.370, 136.390, 141.020, 304.3-270, or 141.040 and 141.0401; and

(g) "Urban core area" means a central, downtown part of this state that is located within a metropolitan statistical area with a population of greater than three hundred thousand (300,000) based on the most recent federal decennial census.

(2) There is hereby created the certified mixed-use rehabilitation credit.

(3) For taxable years beginning on or after January 1, 2028, but before January 1, 2032, a taxpayer shall be allowed a refundable, transferable certified mixed-use rehabilitation credit against the taxes imposed by:

(a) KRS 141.020 or 141.040 and 141.0401, with the ordering of the credits as provided in KRS 141.0205; or

(b) KRS 136.320, 136.330, 136.340, 136.350, 136.370, 136.390, and 304.3-270, with the ordering of the credits as provided in KRS 136.376.

(4) The credit shall be:

(a) Equal to twenty percent (20%) of the eligible rehabilitation expenses incurred during the taxable year; and

(b) Limited to:

1. Twenty-five million dollars ($25,000,000) per eligible taxpayer; and

2. A total of fifty million dollars ($50,000,000) for all tax credits preliminarily approved for each calendar year in which the credit is available.

(5) (a) An eligible taxpayer seeking the credit provided under this section shall file an application with the authority for preliminary approval by December 31, 2027, and by each December 31 thereafter of the calendar year immediately preceding in the calendar year in which the certified mixed-use rehabilitation will take place, and include the following:

1. Project location;

2. Proposed start and completion date of the project;

3. Anticipated costs to be incurred;

4. Verification that the building meets the requirements established in subsection (1) of this section as a qualified abandoned building;

5. Detailed rehabilitation plans that outline the projected use of the qualified abandoned building in its final, rehabilitated state; and

6. Any other information the authority may require to provide preliminary project approval.

(b) The authority shall provide preliminary approval with the anticipated credit amount to be awarded by January 15, 2028, and each January 15 thereafter as long as the credit is available and shall:

1. Create the application by which a taxpayer may apply for preliminary and final credit approval;

2. Provide notification to the taxpayer of preliminary and final credit approval; and

3. Promulgate administrative regulations in accordance with KRS Chapter 13A necessary to implement this section.

(6) (a) If the total amount of credits granted preliminary approval for a calendar year under subsection (5) of this section:

1. Exceeds fifty million dollars ($50,000,000), each taxpayer shall receive no more than its applicable pro rata share as determined by the authority; or

2. Is less than fifty million dollars ($50,000,000), the difference between the amount of credits preliminarily approved and the maximum amount available in accordance with subsection (4) of this section, shall be added to the maximum amount of credit available for preliminary approval in the next calendar year.

(b) In the event that credits are divided pro rata among all applicants, the authority shall provide notification to the taxpayer with preliminary credit approval.

(7) Within thirty (30) days of completion of the certified mixed-use rehabilitation project, the taxpayer shall:

(a) Submit an application to the authority for final credit approval;

(b) Include an irrevocable election to:

1. Use the credit; or

2. Transfer the credit, in which case the following shall be included:

a. Transferee's taxpayer identification number; and

b. Amount of credit to be transferred; and

(c) Provide documentation of final project dates and actual costs incurred as projected in subsection (5) of this section.

(8) Within sixty (60) days of the taxpayer's final application submission, the authority shall:

(a) Review and verify all actual eligible rehabilitation expenses incurred; and

(b) Provide notification of final credit determination to the taxpayer and the department, which may be claimed on the taxpayer's return for the taxable year.

(9) The authority shall notify the department following approval of a certified mixed- use rehabilitation project and include:

(a) The name and taxpayer identification number of each approved taxpayer;

(b) The location of each certified mixed-use rehabilitation project approved;

(c) The total amount of credit available for each taxpayer; and

(d) Any other information required by the department.

Effective: July 1, 2027

History: Created 2026 Ky. Acts ch. 198, sec. 30, effective July 1, 2027.

Kentucky Enterprise Initiative Act Kentucky Enterprise Initiative Act

154.20-200 Definitions for KRS 154.20-200 to 154.20-216.

As used in KRS 154.20-200 to 154.20-216, unless the context clearly indicates otherwise:

(1) "Agreement" means any agreement made pursuant to KRS 154.20-210 between the authority and an approved company with respect to an economic development project in which inducements are granted.

(2) "Approval" means action taken by the authority that authorizes the eligible company to receive inducements in connection with an economic development project under KRS 154.20-200 to 154.20-216 and that designates the eligible company as an approved company.

(3) "Approved company" means an eligible company that initiates an economic development project in the Commonwealth whose application has been approved by the authority.

(4) "Approved expense" means:

(a) For an approved company that establishes a new facility or expands an existing facility:

1. The cost of building and construction materials, upon which Kentucky sales and use tax as defined in KRS Chapter 139 is paid, purchased in connection with the acquisition, construction, installation, equipping, and rehabilitation of an economic development project; and

2. The cost of equipment purchased and used in research and development, at the economic development project, upon which Kentucky sales and use tax as defined in KRS Chapter 139 is paid.

(b) Approved expenses may only be incurred during the life of the project, not to exceed eighteen (18) months from the date an eligible company is designated an approved company by the authority. Provided, however, that the authority may grant a twelve (12) month extension of the project for good cause shown. Approved expenses shall not include any expenditure made before the date the company is approved by the authority.

(5) "Authority" means the Kentucky Economic Development Finance Authority.

(6) "Economic development project" or "project" means a new or expanded service or technology, manufacturing, or tourism attraction activity, conducted by the approved company at a specific site in the Commonwealth, including the acquisition of real property by an approved company and the construction, installation, and rehabilitation of fixtures, and facilities, necessary or desirable for improvement of real estate owned, used, or occupied by the approved company, excluding the cost of labor. The minimum investment for an economic development project located in a preference zone shall be one hundred thousand dollars ($100,000) and for a project not located in a preference zone, five hundred thousand dollars ($500,000).

(7) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or other legal entity that is primarily engaged in manufacturing, service or technology, or operating or developing a tourism attraction. Any company whose primary purpose is retail sales shall not be an eligible company.

(8) "Equipment used in research and development" means:

(a) "Equipment" means assets used in the operation of a business which are subject to depreciation under Sections 167 and 168 of the Internal Revenue Code, including assets which are expensed under Section 179 of the Internal Revenue Code. The term "equipment" shall not include any tangible personal property used to maintain, restore, mend, or repair machinery or equipment, consumable operating supplies, office supplies, or maintenance supplies; and

(b) "Research and development" means experimental or laboratory activity that has as its ultimate goals the development of new products, the improvement of existing products, the development of new uses for existing products, or the development or improvement of methods for producing products. "Research and development" does not include testing or inspection of materials or products for quality control purposes, efficiency surveys, management studies, consumer surveys, or other market research, advertising or promotional activities, or research in connection with literary, historical or similar projects.

(9) "Inducements" means the sales and use tax refund allowed to an approved company for approved expenses under KRS 154.20-200 to 154.20-216.

(10) "Life of the project" or "project life" means the eighteen (18) month period beginning on the date the company is designated as an approved company by the authority and the twelve (12) month extension if the extension is granted by the authority.

(11) (a) "Manufacturing" means to make, assemble, process, produce, or perform any other activity that changes the form or conditions of raw materials and other property, and shall include any ancillary activity to the manufacturing process, such as storage, warehousing, distribution, and related office facilities;

(b) "Manufacturing" does not include any activity involving the performance of work classified by the divisions, including successor divisions, of mining in accordance with the "North American Industry Classification System," as revised by the United States Office of Management and Budget from time to time, or any successor publication.

(12) "Preference zone" or "zone" means the geographic area that was designated as an enterprise zone pursuant to KRS 154.45-050, and that was in existence as an enterprise zone on December 31, 2003. No enterprise zone may be expanded after March 18, 2005. Enterprise zone designations that are scheduled to expire, pursuant to KRS 154.45-050(2), shall expire as scheduled. All preference zones shall expire on December 31, 2007.

(13) "Sales and use tax" means those taxes paid to the Commonwealth for the purchase of goods pursuant to KRS Chapter 139.

(14) (a) "Service or technology" means either:

1. Any activity involving the performance of work except work classified by the divisions, including successor divisions, of agriculture, forestry and fishing, mining, utilities, construction, manufacturing, wholesale trade, retail trade, real estate rental and leasing, educational services, accommodation and food services, and public administration in accordance with the "North American Industry Classification System," as revised by the United States Office of Management and Budget from time to time, or any successor publication; or

2. Regional or headquarters operations of an entity engaged in an activity listed in subparagraph 1. of this paragraph.

(b) Notwithstanding paragraph (a) of this subsection, "service or technology" shall not include any activity involving the performance of work by an individual who is providing direct service to the public pursuant to a license issued by the state or an association that licenses in lieu of the state.

(15) "Tourism attraction" shall have the meaning assigned in KRS 148.851.

Effective: July 12, 2006

History: Amended 2006 Ky. Acts ch. 149, sec. 214, effective July 12, 2006. -- Created 2005 Ky. Acts ch. 168, sec. 36, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

154.20-202 Authority to promulgate administrative regulations -- Requirements for approval of eligible companies and economic development projects.

(1) The authority shall promulgate administrative regulations, pursuant to KRS Chapter 13A, for approving eligible companies pursuant to KRS 154.20-200 to 154.20-216.

(2) Relevant standards for approval of eligible companies and economic development projects shall include but are not limited to creditworthiness of the eligible company, employment opportunities for Kentucky residents, including wages to be paid, whether the project is located in a preference zone, whether the eligible company is participating in other incentive programs pursuant to KRS Chapter 154 for the project, and the likelihood that the project will be an economic success. An eligible company with an economic development project located in a preference zone shall be given priority for approval.

(3) An eligible company shall certify to the authority, by written application provided by the authority, the following:

(a) That the company is making a minimum investment of one hundred thousand dollars ($100,000) in the project, if the project is located in a preference zone or five hundred thousand dollars ($500,000) in the project, if the project is not located in a preference zone;

(b) A description of the project;

(c) An estimate of the expenses for which the company shall seek approval;

(d) Supporting documentation, as requested by the authority; and

(e) Any other information requested by the authority.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 37, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

154.20-203 Deadline for new applications -- Governing law for outstanding approved projects.

New applications shall not be accepted or considered under KRS 154.20-200 to 154.20- 216 on or after June 26, 2009. All outstanding approved projects as of June 26, 2009, shall continue to be governed by the provisions of KRS 154.20-200 to 154.20-216.

Effective: June 26, 2009

History: Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 24, effective June 26, 2009.

154.20-204 Total tax refund incentive -- Application and approval of eligible company -- Transfer of designation as approved company.

(1) The total tax refund incentive available for commitment by the authority for all projects, for each fiscal year, shall not exceed twenty million dollars ($20,000,000) for building and construction materials and five million dollars ($5,000,000) for equipment used in research and development.

(2) If an eligible company proposes to locate or expand its business in the state, the eligible company may submit an application to the authority to become an approved company pursuant to KRS 154.20-200 to 154.20-216.

(3) When the application of an eligible company is complete, it shall be brought before the authority for approval.

(4) The eligible company shall only be designated an approved company for the specific, discrete project contained in its application.

(5) A company may transfer its designation as an approved company for the project to another company upon prior notification to the authority in a manner prescribed by the authority. The company to which approval is transferred shall be eligible for the incentives to which the transferring company was entitled on the entire project.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 38, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

154.20-206 Authorization of sales and use tax refund for approved company -- Administrative regulations.

(1) Notwithstanding any provision of KRS 139.770 to the contrary, an approved company under the terms of KRS 154.20-200 to 154.20-216 may receive a tax refund of sales and use tax paid on approved expenses for the cost of building and construction materials that are permanently incorporated as an improvement to real property to an economic development project and equipment used in research and development at an economic development project. The approved company shall have no obligation to refund or otherwise return any amount of the sales and use tax refund to the person who originally collected the tax and remitted it to the state.

(2) An approved company shall only apply for a refund:

(a) Of sales and use tax paid for construction materials and building fixtures and for equipment used in research and development purchased during the life of the economic development project not to exceed the amount specified in the approved company's agreement, as defined in KRS 154.20-200; and

(b) Within sixty (60) days after the completion of the economic development project or the expiration of the life of the project, whichever occurs first.

(3) An approved company shall execute information-sharing agreements prescribed by the Department of Revenue with contractors, vendors, and other related parties to verify construction material and building fixture costs and equipment used in research and development, including applicable taxes, for the economic development project.

(4) Interest shall not be allowed or paid on any refund made under the provisions of this section. The Department of Revenue may examine any refund within four (4) years from the date the refund application is received. An overpayment resulting from the examination shall be repaid to the State Treasury. Any amount required to be repaid is subject to the interest provisions of KRS 131.183 and to the penalty provisions of KRS 131.180.

(5) The Department of Revenue may promulgate administrative regulations, pursuant to the provisions of KRS Chapter 13A, and shall require the filing of forms designed by the Department of Revenue to reflect the intent of KRS 154.20-200 to 154.20- 216.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 39, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts chs. 11, 85, 95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in 2005 legislation confirming the reorganization of the executive branch. Such a correction has been made in this section.

154.20-208 Time for application and approval of eligible company as approved company.

(1) An eligible company may apply to be designated an approved company under KRS 154.20-200 to 154.20-216 by the authority on and after October 1, 2005.

(2) No approvals under KRS 154.20-200 to 154.20-216 shall be effective before January 1, 2006.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 40, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

154.20-210 Agreement between authority and approved company.

Before any approved company is granted inducements as provided in KRS 154.20-200 to 154.20-216, an agreement with respect to the company's economic development project shall be entered into between the authority and the approved company. The terms and provisions of the agreement, including the amount of approved expenses and the maximum inducement, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions:

(1) The term of an agreement shall not be longer than eighteen (18) months from the date of approval of the company. The agreement may be extended by the authority an additional twelve (12) months for good cause shown by approval of the authority and notation upon the face of the agreement. The authority shall notify the Department of Revenue of any such extension; and

(2) The agreement shall include:

(a) A description of the project for which the inducements have been authorized;

(b) A description of the authorized expenses;

(c) The total inducements allowed for the project, not to exceed the amount negotiated by the authority and the company; and

(d) A provision that the inducements are not assignable without written notice to the authority before any assignment is made.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 41, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts chs. 11, 85, 95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in 2005 legislation confirming the reorganization of the executive branch. Such a correction has been made in this section.

154.20-212 Company's filings under KRS 154.20-200 to 154.20-216 subject to Open Records Act.

The contents of a company's filings under KRS 154.20-200 to 154.20-216 shall be subject to the Kentucky Open Records Act, KRS 61.870 to 61.884.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 42, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

154.20-214 Authority to report annually to Legislative Research Commission and Governor.

The authority shall annually submit a complete and detailed report of the use of the incentives and participation of approved companies under KRS 154.20-200 to 154.20- 216 within one hundred twenty (120) days after the end of each fiscal year to the Legislative Research Commission and to the Governor.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 43, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

154.20-216 Short Title -- Kentucky Enterprise Initiative Act.

KRS 154.20-200 to 154.20-216 shall be known as the Kentucky Enterprise Initiative Act.

Effective: March 18, 2005

History: Created 2005 Ky. Acts ch. 168, sec. 44, effective March 18, 2005.

Legislative Research Commission Note (3/18/2005). 2005 Ky. Acts ch. 168, sec. 165, provides that this section shall apply to tax years beginning on or after January 1, 2005.

Qualified Data Center Project Incentives Qualified Data Center Project Incentives

154.20-220 Definitions for KRS 154.20-220 to 154.20-229.

As used in KRS 154.20-220 to 154.20-229:

(1) "Affiliate" means the following:

(a) Members of a family, including only brothers and sisters of the whole or half blood, spouse, ancestors, and lineal descendants of an individual;

(b) An individual, and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for that individual;

(c) An individual, and a limited liability company of which more than fifty percent (50%) of the capital interest or profits are owned or controlled, directly or indirectly, by or for that individual;

(d) Two (2) corporations which are members of the same controlled group, which includes and is limited to:

1. One (1) or more chains of corporations connected through stock ownership with a common parent corporation if:

a. Stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned by one (1) or more of the other corporations; and

b. The common parent corporation owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of at least one (1) of the other corporations, excluding, in computing the voting power or value, stock owned directly by the other corporations; or

2. Two (2) or more corporations if five (5) or fewer persons who are individuals, estates, or trusts own stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each person only to the extent the stock ownership is identical with respect to each corporation;

(e) A grantor and a fiduciary of any trust;

(f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts;

(g) A fiduciary of a trust and a beneficiary of that trust;

(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts;

(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;

(j) A fiduciary of a trust and a limited liability company more than fifty percent (50%) of the capital interest, or the interest in profits, of which is owned directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;

(k) A corporation, a partnership, or a limited partnership if the same persons own:

1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and

2. More than fifty percent (50%) of the capital interest, or the profits interest, in the partnership or limited partnership;

(l) A corporation and a limited liability company if the same persons own:

1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and

2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company;

(m) A partnership or limited partnership and a limited liability company if the same persons own:

1. More than fifty percent (50%) of the capital interest or profits in the partnership or limited partnership; and

2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company; and

(n) Two (2) or more limited liability companies, if the same persons own more than fifty percent (50%) of the capital interest or are entitled to more than fifty percent (50%) of the capital profits in the limited liability companies;

(2) "Approved company" means an eligible company that has received final approval from the authority;

(3) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010;

(4) "Colocation tenant" means an entity that contracts with the owner or operator for space within a qualified data center project;

(5) "Commonwealth" means the Commonwealth of Kentucky;

(6) "Data center equipment":

(a) Means computer equipment and software for the processing, storage, retrieval, or communication of data, used directly and exclusively in a qualified data center project, including but not limited to:

1. a. Servers;

b. Routers;

c. Connections;

d. Monitoring and security systems for the data center equipment;

e. Fiber optic cabling and network equipment leading to and from the data center project; and

f. Other enabling machinery, equipment, and hardware; regardless of whether the property is affixed to or incorporated into real property;

2. Equipment used in the operation of computer equipment or software or for the benefit of the data center project, including component parts, installations, refreshments, replacements, and upgrades, regardless of whether the property is affixed to or incorporated into real property;

3. All equipment necessary for the transformation, generation, distribution, or management of electricity that is required to operate computer server equipment, including substations, generators, uninterruptible energy equipment, supplies, conduit, fuel piping and storage, cabling, duct banks, switches, switchboards, batteries, testing equipment, and backup generators;

4. All equipment necessary to cool and maintain a controlled environment for the operation of the computer servers and other components of the data center project, including chillers, mechanical equipment, refrigerant piping, fuel piping and storage, adiabatic and free cooling systems, cooling towers, water softeners, air handling units, indoor direct exchange units, fans, ducting, and filters;

5. All water conservation systems for the equipment, including facilities or mechanisms that are designed to collect, conserve, and reuse water;

6. All computer server equipment, chassis, networking equipment, switches, racks, fiber optic and copper cabling, trays, and conduit;

7. All monitoring equipment and security systems for the data center project, including security system monitoring services;

8. All software and prewritten computer software access services;

9. Extended warranty services with respect to data center equipment; and

10. Any other tangible personal property that is essential to the operations of the qualified data center project, excluding:

a. Electricity used by a qualified data center project; and

b. Property used for administrative purposes at the data center project, including office equipment; and

(b) Does not include:

1. Construction equipment; or

2. Building and construction materials permanently incorporated as an improvement to real property;

(7) "Department" means the Department of Revenue;

(8) "Eligible company":

(a) Means any corporation, limited liability company, partnership. limited partnership, sole proprietorship, business trust, or any other entity with a qualified data center project; and

(b) Includes an operator, an owner, a project organizer, and a colocation tenant;

(9) "Eligible costs" means expenditures made by the preliminarily approved company or approved company after preliminary approval for the purchase, installation, repair, and replacement of data center equipment for the qualified data center project;

(10) "Final approval" means the action taken by the authority to verify that, on or before the fifth anniversary of the preliminary approval, the minimum capital investment has been made, with respect to the data center project;

(11) "Memorandum of agreement" means the agreement between the eligible company and the authority executed under KRS 154.20-229;

(12) "Operator":

(a) Means any entity, other than an owner, a project organizer, or a colocation tenant:

1. Operating a qualified data center project pursuant to a lease or other contract with the owner; and

2. Responsible for the control, oversight, or maintenance of a data center project; and

(b) Includes:

1. An affiliate of an operator;

2. A licensed property management company;

3. A property lessor; or

4. Any other individual or entity responsible for the control, oversight, or maintenance of a data center project;

(13) "Owner" means an entity, other than a project organizer, holding fee title to a data center project and includes an affiliate of an owner;

(14) "Preliminary approval" means the action taken by the authority to enter into a memorandum of agreement with an eligible company;

(15) "Project organizer" means an entity that:

(a) Solely provides qualified data center infrastructure for a qualified data center project; and

(b) Will enter into or has entered into a separate agreement with another entity for the purchase, use, or operation of the qualified data center infrastructure;

(16) "Qualified data center infrastructure" means providing site development and organization for a qualified data center project, including but not limited to:

(a) An uninterruptible power supply, including electrical substations and backup generators for safety against power disruptions;

(b) Availability of water and natural gas service, including any necessary infrastructure; and

(c) Multiple layers of security, including:

1. Physical security at the data center project, including fencing, entry control and monitoring, or security guards;

2. Infrastructure monitoring, including monitoring for water, power, telecommunications, and internet connectivity; and

3. Environmental control measures, including sensors or responsive equipment for detecting fire, flood, or other natural disasters;

(17) "Qualified data center project":

(a) Means:

1. Providing qualified data center infrastructure;

2. Acquiring, leasing, rehabilitating, expanding, or constructing one (1) or more buildings that:

a. House a group of networked server computers in order to centralize the storage, management, and dissemination of data and information for a single project; and

b. Contain:

i. Dedicated cooling equipment for the computing machines and related infrastructure;

ii. Extra capacity for data redundancy, including the ability to maintain or replace equipment without a system shutdown; and

iii. Physically isolated systems to avoid disruption from both planned and unplanned events; or

3. Any combination of the activities described in subparagraphs 1. and 2. of this paragraph;

(b) Has the following minimum capital investment on or before the fifth anniversary of the preliminary approval:

1. For an owner, operator, or colocation tenant, at least:

a. Four hundred fifty million dollars ($450,000,000) if located in a county having a population equal to or greater than one hundred thousand (100,000);

b. One hundred million dollars ($100,000,000) if located in a county having a population greater than fifty thousand (50,000) but less than one hundred thousand (100,000); or

c. Twenty-five million dollars ($25,000,000) if located in a county having a population of not more than fifty thousand (50,000); determined using the county's population estimate from the most recently available five (5) year American Community Survey as published by the United States Census Bureau at the time of application by the eligible company; or

2. For a project organizer, at least one hundred fifty million dollars ($150,000,000); and

(c) Does not include any data center project that:

1. Will result in the replacement of data centers existing in the Commonwealth;

2. Applies for or accepts any other economic development incentives under KRS Chapter 154; or

3. Benefits from the sales and use tax exemption for the sale or purchase of electricity used in commercial mining of cryptocurrency; and

(18) "Term" means the period of time for which a memorandum of agreement may be in effect, which shall not exceed:

(a) Fifteen (15) years for a qualified data center project of a project organizer; and

(b) For any other qualified data center project:

1. Fifty (50) years for a data center project having a capital investment equal to or greater than four hundred fifty million dollars ($450,000,000); or

2. Twenty-five (25) years for a data center project having a capital investment less than four hundred fifty million dollars ($450,000,000).

Effective: June 27, 2025

History: Amended 2025 Ky. Acts ch. 98, sec. 34, effective June 27, 2025. -- Created 2024 Ky. Acts ch. 166, sec. 37, effective July 15, 2024.

154.20-222 Purposes -- Legislative findings and declarations.

(1) The purposes of KRS 154.20-220 to 154.20-229 are to:

(a) Provide incentives for an approved company with a qualified data center project;

(b) Encourage the location of data centers within the Commonwealth; and

(c) Advance the public purposes of the:

1. Creation of new jobs that would not exist within the Commonwealth;

2. Creation of new sources of tax revenues for the support of public services provided by the Commonwealth;

3. Improvement in the quality of life for Kentucky citizens through the creation of sustainable jobs with higher salaries; and

4. Provision of an economic stimulus to the Commonwealth.

(2) To qualify for the sales and use tax exemption provided in KRS 139.499, an eligible company shall enter into a memorandum of agreement with the authority and incur eligible costs for a qualified data center project.

(3) The General Assembly finds and declares that the authority granted in KRS 154.20- 220 to 154.20-229 and the purposes accomplished are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the location of data center projects within the Commonwealth is of paramount importance to the economic well-being of the Commonwealth.

Effective: July 15, 2024

History: Created 2024 Ky. Acts ch. 166, sec. 38, effective July 15, 2024.

154.20-226 Application, approval, and review process.

(1) The application, approval, and review process under KRS 154.20-220 to 154.20- 229 shall be as follows.

(a) An eligible company with a proposed data center project may submit an application to the authority detailing the proposed data center project;

(b) Upon review of the application and any additional information submitted, the authority may, by resolution, give preliminary approval to an eligible company and authorize the negotiation and execution of a memorandum of agreement;

(c) The memorandum of agreement shall establish the estimated eligible costs for the qualified data center project;

(d) Upon preliminary approval:

1. The preliminarily approved company may:

a. Undertake the project in accordance with the memorandum of agreement;

b. Begin to make the capital investment; and

c. Begin to purchase or lease data center equipment exempt from sales and use tax as provided in KRS 139.499;

2. The authority shall:

a. Notify the department of the preliminary approval, provide the department with the information contained in the memorandum of agreement, and authorize the department to issue a certificate of exemption to the preliminarily approved company under KRS 139.499; and

b. Post the preliminarily approved company's name, the location of the qualified data center project, and the amount of investment costs on the cabinet's website; and

3. The preliminarily approved company shall submit any documentation required by the authority upon request of the authority;

(e) If, on or before the fifth anniversary of the memorandum of agreement, the preliminarily approved company fails to meet the minimum capital investment as established in the memorandum of agreement:

1. The authority shall notify the department;

2. The department shall revoke the certificate of exemption; and

3. The preliminarily approved company shall immediately pay the tax that was not paid as a result of the sales and use tax exemption upon receipt of the notice of assessment issued by the department under KRS 139.499; and

(f) 1. To obtain final approval, a preliminarily approved company shall submit documentation required by the authority to confirm that the requirements established in the memorandum of agreement have been met.

2. Upon review and confirmation of the documentation, the authority may, by resolution, give final approval to the preliminarily approved company.

3. Upon final approval, the approved company shall be finally approved for the exemption provided by KRS 139.499 for the term of the memorandum of agreement.

(2) (a) The authority may establish procedures and standards for the review and approval of eligible companies and their data center projects through the promulgation of administrative regulations in accordance with KRS Chapter 13A.

(b) Standards to be used by the authority in reviewing and approving an eligible company and its data center project shall include but not be limited to:

1. The creditworthiness of the eligible company;

2. The proposed capital investment to be made; and

3. The likelihood of the economic success of the proposed data center project.

(3) The application shall include but not be limited to:

(a) The name of the applicant for the proposed data center project;

(b) A description of the proposed data center project, including its location, the total proposed capital investment in the proposed project, and total proposed eligible costs; and

(c) Any other information the authority may require.

Effective: July 15, 2024

History: Created 2024 Ky. Acts ch. 166, sec. 39, effective July 15, 2024.

Legislative Research Commission Note (7/15/2024). In subsection (1)(e)3. of this statute, a reference to "the sales tax exemption" has been changed in codification to read "the sales and use tax exemption." The reviser of statutes has made this correction of a manifest clerical or typographical error under the authority of KRS 7.136.

154.20-228 Eligibility for approval of a proposed data center project.

(1) The authority shall not approve a proposed data center project that otherwise meets the requirements of KRS 154.20-220 to 154.20-229 if the proposed data center project will result in the replacement of facilities existing in the state, except as provided in this section.

(2) The authority may approve a proposed data center project that:

(a) Rehabilitates an existing data center used for activities of an eligible company, if:

1. The data center to be rehabilitated has not been in operation for a period of ninety (90) or more consecutive days;

2. a. The current occupant of the data center to be rehabilitated has advertised a notice of closure; and

b. The eligible company proposing the data center project is not an affiliate of the current occupant of the data center to be rehabilitated; or

3. a. The data center to be rehabilitated is sold or transferred pursuant to a foreclosure ordered by a court of competent jurisdiction or an order of a bankruptcy court of competent jurisdiction; and

b. The title to the data center to be rehabilitated prior to the sale is not vested in the eligible company;

(b) Replaces an existing data center of an eligible company if:

1. a. Title to the data center to be replaced:

i. Is held by exercise of the power of eminent domain; or

ii. May be taken pursuant to a nonappealable judgment granting authority to exercise the power of eminent domain; and

b. Normal operations at the data center to be replaced cannot be resumed within twelve (12) months; or

2. The data center to be replaced has been damaged or destroyed by fire or other casualty to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or

(c) Replaces an existing data center located in the same county if the existing data center cannot be expanded due to the unavailability of real estate at or adjacent to the data center to be replaced. Any qualifying data center project satisfying the requirements of this paragraph shall be eligible for incentives under this subchapter only to the extent of the expansion. No incentives shall be available for the equivalent of the facility to be replaced or rehabilitated.

(3) The authority shall not approve a proposed data center project under this section which results in a lease abandonment or lease termination by the eligible company without the consent of the lessor.

Effective: July 15, 2024

History: Created 2024 Ky. Acts ch. 166, sec. 40, effective July 15, 2024.

154.20-229 Memorandum of agreement -- Required terms.

The authority, with preliminary approval of an eligible company, may execute a memorandum of agreement with the eligible company. The terms and conditions of the memorandum of agreement shall be negotiated between the authority and the company. The terms of the memorandum of agreement shall include but not be limited to the following provisions:

(1) The estimated capital investment for the qualified data center project;

(2) That the preliminarily approved company shall provide the authority with all documentation requested in a manner acceptable to the authority and within the timeframes required by the authority related to the minimum capital investment requirement to be used in monitoring compliance of the memorandum of agreement;

(3) That failure of a preliminarily approved company to meet the minimum capital investment on or before the fifth anniversary of the preliminary approval shall result in cancellation of the memorandum of agreement with the preliminarily approved company;

(4) The term of the agreement, which shall not exceed:

(a) Fifteen (15) years for a qualified data center project of a project organizer; or

(b) 1. Fifty (50) years for a qualified data center project having a capital investment of at least four hundred fifty million dollars ($450,000,000); or

2. Twenty-five (25) years for any other qualified data center project;

(5) A provision requiring the preliminarily approved company to notify the authority immediately if the eligible company sells or otherwise transfers or disposes of the land on which a qualified data center project is located;

(6) Authorization for the department to issue a certificate of exemption to the preliminarily approved company under KRS 139.499;

(7) A provision detailing the elimination of the sales and use tax exemption and the notice of assessment by the department provided under KRS 139.499 that shall occur if the preliminarily approved company fails to make the minimum capital investment;

(8) (a) A statement that the memorandum of agreement may remain in effect, even if there is a future transfer, sale, or disposition, directly or indirectly, of the qualified data center project, upon the adoption of a resolution by the authority to that effect.

(b) If continuation of the sales and use tax exemption is desired by the subsequent owner:

1. The memorandum of agreement may be assigned to that owner under paragraph (a) of this subsection provided the subsequent owner assumes the prior owner's obligations under that agreement; or

2. The subsequent owner shall enter into a memorandum of agreement with the authority for the remainder of the eligibility period.

(c) The authority shall notify the department regarding the events that transpire under paragraphs (a) and (b) of this subsection;

(9) That the approved company shall make available to the authority all of its records pertaining to the qualified data center project, including but not limited to records relating to eligible costs and any other records pertaining to the project that the authority may require;

(10) (a) That the authority may share information with the department; and

(b) That the department may share information with the authority; for the purposes of monitoring and enforcing the terms of the memorandum of agreement;

(11) That, if the preliminarily approved company fails to comply with its obligations under the memorandum of agreement by the fifth anniversary of the preliminary approval, the authority shall:

(a) Suspend the memorandum of agreement;

(b) Terminate the incentives available to the preliminarily approved company under the memorandum of agreement;

(c) Notify the department of the authority's actions;

(d) Instruct the department to proceed with the notice of assessment; and

(e) Pursue any other remedy set forth in the memorandum of agreement or to which it may be entitled by law; and

(12) Any other provisions not inconsistent with this subchapter and determined to be necessary or appropriate by the parties to the memorandum of agreement.

Effective: July 15, 2024

History: Created 2024 Ky. Acts ch. 166, sec. 41, effective July 15, 2024.

Kentucky Angel Investment Act Kentucky Angel Investment Act

154.20-230 Definitions for KRS 154.20-230 to 154.20-240.

As used in KRS 154.20-230 to 154.20-240:

(1) "Application" means a document submitted by small businesses and investors, on a form supplied by the authority, for the purpose of requesting certification to participate in the program and to apply for a credit;

(2) "Authority" means the Kentucky Economic Development Finance Authority;

(3) "Commonwealth" means the Commonwealth of Kentucky;

(4) "Credit" means the nonrefundable angel investor tax credit established by KRS 141.396 and awarded by the authority pursuant to KRS 154.20-236;

(5) "Department" means the Department of Revenue;

(6) "Entity" means any corporation, limited liability company, business development corporation, partnership, limited partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization, or other legal entity through which business is conducted;

(7) "Fee" means a nonrefundable application fee in an amount set by the authority, to be collected by the authority to offset the cost of administering KRS 154.20-230 to 154.20-240;

(8) "Full-time employee" means a person that is required to work a minimum of thirty- five (35) hours per week and is subject to the tax imposed by KRS 141.020;

(9) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(10) "Knowledge-based" has the same meaning as in KRS 164.6011;

(11) (a) "Qualified activity" means any knowledge-based activity related to the new economy focus areas of the Office of Entrepreneurship and Innovation, including but not limited to:

1. Bioscience;

2. Environmental and energy technology;

3. Health and human development;

4. Information technology and communications; and

5. Materials science and advanced manufacturing.

(b) A "qualified activity" does not include any activity principally engaged in by financial institutions, commercial development companies, credit companies, financial or investment advisors, brokerage or financial firms, other investment funds or investment fund managers, charitable and religious institutions, oil and gas exploration companies, insurance companies, residential housing developers, retail establishments, or any activity that the authority determines in its discretion to be against the public interest, against the purposes of KRS 154.20-230 to 154.20-240, or in violation of any law. Notwithstanding this paragraph, an entity involved in other technological advances may be deemed to be engaged in qualified activity, as determined by the executive director of the Office of Entrepreneurship and Innovation;

(12) "Qualified investment" means an investment meeting the requirements of KRS 154.20-234 for qualified investments, and certified pursuant to KRS 154.20-236;

(13) "Qualified investor" means an individual investor meeting the requirements of KRS 154.20-234 for qualified investors, and certified pursuant to KRS 154.20-236; and

(14) "Qualified small business" means an entity meeting the requirements of KRS 154.20-234 for qualified small businesses, and certified pursuant to KRS 154.20- 236.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 26, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 16, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 109, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 22, effective July 14, 2018. -- Created 2014 Ky. Acts ch. 102, sec. 21, effective July 15, 2014.

Legislative Research Commission Note (7/15/2014). In codification, the Reviser of Statutes has altered the numbering within subsection (11) of this statute from the way it appeared in 2014 Ky. Acts ch. 102, sec. 21, under the authority of KRS 7.136(1)(c).

154.20-232 Purpose of KRS 154.20-230 to 154.20-240.

(1) KRS 154.20-230 to 154.20-240 shall be known as the "Kentucky Angel Investment Act."

(2) The purpose of KRS 141.396 and 154.20-230 to 154.20-240 is to encourage capital investment in the Commonwealth by individual investors that will further the establishment or expansion of small businesses, create additional jobs, and foster the development of new products and technologies, by providing tax credits for certain investments in small businesses located in the Commonwealth, operating in the fields of knowledge-based, high-tech, and research and development, and showing a potential for rapid growth.

(3) To participate in the program created by KRS 141.396 and 154.20-230 to 154.20- 240:

(a) Small businesses and individual investors shall request certification from the authority pursuant to KRS 154.20-236. To be qualified, the small businesses and individual investors shall fulfill the requirements outlined in KRS 154.20- 234;

(b) Once certified, qualified investors may apply to the authority for a credit in return for making the investment if that investment qualifies under KRS 154.20-234; and

(c) Once the authority certifies the qualified investment, the qualified investor may effectuate the investment, pursuant to any and all guidelines issued by the authority.

(4) Any qualified investment made in a qualified small business under KRS 154.20-230 to 154.20-240 shall be used by that business, insofar as possible, to leverage additional capital investments from other sources.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 110, effective June 29, 2021. -- Amended 2019 Ky. Acts ch. 151, sec. 61, effective June 27, 2019. -- Amended 2018 Ky. Acts ch. 171, sec. 99, effective April 14, 2018. -- Created 2014 Ky. Acts ch. 102, sec. 22, effective July 15, 2014.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 61 of that Act apply retroactively to April 14, 2018.

154.20-234 Angel Investor Program qualification requirements.

(Effective July 15, 2026)

(1) The requirements for small businesses, investors, and investments to be qualified for participation in the Angel Investor Program are as follows:

(a) To be certified as a qualified small business, the business shall demonstrate to the authority that it is an entity which, at the time the small business requests certification:

1. Has a net worth of ten million dollars ($10,000,000) or less or net income after federal income taxes for each of the two (2) preceding fiscal years of three million dollars ($3,000,000) or less;

2. Is actively and principally engaged in a qualified activity within the Commonwealth, or will be actively and principally engaged in a qualified activity within the Commonwealth after the receipt of a qualified investment by a qualified investor;

3. Has no more than one hundred (100) full-time employees;

4. Has more than fifty percent (50%) of its assets, operations, and employees located in the Commonwealth; and

5. Has at no time received an aggregate amount of qualified investments that has allowed qualified investors to receive more than one million dollars ($1,000,000) in angel investor credits;

(b) To be certified as a qualified investor, an individual investor shall demonstrate to the authority that he or she:

1. Is an individual natural person who may utilize a single-member limited liability company to make the investment as long as the individual natural person is the owner and the limited liability company is a disregarded entity;

2. Qualifies as an accredited investor pursuant to Regulation D of the United States Securities and Exchange Commission, 17 C.F.R. sec. 230.501, in effect as of the date the individual investor requests certification;

3. Does not hold in excess of twenty percent (20%) ownership interest in, and is not employed by, the qualified small business prior to making the qualified investment in that qualified small business;

4. Is not closely related to an individual who holds in excess of twenty percent (20%) ownership interest in, or who is employed by, the qualified small business prior to making the qualified investment in that qualified small business. For purposes of this subparagraph, "closely related" means any of the following in relation to the owner or owners or spouse of the owner or owners:

a. Parents or grandparents;

b. Children or their spouses; or

c. Siblings or their spouses; and

5. Seeks a financial return from the investment made in the qualified small business;

(c) To be certified as a qualified investment, the investment shall:

1. Be a cash investment of at least ten thousand dollars ($10,000), in a qualified small business made:

a. Directly by a qualified investor; or

b. Indirectly through a pass-through entity formed for the sole purpose of making one (1) or more investments in a single, qualified small business and treated as a pass-through entity for federal income tax purposes;

2. If made through a pass-through entity, the amount eligible for the tax credit shall be limited to that individual's pro rata share of the capital contributed to the entity that is ultimately invested in the qualified small business; and

3. Be offered and executed in compliance with applicable state and federal securities laws and regulations; and

(d) A pass-through entity utilized under paragraph (c) of this subsection shall not make qualified investments in more than one (1) company.

(2) In consideration for the qualified investment, the qualified investor shall receive an equity interest, or a near equity interest, such as a simple agreement for future equity, or "SAFE agreement," or a convertible debt instrument in the qualified small business.

(3) The authority may establish additional requirements and guidelines for the efficient implementation and administration of the Kentucky Angel Investment Act and to carry out its purposes.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 114, sec. 8, effective July 15, 2026. -- Amended 2021 Ky. Acts ch. 185, sec. 111, effective June 29, 2021. -- Amended 2020 Ky. Acts ch. 76, sec. 1, effective July 15, 2020. -- Amended 2018 Ky. Acts ch. 199, sec. 23, effective July 14, 2018. -- Created 2014 Ky. Acts ch. 102, sec. 23, effective July 15, 2014.

154.20-236 Total amounts of tax credit that may be awarded -- Administrative regulations -- Contract for administration and management of certification and application procedure.

(1) The total amount of credit that may be awarded by the authority in each calendar year, pursuant to KRS 154.20-230 to 154.20-240, to:

(a) All qualified investors shall be no more than three million dollars ($3,000,000); and

(b) Any individual qualified investor shall be no more than two hundred thousand dollars ($200,000).

(2) (a) The total amount of credit that may be awarded by the authority to:

1. All qualified investors pursuant to KRS 154.20-230 to 154.20-240; and

2. All investors in all investment funds pursuant to KRS 154.20-250 to 154.20-284; shall be no more than forty million dollars ($40,000,000) in total for all years prior to December 31, 2020.

(b) Beginning on or after January 1, 2021, the amount of credit that may be awarded by the authority in each calendar year shall be equal to the amount provided in subsection (1) of this section.

(c) The authority shall not grant preliminary or final approval for applications received for the Kentucky Angel Investment Act on or after January 1, 2019, but may resume approving applications received on or after January 1, 2021.

(3) The authority shall, by promulgation of an administrative regulation, develop a standard procedure for:

(a) Small businesses and investors to request certification for participation in the program;

(b) Qualified investors to request certification of a planned investment as being a qualified investment, and to apply for a credit; and

(c) The award of credits to qualified investors making qualified investments.

(4) At a minimum, the procedure shall:

(a) Require small businesses and investors to demonstrate to the authority that they, and any planned investment, satisfy all requirements provided in KRS 154.20-234;

(b) Provide small businesses and investors with a standard written application form to request certification and apply for a credit;

(c) Require the payment of a fee; and

(d) Mandate a time period for the duration of certifications granted to small businesses and investors, and the procedures for recertification thereof.

(5) The amount of credit awarded shall not exceed:

(a) Twenty-five percent (25%) of the amount of the qualified investment, if the principal place of business of the qualified small business is outside a heritage county; or

(b) Forty percent (40%) of the amount of the qualified investment, if the principal place of business of the qualified small business is in a heritage county.

(6) Upon approval of a credit, the authority shall reduce the amount of available credit by the amount of credit approved to the qualified investor.

(7) The authority may, in effectuating this section, contract with a science and technology organization as defined in KRS 164.6011 to administer and manage the certification and application procedure established by the authority. However, the final approval of all credits shall be made solely by the authority.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 27, effective April 27, 2026. -- Amended 2020 Ky. Acts ch. 76, sec. 2, effective July 15, 2020. -- Amended 2018 Ky. Acts 207, sec. 98, effective April 27, 2018. -- Created 2014 Ky. Acts ch. 102, sec. 24, effective July 15, 2014.

154.20-238 Timetables for investments and credit award approval -- Web site reports.

(1) No later than the earlier of:

(a) Eighty (80) days following the date of credit approval, including weekends and holidays; or

(b) December 31 of the calendar year of the approval; The qualified investor shall make the qualified investment and provide proof of the qualified investment to the authority in the manner required by the authority.

(2) No later than sixty (60) days following the receipt of proof of the qualified investment, the authority shall notify the department of the credit award, the amount of the credit, and the name and Social Security number of the qualified investor that will receive the credit.

(3) If the qualified investor either fails to make the qualified investment or fails to provide the required proof of the qualified investment prior to the deadline, the award of credit approval shall be null and void, and the authority shall notify the qualified investor of the nullification and readjust the amount of credit available.

(4) (a) The authority shall maintain a publicly available Web site on which it shall report:

1. A list of all currently certified qualified small businesses and qualified investors;

2. The total amount of credit it has awarded; and

3. The total amount of available credit remaining.

(b) This report shall be updated as new small businesses and investors are certified, and as new credits are awarded or the amount of available credit is otherwise adjusted.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 24, effective July 14, 2018. -- Created 2014 Ky. Acts ch. 102, sec. 25, effective July 15, 2014.

154.20-240 Annual report by small businesses.

(1) On or before February 1 of the calendar year succeeding the year in which a credit was awarded, and continuing for four (4) years thereafter, a qualified small business that has received a qualified investment shall file an annual report with the authority.

(2) (a) This report shall demonstrate that the small business:

1. Continues to have more than fifty percent (50%) of its assets, operations, and employees in the Commonwealth;

2. Has at no time received an aggregate amount of qualified investments that has allowed qualified investors to receive more than one million dollars ($1,000,000) in credits; and

3. Continues to be actively and principally engaged in a qualified activity.

(b) The report shall also provide additional information related to the success of the small business attributable to the investment, including but not limited to:

1. New jobs created;

2. Increased sales or other economic activity conducted;

3. The degree of other private investment attracted; and

4. Any other information requested by the authority.

(3) If a qualified small business either:

(a) Fails to submit the report mandated by this section in any year; or

(b) Fails to meet any of the criteria listed in subsection (2)(a) of this section at any time during any year of the reporting period; the authority shall notify the department, which shall recapture any portion, or the full amount, of the credit awarded for qualified investments in that qualified small business from the qualified investor that received the credit award or any taxpayer receiving the credit through a valid transfer. Any amounts collected from the recapture shall be deposited in the general fund.

(4) If a qualified small business becomes insolvent and ceases operations at any time before the final required annual report is due, it shall file a written report with the authority attesting to that fact and shall thereafter be exempt from the annual report required by this section, and credits awarded and already claimed for qualified investments in that qualified small business shall not be subject to any recapture. Any credits not claimed as of the date the company became insolvent and ceased operations shall be considered expired and shall not be claimed.

Effective: July 15, 2020

History: Amended 2020 Ky. Acts ch. 76, sec. 3, effective July 15, 2020. -- Created 2014 Ky. Acts ch. 102, sec. 26, effective July 15, 2014.

Kentucky Investment Fund Kentucky Investment Fund

154.20-250 Purpose of KRS 154.20-250 to 154.20-284.

The purposes of KRS 154.20-250 to 154.20-284 are to encourage capital investment in the Commonwealth of Kentucky, to encourage the establishment or expansion of small businesses in Kentucky, to provide additional jobs, and to encourage the development of new products and technologies in the state through capital investments. It is the intent of KRS 154.20-250 to 154.20-284 to give investment preference to Kentucky small businesses showing a potential for rapid growth. Insofar as possible, any investment made in a Kentucky small business under the provisions of KRS 154.20-250 to 154.20-284 shall be used by that business to leverage additional capital investments from other sources.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 62, effective June 27, 2019. -- Amended 2018 Ky. Acts ch. 171, sec. 97, effective April 14, 2018. -- Created 1998 Ky. Acts ch. 414, sec. 1, effective July 15, 1998.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 62 of that Act apply retroactively to April 14, 2018.

154.20-253 Repealed, 2002.

[Repealed]

154.20-254 Definitions for KRS 154.20-250 to 154.20-284.

As used in KRS 154.20-250 to 154.20-284, unless the context clearly requires otherwise:

(1) "Affiliate" means any person or entity who directly or indirectly, through one (1) or more intermediaries, controls or is controlled by or is under common control with another person or entity;

(2) "Agreement" means an investment fund agreement entered into pursuant to KRS 154.20-255(5) by the authority and an investment fund manager on behalf of the investment fund, the investment fund manager, and any investor in the investment fund;

(3) "Amended application" means a document submitted by an investment fund manager, in a form acceptable to the authority and on behalf of an investment fund, for the purpose of increasing the aggregate amount of available tax credits;

(4) "Applicant" means any person or entity who has not received approval from the authority as an investment fund manager, but who has submitted or will submit an application to the authority for approval as an investment fund manager;

(5) "Authority" means the Kentucky Economic Development Finance Authority or its designee;

(6) "Cash contribution" means an investment of money by an investor in an investment fund under the terms of KRS 154.20-250 to 154.20-284;

(7) "Committed cash contribution" means a legally binding agreement by an investor to make a cash contribution in an amount set forth in a written agreement between an investor and an investment fund;

(8) "Commonwealth" means the Commonwealth of Kentucky;

(9) "Credit" means a nonrefundable credit for investors against state tax liability allocated and granted by the authority pursuant to KRS 154.20-258 for qualified investments made by approved investment funds;

(10) "Entity" means any corporation, limited liability company, business development corporation, partnership, limited partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization, or other legal entity through which business is conducted;

(11) "Financial institution" means "financial institution" as defined in KRS 136.500(10) and includes savings and loan associations, savings banks, and similar institutions subject to the taxes imposed by KRS 136.290, 136.300, or 136.310;

(12) "Insurance company" means any insurance company subject to the taxes imposed by KRS 136.320, 136.330, or 304.3-270;

(13) "Investment fund" means any entity that is organized by an investment fund manager in compliance with applicable state and federal securities laws and regulations, and is approved by the authority to make qualified investments pursuant to KRS 154.20-256;

(14) "Investment fund manager" means any person or entity that has been approved by the authority to manage one (1) or more investment funds authorized under the provisions of KRS 154.20-250 to 154.20-284 and is in compliance with all applicable federal and state regulations;

(15) "Investor" means any person or entity, including financial institutions and insurance companies, that is subject to state tax liability and that makes a cash contribution or a committed cash contribution to an investment fund in accordance with the provisions of KRS 154.20-250 to 154.20-284 and has not been convicted of violating any of Kentucky's tax laws within the past ten (10) years;

(16) "Knowledge-based" has the same meaning as in KRS 164.6011;

(17) "Nonprofit entity" means an investor that is exempt from federal income tax under Section 501(c) of the Internal Revenue Code of 1986, as amended;

(18) "Qualified activity" has the same meaning as in KRS 154.20-230;

(19) "Qualified investment" means an investment of at least ten thousand dollars ($10,000) in a small business by an investment fund, in compliance with applicable state and federal securities laws and regulations, seeking a financial return based upon that consideration. In consideration for the qualified investment, the investment fund shall receive an equity interest in the small business, such as a general or limited partnership interest, common or preferred stock with or without voting rights and without regard to seniority position, forms of subordinate or convertible unsecured debt, or both, with warrants, rights, or other means of equity conversion attached; and

(20) "Small business" means any entity which at the time a qualified investment is made by an investment fund:

(a) 1. Has a net worth of five million dollars ($5,000,000) or less or net income after federal income taxes for each of the two (2) preceding fiscal years of three million dollars ($3,000,000) or less; or

2. Is a knowledge-based business, as shall be prescribed by the executive director of the Office of Entrepreneurship and Innovation, and has a net worth of ten million dollars ($10,000,000) or less;

(b) Is actively and principally engaged in a qualified activity within the Commonwealth, or will be actively and principally engaged in a qualified activity within the Commonwealth after the receipt of a qualified investment by an investment fund;

(c) Has no more than one hundred (100) employees; and

(d) Has more than fifty percent (50%) of its assets, operations, and employees located in Kentucky.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 114, sec. 9, effective July 15, 2026. -- Amended 2021 Ky. Acts ch. 185, sec. 112, effective June 29, 2021. -- Amended 2006 Ky. Acts ch. 149, sec. 215, effective July 12, 2006; and ch. 210, sec. 9, effective July 12, 2006. -- Amended 2005 Ky. Acts ch. 181, sec. 13, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 17, effective July 15, 2002.

154.20-255 Tax credits available to investment fund -- Application for approval as manager -- Requirements for investment fund -- Agreement -- Total qualified investments made by fund.

(1) (a) The total amount of credits available to any single investment fund awarded credits under KRS 154.20-250 to 154.20-284 shall not exceed, in aggregate:

1. For any calendar year begining prior to January 1, 2022, eight million dollars ($8,000,000) for all investors and all taxable years; and

2. In any calendar year beginning on or after January 1, 2022, one million dollars ($1,000,000).

(b) The total credit available for all investors in all investment funds awarded under KRS 154.20-250 to 154.20-284 shall not exceed a total of three million dollars ($3,000,000) in any calendar year beginning on or after January 1, 2021.

(2) A person or entity seeking to be approved as an investment fund manager for the operation of one (1) or more investment funds shall make written application to the authority pursuant to KRS 154.20-256, in addition to complying with applicable state and federal securities laws and regulations.

(3) Prior to the granting of any tax credits to investors of an investment fund, the committed cash contributions to an investment fund shall be not less than five hundred thousand dollars ($500,000).

(4) (a) An investment fund shall have no less than four (4) investors, and no investor or investment fund manager, including their closely related family members, and affiliates may own or have a capital interest in more than forty percent (40%) of the investment fund's capitalization.

(b) As used in this subsection, "closely related" means any of the following in relation to the investor, the investor's spouse, the fund manager, or the fund manager's spouse:

1. Parents or grandparents;

2. Children or their spouses; or

3. Siblings or their spouses.

(5) Subsequent to approval of the investment fund and the investment fund manager, the authority and the investment fund manager, on behalf of itself and any investors in the investment fund, shall enter into an agreement with respect to the investment

fund. The terms and provisions of each agreement shall be determined by negotiations between the authority and the investment fund manager. The effective date of the agreement shall be the date of approval of the investment fund and the investment fund manager by the authority. If an investment fund manager fails to comply with any of the obligations of the agreement, the authority may, at its option, do any one (1) or more of the following:

(a) Suspend the availability of the credits;

(b) Pursue any remedy provided under the agreement, including termination of the agreement; or

(c) Pursue any other remedy at law to which it may be entitled.

(6) Any investor shall be entitled to a tax credit as a result of its investment in an investment fund as provided in KRS 154.20-258.

(7) Total qualified investments made by an investment fund, including initial and subsequent investments made by an investment fund, in any single small business using approved qualified investments, shall not exceed thirty percent (30%) of the committed cash contributions to the investment fund. This restriction shall not apply to investments of money by the investment fund that are not qualified investments.

(8) The provisions of this section shall not prohibit an investment fund from investing in a business that is not a small business, including a business that is located outside of the Commonwealth; however, such investments shall not be eligible for the tax credit set forth in KRS 154.20-258.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 113, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 207, sec. 99, effective April 27, 2018. -- Amended 2017 Ky. Acts ch. 80, sec. 8, effective June 29, 2017. -- Amended 2014 Ky. Acts ch. 102, sec. 27, effective July 15, 2014. -- Created 2002 Ky. Acts ch. 230, sec. 18, effective July 15, 2002.

154.20-256 Approval of investment funds and managers -- Application -- Documents -- Powers of authority -- Purpose of investment fund -- Criteria for approval -- Disclosure form -- Operation of multiple funds -- Loss of unused credits -- Confidentiality -- Standards.

(1) The approval of investment funds and investment fund managers shall be made pursuant to an application to the authority submitted by a proposed fund manager on behalf of a proposed investment fund and shall include:

(a) The name, address, and Social Security number or employer identification number, as applicable, of the investment fund manager and the investment fund;

(b) The applicant's business plan, including the minimum and maximum amount of cash contributions to be solicited for the investment fund, and strategy for operation of the proposed investment fund;

(c) The amount of credits the investment fund seeks for making qualified investments;

(d) The applicant fund manager's relevant experience and demonstrated ability to manage the proposed investment fund;

(e) The location and account number of a bank account that has been established for use by the investment fund;

(f) The exemption or registration provision that is being relied upon or intended to be relied upon by both the investment fund and the investment fund manager to permit this offering of securities and the activity of the investment fund manager in relation to the offering, in compliance with applicable state and federal securities laws and regulations;

(g) A representation that the investment fund and the investment fund manager are and shall remain in compliance with applicable state and federal securities regulations; and

(h) Any additional information the authority deems necessary.

(2) The applicant shall include copies of the following documents as attachments to the application:

(a) The disclosure documents used in connection with the offering and investment in the investment fund;

(b) The disclosure documents provided to each investor which state that:

1. The investor has certain rights, responsibilities, and liabilities pursuant to KRS 154.20-250 to 154.20-284;

2. The Commonwealth shall be immune from liability for any losses or damages investors, investment funds, or investment fund managers may incur pursuant to KRS 154.20-279;

3. No tax credit shall be available under the provisions of KRS 154.20-250 to 154.20-284 until the investment fund and the investment fund manager have complied with applicable state and federal securities laws and regulations and have been approved by the authority, and an agreement has been executed, and the terms of that agreement have been disclosed in writing to each investor; and

4. Investors shall lose all rights to any unused credits allocated to an investment fund that does not make a qualified investment within one

(1) year of the date of the agreement with the authority or within any one

(1) year period thereafter through the end of the term of the agreement. An applicant soliciting cash contributions for the initial capitalization of an investment fund, or an investment fund manager soliciting additional cash contributions for an approved investment fund, shall disclose in advance and in writing to each potential investor those items described in this subsection in addition to any other items required by law or by agreement.

(3) The authority shall have, in addition to its other powers provided in this chapter and as otherwise provided by law, all powers and authority, not explicitly prohibited by statute, that are necessary or convenient to carry out and effectuate the purposes, objectives, and provisions of KRS 154.20-250 to 154.20-284, including but not limited to power to:

(a) Require consultation, advisory, and legal fees and other expenses the authority deems necessary or incident to the preparation, adoption, implementation, modification, or enforcement of the terms of any agreement or other document, or otherwise necessary or incident to any transaction;

(b) Require the investment fund manager to pay these fees and expenses directly to the person providing such consultation, advisory, legal, or other services on behalf of the authority; and

(c) Impose and collect fees and charges in connection with any transaction and provide for reasonable penalties for delinquent payment of fees or charges. Any payments made by an investment fund manager pursuant to this subsection may be passed on to the investment fund manager's investment fund.

(4) An investment fund's stated purpose shall be primarily to encourage and assist in the creation, development, or expansion of small businesses located in Kentucky.

(5) The criteria considered by the authority for the approval of investment fund managers and the maximum amount of credits allocated to the investors of an investment fund shall include but not be limited to:

(a) Compliance by those persons with applicable state and federal securities laws and regulations;

(b) A review of the application;

(c) The investment strategy for the investment fund;

(d) The relevant experience of the applicant fund manager or, if the applicant fund manager is an entity, the applicant's management;

(e) The applicant's demonstrated ability to manage the investment fund; and

(f) The amount of credits requested by the investment fund and the total amount of credits which may be granted to investors under KRS 154.20-258.

(6) Following the making of a qualified investment, the investment fund manager shall within eighty (80) days file a disclosure form with the authority detailing the following information:

(a) The name and address of the small business in which the qualified investment was made;

(b) The amount of the qualified investment; and

(c) The name, address, and Social Security number or employer identification number, as may be applicable, of each investor and the amount of credit allocated to each investor by virtue of the investor's proportional ownership interest in the qualified investment.

(7) An investment fund manager and its affiliates may operate no more than three (3) separate investment funds pursuant to separate applications submitted to and approved by the authority, provided the investment fund manager is in compliance with any applicable state and federal securities laws and regulations as evidenced by a written statement to the authority by an investment fund manager to that effect.

(8) An investment fund manager seeking to expand a previously approved investment fund shall submit to the authority an amended application in a form acceptable to the authority.

(9) An investment fund shall lose all unused credits that are available to its investors if the investment fund does not make a qualified investment within one (1) year of the date of the agreement or within any one (1) year period thereafter through the end of the term of the agreement.

(10) The contents of the information form required under subsections (1), (2), and (6) of this section shall be treated by the authority and by the Department of Revenue as confidential and shall not be considered public records under KRS 61.870 to 61.884.

(11) The authority, in consultation with the Department of Revenue, may establish additional procedures and standards, as it deems necessary for the approval of investment funds and investment fund managers, and for the allocation and granting of investment tax credits by the promulgation of administrative regulations in accordance with the provisions of KRS Chapter 13A.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 114, effective June 29, 2021. -- Amended 2005 Ky. Acts ch. 85, sec. 570, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 19, effective July 15, 2002.

154.20-257 Repealed, 2002.

[Repealed]

154.20-258 Investor entitled to credit -- Amount -- Carry-forward -- Liabilities -- Transferability -- Notification of Department of Revenue -- Additional credits.

(1) (a) For investment funds approved by the authority prior to January 1, 2023, an investor shall be entitled to a nonrefundable credit equal to forty percent (40%) of the investor's proportional ownership share of all qualified investments made by its investment fund and verified by the authority. The aggregate tax credit available to any investor shall not exceed forty percent (40%) of the cash contribution made by the investor to its investment fund.

(b) For investment funds approved by the authority on or after January 1, 2023, an investor shall be entitled to a nonrefundable credit not to exceed twenty-five percent (25%) of the investor's proportional ownership share of all qualified investments made by its investment fund and verified by the authority.

(c) The credit may be applied against:

1. Both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with the ordering of the credits as provided in KRS 141.0205;

2. The insurance taxes imposed by KRS 136.320, 136.330, and 304.3-270; and

3. The taxes on financial institutions imposed by KRS 136.300, 136.310, and 136.505.

(2) The tax credit amount that may be claimed by an investor in any tax year shall not exceed fifty percent (50%) of the initial aggregate credit amount approved by the authority for the investment fund which would be proportionally available to the investor. For qualified investments approved on or after January 1, 2022, an investor may first claim the credit granted in subsection (1) of this section on the tax return filed for the taxable year in which the qualified investment is made by the investment fund. No tax credit shall become effective until the authority notifies the Department of Revenue in accordance with subsection (6) of this section.

(3) If the credit amount that may be claimed in any tax year, as determined under subsections (1) and (2) of this section, exceeds the investor's combined tax liabilities against which the credit may be claimed for that year, the investor may carry the excess tax credit forward until the tax credit is used, but the carry-forward of any excess tax credit shall not increase the fifty percent (50%) limitation established by subsection (2) of this section. Any tax credits not used within fifteen (15) years of the approval by the authority of the aggregate tax credit amount available to the investor shall be lost.

(4) The tax credits allowed by this section shall not apply to any liability an investor may have for interest, penalties, past due taxes, or any other additions to the investor's tax liability. The holder of the tax credit shall assume any and all liabilities and responsibilities of the credit.

(5) The tax credits allowed by this section are not transferable, except that:

(a) A nonprofit entity may transfer, for some or no consideration, any or all of the credits it receives under this section and any related benefits, rights, responsibilities, and liabilities. Within thirty (30) days of the date of any transfer of credits pursuant to this subsection, the nonprofit entity shall notify the authority and the Department of Revenue of:

1. The name, address, and Social Security number or employer identification number, as may be applicable, of the party to which the nonprofit entity transferred its credits;

2. The amount of credits transferred; and

3. Any additional information the authority or the Department of Revenue deems necessary.

(b) If an investor is an entity and is a party to a merger, acquisition, consolidation, dissolution, liquidation, or similar corporate reorganization, the tax credits shall pass through to the investor's successor.

(c) If an individual investor dies, the tax credits shall pass to the investor's estate or beneficiaries in a manner consistent with the transfer of ownership of the investor's interest in the investment fund.

(6) The tax credit amount that may be claimed by an investor shall reflect only the investor's participation in qualified investments properly reported to the authority by the investment fund manager. No tax credit authorized by this section shall become effective until the Department of Revenue receives notification from the authority that includes:

(a) A statement that a qualified investment has been made that is in compliance with KRS 154.20-250 to 154.20-284 and all applicable regulations; and

(b) A list of each investor in the investment fund that owns a portion of the small business in which a qualified investment has been made by virtue of an investment in the investment fund, and each investor's amount of credit granted to the investor for each qualified investment. The authority shall, within sixty (60) days of approval of credits, notify the Department of Revenue of the information required pursuant to this subsection and notify each investor of the amount of credits granted to that investor, and the year the credits may first be claimed.

(7) After the date on which investors in an investment fund have cumulatively received an amount of credits equal to the amount of credits allocated to the investment fund by the authority, no investor shall receive additional credits by virtue of its investment in that investment fund unless the investment fund's allocation of credits is increased by the authority pursuant to an amended application.

Effective:April 8, 2022

History: Amended 2022 Ky. Acts ch. 146, sec. 1, effective April 8, 2022. -- Amended 2021 Ky. Acts ch. 185, sec. 115, effective June 29, 2021. -- Amended 2019 Ky. Acts ch. 151, sec. 63, effective June 27, 2019. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 42, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 571, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 20, effective July 15, 2002.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 63 of that Act apply retroactively to April 14, 2018.

Legislative Research Commission Note (4/27/2018). KRS 136.070 was repealed in 2018 Ky. Acts chs. 171 and 207, but a conforming amendment was not made to this statute to address the reference it contains to KRS 136.070. The Reviser of Statutes has determined that making such a conforming change during the 2018 codification exceeds the permissible correction of manifest clerical or typographical errors under KRS 7.136(1)(h). Therefore, the reference to KRS 136.070 remains unchanged and would have to be changed pursuant to future legislative action.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.20-259 Repealed, 2002.

[Repealed]

154.20-260 Claim of credit on tax return -- Confidentiality.

(1) To receive the credit provided by KRS 154.20-258, an investor shall claim the credit on the investor's annual state tax returns in the manner prescribed by the Department of Revenue.

(2) The contents of an investor's filings under subsection (1) of this section shall be treated by the authority and by the Department of Revenue as confidential and shall not be considered public records under the Kentucky Open Records Act, KRS 61.870 to 61.884.

Effective: June 20, 2005

History: Amended 2005 Ky. Acts ch. 85, sec. 572, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 21, effective July 15, 2002.

154.20-261 Repealed, 2002.

[Repealed]

154.20-262 Penalties and interest -- Liability of investors -- Powers and duties of Department of Revenue.

(1) An investment fund that violates the provisions of KRS 154.20-250 to 154.20-284 shall pay to the State Treasurer a penalty in an amount equal to the amount of all credits claimed by the investors when these credits are determined to be derived from unqualified investments, plus interest at the rate of two percent (2%) per month, compounded monthly, from the date the credits were taken. If the investment fund fails to pay the penalty and interest in full as required by the Department of Revenue, each investor shall be personally liable to the Department of Revenue for that investor's share of the unpaid penalty, which shall be determined by the amount of credits received and utilized by the investor and all applicable interest. Any payment of unpaid penalty by an investor shall be included with the investor's state tax return for the period in which the failure or violation occurred. The commissioner of the Department of Revenue shall give notice in writing to the authority, the investment fund manager, and the investors of any penalties imposed. The commissioner of the Department of Revenue may abate any imposed penalty upon written request, if the investment fund manager establishes reasonable cause for the failure to make qualified investments in small businesses under the provisions of KRS 154.20-250 to 154.20-284, or to otherwise comply with the provisions of KRS 154.20-250 to 154.20-284. The State Treasurer shall deposit any amounts received pursuant to this section in the Commonwealth's general fund.

(2) The administration of this section shall be the responsibility of the Department of Revenue.

Effective: June 20, 2005

History: Amended 2005 Ky. Acts ch. 85, sec. 573, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 22, effective July 15, 2002.

154.20-263 Repealed, 2002.

[Repealed]

154.20-264 Annual report by investment fund manager -- Status report by authority -- Confidentiality -- Fee.

(1) Each investment fund manager shall file an annual report with the commissioner of the Department of Revenue and with the authority, on or before February 15 of each year during which it manages an investment fund. This report shall include information that the authority prescribes from time to time, including but not limited to the following:

(a) For each small business in which qualified investments are made by the investment fund during the reporting period, the name and address of the small business, the amount of qualified investments made by the investment fund, the job creation anticipated and achieved by the small business, and new products and technologies being developed by the small business;

(b) An affidavit prepared by the investment fund manager or, if the investment fund is an entity, by an authorized officer, partner, trustee, member, or manager of the investment fund management firm that states:

1. At the time of each qualified investment, each small business qualifies as a small business under the provisions of KRS 154.20-250 to 154.20-284;

2. The name and address of each investor, and the amount of cash contribution to the investment fund of each investor who is entitled to the credits; and

3. The continued compliance by the investment fund and the investment fund manager with all applicable state and federal securities laws and regulations.

(2) The authority shall provide an annual written status report to the standing Appropriations and Revenue Committee of each house or to the Interim Joint Committee on Appropriations and Revenue, as appropriate, concerning the activities of the Kentucky investment fund for each fiscal year beginning with the fiscal year ended July 30, 2003. On or before November 1 of each year, the authority shall make an annual report for the preceding fiscal year to the Governor and the Legislative Research Commission. The annual report shall include but not be limited to the following information:

(a) The total number of investors and the aggregate amount of committed cash contributions to all investment funds, categorized by the types of business entities through which investors conduct business and the geographical distribution of investors, including the area development districts;

(b) The total number and amounts of qualified investments made by each investment fund to qualified small businesses, categorized by type of businesses, amount of investment, job creation anticipated and achieved, geographical distribution, including area development districts, and new products and technologies developed; and

(c) The total amount of credits granted to investors.

(3) The contents of the annual reports from investment fund managers to the authority described in subsection (1) of this section shall be treated by the authority as confidential, and shall not be considered a public record under the Kentucky Open Records Act, KRS 61.870 to 61.884.

(4) The authority may charge a fee in connection with the administration and processing of an annual report made by an investment fund manager.

Effective:June 29, 2017

History: Amended 2017 Ky. Acts ch. 80, sec. 9, effective June 29, 2017. -- Amended 2005 Ky. Acts ch. 85, sec. 574, effective June 20, 2005. -- Created 2002 Ky. Acts ch. 230, sec. 23, effective July 15, 2002.

154.20-265 Investment fund approved before July 1, 2002.

Any investment fund approved to make qualified investments pursuant to KRS 154.20- 250 to 154.20-284 prior to July 1, 2002, unless otherwise approved by the authority, shall continue to operate and be granted credits pursuant to the agreement entered into and the rules, regulations, and procedures adopted by the authority prior to July 15, 2002.

Effective: July 15, 2002

History: Created 2002 Ky. Acts ch. 230, sec. 24, effective July 15, 2002.

154.20-267 Repealed, 2002.

[Repealed]

154.20-269 Repealed, 2002.

[Repealed]

154.20-271 Repealed, 2002.

[Repealed]

154.20-273 Repealed, 2002.

[Repealed]

154.20-277 Annual examination of investment funds by authority and Department of Revenue -- Other audits -- Department's powers of enforcement -- Notice of noncompliance -- Examination, investigative, and enforcement powers of securities regulatory organizations.

(1) Each year the annual financial statements and annual reports of the investment fund shall be delivered to the authority within ninety (90) days after the end of the investment fund's fiscal year.

(2) The authority and the Department of Revenue, individually or collectively, may examine, under oath, any of the officers, trustees, partners, members, managers, directors, agents, employees, or investors of an investment fund regarding the affairs and business of the investment fund. The authority and the Department of Revenue, individually or collectively, may issue subpoenas and subpoenas duces tecum and administer oaths. Refusal to obey such a subpoena or subpoena duces tecum may be reported to the Franklin Circuit Court, which shall enforce the subpoena or subpoena duces tecum according to the rules of civil or criminal procedure, as applicable.

(3) In addition to the audits required by this section, the authority or the Department of Revenue may audit one (1) or more investment funds or investment fund managers in any year on a random basis or for cause. The authority or the Department of Revenue may also audit, for cause, any small business in which an investment fund has made a qualified investment. Nothing in this section shall be construed to prohibit the Department of Revenue from conducting any audit relating to the administration or enforcement of the tax laws of the Commonwealth which the Department of Revenue determines to be appropriate.

(4) If any audit conducted pursuant to this section discloses that an investment fund or investment fund manager is not in compliance with the provisions of KRS 141.068 and KRS 154.20-250 to 154.20-284, the authority and the Department of Revenue may consult with one another with respect to this noncompliance and the Department of Revenue may exercise any of its powers to protect the Commonwealth's interest and to enforce the provisions of KRS 141.068 and KRS 154.20-250 to 154.20-284.

(5) The authority may give an investment fund manager written notice of any noncompliance with the provisions of KRS 154.20-250 to 154.20-284 and specify a period of time the investment fund manager shall have to cure any noncompliance. Failure to cure any such noncompliance within the period of time specified by the authority may result in further action by the authority pursuant to this section.

(6) Nothing in this section shall be construed to prohibit the Department of Financial Institutions, Division of Securities, or any other securities regulatory organization or body with jurisdiction over the activity of an investment fund or the investment fund manager from conducting any examination or investigation relating to the securities activities of the investment fund or investment fund manager. If any examination or investigation conducted pursuant to any securities laws or regulations discloses that an investment fund or investment fund manager is not in compliance with any provision of any applicable securities laws or regulations, the appropriate securities regulator may take whatever action it deems appropriate in accordance with such securities laws and regulations to respond to the noncompliance, notwithstanding any action the authority or the Department of Revenue may or may not take with respect to the noncompliance.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 116, effective June 29, 2021. -- Amended 2010 Ky. Acts ch. 24, sec. 197, effective July 15, 2010. -- Amended 2005 Ky. Acts ch. 85, sec. 575, effective June 20, 2005. -- Amended 2002 Ky. Acts ch. 230, sec. 25, effective July 15, 2002. -- Created 1998 Ky. Acts ch. 414, sec. 11, effective July 15, 1998.

154.20-279 Limitation of liability for the Commonwealth and its agents.

The Commonwealth, the authority, or any officer, director, official, employee, or agent of the Commonwealth or the authority shall not be liable to any investor, investment fund, or investment fund manager as a result of KRS 154.20-250 to 154.20-284, or any of the activities authorized by KRS 154.20-250 to 154.20-284. This limitation of liability includes, without limitation:

(1) Losses or damages investors incur in connection with any committed or contributed cash contributions made to an investment fund or any qualified investments made by an investment fund in small businesses; and

(2) Any claim, liability, obligation, loss, damage, assessment, judgment, cost, and expense of any kind or character relating to federal or state securities laws, rules, regulations, or orders.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 230, sec. 26, effective July 15, 2002. -- Created 1998 Ky. Acts ch. 414, sec. 12, effective July 15, 1998.

154.20-281 Dissolution or liquidation of investment fund.

(1) An investment fund may be dissolved or liquidated only after notice to the authority in compliance with any applicable state or federal securities laws or regulations.

(2) This section shall not prohibit an investment fund from making distributions to investors in compliance with any applicable state or federal securities laws or regulations, if the investment fund is in compliance with the terms of KRS 154.20- 250 to 154.20-284.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 230, sec. 27, effective July 15, 2002. -- Created 1998 Ky. Acts ch. 414, sec. 13, effective July 15, 1998.

154.20-283 Prohibition against certain qualified investments and financial interests -- Investment fund manager's limitations on holding management positions in small businesses in which investment fund has invested.

(1) No qualified investments shall be made in a small business that is the "alter ego" of the investment fund or the investment fund manager. For purposes of this subsection, a business is an "alter ego" of an investment fund or an investment fund manager if any of the following criteria are satisfied:

(a) Prior to an investment fund making a qualified investment in the small business, the small business is owned in whole or in an amount greater than twenty percent (20%) of the small business by an investor, officer, director, partner, member, manager, trustee or employee of the investment fund or the investment fund manager; or

(b) The small business employs on a full-time or part-time basis an investor.

(2) An investment fund manager may occupy any management position in any small business in which that investment fund has made a qualified investment for the purpose of:

(a) Filling a management position in an effort to remedy problems arising from a lack of profitability of the small business, or from dishonesty of the persons otherwise managing the small business; or

(b) Serving in a management position in the small business in order to add value to the investment fund and the business by his or her experience, skills, or relationships to help a business succeed.

(3) No officer, member, or employee of the authority shall have a direct or indirect financial interest in any investment fund or investment fund manager.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 230, sec. 28, effective July 15, 2002. -- Created 1998 Ky. Acts ch. 414, sec. 14, effective July 15, 1998.

154.20-284 Short title for KRS 154.20-250 to 154.20-284.

KRS 154.20-250 to 154.20-284 shall be known as the Kentucky Investment Fund Act.

Effective: July 15, 1998

History: Created 1998 Ky. Acts ch. 414, sec. 15, effective July 15, 1998.

154.20-285 Investment in single knowledge-based entity -- Investment by local governments -- Transfer of tax credits.

Notwithstanding the provisions of KRS 154.20-254, 154.20-255, and 154.20-258, an investment fund approved by the Kentucky Economic Development Finance Authority after July 1, 2004, and otherwise qualified for tax credits pursuant to the Kentucky Investment Fund Act as set forth in KRS 154.20-250 to 154.20-284, may invest up to one hundred percent (100%) of its committed cash contributions in a single knowledge-based entity. A city, county, other local governmental entity, or any entity approved by the Kentucky Economic Development Finance Authority, may invest in an investment fund created for this purpose and may transfer, for some or no consideration, any or all of the tax credits received pursuant to the Kentucky Investment Fund Act to a private entity. The Kentucky Economic Development Finance Authority shall have discretion to approve or deny applications for entities seeking credits pursuant to this section.

Effective: April 21, 2004

History: Created 2004 Ky. Acts ch. 142, sec. 3, effective April 21, 2004.

Commonwealth Venture Fund Commonwealth Venture Fund

154.20-300 Repealed, 1998.

[Repealed]

154.20-305 Repealed, 1998.

[Repealed]

154.20-310 Repealed, 1998.

[Repealed]

154.20-320 Repealed, 1998.

[Repealed]

154.20-330 Repealed, 1998.

[Repealed]

154.20-340 Repealed, 1998.

[Repealed]

154.20-350 Repealed, 1998.

[Repealed]

154.20-360 Repealed, 1998.

[Repealed]

154.20-370 Repealed, 1998.

[Repealed]

154.20-380 Repealed, 1998.

[Repealed]

154.20-390 Repealed, 1998.

[Repealed]

Kentucky Alternative Fuel and Renewable Energy Fund Program Kentucky Alternative Fuel and Renewable Energy Fund Program

154.20-400 Definitions for KRS 154.20-400 to 154.20-420.

As used in KRS 154.20-400 to 154.20-420:

(1) "Alternative fuels" means:

(a) Alternative transportation fuels as defined in KRS 152.715;

(b) Synthetic natural gas as defined in KRS 152.715;

(c) Biodiesel produced from biomass resources as defined in KRS 152.715 that is used for purposes other than transportation fuel;

(d) Ethanol as defined in KRS 141.422;

(e) Cellulosic ethanol as defined in KRS 141.422; and

(f) Any other fuel that is produced from a renewable or sustainable source;

(2) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, person, group, city, county, charter county, consolidated local government, urban-county government, or unified local government entity, or other entity engaged in research and development and commercialization related to, or the production of, alternative fuels or renewable energy;

(3) "Kentucky-based" means a business with its principal place of business in Kentucky or at least fifty-one percent (51%) of its property and payroll located in Kentucky;

(4) "Qualified company" means an eligible company that may be granted funding pending final approval;

(5) "Renewable energy" means electricity produced by hydropower, solar power, landfill methane gas, wind power, geothermal, biomass, or other renewable sources; and

(6) "Science and technology organization" means an independent, nonprofit quasi- governmental organization with a statewide mission and demonstrated history of managing complicated programs in the areas of entrepreneurial innovation, research and development, and science and technology advancement.

Effective: June 25, 2013

History: Amended 2013 Ky. Acts ch. 116, sec. 5, effective June 25, 2013. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 45, effective August 30, 2007.

154.20-405 Repealed, 2022.

[Repealed]

154.20-410 Kentucky alternative fuel and renewable energy fund -- Suspension -- Transfer of funds.

On July 1, 2022, the Kentucky alternative fuel and renewable energy fund shall cease making any further investments and shall be suspended. All funds, grants, investments, unallocated or unencumbered balances, rights, contractual rights and obligations, and earned income retained by the Kentucky alternative fuel and renewable energy fund as of June 30, 2022, shall be transferred to the Kentucky enterprise fund and allocated and invested pursuant to the Kentucky enterprise fund's statutory mandate as provided in KRS 164.6019 and 164.6021. To the extent any costs are incurred in the transfer of such interests, those costs may be paid from the funds or from the general fund appropriation to the cabinet, as determined by the cabinet.

Effective:April 8, 2022

History: Amended 2022 Ky. Acts ch. 146, sec. 2, effective April 8, 2022. -- Amended 2013 Ky. Acts ch. 116, sec. 6, effective June 25, 2013. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 47, effective August 30, 2007.

154.20-415 Kentucky Alternative Fuel and Renewable Energy Fund Program -- Purpose.

(1) There is created in the cabinet a Kentucky Alternative Fuel and Renewable Energy Fund Program to provide funding to Kentucky-based companies to undertake research and development and commercialization work in the area of alternative fuels and renewable energy.

(2) The purpose of the program is to:

(a) Accelerate knowledge transfer and technological innovation, improve economic competitiveness, and spur economic growth of Kentucky-based companies involved in the areas of alternative fuels or renewable energy;

(b) Support research and development activities that have clear potential to lead to commercially successful products, processes, or services in the areas of alternative fuels or renewable energy within a reasonable period of time;

(c) Stimulate growth-oriented alternative fuels and renewable energy enterprises within the Commonwealth;

(d) Encourage partnerships and collaborative projects between private enterprises, Kentucky's public and private colleges and universities, and research organizations in alternative fuels and renewable energy; and

(e) Promote research and development and commercialization activities in alternative fuels and renewable energy that are market-oriented.

Effective: June 25, 2013

History: Amended 2013 Ky. Acts ch. 116, sec. 7, effective June 25, 2013. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 48, effective August 30, 2007.

154.20-420 Science and technology organization -- Duties -- Funding application process -- Negotiation of agreements.

(1) The science and technology organization shall have the authority to review applications, qualify companies, and certify qualified companies.

(2) The science and technology organization shall develop application criteria and an application process.

(3) The science and technology organization shall focus on providing support to research and development projects that are likely to:

(a) Produce a measurable result and be technically sound;

(b) Lead to innovative technology or new knowledge;

(c) Lead to commercially successful products, processes, or services within a reasonable period of time; or

(d) Show significant potential for stimulating innovation-driven economic growth and a reasonable probability to enhance employment opportunities within the Commonwealth.

(4) An eligible company may submit to the science and technology organization an application for funding. The application shall include but not be limited to the following information:

(a) Verification that the applicant is an eligible company that is Kentucky-based;

(b) A technical research and commercialization plan that is sufficient for outside expert review;

(c) A detailed financial analysis that includes the commitment of resources by the applicant and others;

(d) Sufficient detail concerning proposed project partners, type and amount of work to be performed by each partner, and expected product or service with estimated costs to be reflected in the negotiated contract or agreement;

(e) A statement of the economic development potential of the project; and

(f) Any other information the science and technology organization may require.

(5) The science and technology organization shall conduct an independent review using internal and external resources to evaluate each application. Following the application review, the science and technology organization shall make a written determination of whether the applicant is a qualified company as defined in KRS 154.20-400.

(6) Before a qualified company is approved for funding, the qualified company shall negotiate an agreement and funding contract that is satisfactory to the science and technology organization with any project partners to undertake the research and development work.

(7) Upon a qualified company's presentation of a legal agreement or contract meeting the conditions under subsection (6) of this section, the science and technology organization shall negotiate the terms for funding with the qualified company and shall enter into a contract with the qualified company if an agreement is reached.

(8) Any agreement shall include a provision that a qualified company shall, at a minimum, match the funding provided through the science and technology organization on a one-to-one dollar ratio for each year of the project. The science and technology organization shall have sole discretion to authorize an in-kind contribution in lieu of part of the match required for the qualified company, if the science and technology organization determines that the financial limitations of the qualified company warrant this authorization.

(9) The science and technology organization may negotiate with the qualified company the ownership and disposition of patents, royalties, all other intellectual property rights, and an equity or related position on behalf of the Kentucky alternative fuel and renewable energy fund for the sole purpose of reinvesting and sustaining a revolving fund to carry out KRS 154.20-400 to 154.20-420.

(10) The science and technology organization, upon approval by the cabinet, shall issue guidelines for statewide notification of the program's availability and a program schedule, including but not limited to an application review cycle including:

(a) A deadline for submission of applications, which shall be at least biennially; and

(b) A deadline for completing the review of applications, which shall not exceed five (5) months after the application submission deadline.

Effective: August 30, 2007

History: Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 49, effective August 30, 2007.

Interim and Supplemental Financing Interim and Supplemental Financing

154.20-520 Trust funds -- Payments.

(1) There are hereby established in the Treasury of the Commonwealth trust funds for each area of responsibility for which it was established, and to which shall be credited all funds appropriated by the General Assembly to the authority for the purposes of this chapter, together with interest earned by these funds and all funds obtained by the authority from other sources which, by contract or otherwise, are payable into such funds. The authority may request, and such request shall be honored, that the trust funds be invested and reinvested for the benefit of the authority until such time as the funds are needed to satisfy loan commitments. Income from the investments shall be credited to the authority's funds. If at any time the authority shall determine the moneys in any fund exceed the amount needed by the authority to carry out the purposes of this chapter as it relates to a particular area of responsibility, the authority shall take such action as shall be required to transfer the excess amounts from the fund for one (1) area of responsibility to the fund for another area of responsibility as economic development needs dictate and are determined by the authority or shall release such excess funds and transfer such excess funds to the general fund of the State Treasury.

(2) The mortgage insurance fund shall be used solely and only as reserve for insurance commitments and to pay the costs of procuring insurance of private or governmental loans to accomplish the purposes of the authority as stated in KRS 154.20-030. Such costs shall be paid from said fund upon approval by the authority solely under terms of its contract with the insurance corporation, and may include the costs of obtaining interim and permanent guarantees which are authorized by this chapter, whether or not the loan application finally results in a loan or guarantee by the government.

(3) All loans and all costs of administration of this chapter shall be paid out of the authority's funds. Payments shall be made in the same manner as other state expenditures, except that they shall be subject to the approval of the Finance and Administration Cabinet only as to availability of funds.

Effective: July 15, 1980

History: Amended 1980 Ky. Acts ch. 340, sec. 16, effective July 15, 1980. -- Created 1978 Ky. Acts ch. 96, sec. 14, effective July 1, 1978. Formerly codified as KRS 154.550

154.20-530 Mortgage insurance corporation -- Trust account.

The authority may cause to be established, by any number of natural persons not in excess of fifteen (15), a Kentucky nonprofit corporation which shall have as its purpose the insurance of mortgage loans entered into by and between lenders and persons or corporations located in Kentucky and offering gainful employment to the inhabitants of the Commonwealth. The mortgage insurance corporation shall not be deemed to have been established for the purposes of this chapter unless and until its articles of incorporation shall have been approved by the authority, and if so approved, no approval by the Department of Insurance shall be required. Such articles of incorporation, in order to secure such approval, shall contain, inter alia, the following provisions:

(1) The corporation shall be designated "Kentucky Mortgage Insurance and Guarantee Corporation;"

(2) No member of the board of directors of the insurance corporation shall receive any emoluments for his services thereon, except that he may be reimbursed for expenditures incurred by him in the performance of duties for the insurance corporation;

(3) All assistance fees received by the insurance corporation shall be held in a trust account in one or more banks and trust companies having a principal place of business in the Commonwealth;

(4) The trust account shall be held for the security of the holders of mortgage loans or bonds guaranteed by the insurance corporation, except that provision may be made for the payment of expenses of the insurance corporation from the trust account or a segregated portion thereof;

(5) The trust account shall be governed by a trust agreement entered into by and between the insurance corporation and the trustee or trustees. Said trust agreement shall contain such lawful provisions and limitations as may be deemed appropriate, and may include a pledge of premiums and other moneys deposited in the fund to the payment of the obligations insured by the insurance corporation; and

(6) The trust agreement shall make appropriate provisions for the investment by the trustee or trustees of funds in the trust account for the benefit of the insurance corporation and of any claimants against the trust account. The moneys so pledged and thereafter received by the trust account shall be subject to the lien of such pledge without any further act, and the lien of such pledge shall be valid and binding against all parties in accordance with the terms of the trust agreement.

Effective: July 15, 2010

History: Amended 2010 Ky. Acts ch. 24, sec. 198, effective July 15, 2010. -- Amended 1980 Ky. Acts ch. 340, sec. 17, effective July 15, 1980. -- Created 1978 Ky. Acts ch. 96, sec. 15, effective July 1, 1978. Formerly codified as KRS 154.555.

154.20-540 Powers of insurance corporation.

The insurance corporation shall be empowered by its articles:

(1) To contract with the authority to insure loans, bonds or their debt service, made by any lender or issuer to finance the acquisition, construction or alteration of any eligible project;

(2) To enter into agreements for such insurance;

(3) To fix a rate or rates of premiums to be paid for such insurance by the person or corporation assisted, which premiums shall be fixed to take into account the fact that the authority has paid an assistance fee to the insurance corporation as an assistance to the person or corporation whose loan or bond is being insured; and

(4) To exercise such other powers as are necessary or incidental to the foregoing.

Effective: July 15, 1986

History: Amended 1986 Ky. Acts ch. 201, sec. 7, effective July 15, 1986. -- Amended 1980 Ky. Acts ch. 340, sec. 18, effective July 15, 1980. -- Created 1978 Ky. Acts ch. 96, sec. 16, effective July 1, 1978. Formerly codified as KRS 154.560

154.20-550 Insurance payable from trust account.

The insurance provided by the insurance corporation shall be payable solely from the trust account established by the insurance corporation under the terms of KRS 154.20-530, and shall not constitute a debt or pledge of the faith and credit of the Commonwealth or any of its agencies, or of the authority.

Effective: July 1, 1978

History: Created 1978 Ky. Acts ch. 96, sec. 17, effective July 1, 1978. Formerly codified as KRS 154.565

154.20-560 Restrictions on insurance commitment.

The authority shall not recommend to the insurance corporation, and the insurance corporation shall not approve the insurance of any loan or bond under its contract with the authority, if the insurance of such loan or bond will result in a total commitment by the insurance corporation in excess of ten (10) times the amount in the trust account. No insurance commitment shall be made by the insurance corporation unless the authority has made the following findings:

(1) That the loan or bond is to be secured by a first mortgage of real or personal property or both satisfactory to the authority;

(2) That the mortgagor and mortgagee are responsible parties;

(3) That the occupant of the project or projects is a responsible occupant;

(4) That the provisions of the mortgage loan or bond are reasonable and proper, and in making such determination the authority may take into account such factors as it deems relevant including, without limitation, the provisions for maintaining, insuring and repairing the project by the mortgagee and the remedies of the authority or the insurance corporation upon default of the mortgagee;

(5) That the project will provide employment having a reasonable relationship to the principal amount of the loan or bond issue to be insured therefor, taking into account, among other things, the investment per employee of comparable facilities;

(6) That adequate provision is being or will be made to meet any increased demand upon community public facilities that might result from the project;

(7) That the size and scope of the project is such that a definite benefit to the economy of the Commonwealth may reasonably be expected to result from the construction or improvement thereof; and the employment created shall be substantially primary employment;

(8) That the principal amount of the loan or bond does not exceed ninety-five percent (95%) of the cost of the land, buildings, and improvements and eighty percent (80%) of the cost of the machinery and equipment;

(9) That the duration of the loan or bond shall not exceed thirty (30) years on land, buildings and improvements exclusive of machinery and equipment, and fifteen

(15) years on machinery and equipment; and that the authorization provisions are satisfactory to the authority;

(10) That the insurance agreement provides for subrogation upon payment of insured debt service from the trust account;

(11) That the public interest is adequately protected by the terms of the loan or bond and of the insurance agreement;

(12) That the insurance of the loan or bond will not cause the insured debt service coming due in any one (1) calendar year on account of an insured loan or bond for any one (1) mortgagor to exceed twenty percent (20%) of the amount in the trust account when the finding is made; and

(13) That the insurance of the loan or bond will not cause the insured debt service coming due in any one (1) calendar year on account of permanent guarantees to exceed one hundred percent (100%) of the amount in the mortgage insurance trust when the finding is made. The authority shall consult with the appropriate local and regional planning agencies to ascertain the relationship of a proposed project to any existing local or regional comprehensive plan; that, so far as feasible, the project is to be located in an area of generally high unemployment; and that employment opportunities will become available to the residents of such area.

Effective: July 15, 1980

History: Amended 1980 Ky. Acts ch. 340, sec. 18, effective July 15, 1980. -- Created 1978 Ky. Acts ch. 96, sec. 19, effective July 1, 1978. Formerly codified as KRS 154.570

154.20-570 Contract recapture provisions.

Any contract between the authority and the insurance corporation shall contain provisions for the recapture by the authority of any profits made by the insurance corporation; but such recapture may be delayed indefinitely if the continued use of funds so derived by the insurance corporation shall be deemed by the authority to promote the purposes of the authority.

Effective: July 1, 1978

History: Created 1978 Ky. Acts ch. 96, sec. 19, effective July 1, 1978. Formerly codified as KRS 154.575

Western Kentucky Risk Assistance Fund Western Kentucky Risk Assistance Fund

154.20-580 Definitions for KRS 154.20-580 to 154.20-589.

As used in KRS 154.20-580 to 154.20-589:

(1) "Approved costs" may include, as approved by the qualified lender:

(a) Obligations incurred for labor and materials in connection with the acquisition, construction, equipping, rehabilitation, and installation of an eligible company;

(b) The cost of contract bonds and any insurance that may be required or necessary during the course of acquisition, construction, equipping, rehabilitation, and installation of an eligible company which is not paid by a vendor, supplier, deliveryman, contractor, or otherwise provided;

(c) All costs of architectural and engineering services, including estimates, plans and specifications, preliminary investigations, and supervision of construction, rehabilitation, and installation, including the performance of all the duties required by or consequent upon the acquisition, construction, equipping, rehabilitation, and installation of an eligible company;

(d) All costs required to be paid under the terms of any contract for the acquisition, construction, equipping, rehabilitation, or installation of an eligible company;

(e) All costs required for the installation of utilities, including water, sewer, sewer treatment, gas, electricity, communications, railroads, and any off-site construction of the facilities to be paid by the eligible company;

(f) All costs required for the operating of the eligible company, including inventory, furniture, equipment, labor, and other incidental costs for startup or enhancement of the eligible company, if the location has been completed;

(g) Ongoing and future operating expenses; and

(h) Any other necessary and reasonable costs;

(2) "Commercial loan" means an agreement between an eligible company and one

(1) or more qualified lenders for approved costs;

(3) "Cooperative lender" means a not-for-profit consortium of qualified lenders;

(4) "Eligible company" means:

(a) Any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity that experienced direct or indirect loss from the December 2021 storms and tornadoes that occurred in the west Kentucky region and have or had an existing or proposed business located in the counties which were declared disaster relief areas by any state or federal agency; or

(b) The successor of the entity under paragraph (a) of this subsection in interest or business activity;

(5) "Final approval" means the approval of the commercial loan after underwriting by the qualified lender, in accordance with internal underwriting standards, and subject to the qualified lender s terms and conditions;

(6) "Inducement" means payments from the western Kentucky risk assistance fund created in KRS 154.20-589; and

(7) "Qualified lender" means a cooperative lender or a depository institution as defined in 12 U.S.C. sec. 1813(c), which has a physical presence in the Commonwealth and is currently in good standing as reported by the Department of Financial Institutions.

Effective:April 15, 2022

History: Created 2022 Ky. Acts ch. 222, sec. 2, effective April 15, 2022.

154.20-583 Commercial loans -- Procedures.

(1) A qualified lender of a commercial loan to an eligible company shall not be eligible to apply for inducements until final approval has been made by the qualified lender and funding has been completed in accordance with the commercial loan.

(2) Commercial loan proceeds shall be spent by the eligible company on approved costs within three (3) years of final approval, unless an extension is required by the qualified lender or necessitated by circumstances beyond the control of the eligible company or the qualified lender.

(3) The eligible company shall submit all documentation, including documentation evidencing expenditures, as required by the qualified lender.

(4) Qualified lenders may provide applications to an eligible company and then decide, regardless of further processing or underwriting results, to not provide final approval so long as the decision is not prohibited by state or federal law. If the qualified lender decides not to proceed, the qualified lender shall provide the application to a cooperative lender for further review and possible assignment to one (1) or more other qualified lenders.

(5) A qualified lender that is unable to fund the entire amount requested in an application shall submit all or any portion of the requested amount to a cooperative lender for further review and possible assignment of the unfunded portion to one (1) or more qualified lenders.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 17, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 222, sec. 3, effective April 15, 2022.

154.20-586 Eligible companies -- Requirements.

(1) The eligible company shall:

(a) Apply for all other available assistance that is not a commercial loan, including disaster relief assistance and insurance proceeds;

(b) Notify the qualified lenders immediately upon application of other assistance; and

(c) Provide an update on the status of that assistance when requested by the qualified lenders.

(2) The eligible company may assign any other available assistance to the qualified lender.

(3) The qualified lender shall use the other available assistance to first pay any fees or other amounts outstanding to reduce the principal balance of the commercial loan.

(4) The eligible company may apply for other programs administered by the Cabinet for Economic Development for which it meets the relevant program specific eligibility.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 18, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 222, sec. 4, effective April 15, 2022.

154.20-589 Western Kentucky risk assistance fund.

(1) (a) There is hereby established in the State Treasury a trust and agency account to be known as the western Kentucky risk assistance fund.

(b) The fund shall be maintained by the Cabinet for Economic Development.

(c) Amounts deposited in the fund shall be used as required under subsection (2) of this section.

(d) Notwithstanding KRS 45.229, moneys not expended at the close of a fiscal year shall not lapse but shall be carried forward into the next fiscal year.

(e) Any interest earnings of the fund shall become a part of the fund and shall not lapse.

(f) Moneys deposited in the fund are hereby appropriated for the purposes set forth in this section.

(2) The fund shall be used to pay a qualified lender on the unpaid principal balance of a commercial loan in an amount up to the lesser of the first twenty-five percent (25%) of the loss suffered on the unpaid principal balance on a commercial loan or one million dollars ($1,000,000), as evidenced by the loss being determined by the following method:

(a) The amount of loan loss reserve the lending institution establishes based on the current expected credit losses methodology for estimating allowances for credit losses, as reflected in an official, filed call report which reflects the changes in the allowance for credit loss relating to the loan originated under this section; or

(b) The amount of the estimated loss as documented by an updated appraisal of the underlying collateral, or a change in economic value of the loan based on expected cash flows.

(3) The western Kentucky risk assistance fund shall be used to provide loan loss support payments to qualified lenders for commercial loans that, in the aggregate, have outstanding principal balances not exceeding one hundred million dollars ($100,000,000) and have been approved for enrollment in the program following the application process set forth in subsections (4) and (5) of this section. The one hundred million dollar ($100,000,000) maximum amount for eligible loans shall be proportionally reduced as the loss payments are disbursed.

(4) The cabinet shall accept applications for inducements on a form created by the cabinet, which shall include the following:

(a) The name of the qualified lender;

(b) The qualified lender's status of good standing by the Department of Financial Institutions;

(c) The Kentucky address of the physical location of the qualified lender;

(d) The name, e-mail address, and phone number of an employee of the qualified lender who can be contacted regarding questions about the application; and

(e) The amount of the commercial loan.

(5) (a) The cabinet shall accept applications for access to the western Kentucky risk assistance fund only for a commercial loan that originated before December 31, 2027.

(b) Applications from qualified lenders shall be approved in the order in which the applications are received, with each qualified lender being limited to a maximum of applications totaling ten million dollars ($10,000,000) in commercial loans.

(6) Once a loss has been suffered by a qualified lender, the cabinet shall accept requests for loss payments from the western Kentucky risk assistance fund on a form created by the cabinet that provides the following:

(a) The name of the qualified lender;

(b) The qualified lender's status of good standing by the Department of Financial Institutions;

(c) The Kentucky address of the physical location of the qualified lender;

(d) The name, e-mail address, and phone number of an employee of the qualified lender, who can be contacted regarding questions about the application;

(e) The amount of the commercial loan;

(f) The requested loss payment amount calculated in accordance with subsection

(2) of this section; and

(g) Documentation of the suffered loss.

(7) (a) An application for a loss payment may only be submitted for losses suffered within five (5) years from the origination of the loan.

(b) Once a complete loss application has been submitted to the cabinet, a decision to approve or deny the application shall be made within thirty (30) days of submission.

(c) Within sixty (60) days of a complete submission:

1. If approved, the amount due shall be issued to the qualified lender; or

2. If denied, an explanation shall be sent to the qualified lender for the denial.

(8) Should the qualified lender, at any time after the receipt of a loss payment from the western Kentucky risk assistance fund, collect more than seventy-five percent (75%) of the previously considered uncollectable balance, any portion over seventy-five percent (75%) shall be repaid to the cabinet for deposit into western Kentucky risk assistance fund, however, no more than one million dollars ($1,000,000) shall be recovered.

(9) Inducements shall be paid in the order that requests for loss payments are received in accordance with subsection (6) of this section, as long as moneys are available in the fund from the initial funding or subsequent loss collection by qualified lenders on commercial loans originating before December 31, 2027.

(10) An administrative fee equal to one percent (1%) of the approved inducement amount shall be applied to the loss payment and may be deducted from the approved inducement amount.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 19, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 222, sec. 5, effective April 15, 2022.

Subchapter 21 Kentucky Product Development Initiative Subchapter 21 Kentucky Product Development Initiative

154.21-010 Legislative findings.

The General Assembly finds and declares that the purpose of KRS 154.21-010 to 154.21- 040 is to support economic development and job growth across this Commonwealth. In enacting this legislation, it is the intention of the General Assembly to enable the Cabinet for Economic Development to enter into a partnership with the Kentucky Association for Economic Development for the purposes of this program, herein known as the Kentucky Product Development Initiative, and to administer program funds to achieve this purpose.

Effective: July 14, 2022

History: Created 2022 Ky. Acts ch. 176, sec. 1, effective July 14, 2022.

154.21-015 Definitions for KRS 154.21-010 to 154.21-040.

As used in KRS 154.21-010 to 154.21-040:

(1) "Cabinet" means the Cabinet for Economic Development;

(2) "County population ranking" means the score of each county determined by the cabinet under KRS 154.21-017;

(3) "Eligible grant recipient" means a grant applicant that is a local government or an economic development authority in an economic development district in this Commonwealth that is engaged in an eligible project;

(4) "Eligible project":

(a) Means an economic development project initiated on a property that meets the availability requirements in KRS 154.21-035(3); and

(b) Requires local matching funds based on the county population ranking;

(5) "Eligible use":

(a) Means the authorized purpose for which an awarded grant may be used depending on the source of funds from the Commonwealth; and

(b) May include expenditures in any of the following categories or some combination thereof:

1. Due diligence study;

2. Property acquisition;

3. Infrastructure extension or improvement;

4. Site preparation work;

5. Building construction or renovation; or

6. Road improvement;

(6) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(7) "Population density":

(a) Means the number of persons per square mile of a county;

(b) Is calculated by dividing the total county population by the square miles in the county;

(c) Is determined by using the population estimate from the most recent available five (5) year American Community Survey as published by the United States Census Bureau; and

(d) Is used to rank each county in descending order, with the county having the largest population density receiving a rank of one (1) and the county with the smallest population density receiving a rank of one hundred twenty (120);

(8) "Regional project" means an eligible project that is proposed by eligible grant recipients residing in different counties in this Commonwealth who submit a single grant application as co-applicants; and

(9) "Ten (10) year percentage change in population":

(a) Means the percentage change in population within a county;

(b) Is determined by comparing the population estimate from the most recent available five (5) year American Community Survey as published by the United States Census Bureau to the same survey ten (10) years prior to the most recent available survey; and

(c) Is used to rank each county in descending order, with the county having the largest positive percentage change in population receiving a rank of one (1) and the county with the largest negative percentage change receiving a rank of one hundred twenty (120).

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 6, effective April 27, 2026. -- Amended 2024 Ky. Acts ch. 191, sec. 1, effective July 1, 2024. -- Amended 2023 Ky. Acts ch. 12, sec. 3, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 176, sec. 2, effective July 14, 2022.

154.21-017 Kentucky Product Development Initiative of 2024 -- Establishment -- Grant criteria -- County population ranking and local match for eligible projects -- Limitations -- Maximum amount -- Pooling of funds -- Report.

(1) The Kentucky Product Development Initiative of 2024 is hereby established under the cabinet. The cabinet shall partner with the Kentucky Association for Economic Development to administer the program. The cabinet's administration of the program includes:

(a) Creating and making available a standardized grant application and regional grant application;

(b) Adopting a standardized scoring system pursuant to KRS 154.21-040;

(c) Reviewing the applications and proposals submitted by the proposed grant recipients;

(d) Verifying the eligibility of the proposed grant recipients;

(e) Verifying that the proposed grant recipient seeks grant money for an eligible project prior to prioritizing all eligible projects;

(f) Determining the county's population ranking under subsection (3) of this section;

(g) Awarding grants to selected eligible grant recipients in multiple rounds of funding; and

(h) Compiling and submitting the reports required by subsections (3) and (5) of this section.

(2) Upon receipt of eligible grant recipients and eligible project recommendations and prioritization from the Kentucky Association for Economic Development and the third-party independent site selection consultant, the cabinet shall verify and process the eligible grant recipients and eligible project recommendations with the intent to approve and award grants under the economic development fund program pursuant to KRS 154.12-100 and based on the following criteria:

(a) Consideration of whether the eligible grant recipient had received a grant award from the Kentucky Product Development Initiative of 2022 under KRS 154.21-020; and

(b) The matching funds for the selected grant recipient's contribution to its eligible project based on the county population ranking determined under subsection (3) of this section.

(3) (a) On or before June 1, 2024, and no later than June 1 every two (2) years thereafter, the cabinet shall determine a county population ranking for each county by adding the following two (2) factors:

1. The population density ranking; and

2. The ten (10) year percentage change in population ranking.

(b) The required local match for each county shall be as follows:

1. Eligible projects in counties where the county population ranking is greater than or equal to one hundred ninety-three (193) shall provide a minimum amount of local matching funds equal to ten percent (10%) of the project cost;

2. Eligible projects in counties where the county population ranking is less than one hundred ninety-three (193) but greater than or equal to one hundred forty-five (145) shall provide a minimum amount of local matching funds equal to twelve and one-half percent (12.5%) of the project cost;

3. Eligible projects in counties where the county population ranking is less than one hundred forty-five (145) but greater than or equal to ninety- seven (97) shall provide a minimum amount of local matching funds equal to fifteen percent (15%) of the project cost;

4. Eligible projects in counties where the county population ranking is less than ninety-seven (97) but greater than or equal to forty-nine (49) shall provide a minimum amount of local matching funds equal to seventeen and one-half percent (17.5%) of the project cost;

5. Eligible projects in counties where the county population ranking is less than forty-nine (49) shall provide a minimum amount of local matching funds equal to twenty percent (20%) of the project cost; and

6. For eligible projects requesting due diligence as an eligible use, the due diligence must be completed prior to acquisition of the site. If the due diligence result leads to the decision to not purchase the site, then the cabinet may expend up to two hundred thousand dollars ($200,000) with no local matching funds required. If the amount to be reimbursed by the cabinet exceeds two hundred thousand dollars ($200,000), the cabinet shall report to the Interim Joint Committee on Appropriations and Revenue, or the Senate Standing Committee on Appropriations and Revenue and the House Standing Committee on Appropriations and Revenue, within five (5) days of the disbursement. The report shall include the name and county location of the eligible project approved, the amount of the grant awarded, the amount of the funding disbursed for due diligence and the extenuating circumstances related to the due diligence study.

(c) On or before July 1, 2024, and no later than July 1 every two (2) years thereafter, the cabinet shall report to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue the following information for each county:

1. The county name;

2. The population density ranking for that county;

3. The ten (10) year percentage change in population ranking for that county; and

4. The county population ranking for that county.

(d) When awarding grants in this initiative, the cabinet shall not award grants to:

1. An eligible grant recipient or a group of eligible grant recipients in excess of the amount allocated to the county in which the county is located, except when pooled pursuant to subsection (4) of this section; or

2. An eligible grant recipient that received a grant award from the Kentucky Product Development Initiative of 2022 prior to all other eligible grant recipients receiving a grant award from the Kentucky Product Development Initiative of 2024 if the eligible project scores are equal to or above the score of an eligible project from an eligible grant recipient who received a grant award from the Kentucky Product Development Initiative of 2022 under KRS 154.21-040, and in the case where the scores are equal, discretion by the Kentucky Association for Economic Development and the cabinet shall be used.

(e) The maximum funding available for an approved development project is two million five hundred thousand dollars ($2,500,000) in a heritage county and two million dollars ($2,000,000) in any other county, except as permitted by subsection (4) of this section.

(f) If there are funds available after the first round of grant awards of the Kentucky Product Development Initiative of 2024, the cabinet shall initiate additional rounds of grant awards.

(4) (a) For selected eligible grant recipients that are involved in a regional project, the cabinet may pool the potential allocation of funds available for each county represented by the eligible grant recipients for the grant amount awarded.

(b) A county that is an eligible grant recipient involved in a regional project shall provide that county's local matching funds based on the county population ranking determined under subsection (3) of this section and each county's local matching funds may be pooled as described in paragraph (a) of this subsection.

(5) Beginning no later than November 1, 2024, and annually thereafter until the authorized appropriation is spent or returned, the cabinet shall compile and submit a report for each application approved by the Kentucky Economic Development Finance Authority for the Kentucky Product Development Initiative of 2024. The report shall be electronically delivered to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue and contain the following information:

(a) The name of the applicant, a description of the eligible project, and the location of each proposed project for which an application was approved;

(b) The date the application was approved by the Kentucky Economic Development Finance Authority;

(c) The amount of funding authorized for each project approved;

(d) The total amount of funding disbursed for each project approved; and

(e) The round of funding for which each project received approval.

(6) The Kentucky Product Development Initiative of 2024 shall begin July 1, 2024.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 7, effective April 27, 2026. -- Created 2024 Ky. Acts ch. 191, sec. 3, effective July 1, 2024.

154.21-020 Kentucky Product Development Initiative of 2022 -- Establishment -- Funds -- Maximum amount.

(1) The Kentucky Product Development Initiative of 2022 is hereby established under the cabinet. The cabinet shall partner with the Kentucky Association for Economic Development to administer the program. The cabinet's administration of the program includes but is not limited to the following:

(a) Creating and making available a standardized grant application and regional grant application;

(b) Adopting a standardized scoring system pursuant to KRS 154.21-040;

(c) Reviewing the applications and proposals submitted by the proposed grant recipients;

(d) Verifying the eligibility of the proposed grant recipients;

(e) Verifying that the proposed grant recipient seeks grant money for an eligible project prior to prioritizing and recommending the eligible grant recipient and eligible project to the cabinet;

(f) Awarding grants to selected eligible grant recipients in two (2) rounds of funding; and

(g) Compiling and submitting the following information, no later than November 1, 2024, and annually thereafter until the authorized appropriation is spent or returned, for each application approved by the Kentucky Economic Development Finance Authority related to the Kentucky Product Development Initiative of 2022 to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue:

1. The name of the applicant, a description of the eligible project, and the location of each proposed project for which an application was received;

2. The date the application was approved by the Kentucky Economic Development Finance Authority;

3. The amount of funding authorized for each project approved;

4. The total amount of funding disbursed for each project approved; and

5. The round of funding for which each project received approval.

(2) Upon receipt of eligible grant recipients and eligible project recommendations and prioritization from the Kentucky Association for Economic Development and the third-party independent site selection consultant, the cabinet shall verify and process the eligible grant recipients and eligible project recommendations with the intent to approve and award grants matching the selected grant recipient's contribution to its eligible project on a dollar-for-dollar basis, under the economic development fund program pursuant to KRS 154.12-100.

(3) (a) Prior to the first round of grant awards, the cabinet shall allocate a percentage of the total funds appropriated to this program by the General Assembly to each county in the Commonwealth. When awarding grants in the first round of funding, the cabinet shall not award grants to an eligible grant recipient or a group of eligible grant recipients in excess of the amount allocated to the county in which it or they are located, except when pooled pursuant to subsection (4) of this section. The allocation shall be made according to the following calculations:

1. For all counties except Jefferson County, the percentage of the fund each county is eligible to receive shall be determined by each county's proportion of the state's population based on the most recent federal decennial census;

2. For Jefferson County, the percentage of the fund it shall be eligible to receive shall be determined by the county's proportion of the state's population based on the most recent federal decennial census, which shall be discounted by fifty percent (50%); and

3. The maximum funding available for an approved development project is two million dollars ($2,000,000) per county except as permitted by subsection (4) of this section.

(b) If there are funds available after the first round of grant awards, the cabinet shall initiate a second round of grant awards through the Kentucky Product Development Initiative. Any remaining funds available for program use shall be pooled and available to eligible grant recipients from all counties on a first- come, first-served basis, but each county's eligible allocation shall not exceed two million dollars ($2,000,000) except as permitted by subsection (4) of this section.

(4) For selected eligible grant recipients that are involved in a regional project, the cabinet may pool the potential allocation of funds available for each county represented by the eligible grant recipients for the grant amount awarded. For example, if a county that is eligible for up to ten percent (10%) of the program funds based on the calculations in subsection (3) of this section partners with a county that is eligible for five percent (5%) of the program funds based on the calculations in subsection (3) of this section, then the total allocation for the regional project that the cabinet may award is fifteen percent (15%).

(5) Grant applicants that have received discretionary mega-development project funding shall be disqualified from participation in the Kentucky Product Development Initiative.

Effective: July 1, 2024

History: Amended 2024 Ky. Acts ch. 191, sec. 2, effective July 1, 2024. -- Amended 2023 Ky. Acts ch. 12, sec. 4, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 176, sec. 3, effective July 14, 2022.

Legislative Research Commission Note (7/1/2024). In subsection (1)(g)2. of this statute, a reference to "Kentucky Economic Development Authority" has been changed in codification to read "Kentucky Economic Development Finance Authority." The reviser of statutes has made this correction of a manifest clerical or typographical error under the authority of KRS 7.136.

Legislative Research Commission Note (7/14/2022). See State/Executive Branch Budget, 2022 Ky. Acts ch. 199, Pt. I, B, 1, (12)(b) at 1655, which appropriated funds in fiscal years 2021-2022 and 2022-2023 to support the creation and implementation of the Kentucky Product Development Initiative and established an alternate allocation method for the 2022-2024 fiscal biennium.

154.21-025 Grant application -- Compliance.

(1) (a) To participate in the Kentucky Product Development Initiative, grant applicants shall submit an application to the Kentucky Association for Economic Development that will be received by or shared with the third-party independent site selection consultant for review.

(b) Grant applicants wishing to engage in a regional project shall submit a single application to the Kentucky Association for Economic Development that will be received by or shared with the third-party independent site selection consultant for review.

(2) If a grant applicant is selected as an eligible grant recipient approved under the economic development fund program, it shall comply with any incentive agreements and reporting requirements deemed necessary by the cabinet to verify that the awarded grant goes toward an eligible use.

(3) If the selected grant recipient fails to comply with subsection (2) of this section or uses the awarded grant money for any purpose other than an eligible use, the selected eligible grant recipient shall forfeit and be liable to the cabinet for the full award amount.

Effective: July 14, 2022

History: Created 2022 Ky. Acts ch. 176, sec. 4, effective July 14, 2022.

154.21-030 Application processes -- Annual report.

(1) In the implementation of the Kentucky Product Development Initiative, the Kentucky Association for Economic Development shall:

(a) Process the grant applications;

(b) Determine whether a grant applicant is an eligible grant recipient and seeking a grant for an eligible project;

(c) Evaluate the project site cited or proposed by each grant applicant in accordance with the program's evaluation model described in KRS 154.21-035 and based on the criteria recommended by the third-party independent site selection consultant;

(d) Score each grant applicant's project pursuant to the scoring system described in KRS 154.21-040;

(e) Rank the grant applicants:

1. In a manner that prioritizes the greatest return on investment, workforce creation, and relative positive impact on the community; and

2. Based on the project site evaluation and subsequent project score described in KRS 154.21-035 and 154.21-040;

(f) Compile a list of proposed grant recipients whose eligible project demonstrates a high level of investment potential if a grant is made, as revealed by the evaluation, scoring, and ranking process described in this section and KRS 154.21-035 and 154.21-040;

(g) Submit the proposed grant recipients and their prioritization to the cabinet for final selection of the grant recipients;

(h) Provide detailed feedback to all grant applicants after the project site evaluation and project score are completed; and

(i) Compile an annual report for the cabinet conveying the following information about the program:

1. A list of all program applicants;

2. The identity of applicants who were not selected for recommendation;

3. Trends found in feedback given to applicants who were not selected for recommendation;

4. Eligible uses of the properties cited in the grant applications; and

5. Any other information requested by the cabinet.

(2) The Kentucky Association for Economic Development shall contract with a third- party independent site selection consultant to assist with the grant applicant site evaluations, scoring, prioritization, and recommendations described in this section and KRS 154.21-035 and 154.21-040.

Effective: July 14, 2022

History: Created 2022 Ky. Acts ch. 176, sec. 5, effective July 14, 2022.

Legislative Research Commission Note (7/14/2022). In codification, a correction has been made to subsection (1)(c) of this statute. 2022 House Bill 745, Section 5, which created this statute, contained a reference in subsection (1)(c) to "Section 7 of this Act," which has been codified as KRS 154.21-040. However, it is clear from the text and context that the reference was intended to read "Section 6 of this Act," which has been codified as KRS 154.21-035. Under the authority of KRS 7.136, the Reviser of Statutes has corrected this reference.

154.21-035 Evaluation criteria -- Availability -- Developable property -- Zoning -- Transportation -- Utilities.

(1) The Kentucky Association for Economic Development shall evaluate each applicant's eligible project according to the criteria described in this section and KRS 154.21-040 for the purposes of compiling a recommendation and score for the eligible project and project site pursuant to KRS 154.21-040.

(2) The Kentucky Association for Economic Development and the third-party independent site selection consultant shall consider the requirements in the following five (5) categories in the evaluation of proposed projects:

(a) Property availability as described in subsection (3) of this section;

(b) Property development ability as described in subsection (4) of this section;

(c) Zoning availability as described in subsection (5) of this section;

(d) Transportation accessibility as described in subsection (6) of this section; and

(e) Utility adequacy as described in subsection (7) of this section.

(3) The property that the eligible project occupies or is proposed to occupy shall be available. Property shall be deemed available for the purposes of this program:

(a) If the property is publicly owned; or

(b) If the project's eligible use includes property acquisition or a due diligence study. In this situation the application shall include one (1) of the following:

1. A legally binding letter of intent or option for the sale to an eligible grant recipient; or

2. An agreement for the sale to an eligible recipient.

(4) The property that the eligible project occupies or is proposed to occupy shall be developable. Property shall be deemed developable if:

(a) The acreage intended for development is clearly defined by either:

1. The grant applicant; or

2. An engineering partner during or after a site visit, if the applicant is unable to define the developable acreage; and

(b) The property is free of impediments to development, or a known impediment can be mitigated by a grant applicant. A property is free of impediments if it:

1. Is located outside of the one hundred (100) year and five hundred (500) year flood zone;

2. Is free of recognized environmental conditions;

3. Is free of wetlands;

4. Is free of state and federally threatened and endangered species;

5. Is free of areas of archaeological or historical significance; and

6. Possesses soils compatible with the grant applicant's intended development.

(5) The property that the eligible project occupies or is proposed to occupy shall be appropriately zoned for the intended use or shall be able to be rezoned within ninety

(90) calendar days. The properties surrounding the grant applicant's project site shall be zoned so they are compatible with the grant applicant's intended development and use of the project site.

(6) The property that the eligible project occupies or is proposed to occupy shall be directly served by a road or roads that are compatible with the intended use of the property. Additionally, if the property is marketed as rail-served, the property shall be deemed rail-served if:

(a) The grant applicant provides documentation from the rail provider that evinces that rail infrastructure exists and the rail provider actually provides rail service; or

(b) If the rail service does not exist at the time of the grant application, the grant applicant provides documentation from the rail provider that evinces that the project site will be able to be rail-served within twelve (12) months.

(7) The property that the eligible project occupies or is proposed to occupy shall have access to adequate utilities and shall be served or able to be served by the following:

(a) Electric infrastructure;

(b) Natural gas or propane;

(c) Water infrastructure and a public water system;

(d) Wastewater infrastructure and a public wastewater treatment plant, excluding a septic wastewater treatment system; and

(e) Fiber telecommunications infrastructure.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 8, effective April 27, 2026. -- Amended 2024 Ky. Acts ch. 191, sec. 4, effective July 1, 2024. -- Amended 2023 Ky. Acts ch. 12, sec. 5, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 176, sec. 6, effective July 14, 2022.

154.21-040 Scoring system.

(1) In the administration of the Kentucky Product Development Initiative, the Kentucky Association for Economic Development, via a third-party independent site selection consultant, shall develop a scoring system for the project and the project site proposed by each grant applicant based on the total projected return on investment, key workforce characteristics, and the relative positive impact in the community.

(2) The scoring system shall include:

(a) A score in each category as specified in subsection (3) of this section; and

(b) A total weighted score, which is the average of the scores in each category.

(3) The scoring categories shall include but are not limited to:

(a) Projected return on investment the project will yield, which includes an assessment of the:

1. Likelihood of project completion at the applicant's proposed site, both with the cabinet's funding and without;

2. Projected gross economic impact of the proposed project on the community;

3. Projected number of jobs created by the proposed project and subsequent impact on the community; and

4. A determination of the cost of the job based on the cost expended by the cabinet if it awards the requested grant amount to the applicant;

(b) Key workforce characteristics, including an assessment of objective workforce data for the community in which the project is located; and

(c) Relative positive impact the project will have on the surrounding community.

Effective: July 14, 2022

History: Created 2022 Ky. Acts ch. 176, sec. 7, effective July 14, 2022.

Subchapter 22 Financing of Rural Economic Development Subchapter 22 Financing of Rural Economic Development

154.22-010 Definitions for KRS 154.22-010 to 154.22-080.

The following words and terms as used in KRS 154.22-010 to 154.22-080, unless the context clearly indicates a different meaning, shall have the following meanings:

(1) "Activation date" means a date selected by an approved company in the tax incentive agreement at any time within a two (2) year period after the date of final approval of the tax incentive agreement by the authority;

(2) "Affiliate" means the following:

(a) Members of a family, including only brothers and sisters of the whole or half blood, spouse, ancestors, and lineal descendants of an individual;

(b) An individual, and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for that individual;

(c) An individual, and a limited liability company of which more than fifty percent (50%) of the capital interest or profits are owned or controlled, directly or indirectly, by or for that individual;

(d) Two (2) corporations which are members of the same controlled group, which includes and is limited to:

1. One (1) or more chains of corporations connected through stock ownership with a common parent corporation, if:

a. Stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned by one (1) or more of the other corporations; and

b. The common parent corporation owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of at least one (1) of the other corporations, excluding, in computing the voting power or value, stock owned directly by the other corporations; or

2. Two (2) or more corporations, if five (5) or fewer persons who are individuals, estates, or trusts own stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each person only to the extent the stock ownership is identical with respect to each corporation;

(e) A grantor and a fiduciary of any trust;

(f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts;

(g) A fiduciary of a trust and a beneficiary of that trust;

(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts;

(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;

(j) A fiduciary of a trust and a limited liability company more than fifty percent (50%) of the capital interest, or the interest in profits, of which is owned directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;

(k) A corporation, a partnership, and a limited partnership, if the same persons own:

1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and

2. More than fifty percent (50%) of the capital interest, or the profits interest, in the partnership or limited partnership;

(l) A corporation and a limited liability company, if the same persons own:

1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and

2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company;

(m) A partnership, limited partnership, and a limited liability company, if the same persons own:

1. More than fifty percent (50%) of the capital interest or profits in the partnership or limited partnership; and

2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company;

(n) An S corporation and another S corporation, if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation, S corporation designation being the same as that designation under the Internal Revenue Code of 1986, as amended; or

(o) An S corporation and a C corporation, if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation; S and C corporation designations being the same as those designations under the Internal Revenue Code of 1986, as amended;

(3) "Agribusiness" means any activity involving the processing of raw agricultural products, including timber, or the providing of value-added functions with regard to raw agricultural products;

(4) "Approved company" means any eligible company seeking to locate an economic development project in a qualified county, which eligible company is approved by the authority pursuant to KRS 154.22-010 to 154.22-080;

(5) "Approved costs" means:

(a) Obligations incurred for labor and to contractors, subcontractors, builders, and materialmen in connection with the acquisition, construction, installation, equipping, and rehabilitation of an economic development project;

(b) The cost of acquiring land or rights in land and any cost incidental thereto, including recording fees;

(c) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, installation, equipping, and rehabilitation of an economic development project which is not paid by the contractor or contractors or otherwise provided for;

(d) All costs of architectural and engineering services, including test borings, surveys, estimates, plans and specifications, preliminary investigations, and supervision of construction, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, installation, equipping, and rehabilitation of an economic development project;

(e) All costs which shall be required to be paid under the terms of any contract or contracts for the acquisition, construction, installation, equipping, and rehabilitation of an economic development project; and

(f) All other costs of a nature comparable to those described above;

(6) "Assessment" means the job development assessment fee authorized by KRS 154.22-010 to 154.22-080;

(7) "Authority" means the Kentucky Economic Development Finance Authority as created in KRS 154.20-010;

(8) "Average hourly wage" means the wage and employment data published by the Department of Workforce Development in the Education and Labor Cabinet collectively translated into wages per hour based on a two thousand eighty (2,080) hour work year for the following sectors:

(a) Manufacturing;

(b) Transportation, communications, and public utilities;

(c) Wholesale and retail trade;

(d) Finance, insurance, and real estate; and

(e) Services;

(9) "Commonwealth" means the Commonwealth of Kentucky;

(10) (a) "Economic development project" means and includes:

1. The acquisition of ownership in any real estate in a qualified county by the authority, the approved manufacturing or agribusiness company, or its affiliate;

2. The present ownership of real estate in a qualified county by the approved manufacturing or agribusiness company or its affiliate;

3. The acquisition or present ownership of improvements or facilities, as described in paragraph (b) of this subsection, on land which is possessed or is to be possessed by the approved manufacturing or agribusiness company pursuant to a ground lease having a term of sixty (60) years or more;

4. The new construction of an electric generation facility; and

5. The legal possession of facilities by an approved company or its affiliate pursuant to a lease having a term equal to or greater than fifteen (15) years with a third-party entity, negotiated at arm's length, if the facility will be used by the approved company to conduct the approved activity for which the inducement has been granted. An economic development project qualifying under this subparagraph shall only be eligible for credits against equipment and costs related to installation of equipment and for purposes of the tax credits provided under the provisions of KRS 154.22-010 to 154.22-080 only to the extent of twenty thousand dollars ($20,000) per job created by and maintained at the economic development project. Notwithstanding KRS 154.22-050(8) and 154.22-060, an economic development project qualifying under this subparagraph shall be eligible only for the aggregate assessments pursuant to KRS 154.22-070 withheld by the approved company each year and shall not be eligible for credit against Kentucky income tax and limited liability entity tax.

(b) For purposes of paragraph (a)1. and 2. of this subsection, ownership of real estate shall only include fee ownership of real estate and possession of real estate pursuant to a capital lease as determined in accordance with Statement of Financial Accounting Standards No. 13, Accounting for Leases, issued by the Financial Accounting Standards Board, November 1976. With respect to paragraph (a)1., 2., and 3. of this subsection or this paragraph, the construction, installation, equipping, and rehabilitation of improvements, including fixtures and equipment, and facilities necessary or desirable for improvement of the real estate, including surveys; site tests and inspections; subsurface site work; excavation; removal of structures, roadways, cemeteries, and other surface obstructions; filling, grading, and provision of drainage, storm water retention, installation of utilities such as water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the real estate; and the acquisition, installation, equipping, and rehabilitation of manufacturing facilities on the real estate, for use and occupancy by the approved company or its affiliates for manufacturing purposes, electric generation, or for agribusiness purposes. Pursuant to paragraph (a)3. and 5. of this subsection, an economic development project shall not include lease payments made pursuant to a ground lease for purposes of the tax credits provided under the provisions of KRS 154.22-010 to 154.22-080;

(11) "Electric generation" means the generation of electricity for resale by means of combusting at least fifty percent (50%) of the total fuel used to generate electricity from coal or from gas derived from coal;

(12) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity engaged in manufacturing, electric generation, or in agribusiness;

(13) "Employee benefits" means nonmandated costs paid by an eligible company for its full-time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k), or similar plans;

(14) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under this subchapter;

(15) "Full-time employee" means a person employed by an approved company for a minimum of thirty-five (35) hours per week and subject to the state income tax imposed by KRS 141.020;

(16) "Inducements" means the assessment and the tax credits allowed by KRS 154.22-060;

(17) "Manufacturing" means any activity involving the manufacturing, processing, assembling, or production of any property, including the processing resulting in a change in the conditions of the property and any activity related to it, together with the storage, warehousing, distribution, and related office facilities; however, "manufacturing" shall not include mining, coal or mineral processing, or extraction of minerals;

(18) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements under this subchapter;

(19) "Qualified county" means any county certified as such by the authority pursuant to KRS 154.22-010 to 154.22-080;

(20) "Revenues" shall not be considered state funds;

(21) "State agency" shall have the meaning assigned to the term in KRS 56.440(8);

(22) "Tax incentive agreement" means the agreement entered into, pursuant to KRS 154.22-050, between the authority and an approved company with respect to an economic development project;

(23) "Kentucky gross receipts" means "Kentucky gross receipts" as defined in KRS 141.0401; and

(24) "Kentucky gross profits" means "Kentucky gross profits" as defined in KRS 141.0401.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 50, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 19, effective June 27, 2019. -- Repealed and reenacted 2010 Ky. Acts ch. 51, sec. 43, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 11, sec. 37, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 75, sec. 1, effective June 26, 2007; and ch. 137, sec. 43, effective June 26, 2007. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 43, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 216, effective July 12, 2006; and ch. 211, sec. 69, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 105, sec. 2, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 19, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 321, sec. 1, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 29, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 4, effective July 15, 1994; and ch. 450, sec. 3, effective July 15, 1994. Repealed, reenacted, and amended as KRS 154.22-010, 1992 Ky. Acts ch. 105, sec. 22, effective July 14, 1992; ch. 360, sec. 1, effective July 14, 1992; and ch. 363, sec. 12, effective July 14, 1992. -- Amended 1990 Ky. Acts ch. 326, sec. 2, effective July 13, 1990. -- Created 1988 Ky. Acts ch. 392, sec. 1, effective April 8, 1988. Formerly codified as KRS 152.260

Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 51, sec. 183, provides, "The specific textual provisions of Sections 1 to 178 of this Act which reflect amendments made to those sections by 2007 Ky. Acts ch. 137 shall be deemed effective as of June 26, 2007, and those provisions are hereby made expressly retroactive to that date, with the remainder of the text of those sections being unaffected by the provisions of this section."

Legislative Research Commission Note (7/12/2006). In 2006 Ky. Acts ch. 149, almost all references in the Kentucky Revised Statutes to "registered limited liability partnerships" were removed by amendments to various sections of the KRS. However, in this section and in sec. 217 of the bill, KRS 154.23-010, this phrase was not changed or deleted. It appears that leaving this phrase in these two sections was an oversight.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.22-020 Legislative findings.

(1) The General Assembly hereby finds and declares that the general welfare and material well-being of citizens of the Commonwealth, and particularly those residing in qualified counties, depends in large measure upon the development and growth of industry in the Commonwealth.

(2) The General Assembly hereby finds and declares further that it is in the best interest of the Commonwealth to induce the location of manufacturing facilities, electric generation, and agribusiness operations within the qualified counties of the Commonwealth in order to advance the public purposes of relieving unemployment by creating new jobs within the qualified counties that but for the inducements to be offered by the authority to approved companies as herein provided would not exist and of creating new sources of tax revenues for the support of the public services provided by the Commonwealth and qualified counties.

(3) The General Assembly hereby finds and declares further that the authority granted by KRS 154.22-010 to 154.22-070 and the purposes to be accomplished hereby are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the location of manufacturing facilities, electric generation, and agribusiness operations within qualified counties is of paramount importance, mandating that the provisions of KRS 154.22-010 to 154.22-070 be liberally construed and applied in order to advance the public purposes.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 321, sec. 2, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 390, sec. 5, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-020, 1992 Ky. Acts ch. 105, sec. 23, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 392, sec. 2, effective April 8, 1988. Formerly codified as KRS 152.262

154.22-030 Repealed, 1996.

[Repealed]

154.22-040 Certification of qualified counties -- Loss of certification -- Coal-producing counties qualified for electric generation -- Selection of eligible companies under Rural Economic Development Assistance Program -- Limitation of applicability to nonprofit corporations with handicapped and sheltered workers.

(1) Each year, the authority shall, under its Rural Economic Development Assistance Program, on the basis of the final unemployment figures calculated by the Department of Workforce Development in the Education and Labor Cabinet, determine which counties have had a countywide rate of unemployment exceeding the statewide unemployment rate of the Commonwealth in the most recent five (5) consecutive calendar years, or which have had an average countywide rate of unemployment exceeding the statewide unemployment rate of the Commonwealth by two hundred percent (200%) in the most recent calendar year, and shall certify those counties as qualified counties. A county not certified on the basis of final unemployment figures may also be certified as a qualified county if the authority determines the county is one (1) of the sixty (60) most distressed counties in the Commonwealth based on the following criteria with equal weight given to each criterion:

(a) The average countywide rate of unemployment in the most recent three

(3) consecutive calendar years, on the basis of final unemployment figures calculated by the Department of Workforce Development in the Education and Labor Cabinet;

(b) In each county the percentage of adults twenty-five (25) years of age and older who have attained at least a high school education or equivalent, on the basis of the most recent data available from the United States Department of Commerce, Bureau of the Census; and

(c) Road quality, as quantified by the access within a county to roads ranked in descending order from best quality to worst quality as follows: two (2) or more interstate highways, one (1) interstate highway, a state four (4) lane parkway, four (4) lane principal arterial access to an interstate highway, state two (2) lane parkway and none of the preceding road types, as certified by the Kentucky Transportation Cabinet to the authority. If the authority determines that a county which has previously been certified as a qualified county no longer meets the criteria of this subsection, the authority shall decertify that county. The authority shall not provide inducements for any facilities in that county and an approved company shall not be eligible for the inducements offered by KRS 154.22-010 to 154.22-070 unless the tax incentive agreements required herein are entered into by all parties prior to July 1 of the year following the calendar year in which the authority decertified that county. In addition, the authority shall certify coal-producing counties, not otherwise certified as qualified counties in this subsection, for economic development projects involving the new construction of electric generation facilities. A coal-producing county shall mean a county in the Commonwealth of Kentucky that has produced coal upon which the tax imposed under KRS 143.020 was paid at any time. For economic development projects undertaken in a regional industrial park, as defined in KRS 42.4588, or in an industrial park created pursuant to an interlocal agreement in which revenues are shared as provided in KRS 65.210 to 65.300, where the physical boundaries of the industrial park lie within two (2) or more counties of which at least one (1) of the counties is a qualified county under this section, an eligible company undertaking an economic development project within the physical boundaries of the industrial park may be approved for the inducements under KRS 154.22-010 to 154.22-080.

(2) The authority shall establish the procedures and standards for the determination and approval of eligible companies and their economic development projects by the promulgation of administrative regulations in accordance with KRS Chapter 13A. The criteria for approval of eligible companies and economic development projects shall include but not be limited to the creditworthiness of eligible companies; the number of new jobs to be provided by an economic development project to residents of the Commonwealth; and the likelihood of the economic success of the economic development project.

(3) The economic development project shall involve a minimum investment of one hundred thousand dollars ($100,000) by the eligible company and shall result in the creation by the eligible company, within two (2) years from the date of the final approval authorizing the economic development project, of a minimum of fifteen (15) new full-time jobs at the site of the economic development project for Kentucky residents to be employed by the eligible company and to be held by persons subject to the personal income tax of the Commonwealth. The authority may extend this two (2) year period upon the written application of an eligible company requesting an extension.

(4) (a) Within six (6) months after the activation date, the approved company shall compensate a minimum of ninety percent (90%) of its full-time employees whose jobs were created with base hourly wages equal to either:

1. Seventy-five percent (75%) of the average hourly wage for the Commonwealth; or

2. Seventy-five percent (75%) of the average hourly wage for the county in which the project is to be undertaken.

(b) If the base hourly wage calculated in paragraph (a)1. or 2. of this subsection is less than one hundred fifty percent (150%) of the federal minimum wage, then the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage. However, for projects receiving preliminary approval of the authority prior to July 1, 2008, the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage existing on January 1, 2007. In addition to the applicable base hourly wage calculated above, the eligible company shall provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage; however, if the eligible company does not provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage, the eligible company may qualify under this section if it provides the employees hired by the eligible company as a result of the economic development project total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the applicable base hourly wage through increased hourly wages combined with employee benefits.

(c) The requirements of this subsection shall not apply to eligible companies which are nonprofit corporations established under KRS 273.163 to 273.387 and whose employees are handicapped and sheltered workshop workers employed at less than the established minimum wage as authorized by KRS 337.295. For an eligible company, within a regional industrial park which lies within two

(2) or more counties, the calculation of the wage and benefit requirement shall be determined by averaging the average county hourly wage for all counties within the regional industrial park.

(5) No economic development project which will result in the replacement of agribusiness, manufacturing, or electric generation facilities existing in the state shall be approved by the authority; however, the authority may approve an economic development project that:

(a) Rehabilitates an agribusiness, manufacturing, or electric generation facility:

1. Which has not been in operation for a period of ninety (90) or more consecutive days;

2. For which the current occupant of the facility has published a notice of closure so long as the eligible company intending to acquire the facility is not an affiliate of the current occupant; or

3. The title to which is vested in other than the eligible company or an affiliate of the eligible company and that is sold or transferred pursuant to a foreclosure ordered by a court of competent jurisdiction or an order of a bankruptcy court of competent jurisdiction;

(b) Replaces an agribusiness, manufacturing, or electric generation facility existing in the Commonwealth:

1. The title to which shall have been taken under the exercise of the power of eminent domain, or the title to which shall be the subject of a nonappealable judgment granting the authority to exercise the power of eminent domain, in either event to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or

2. Which has been damaged or destroyed by fire or other casualty to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or

(c) Replaces an existing agribusiness, manufacturing, or electric generation facility located in the same qualified county, and the existing agribusiness, manufacturing, or electric generation facility to be replaced cannot be expanded due to the unavailability of real estate at or adjacent to the agribusiness, manufacturing, or electric generation facility to be replaced. Any economic development project satisfying the requirements of this subsection shall only be eligible for inducements to the extent of the expansion, and no inducements shall be available for the equivalent of the agribusiness, manufacturing, or electric generation facility to be replaced. No economic development project otherwise satisfying the requirements of this subsection shall be approved by the authority which results in a lease abandonment or lease termination by the approved company without the consent of the lessor.

(6) With respect to each eligible company making an application to the authority for inducements, and with respect to the economic development project described in the application, the authority shall request materials and make inquiries of the applicant as necessary or appropriate. Upon review of the application and completion of initial inquiries, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and authorizing the undertaking of the economic development project. After preliminary approval, the authority may by final approval designate an eligible company to be an approved company.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 51, effective July 1, 2022. -- Amended 2020 Ky. Acts ch. 98, sec. 14, effective July 15, 2020. -- Amended 2019 Ky. Acts ch. 146, sec. 20, effective June 27, 2019. -- Amended 2009 Ky. Acts ch. 11, sec. 38, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 69, sec. 2, effective June 26, 2007. -- Amended 2006 Ky. Acts ch. 211, sec. 70, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 84, sec. 1, effective April 6, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 20, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 321, sec. 3, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 349, sec. 1, effective July 15, 1998; and ch. 584, sec. 1, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 194, sec. 30, effective July 15, 1996; and ch. 271, sec. 8, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 5, effective July 15, 1994. Repealed, reenacted, and amended as KRS 154.22-040, 1992 Ky. Acts ch. 105, sec. 25, effective July 14, 1992; ch. 360, sec. 5, effective July 14, 1992; and ch. 363, sec. 13, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 392, sec. 9, effective April 8, 1988. Formerly codified as KRS 152.276

154.22-050 Tax incentive agreements between authority and approved companies -

• Time limits -- Extensions -- Tax credits and assessments as inducements for approved companies -- Assignment of tax incentive agreement -- Documentation of expenditures -- Suspension of inducements -- Authority's remedies in case of failure to comply -- Activation date. The authority may enter into, with any approved company, a tax incentive agreement with respect to its economic development project, upon adoption of a resolution authorizing the tax incentive agreement. Subject to the inclusion of the mandatory provisions set forth below, the terms and provisions of each tax incentive agreement shall be determined by negotiations between the authority and the approved company.

(1) The tax incentive agreement shall set forth the maximum amount of inducements available to the approved company for recovery of the approved costs authorized by the authority and expended by the approved company.

(2) The approved company shall expend the authorized approved costs for the economic development project within three (3) years of the date of the final approval by the authority.

(3) The approved company shall provide the authority with documentation as to the expenditures for approved costs in a manner acceptable to the authority.

(4) (a) The term of the tax incentive agreement shall commence upon the activation date and shall terminate upon the earlier of the full receipt of the maximum amount of inducements by the approved company or fifteen (15) years after the activation date unless paragraph (b) of this subsection applies.

(b) 1. An approved company may request an extension of the fifteen (15) year term as provided in this paragraph. The extension may be granted by the authority for up to ten (10) years under the following conditions:

a. The approved company commits to an additional investment or the creation of additional jobs at the approved economic development project;

b. The approved company consolidates operations, facilities, or services currently located in another state to the Kentucky facility;

c. At the time the extension is granted, the approved company has used less than sixty percent (60%) of the inducements awarded under the tax incentive agreement; and

d. The authority shall not increase the maximum amount of incentives established by the existing tax incentive agreement.

2. If the authority approves the extension, the tax incentive agreement shall be amended as necessary to extend the term, and to incorporate any additional requirements established by the authority as required by this paragraph.

(5) The tax incentive agreement shall include the activation date. To implement the activation date, the approved company shall notify the authority, the Department of Revenue, and the approved company's employees of the activation date when the implementation of the inducements authorized in the tax incentive agreement shall occur. If the approved company does not satisfy the minimum investment and minimum employment requirements of KRS 154.22-040(3) by the activation date, the approved company shall not be entitled to receive inducements pursuant to this subchapter until the approved company satisfies the requirements; however, the fifteen (15) year period for the term of the tax incentive agreement shall begin from the activation date. Notwithstanding the previous sentence, if the approved company does not satisfy the minimum investment and minimum employment requirements of KRS 154.22-040(3) within two (2) years from the date of final approval of the tax incentive agreement, then the approved company shall be ineligible to receive inducements under this subchapter unless an extension is approved by the authority.

(6) The tax agreement shall also state that if the total number of new full-time employees at the site of the economic development project who are residents of the Commonwealth and subject to the Kentucky income tax is less than fifteen (15) at any time after activation, the authorized inducements shall be suspended for a period of up to one (1) year. If the company does not have at least fifteen (15) new full-time employees at the site who are residents of the Commonwealth and subject to Kentucky income tax within one (1) year from the date of the initial suspension, the inducements may be terminated at the discretion of the authority.

(7) The approved company shall comply with the hourly wage criteria set forth in KRS 154.22-040(4) and provide documentation in connection with hourly wages paid to its full-time employees hired as a result of the economic development project in a manner acceptable to the authority.

(8) The approved company may be permitted the following inducements during the term of the tax incentive agreement:

(a) A one hundred percent (100%) credit against the Kentucky income tax and the limited liability entity tax imposed under KRS 141.0401 that would otherwise be owed in the approved company's fiscal year, as determined under KRS 141.347, to the Commonwealth by the approved company on the income, Kentucky gross receipts, or Kentucky gross profits of the approved company generated by or arising from the economic development project. The ordering of the credits shall be as provided in KRS 141.0205; and

(b) The aggregate assessments withheld by the approved company in each year.

(9) The credit allowed the approved company shall be applied against both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with credit ordering as provided in KRS 141.0205, for the fiscal year for which the tax return of the approved company is filed. The total inducements may not exceed authorized cumulative approved costs paid by the approved company in the period commencing with the date of final approval.

(10) The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross receipts or Kentucky gross profits generated by or arising from the economic development project.

(11) The tax incentive agreement may be assigned by the approved company only upon the prior written consent of the authority following the adoption of a resolution by the authority to that effect.

(12) The tax incentive agreement shall provide that if an approved company fails to comply with its obligations under the tax incentive agreement then the authority shall have the right, at its option, to:

(a) Suspend the tax credits and assessments available to the approved company;

(b) Pursue any remedy provided under the tax incentive agreement, including termination thereof; and

(c) Pursue any other remedy at law to which it may be entitled.

(13) All remedies provided in subsection (12) of this section shall be deemed to be cumulative.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 64, effective June 27, 2019. -- Amended 2010 Ky. Acts ch. 152, sec. 1, effective July 15, 2010. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 44, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 576, effective June 20, 2005. -- Amended 2004 Ky. Acts ch. 105, sec. 3, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 21, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 18, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 31, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 6, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-050, 1992 Ky. Acts ch. 105, sec. 26, effective July 14, 1992; and ch. 360, sec. 6, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 329, sec. 10, effective April 8, 1988. Formerly codified as KRS 152.278

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 64 of that Act apply retroactively to April 14, 2018.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.22-055 Repealed, 2000.

[Repealed]

154.22-060 Determination of income tax credit by Department of Revenue.

(1) The approved company shall be entitled to a credit against the Kentucky tax liability mandated by KRS Chapter 141, as determined under KRS 141.347. The credit shall be equal to the total amount of the tax liability, and together with the aggregate assessments not to exceed the maximum amount of inducements as set forth in the tax incentive agreement.

(2) By October 1 of each year, the Department of Revenue of the Commonwealth shall certify to the authority in the form of an annual report, aggregate income tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year, and assessments taken by approved companies with respect to their economic development projects during the prior calendar year under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state income tax return, when an approved company has taken income tax credits equal to its total inducements.

Effective: June 28, 2006

History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 45, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 577, effective June 20, 2005. -- Amended 2002 Ky. Acts ch. 338, sec. 22, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 19, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 32, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 8, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-060, 1992 Ky. Acts ch. 105, sec. 27, effective July 14, 1992; and ch. 360, sec. 7, effective July 15, 1996. -- Created 1988 Ky. Acts ch. 392, sec. 11, effective April 8, 1988. Formerly codified as KRS 152.280

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.22-070 Assessment based on employee's gross wages -- Credits against Kentucky income tax.

(1) The approved company or, with the authority's consent, an affiliate of the approved company may require that each employee subject to state tax imposed by KRS 141.020, as a condition of employment, agree to pay an assessment, equal to four percent (4%) of the gross wages of each employee whose job was created as a result of the economic development project, for the purpose of recovering authorized approved costs as set forth in the tax incentive agreement.

(2) Each employee so assessed shall be entitled to credits against Kentucky income tax equal to the assessment withheld from wages during the calendar year as provided by KRS 141.310 and 141.350.

(3) If an approved company shall elect to impose the assessment as a condition of employment, it shall be authorized to deduct the assessment from each paycheck of each employee.

(4) Any approved company collecting an assessment as provided in subsection (1) of this section shall make its payroll books and records available to the authority at such reasonable times as the authority shall request and shall file with the authority documentation respecting the assessment as the authority may require.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 338, sec. 23, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 33, effective July 15, 1996; and ch. 337, sec. 2, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 9, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-070, 1992 Ky. Acts ch. 105, sec. 28, effective July 14, 1992; and ch. 360, sec. 8, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 392, sec. 12, effective April 8, 1988. Formerly codified as KRS 152.282

154.22-080 Application of law prior to July 15, 1994, in certain circumstances.

If the authority adopts a preliminary resolution designating an eligible company as an approved company and preliminarily approving the project of the eligible company as an economic development project prior to July 15, 1994, and the authority adopts a final resolution approving the eligible company as an approved company and the project of the eligible company as an economic development project, and the authority and the eligible company enter into a financing agreement no later than June 30, 1995, then the approved company thereafter shall be subject to KRS 154.22-010 to 154.22-070 as in effect prior to July 15, 1994.

Effective: April 11, 2002

History: Amended 2002 Ky. Acts ch. 338, sec. 44, effective April 11, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 66, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 450, sec. 10, effective July 15, 1994.

154.22-081 Short title for KRS 154.22-010 to 154.22-080.

KRS 154.22-010 to 154.22-080 shall be known as the Kentucky Rural Economic Development Act.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 194, sec. 28, effective July 15, 1996.

154.22-083 Deadline for new applications -- Governing law for outstanding approved projects.

New applications shall not be accepted or considered under this subchapter on or after June 26, 2009. All outstanding projects with preliminary or final approval under this subchapter as of June 26, 2009, shall continue to be governed by the provisions of this subchapter.

Effective: June 26, 2009

History: Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 25, effective June 26, 2009.

154.22-090 Repealed, 2002.

[Repealed]

154.22-100 Approved company's ability to elect to reduce job assessment fee rate imposed prior to July 15, 1996.

(1) If an approved company's financing agreement in effect prior to July 15, 1996, stipulates that the approved company elects to impose a six percent (6%) job development assessment fee pursuant to KRS 154.22-070 as in effect prior to July 15, 1996, the approved company, subject to provisions of subsection (2) of this section, may elect to change the job development fee rate from six percent (6%) as prescribed in KRS 154.22-070 as in effect prior to July 15, 1996, to four percent (4%) as set forth in KRS 154.22-070.

(2) An approved company may elect to reduce the job assessment fee rate as prescribed in subsection (1) of this section if the financing agreement respecting the approved company's approved project is amended upon written approval of all parties thereto, and the approved company attests in writing to the satisfaction of the authority that the approved company has not entered into any other agreement by which the company has pledged the proceeds of a six percent (6%) job development assessment fee as partial or full payment of any debt or other obligation to any other party.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 539, sec. 1, effective July 14, 2000. -- Created 1996 Ky. Acts ch. 337, sec. 3, effective July 15, 1996.

154.22-102 Application of statutes to companies that are approved and that enter into agreements by certain dates.

If the authority adopts a preliminary resolution designating an eligible company as an approved company and preliminarily approving the project of the eligible company as an economic development project prior to July 15, 2002, and the authority adopts a final resolution approving the eligible company as an approved company and the project of the eligible company as an economic development project, and the authority and the eligible company enter into a financing agreement no later than June 30, 2003, then the approved company thereafter shall be subject to KRS 154.22-010 to 154.22-100 as in effect prior to July 15, 2002.

Effective: July 15, 2002

History: Created 2002 Ky. Acts ch. 338, sec. 24, effective July 15, 2002.

Subchapter 23 Economic Development Projects in Qualified Zones Subchapter 23 Economic Development Projects in Qualified Zones

Kentucky Economic Opportunity Zone Act Kentucky Economic Opportunity Zone Act

154.23-005 Repealed, 2023.

[Repealed]

154.23-010 Repealed, 2023.

[Repealed]

154.23-015 Repealed, 2023.

[Repealed]

154.23-020 Repealed, 2023.

[Repealed]

154.23-025 Repealed, 2023.

[Repealed]

154.23-030 Repealed, 2023.

[Repealed]

154.23-035 Repealed, 2023.

[Repealed]

154.23-040 Repealed, 2023.

[Repealed]

154.23-045 Repealed, 2023.

[Repealed]

154.23-050 Repealed, 2023.

[Repealed]

154.23-055 Repealed, 2023.

[Repealed]

154.23-060 Repealed, 2023.

[Repealed]

154.23-065 Repealed, 2023.

[Repealed]

154.23-070 Repealed, 2023.

[Repealed]

154.23-075 Repealed, 2023.

[Repealed]

154.23-079 Repealed, 2023.

[Repealed]

154.23-080 Repealed, 2023.

[Repealed]

Subchapter 24 Financing of Jobs Development Subchapter 24 Financing of Jobs Development

154.24-010 Definitions for KRS 154.24-010 to 154.24-150.

The following words and terms, unless the context clearly indicates a different meaning, shall have the following respective meanings in KRS 154.24-010 to 154.24-150:

(1) "Affiliate" has the same meaning as in KRS 154.22-010;

(2) "Agreement" means the service and technology agreement made pursuant to KRS 154.24-120, between the authority and an approved company with respect to an economic development project;

(3) "Approved company" means any eligible company seeking to locate an economic development project from outside the Commonwealth into the Commonwealth, or undertaking an economic development project in the Commonwealth for which it is approved pursuant to KRS 154.24-100;

(4) "Approved costs" means fifty percent (50%) of the total of the start-up costs up to a maximum of ten thousand dollars ($10,000) per new full-time job created and to be held by a Kentucky resident subject to the personal income tax of the Commonwealth, plus fifty percent (50%) of the annual rent for each elapsed year of the service and technology agreement;

(5) "Assessment" means the "service and technology job creation assessment fee" authorized by KRS 154.24-110;

(6) "Authority" means the Kentucky Economic Development Finance Authority, as created in KRS 154.20-010;

(7) "Average hourly wage" means the wage and employment data published by the Department of Workforce Development within the Education and Labor Cabinet collectively translated into wages per hour based on a two thousand eighty (2,080) hour work year for the following sectors:

(a) Manufacturing;

(b) Transportation, communications, and public utilities;

(c) Wholesale and retail trade;

(d) Finance, insurance, and real estate; and

(e) Services;

(8) "Commonwealth" means the Commonwealth of Kentucky;

(9) "Economic development project" or "project" means a new or expanded service or technology activity conducted at a new or expanded site by:

(a) An approved company; or

(b) An approved company and its affiliate or affiliates;

(10) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity engaged in service or technology and meeting the standards promulgated by the authority in accordance with KRS Chapter 13A;

(11) "Employee benefits" means nonmandated costs paid by an approved company for its full-time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k) or similar plans;

(12) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under this subchapter;

(13) "Full-time employee" means a person employed by an approved company for a minimum of thirty-five (35) hours per week and subject to the state tax imposed by KRS 141.020;

(14) "In lieu of credits" means a local government appropriation to the extent permitted by law, or other form of local government grant or service benefit, directly related to the economic development project and in an amount equal to one percent (1%) of employees' gross wages, exclusive of any noncash benefits provided to an employee, or the provision by a local government of an in-kind contribution directly related to the economic development project and in an amount equal to one half (1/2) of the rent for the duration of the agreement;

(15) "Inducements" means the tax credits allowed and the assessment authorized by KRS 154.24-110, which are intended to induce companies engaged in service and technology industries to locate or expand in the Commonwealth;

(16) "Person" means an individual, sole proprietorship, partnership, limited partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, entity or government, whether federal, state, county, city, or otherwise, including without limitation any instrumentality, division, political subdivision, district, court, agency, or department thereof;

(17) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements under this subchapter;

(18) "Rent" means:

(a) The actual annual rent or leasing fee paid by an approved company to a bona fide entity negotiated at arms length for the use of a building by the approved company to conduct the approved activity for which the inducement has been granted; or

(b) The fair rental value on an annual basis in a building owned by the approved company of the space used by the approved company to conduct the approved activity for which the inducement has been granted as determined by the authority using criteria which is customary in the real estate industry for the type of building being used. The fair rental value shall include an analysis of the cost of amortizing the cost of land and building over the period of time customary in the real estate industry for the type of building and for the land being utilized;

(c) Rent shall include the customary cost of occupancy, including but not limited to property taxes, heating and air-conditioning, electricity, water, sewer, and insurance;

(19) (a) "Service or technology" means either:

1. Any activity involving the performance of work, except work classified by the divisions, including successor divisions, of agriculture, forestry and fishing, mining, utilities, construction, manufacturing, wholesale trade, retail trade, real estate rental and leasing, educational services, accommodation and food services, and public administration in accordance with the "North American Industry Classification System," as revised by the United States Office of Management and Budget from time to time, or any successor publication; or

2. Regional or headquarters operations of an entity engaged in an activity listed in subparagraph 1. of this paragraph.

(b) Notwithstanding paragraph (a) of this subsection, "service or technology" shall not include any activity involving the performance of work by an individual who is providing direct service to the public pursuant to a license issued by the state or an association that licenses in lieu of the state unless seventy-five percent (75%) of the services provided by the eligible company from the project are provided to persons located outside the Commonwealth during the period in which it receives the inducements authorized in KRS 154.24-110; and

(20) "Start-up costs" means the acquisition cost associated with the project related to the furnishing and equipping the building for ordinary business functions, including computers, furnishings, office equipment, the relocation of out-of-state equipment, and nonrecurring costs of fixed telecommunication equipment as verified and approved by the authority in accordance with KRS 154.24-130.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 54, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 23, effective June 27, 2019. -- Amended 2009 Ky. Acts ch. 11, sec. 41, effective June 25, 2009. -- Amended 2008 Ky. Acts ch. 50, sec. 1, effective April 10, 2008. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 51, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 218, effective July 12, 2006; and ch. 211, sec. 73, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 105, sec. 10, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 32, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 36, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 11, effective July 15, 1994; and ch. 499, sec. 21, effective July 15, 1994. Created 1992 Ky. Acts ch. 358, sec. 1, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.24-020 Legislative findings.

(1) The General Assembly hereby finds and declares that the general welfare and material well-being of citizens of the Commonwealth depends in large measure upon the development and growth of the service and technology industries in the Commonwealth.

(2) The General Assembly hereby finds and further declares that it is in the best interest of the Commonwealth to induce:

(a) The location of service and technology facilities in the Commonwealth; and

(b) The expansion of existing service and technology industries in the Commonwealth, in order to advance the public purposes of relieving unemployment by creating new jobs in the Commonwealth that, but for the inducements to be offered by the authority to approved companies, would not exist, and of creating new sources of tax revenues for the support of the public services provided by the Commonwealth.

(3) The General Assembly hereby finds and further declares that the authorities granted by KRS 154.24-010 to 154.24-150 are proper governmental and public purposes for which public moneys may be expended, and that the inducement of:

(a) The location of service and technology facilities in the Commonwealth; and

(b) The expansion of existing service and technology industries in the Commonwealth is of paramount importance, mandating that the provisions of KRS 154.24-010 to 154.24-150 be liberally construed and applied in order to advance the public purposes.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 358, sec. 2, effective July 14, 1992.

154.24-030 Repealed, 1994.

[Repealed]

154.24-040 Repealed, 1996.

[Repealed]

154.24-050 Personnel.

The secretary of the Cabinet for Economic Development shall provide sufficient personnel to the authority to permit it to adequately discharge its duties and responsibilities described in KRS 154.24-010 to 154.24-150.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 358, sec. 5, effective July 14, 1992.

154.24-060 Personal liability or accountability of director or officer.

No director or officer of the authority shall be subject to any personal liability or accountability by reason of his execution of any service and technology agreement on behalf of the authority.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 358, sec. 6, effective July 14, 1992.

154.24-070 Acceptance of moneys -- Expenditures.

The authority may accept moneys which may be appropriated by the General Assembly, or moneys which may be received from any other source, including, but not limited to, income from the authority's operations; and expend funds consistent with its purposes, including, but not limited to, the payment of its expenses of administration and operation, and the establishment and maintenance of a reserve or contingency fund.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 358, sec. 7, effective July 14, 1992.

154.24-080 Conflicts of interest.

(1) No director, officer, or employee of the authority shall be interested, directly or indirectly, or shall be an officer or employee of, or have an ownership interest in, any firm or corporation interested, directly or indirectly, in any contract with the authority.

(2) Should a director, officer, or employee of the authority have such an interest or be an officer or employee of or have an ownership interest in any such firm or corporation, then the director, officer, or employee of the authority shall:

(a) Disclose the interest and the office, employment, or ownership in that firm or corporation;

(b) Refrain from participation in discussions relating to any contract of the firm or corporation with the authority; and

(c) Refrain from voting or otherwise taking action on any contract or proposed contract of the authority with the firm or corporation.

(3) If any contract or agreement shall be made in violation of the provisions of this section it shall be null and void and no action shall be maintained against the authority.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 450, sec. 13, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 8, effective July 14, 1992.

154.24-090 Administrative regulations to include criteria for approval of eligible companies.

The authority shall promulgate administrative regulations in accordance with KRS Chapter 13A, regarding the approval of eligible companies and economic development projects conducted by those companies. The criteria for approval of eligible companies and economic development projects shall include but not be limited to the following criteria:

(1) A determination by the authority that more than seventy-five percent (75%) of services provided by the eligible company from the proposed project shall be provided for persons located outside the Commonwealth during each year of the period during which it receives inducements as authorized in KRS 154.24-110;

(2) The economic development project shall result in the creation by the eligible company of a minimum of fifteen (15) new full-time jobs for Kentucky residents to be employed by the eligible company and to be held by persons subject to the personal income tax of the Commonwealth at the activation date set forth in the company's service and technology agreement as described in KRS 154.24-120. The activation date shall occur within two (2) years after the date of the final resolution authorizing the economic development project. The authority may extend the period for compliance with this subsection up to one (1) year from the activation date upon the written application of an eligible company requesting an extension;

(3) (a) Within six (6) months after the activation date, the approved company shall compensate a minimum of ninety percent (90%) of its full-time employees whose jobs were created with base hourly wages equal to either:

1. Seventy-five percent (75%) of the average hourly wage for the Commonwealth; or

2. Seventy-five percent (75%) of the average hourly wage for the county in which the project is to be undertaken.

(b) If the base hourly wage calculated in paragraph (a)1. or 2. of this subsection is less than one hundred fifty percent (150%) of the federal minimum wage, then the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage. However, for projects receiving preliminary approval of the authority prior to July 1, 2008, the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage existing on January 1, 2007.

(c) In addition to the base hourly wages, the eligible company shall provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wages; however, if the eligible company does not provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wages, the eligible company may qualify under this section if it provides the employees hired by the eligible company as a result of the economic development project total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the applicable base hourly wages through increased hourly wages combined with employee benefits;

(4) If an eligible company receives approval from the authority before July 1, 2008, and locates an economic development project on property that adjoins one (1) of the five

(5) regional postsecondary education centers operated and occupied in cooperation with the Kentucky Community and Technical College System, or operated and occupied under the combined efforts of the Kentucky Community and Technical College System and a public four (4) year comprehensive university, the eligible company may alternatively satisfy the requirements of subsection (3) of this section in the following manner:

(a) Within six (6) months after the activation date, the approved company shall compensate a minimum of ninety percent (90%) of its full-time employees whose jobs were created as a result of the project with total of base hourly wages plus employee benefits equal to or greater than two hundred percent (200%) of the federal minimum wage, providing that base hourly wages shall be greater than or equal to one hundred fifty percent (150%) of the federal minimum wage;

(b) The eligible company shall provide to the authority a statement certifying that the eligible company will seek to provide full-time or part-time employment opportunities for nontraditional students who are enrolled or seek to be enrolled at a regional postsecondary education center; and

(c) The director of the regional postsecondary education center shall provide to the authority a statement asserting that the eligible company is likely to provide appropriate employment opportunities for students and that the economic development project may be reasonably expected to provide meaningful opportunities for technological and infrastructural enhancements;

(5) Written evidence that:

(a) Approval of the economic development project and the resulting inducements to be offered are essential to the creation of new jobs in the Commonwealth by an eligible company in connection with its economic development project; and

(b) No significant number of existing jobs in the Commonwealth will be lost, or adversely affected, due to the designation of an eligible company as an approved company, and to the approval of the eligible company's economic development project; and

(6) That the economic development project could reasonably and efficiently locate outside of the Commonwealth and, without the inducements offered by the authority, the eligible company would likely locate outside the state.

Effective: July 15, 2008

History: Amended 2008 Ky. Acts ch. 113, sec. 3, effective July 15, 2008. -- Amended 2007 Ky. Acts ch. 2, sec. 1, effective March 16, 2007; and ch. 69, sec. 4, effective June 26, 2007. -- Amended 2003 Ky. Acts ch. 73, sec. 1, effective March 18, 2003. -- Amended 2002 Ky. Acts ch. 338, sec. 33, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 37, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 14, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 9, effective July 14, 1992.

154.24-100 Preliminary and final approval of projects -- Designation of eligible companies.

(1) With respect to each eligible company making an application to the authority for inducements, and with respect to the economic development project described in the eligible company's application, the authority shall request materials and make all inquiries respecting the application the authority deems necessary. Upon review of the application and completion of initial inquiries, the authority may, by resolution of the board of directors, give its preliminary approval by designating an eligible company as a preliminarily approved company and authorizing the undertaking of the economic development project, and approve a report as prescribed in subsection

(2) of this section.

(2) A report describing the economic development project as prescribed in subsection

(1) of this section shall set out the following:

(a) The name, location, business, and standard industrial classification of the eligible company, and if the standard industrial classification is indicative of other than a service or technology activity, then an explanation of the service or technology activity of the eligible company;

(b) The nature of the economic development project;

(c) The use and projected amounts of the inducements to be available to the eligible company by year; and

(d) Other information the authority may require.

(3) After the adoption of the board's preliminary approval, an agent designated by the authority shall hold at least one (1) public hearing to solicit public comments regarding the preliminary designation of an eligible company as an approved company and the preliminary authorization of the company's economic development project. Notice of the public hearing shall be given pursuant to KRS Chapter 424.

(4) Unless the board, within one (1) year after the adoption of the resolution prescribed in subsection (1) of this section, gives its final approval by adopting a final resolution which designates the eligible company as an approved company, authorizes the economic development project, and executes a service and technology agreement between the eligible company and the authority, the approved company's request for designation and economic development project authorization shall be considered denied.

(5) The decision to grant an eligible company the status of approved company shall be solely that of the authority, which the board shall base its decision upon consideration of all information provided.

Effective: July 15, 1996

History: Amended 1996 Ky. Acts ch. 194, sec. 38, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 15, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 10, effective July 14, 1992.

154.24-110 Tax credits -- Employee job assessment fees.

(1) The approved company shall be entitled to a tax credit equal to one hundred percent (100%) of the income tax and one hundred percent (100%) of the limited liability entity tax imposed by KRS 141.0401 that would otherwise be due to the Commonwealth by the approved company attributable to the economic development project, as limited by the provisions of this section and KRS 154.24-

130. The amount of the approved company's income, Kentucky gross profits, or Kentucky gross receipts that is attributable to the economic development project shall be determined under KRS 141.407. The ordering of credits shall be as provided in KRS 141.0205.

(a) The tax credit allowed to the approved company shall be subtracted from the approved cost balance in the fiscal year of the approved company for which the tax return of the approved company is filed; and

(b) By October 1 of each year, the Department of Revenue of the Commonwealth shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year, and assessments taken by approved companies with respect to their economic development projects during the prior calendar year under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state tax return, when an approved company has taken tax credits and assessments equal to its total inducements.

(2) The approved company or, with the authority's consent, an affiliate of the approved company may require each employee, subject to state tax imposed by KRS 141.020, as a condition of employment, to agree to pay a service and technology job creation assessment fee up to five percent (5%) of the gross wages exclusive of any noncash benefits provided to an employee for each employee whose job has been deemed by the authority to be created as a result of the economic development project, provided that the service and technology job creation assessment fee shall not exceed the amount determined in accordance with KRS 154.24-150(5) if the circumstances in that subsection apply. Where a person is already employed by the approved company at a site other than the site of the economic development project and where that employee is subject to state tax imposed by KRS 141.020, the employee's job shall be deemed to have been created when the employee is transferred to the site of the economic development project, provided that the employee's existing job is filled with a new employee.

(a) Each employee paying the assessment shall be entitled to a credit against his Kentucky income tax required to be withheld under KRS 141.310 equal to four-fifths (4/5) of the assessment;

(b) If the assessment has been approved by the local jurisdiction as provided in KRS 154.24-150, each employee paying the assessment also shall be entitled, in the local jurisdiction in which the economic development project is located, to a credit against his local occupational license fee in the form of a simultaneous adjustment of his local occupational license fee withholding equal to one-fifth (1/5) of the assessment. If more than one (1) local tax is incurred, the one-fifth (1/5) assessment shall be prorated proportionately among the taxes unless one (1) local jurisdiction agrees to forgo the receipt of these taxes in an amount equal to the one-fifth (1/5) assessment, in which case no proration need be made;

(c) If an approved company elects to impose the assessment as a condition of employment, it shall be authorized to deduct the assessment from each payment of wages to the employee;

(d) No credit, or portion thereof, shall be allowed against any occupational license fee imposed by or dedicated solely to the board of education in a local jurisdiction;

(e) The approved company collecting an assessment shall make its payroll, books, and records available to the authority when the authority shall request, and shall file with the authority documentation pertaining to the assessment as the authority may require; and

(f) Any assessment of the wages of employees of an approved company in connection with their employment at an economic development project shall permanently cease at the expiration of the agreement.

(3) Notwithstanding subsection (2) of this section, if a local government in which the project is located has a local occupational license fee that is less than one percent (1%) and agrees to forgo all of its local occupational license fee, then the assessment shall be four percent (4%), all of which shall be contributed by the Commonwealth, plus the percentage of the local occupational license fee that the local government has agreed to forgo. Each employee paying the assessment under this subsection shall be entitled to a credit against Kentucky income tax, under KRS 141.350, equal to four percent (4%) and a credit against the local occupational license fee equal to the local occupational license fee that the local jurisdiction has agreed to forgo.

Effective: June 28, 2006

History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 52, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 580, effective June 20, 2005. -- Amended 2002 Ky. Acts ch. 338, sec. 34, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 20, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 39, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 16, effective July 15, 1994. -- Created 1992 Ky. Acts ch. 358, sec. 11, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.24-120 Service and technology agreement with respect to company's economic development project -- Contents.

Before any approved company is granted inducements as prescribed in KRS 154.24-010 to 154.24-150, a service and technology agreement with respect to the company's economic development project shall be entered into between the authority and the approved company. The terms and provisions of the agreement, including the amount of approved costs, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions:

(1) The term of an agreement shall not be longer than ten (10) years from the activation date established by the approved company. The activation date shall be any time within two (2) years after the date of final approval of the agreement by the authority. In order to implement the activation date, the approved company shall notify the authority, the Kentucky Department of Revenue, the employees, and the affected local jurisdictions, if any, of the activation date on which implementation of the inducements authorized in the agreement shall occur.

(2) The agreement shall include:

(a) A description of the authorized inducements to be used by the approved company;

(b) A provision that, if the total number of full-time employees at the site of the economic development project who are residents of the Commonwealth and subject to the Kentucky income tax is less than fifteen (15), or in the case of an existing Kentucky business the approved company fails to maintain the increase of at least fifteen (15) full-time employees who are residents of the Commonwealth and subject to the Kentucky income tax, the authorized inducements shall be suspended for a period of up to one (1) year. If the company does not have at least fifteen (15) new full-time employees at the site who are residents of the Commonwealth and subject to Kentucky income tax within one (1) year from the date of the initial suspension, the inducements may be terminated at the discretion of the authority;

(c) A provision that, if seventy-five percent (75%) or less of services provided by the approved company from the economic development project should be provided to persons located outside of the Commonwealth during any fiscal year of the approved company as prescribed in KRS 154.24-090, the authorized inducements shall be suspended for a period of up to one (1) year. If the percentage of these services does not exceed seventy-five percent (75%) within one (1) year from the initial date of suspension, the inducements may be terminated at the discretion of the authority; and

(d) A provision that neither tax credits nor assessments are assignable without written consent by the authority.

Effective: June 28, 2006

History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 53, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 581, effective June 20, 2005. -- Amended 2004 Ky. Acts ch. 105, sec. 11, effective July 13, 2004. -- Amended 2003 Ky. Acts ch. 73, sec. 2, effective March 18, 2003. -- Amended 2002 Ky. Acts ch. 338, sec. 35, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 40, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 17, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 12, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.24-130 Limit on term of inducement after agreement activation date -- Effect of excess in assessments.

(1) Before the end of the first year following the activation date, the authority shall, using data supplied by the approved company, verify and determine the total start- up costs for the approved company's economic development project. The initial approved costs shall be fifty percent (50%) of the start-up cost.

(2) Each year, during the ten (10) year life span of the agreement, fifty percent (50%) of the annualized rental payments shall be added to the unrecouped balance of approved costs.

(3) Each year, the inducement earned and any in lieu of credits received shall be subtracted from the approved costs.

(4) If, in any fiscal year of the approved company during which the agreement is in effect, the accumulated inducements equal the unrecouped remaining balance of the approved costs then expended, the assessments collected from the wages of the employees shall cease for the remainder of that fiscal year of the approved company, and the approved company shall resume normal personal income tax and occupational license fee withholdings from the employees' wages for the remainder of that fiscal year.

(5) If in any fiscal year of the approved company during which the agreement is in effect, the total of the tax credit granted to the approved company plus the assessment collected from the wages of the employees exceeds the remaining balance of the approved costs then expended, the approved company shall pay the excess to the Commonwealth as income tax or limited liability entity tax as the case may be.

(6) If in any fiscal year of the approved company during which the agreement is in effect the assessment collected from the wages of the employees exceeds the unrecouped remaining balance of the approved costs then expended, the assessment collected from the wages of the employees shall cease for the remainder of that fiscal year of the approved company, the approved company shall resume normal personal income tax and occupational license fee withholdings from the employees' wages for the remainder of that fiscal year, and the approved company shall remit to the Commonwealth and applicable local jurisdictions their respective shares of the excess assessment collected on the withholding filing date for employees' wages next succeeding the first date when the approved company collected excess assessments.

Effective: June 28, 2006

History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 54, effective June 28, 2006. -- Amended 1994 Ky. Acts ch. 450, sec. 18, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 13, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.24-140 Adjustment of inducements.

(1) If an eligible company operates an existing service and technology business in Kentucky, and wishes to expand that business within the Commonwealth, the eligible company may submit an application to the authority to become an approved company and eligible for the inducements offered in KRS 154.24-010 to 154.24- 150.

(2) If an existing business becomes an approved company, the authority shall determine a base level of employment, a base level of state income tax liability, a base level of limited liability entity tax liability, and a base level of services of the approved company for determining eligible credits in remaining years of the approved company's project period. The base level shall be determined by taking into consideration any seasonal fluctuations or aberrations of employment levels over a preceding three (3) year period. Notwithstanding the determination of a base level of employment, no employee of the existing business who is an employee of such business prior to the date of the preliminary resolution of the authority as prescribed in KRS 154.24-100 shall be subject to assessment.

(3) The authority shall identify, by name, all of the existing employees engaged in the service and technology activity, and these employees shall be exempt from the assessment. If any of these employees cease working in the activity, another employee shall be added to the base level of employment, based on the earliest date of entry into the workforce, and he shall be exempt from the assessment. The authority may negotiate with the approved company a different method of determining the base level of employment which would yield a more equitable result for the approved company, the Commonwealth, local jurisdictions, and the employees.

(4) To become eligible for inducements, the approved company shall create and maintain above the base level of employment an increase at the site of the economic development project of at least fifteen (15) full-time employees who are residents of the Commonwealth, subject to the Kentucky income tax.

(5) The approved company shall continue to pay to the Commonwealth, on an annualized basis during the term of the agreement, the base level of income tax, and limited liability entity tax adjusted on an annual basis to reflect changes in the consumers price index. Any excess income tax or limited liability entity tax owed may be taken as a credit.

(6) If any approved company expands because of an increase in business or because of the commencement of a new line of business, it shall be eligible, at the discretion of the authority, to negotiate a separate and additional agreement to cover the expanded business under the same conditions as authorized for expansion in this section.

Effective: June 28, 2006

History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 55, effective June 28, 2006. -- Amended 2002 Ky. Acts ch. 338, sec. 36, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 41, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 19, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 14, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.24-150 Approval of application by local jurisdiction under service and technology agreement -- Alternative inducements offered -- Assessment fees.

(1) Before any agreement as prescribed in KRS 154.24-120 shall become effective, the legislative body of any local jurisdiction which may lose revenue as a result of the inducements offered pursuant to KRS 154.24-010 to 154.24-150 and which assesses a local occupational license fee shall approve by official action the granting of inducements to the approved company. If a local jurisdiction which satisfies the requirements of the previous sentence of this subsection does not approve the granting of the inducements or does not elect to provide in lieu of credits as described in subsection (2) of this section, then an approved company shall not be permitted to impose assessments against the wages of its employees.

(2) Subject to the prior written approval of the authority of any proposed in lieu of credits, the local government may elect, by vote of its legislative body, to provide for in lieu of credits for the approved company and its economic development project.

(3) If the local government elects to provide in lieu of credits as described in subsection

(2) of this section, the assessment authorized by KRS 154.24-110 shall be four percent (4%), one hundred percent (100%) of which shall be permitted as a credit against Kentucky income tax withheld pursuant to KRS 141.350.

(4) If a local jurisdiction in which the economic development project is to be located does not assess a local occupational license fee and does not elect to provide in lieu of credits as described in subsection (2) of this section, the assessment authorized by KRS 154.24-110 shall be four percent (4%), one hundred percent (100%) of which shall be permitted as a credit against Kentucky income tax withheld pursuant to KRS to KRS 141.350.

(5) If a local jurisdiction in which the economic development project is to be located, approves the inducements in accordance with subsection (1) of this section, assesses less than a one percent (1%) local occupational license fee, and does not elect to provide in lieu of credits as described in subsection (2) of this section, then the approved company may require that each employee subject to state tax imposed by KRS 141.020, as a condition of employment, agree to pay a service and technology job creation assessment fee as prescribed in KRS 154.24-110(2) or (3), as applicable, provided that each employee paying the assessment shall only be entitled to credits against his Kentucky income tax as prescribed in KRS 154.24- 110(2)(a) or (3), as applicable and to credits against his local occupational license fee to the extent of the local occupational license fee collected by the local jurisdiction.

(6) If a local jurisdiction in which the economic development project is to be located does not assess a local occupational license fee and elects to provide in lieu of credits as described in subsection (2) of this section, then the assessment shall be in accordance with subsection (3) of this section.

(7) Subsection (4) of this section shall apply only to those approved companies which enter into service and technology agreements with the authority after July 15, 1996.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 300, sec. 21, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, secs. 42 and 43, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 20, effective July 15, 1994. – Created 1992 Ky. Acts ch. 358, sec. 15, effective July 14, 1992.

154.24-151 Short title for KRS 154.24-010 to 154.24-150.

KRS 154.24-010 to 154.24-150 shall be known as the Kentucky Jobs Development Act.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 194, sec. 35, effective July 15, 1996.

154.24-152 Deadline for new applications -- Governing law for outstanding approved projects.

New applications shall not be accepted or considered under this subchapter on or after June 26, 2009. All outstanding projects with preliminary or final approval under this subchapter as of June 26, 2009, shall continue to be governed by the provisions of this subchapter.

Effective: June 26, 2009

History: Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 27, effective June 26, 2009.

154.24-160 Renumbered as KRS 154.20-160.

[Renumbered as KRS 154.20-160.]

Subchapter 25 Kentucky Jobs Retention Act Program Subchapter 25 Kentucky Jobs Retention Act Program

154.25-010 Definitions for subchapter.

As used in this subchapter:

(1) "Activation date" means a date selected by an approved company and set forth in the jobs retention agreement at any time within a three (3) year period after the date of final approval of the agreement by the authority upon which the required investment shall be made and the jobs retention project completed;

(2) "Agreement" means a jobs retention agreement entered into pursuant to KRS 154.25-030 on behalf of the authority and an approved company with respect to a jobs retention project;

(3) "Agribusiness" has the same meaning as in KRS 154.32-010;

(4) "Approved company" means any eligible company approved by the authority pursuant to KRS 154.25-030 for a jobs retention project;

(5) "Approved costs" means that portion of the eligible costs approved by the authority that an approved company may recover through the inducements authorized by KRS 154.25-030, being a percentage of eligible costs as approved by the authority;

(6) "Assessment" means the wage assessment fee authorized by KRS 154.25-040;

(7) "Authority" means the Kentucky Economic Development Finance Authority created by KRS 154.20-010;

(8) "Commonwealth" means the Commonwealth of Kentucky;

(9) "Eligible company":

(a) Means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity that has been operating within the Commonwealth on a continuous basis for at least sixty (60) months preceding the request for approval by the authority of the project which meets the standards set forth in KRS 154.25-020, has been previously approved for economic development incentives from the Commonwealth related to one (1) or more of its facilities, and employs a minimum of two hundred fifty (250) full-time persons for a project located in a heritage county or one thousand (1,000) full-time persons for a project located in any other county, engaged in one (1) or more of the following activities:

1. Manufacturing;

2. Agribusiness;

3. Nonretail service or technology; or

4. Headquarters operations, regardless of the underlying business activity of the company; and

(b) Does not include companies where the primary activity to be conducted within the Commonwealth is forestry, fishing, mining, coal or mineral processing, the provision of utilities, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, accommodation and food services, or public administration services;

(10) "Eligible costs" means:

(a) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and materialmen in connection with the acquisition, construction, equipping, rehabilitation, and installation of a jobs retention project;

(b) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of a jobs retention project which is not paid by the vendor, supplier, deliveryman, contractor, or otherwise provided;

(c) All costs of architectural and engineering services, including estimates, plans and specifications, preliminary investigations, and supervision of construction, rehabilitation, and installation, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, equipping, rehabilitation, and installation of a jobs retention project;

(d) All costs required to be paid under the terms of any contract for the acquisition, construction, equipping, rehabilitation, and installation of a jobs retention project;

(e) All costs required for the installation of utilities, including but not limited to water, sewer, sewer treatment, gas, electricity, communications, and railroads, and including off-site construction of the facilities paid for by the approved company; and

(f) All other costs comparable with those described above;

(11) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under this subchapter;

(12) "Headquarters" has the same meaning as in KRS 154.32-010;

(13) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(14) "Inducements" means the Kentucky tax credit and the wage assessment fee as prescribed in KRS 154.25-030 and 154.25-040;

(15) "Jobs retention project" or "project" means the acquisition, construction, and installation of new equipment and, with respect thereto, the construction, rehabilitation, and installation of improvements to facilities necessary to house the acquisition, construction, and installation of new equipment, including surveys; installation of utilities, including water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the real estate on which the facilities are located; and shall contain eligible costs of not less than twenty-five million dollars ($25,000,000) for a project located in a heritage county or one hundred million dollars ($100,000,000) for a project located in any other county, all of which are utilized to improve the economic and operational situation of an approved company to allow the approved company to reinvest in its operations and retain a significant number of existing jobs within the Commonwealth;

(16) "Kentucky gross profits" means Kentucky gross profits as defined in KRS 141.0401;

(17) "Kentucky gross receipts" means Kentucky gross receipts as defined in KRS 141.0401;

(18) "Manufacturing" has the same meaning as in KRS 154.32-010;

(19) "Nonretail service or technology" has the same meaning as in KRS 154.32-010;

(20) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements under this subchapter;

(21) "Supplemental project" means an additional jobs retention project proposed by the approved company or its affiliate during the term of a previously approved jobs retention project, which may be included in the jobs retention agreement by way of amendment and which may result in increased inducements and an extension of the original project term as set forth in KRS 154.25-050; and

(22) "Transferred credits" means unused approved costs as determined by the Department of Revenue from a previously approved, independent, active project under a different incentive program governed by the Cabinet for Economic Development that may be transferred to a jobs retention project and used by the approved company pursuant to a jobs retention agreement.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 9, effective April 27, 2026. -- Amended 2019 Ky. Acts ch. 172, sec. 2, effective March 26, 2019. -- Amended 2014 Ky. Acts ch. 97, sec. 1, effective July 15, 2014. -- Amended 2012 Ky. Acts ch. 23, sec. 1, effective July 12, 2012. -- Created 2007 Ky. Acts ch. 91, sec. 1, effective March 23, 2007.

154.25-020 Criteria for approval of eligible companies and job retention projects -- Preliminary approval.

(1) The criteria for approval of eligible companies and jobs retention projects shall include but not be limited to:

(a) The need for the project, as indicated by the impact of the existing facility upon the local community and the economic and employment impact that the loss of the facility would have;

(b) The new capital investment in its facilities and the likelihood that the capital investment will increase potential for sustainability of its workforce and facilities in the future; and

(c) The retention or creation of employment at the facility where the jobs retention project will occur as well as any other facilities owned by the approved company in the Commonwealth.

(2) With respect to each eligible company making an application to the authority for inducements, and with respect to the economic development project described in the application, the authority shall request materials and make inquiries of the applicant as necessary or appropriate. Upon review of the application and completion of initial inquiries, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and authorizing the undertaking of the jobs retention project. The authority and the preliminarily approved company shall enter into a memorandum of agreement that sets forth the conditions necessary for the company to obtain final approval of the project. Upon satisfaction of the conditions set forth in the memorandum of agreement, the authority may, by resolution, designate the preliminarily approved company to be an approved company and authorize the execution of a jobs retention agreement.

Effective: March 23, 2007

History: Created 2007 Ky. Acts ch. 91, sec. 2, effective March 23, 2007.

154.25-030 Jobs retention project agreement -- Requirements, limitations, and permitted inducements.

(1) The authority, upon adoption of its final approval, may enter into, with any approved company, an agreement with respect to the jobs retention project. The terms and provisions of each agreement, including the amount of approved costs, the amount of the inducement, the job maintenance requirement, and any limitations the authority may deem necessary, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions:

(a) The amount the approved company may recover through inducements under this subchapter for the initial project, which shall be a negotiated percentage not to exceed fifty percent (50%) of eligible costs. However, the authority may negotiate an increase in the percentage such that both the initial project and any supplemental projects are eligible for seventy-five percent (75%) of eligible costs upon approval of a supplemental project. The adjustment to the initial project shall be made on the total approved costs and any credits taken prior to the addition of a supplemental project shall then be subtracted from that increased amount of approved costs. Neither the initial project nor any supplemental project shall ever be eligible for inducements greater than seventy-five percent (75%) of the eligible costs. The authority shall negotiate a maximum allowable inducement for each year of the agreement, and the approved company may not recover inducements above that maximum in any year during the term of the agreement, except that the annual maximum allowable inducement may be exceeded if a carry-forward of unused inducements from previous years exists. Any carry-forward of unused inducements will lapse upon maturity or termination of the agreement;

(b) A provision that sets the activation date for the initial project within three (3) years of the final approval. Prior to the activation date, the authority may extend the time for the completion of the jobs retention project and compliance with the required investment upon request of the approved company for good cause; however, the ten (10) year period for the term of the agreement shall begin from the activation date. No inducements from the jobs retention project shall be available, other than the transferred credits provided for under subsection (2) of this section, until activation. Upon activation, the balance of transferred credits shall expire;

(c) A provision that states that within three (3) months of the completion of the jobs retention project, the approved company shall document the actual cost of the project in a manner acceptable to the authority. The authority may employ an independent consultant or utilize technical resources to verify the cost of the project. The approved company shall reimburse the authority for the cost of the consultant;

(d) A provision that establishes a minimum required number of full-time jobs that must be maintained at the site of the jobs retention project and filled with residents of the Commonwealth subject to Kentucky income tax and states that the authorized inducements may be suspended at the discretion of the authority from the date of noncompliance until the date compliance is reestablished if the approved company's employment falls below the established minimum employment requirement. If the company does not increase the number of full-time employees at the site who are residents of the Commonwealth and subject to Kentucky income tax sufficiently to meet the minimum employment requirement within one (1) year from the date of the initial suspension, the remaining unused inducements may be terminated at the discretion of the authority;

(e) A provision that gives the authority discretion to suspend or terminate the authorized inducements for any failure to comply with the terms of the agreement; and

(f) 1. A provision that provides the term shall not be longer than the earlier of:

a. The date on which the approved company has received inducements or withheld assessments equal to the amount that the company may recover under paragraph (a) of this subsection; or

b. Ten (10) years from the activation date.

2. The term in subparagraph 1. of this paragraph may be extended to a period longer than ten (10) years upon:

a. The approved company demonstrating that less than seventy-five percent (75%) of the incentives awarded under the agreement will be claimed during the term of the agreement; or

b. The addition of a supplemental project as negotiated and approved by the authority.

3. An extension of the term shall not amend any provision of the agreement impacting the scope of the project or the maximum amount of incentives awarded under the agreement.

(2) In consideration of the execution of the agreement, during the time the agreement is in effect, which time shall commence on the date of the agreement, the approved company may be permitted the following inducements:

(a) Beginning on the effective date of the jobs retention agreement, which shall also be the date of final approval, if the approved company has a balance of unused approved costs on a previously existing and active incentive agreement approved by the authority pursuant to KRS Chapter 154, the approved company may impose wage assessments on employees whose jobs are at the facility where the project defined in the previously existing incentive agreement was located. The wage assessments may be imposed as provided in KRS 154.25-040, and shall be available in an amount up to the balance of transferred credits from the previously existing project.

1. The transferred credits shall only be available to the approved company until the activation date, the term from the original incentive agreement expires, or the balance of transferred credits is exhausted, whichever occurs first; and

2. Should the approved company exercise this option, the incentive agreement from which the credits were transferred shall be terminated upon transfer and all parties shall be released from their obligations thereunder.

(b) After the activation date:

1. A one hundred percent (100%) credit against the taxes imposed by KRS 141.020, 141.040, and 141.0401 that would otherwise be owed by the approved company, in the approved company's taxable year, as determined under KRS 141.402, on the taxable income, Kentucky gross receipts, or Kentucky gross profits of the approved company generated by or arising from the jobs retention project. The ordering of credits shall be as provided in KRS 141.0205; and

2. The aggregate assessment withheld by the approved company as provided in KRS 154.25-040 in each year after the activation date;

(c) The tax credits allowed to the approved company shall be equal to the lesser of the total amount of the tax liability or the amount that the company may recover under subsection (1)(a) of this section that has not yet been recovered, reduced by any recovery through the collection of assessments subject to the annual maximum inducements authorized pursuant to subsection (1)(a) of this section. The credit shall be allowed for each taxable year of the approved company during the term of the agreement and for which a tax return of the approved company is filed until the amount that the company may recover under subsection(1)(a) of this section has been received through a combination of credits and assessments, if the company elects to impose assessments. The approved company shall not be required to pay estimated tax payments as prescribed under KRS 141.044 or 141.305 on income, Kentucky gross profits, or Kentucky gross receipts from the jobs retention project. One hundred eighty (180) days after the filing of the tax return of the approved company, the Department of Revenue shall certify to the authority the state tax liability for the preceding taxable year of the approved company and the amount of any tax credits taken pursuant to this section;

(d) Prior to execution of the agreement, the eligible company shall secure from all local governmental authorities responsible for collecting local occupational license fees a resolution or order of the local governmental entities acknowledging and consenting to the termination or partial termination of the receipt of local occupational license fees on wages subject to the agreement paid by the approved company on behalf of its employees to the local government entities;

(e) If more than one (1) local occupational license fee is imposed upon the employees of the approved company, the assessment imposed upon the employees shall be credited against the local occupational license fee and shall be apportioned to each local occupational license fee according to each local occupational license fee's proportion to the total of all local occupational license fees for such employees. No credit or portion thereof shall be allowed against any local occupational license fee imposed by or dedicated solely to a local board of education; and

(f) If, in any taxable year of the approved company during which the agreement is in effect, the assessment collected from the wages of the employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, or exceeds the annual maximum negotiated by the authority, the assessment collected from the wages of the employees shall cease for the remainder of that taxable year of the approved company. The approved company shall resume normal personal income tax and occupational license fee withholdings from the employees' wages for the remainder of that taxable year, and the approved company shall remit to the Commonwealth and applicable local jurisdictions their respective shares of the excess assessment collected on the withholding filing date for employees' wages next succeeding the first date when the approved company collected excess assessments.

(3) The jobs retention agreement and inducements available pursuant thereto shall not be transferable or assignable by the approved company without the expressed written consent of the authority.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 10, effective April 27, 2026. -- Amended 2012 Ky. Acts ch. 23, sec. 2, effective July 12, 2012. -- Created 2007 Ky. Acts ch. 91, sec. 3, effective March 23, 2007.

Legislative Research Commission Note (3/23/2007) Although subsection (1)(b) of 2007 Ky. Acts ch. 91, sec. 3, refers to "transferred credits provided for under Section 3 of this Act, "it appears from context and on advice of the drafter that the reference should have been to "transferred credits provided for under subsection (2) of this section." The Reviser of Statutes has made this change pursuant to KRS 7.136.

154.25-040 Wage assessment -- Tax credits for employees -- Department of Revenue to make annual report to authority.

(1) The approved company may require that each employee subject to the income tax imposed by KRS 141.020, whose job was preserved or created as a result of the project, as a condition of employment or the retention of employment, agree to pay an assessment up to one hundred percent (100%) of the individual income tax rate imposed by KRS 141.020 for each employee subject to the income tax imposed by KRS 141.020. The Commonwealth's wage assessment shall be equal to the following:

(a) Up to eighty percent (80%) of the individual income tax rate imposed by KRS 141.020 if the project is located in a local jurisdiction where:

1. No local occupational license fee is imposed;

2. a. A local occupational fee greater than or equal to twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo the local wage assessment of at least twenty percent (20%) of the individual income tax rate imposed by KRS 141.020 via credits against the local occupational license fee for the affected employees; or

3. a. A local occupational license fee less than twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo the total amount of the local occupational license fee as the local wage assessment; or

(b) Up to four (4) times the forgone local wage assessment rate if the project is located in a local jurisdiction where:

1. a. A local occupational license fee greater than or equal to twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo an amount of the local occupational license fee that is less than twenty percent (20%) of the individual income tax rate imposed by KRS 141.020 as the local wage assessment; or

2. a. A local occupational license fee less than twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo only a portion of the total amount of the local occupational license fee as the local wage assessment.

(2) Each assessed employee shall be entitled to a credit against the Kentucky income tax required to be withheld under KRS 141.310 in the form of a simultaneous adjustment equal to the Commonwealth's assessment outlined in subsection (1) of this section.

(3) Each employee assessed under subsection (1) of this section also shall be entitled to a credit against the local occupational license fee in the form of a simultaneous adjustment of the local occupational license fee withholding equal to the local wage assessment outlined in subsection (1) of this section.

(4) If an approved company elects to impose the assessment as a condition of employment or the retention of employment, the approved company shall deduct the assessment from each paycheck of each employee subject to the provisions of subsections (2) and (3) of this section.

(5) Any approved company collecting an assessment shall make its payroll books and records available to the authority at such reasonable times as the authority shall request and shall file with the authority the documentation respecting the assessment the authority may require.

(6) Any assessment of the wages of the employees of an approved company shall permanently lapse upon expiration or termination of the agreement unless the agreement has been amended to extend the termination as a result of a supplemental project.

(7) By October 1 of each year, the Department of Revenue shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the taxable year ending June 30 of that year and wage assessment fees taken during the prior calendar year by approved companies with respect to their jobs retention projects under this subchapter, and shall certify to the authority, within one hundred eighty (180) days from the date an approved company has filed its state tax return, when an approved company has taken tax credits equal to its total inducements.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 20, effective June 29, 2023. -- Created 2007 Ky. Acts ch. 91, sec. 4, effective March 23, 2007.

154.25-050 Supplemental projects -- Application for and approval of -- Project's activation date -- Inducements, when authorized.

(1) If an approved company makes additional investments in the form of additional jobs retention projects during the term of the initial jobs retention project, the approved company may apply for, and the authority may approve, a supplemental project.

(2) The authority, upon adoption of its final approval of a supplemental project, may enter into, with any approved company, an amended agreement with respect to both the initial jobs retention project and the supplemental project which shall jointly make up its project. The terms and provisions of each amended agreement, including the amount of approved costs, the amount of the tax credit pursuant to KRS 154.25-030, the job maintenance requirement established by the agreement, and any limitations the authority may deem necessary, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions:

(a) Upon approval of a supplemental project, the amount the approved company may recover through inducements for the initial project and any supplemental projects shall be a negotiated percentage not to exceed seventy-five percent (75%) of the eligible costs from the initial project and all newly incurred eligible costs from any supplemental projects, subject to the annual maximum negotiated and approved by the authority. At the time a supplemental project is approved, the recoverable amount and the annual maximum inducement for the initial jobs retention project and any previous supplemental projects may also be increased at the discretion of the authority pursuant to KRS 154.25- 030;

(b) The activation date for a supplemental project shall be no more than three (3) years from final approval of the supplemental project. Prior to the activation date, the authority may extend the time for the completion of the jobs retention project and compliance with the required investment upon request of the approved company for good cause; however, the ten (10) year period for the term of the agreement shall begin from the activation date. Within three

(3) months of the completion date for a supplemental project, the approved company shall document the actual cost of the project in a manner acceptable to the authority. The authority may employ an independent consultant to verify the cost of the supplemental project subject to reimbursement for the cost of same from the approved company; and

(c) In consideration of the execution of the amended agreement, on the date stated in the agreement, the approved company may be permitted during the term of the amended agreement to take the inducements set forth in KRS 154.25-030(2)(b), (2)(c), and (3)(a), subject to the remaining terms of that section.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 12, effective April 27, 2026. -- Amended 2012 Ky. Acts ch. 23, sec. 3, effective July 12, 2012. -- Created 2007 Ky. Acts ch. 91, sec. 5, effective March 23, 2007.

Legislative Research Commission Note (4/27/2026). In subsection (2)(c) of this statute, there is a reference to KRS 154.25-030(3)(a), a provision that does not exist. Language that would have added a new subsection (3)(a) to KRS 154.25-030 was proposed in the House Committee Substitute to 2026 House Bill 869, but that language was deleted before the final version of the bill was enacted. An internal reference to that deleted provision, however, was inadvertently left in place.

Subchapter 26 Financing of Existing Industry Development Subchapter 26 Financing of Existing Industry Development

154.26-010 Definitions for Subchapter 26 of KRS Chapter 154.

As used in this subchapter, unless the context clearly indicates otherwise:

(1) "Agreement" means a revitalization agreement entered into, pursuant to KRS 154.26-090, on behalf of the authority and an approved company with respect to an economic revitalization project;

(2) "Agribusiness" means any activity involving the processing of raw agricultural products, including timber, or the providing of value-added functions with regard to raw agricultural products;

(3) "Appropriation agreement" means an agreement entered into, pursuant to KRS 154.26-090(1)(f)2., among the approved company, the authority, and local governmental entities with respect to appropriations by these local governmental entities for the benefit of the approved company;

(4) "Approved company" means any eligible company approved by the authority pursuant to KRS 154.26-080 requiring an economic revitalization project;

(5) "Approved costs" means:

(a) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and materialmen in connection with the acquisition, construction, equipping, rehabilitation, and installation of an economic revitalization project;

(b) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, equipping, rehabilitation, and installation of an economic revitalization project which is not paid by the vendor, supplier, deliveryman, contractor, or otherwise provided;

(c) All costs of architectural and engineering services, including estimates, plans and specifications, preliminary investigations, and supervision of construction, rehabilitation and installation, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, equipping, rehabilitation, and installation of an economic revitalization project;

(d) All costs required to be paid under the terms of any contract for the acquisition, construction, equipping, rehabilitation, and installation of an economic revitalization project;

(e) All costs required for the installation of utilities, including but not limited to water, sewer, sewer treatment, gas, electricity, communications, and railroads, and including off-site construction of the facilities paid for by the approved company; and

(f) All other costs comparable with those described above;

(6) "Assessment" means the job revitalization assessment fee authorized by KRS 154.26-100;

(7) "Authority" means the Kentucky Economic Development Finance Authority created by KRS 154.20-010;

(8) "Commonwealth" means the Commonwealth of Kentucky;

(9) "Economic revitalization project" or "project":

(a) Means the acquisition, construction, equipping, and rehabilitation of machinery and equipment, constituting fixtures or otherwise, and with respect thereto, the construction, rehabilitation, and installation of improvements of facilities necessary or desirable for the acquisition, construction, installation, and rehabilitation of the machinery and equipment, including surveys; installation of utilities, including water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; and off-site construction of utility extensions to the boundaries of the real estate on which the facilities are located, all of which are utilized to improve the economic situation of the approved company to allow the approved company to remain in operation and retain or create jobs or to resume operations in the case of closed facilities as provided in subsection (10)(b) of this section; and

(b) Includes any supplemental project;

(10) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity:

(a) Employing or intending to employ full-time a minimum of twenty-five (25) persons engaged in manufacturing or agribusiness operations at the same facility, whether acquired, owned, or leased, located and operating within the Commonwealth on a permanent basis for a reasonable period of time preceding the request for approval by the authority of an economic revitalization project, including facilities where manufacturing or agribusiness operations has been temporarily suspended and which meets the standards promulgated by the authority pursuant to KRS 154.26-080; or

(b) Having or, in the case of closed facilities, intending, raw production of at least three (3) million tons of coal mined from the economic revitalization project facility and employing or, in the case of closed facilities, intending to employ, a minimum of five hundred (500) persons engaged in coal mining and processing operations at facilities, whether owned or leased, located and operating within the Commonwealth on a permanent basis for a reasonable period of time preceding the request for approval by the authority of an economic revitalization project, including facilities on or adjacent to where coal mining and processing operations have been closed, temporarily suspended, or severely reduced, and which meets the standards promulgated by the authority under KRS 154.26-080;

(11) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under this subchapter;

(12) "Inducements" means the Kentucky tax credit and the job revitalization assessment fee as prescribed in KRS 154.26-090 and 154.26-100;

(13) "Manufacturing" means any activity involving the manufacturing, processing, assembling, or production of any property, including the processing that results in a change in the condition of the property and any related activity or function, together with the storage, warehousing, distribution, and related office facilities;

(14) "Coal mining and processing" means activities resulting in the eligible company being subject to the tax imposed by KRS Chapter 143;

(15) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements under this subchapter;

(16) "State agency" means any state administrative body, agency, department, or division as defined in KRS 42.010, or any board, commission, institution, or division exercising any function of the state which is not an independent municipal corporation or political subdivision;

(17) "Supplemental project" means an additional investment in an approved economic revitalization project proposed during, or within sixty (60) months after the expiration of, the initial term of an agreement, and which may be approved by the authority for additional inducements as set forth in KRS 154.26-090;

(18) "Kentucky gross profits" means Kentucky gross profits as defined in KRS 141.0401;

(19) "Kentucky gross receipts" means Kentucky gross receipts as defined in KRS 141.0401; and

(20) "Supplemental project agreement" means an agreement, entered into pursuant to KRS 154.26-090, on behalf of the authority and an approved company with respect to a supplemental project.

Effective: July 15, 2016

History: Amended 2016 Ky. Acts ch. 109, sec. 1, effective July 15, 2016. -- Amended 2014 Ky. Acts ch. 129, sec. 2, effective July 15, 2014. -- Amended 2012 Ky. Acts ch. 119, sec. 1, effective July 12, 2012. -- Amended 2007 Ky. Acts ch. 71, sec. 1, effective March 23, 2007. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 56, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 219, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 18, sec. 6, effective July 13, 2004; and ch. 105, sec. 22, effective July 13, 2004. -- Amended 2001 Ky. Acts ch. 153, sec. 1, effective March 20, 2001. -- Amended 2000 Ky. Acts ch. 547, sec. 2, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 45, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 6, effective July 15, 1994; ch. 450, sec. 21, effective July 15, 1994; and ch. 499, sec. 23, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 1, effective July 14, 1992.

Legislative Research Commission Note (7/12/2012). 2012 Ky. Acts ch. 119, sec. 4, provides that this statute, as amended by 2012 Ky. Acts ch. 119, sec. 1, "shall apply to taxable years beginning on or after January 1, 2014."

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.26-015 Legislative findings.

The General Assembly finds and declares that the general welfare and material well-being of the citizens of the Commonwealth depends in large measure upon the revitalization and development of industry in the Commonwealth, and that it is in the best interest of the Commonwealth to induce the revitalization of existing manufacturing or agribusiness facilities within the Commonwealth in order to advance the public purposes of relieving unemployment by preserving and creating jobs that would not exist if not for the inducements to be offered by the authority to approved companies, and by preserving and creating sources of tax revenues for the support of public services provided by the Commonwealth; and that the authority prescribed by KRS 154.26-015 to 154.26-100, and the purposes to be accomplished under the provisions of KRS 154.26-015 to 154.26-100 are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the creation of projects is of paramount importance mandating that the provisions of KRS 154.26-015 to 154.26-100 be liberally construed and applied in order to advance public purposes.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 390, sec. 7, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 2, effective July 14, 1992.

154.26-020 Repealed, 1994.

[Repealed]

154.26-030 Repealed, 1996.

[Repealed]

154.26-040 Staff of authority.

The secretary of the Cabinet for Economic Development shall provide sufficient personnel to serve as staff for the authority in order to permit the authority to adequately discharge its duties and responsibilities prescribed in KRS 154.26-015 to 154.26-100.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 359, sec. 5, effective July 14, 1992.

154.26-050 Personal liability of director or officer.

No director or officer of the authority shall be subject to any personal liability or accountability by reason of his execution of any obligation duly authorized by the authority.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 359, sec. 6, effective July 14, 1992.

154.26-060 Funding for authority.

The authority may accept and expend moneys which may be appropriated from time to time by the General Assembly, or moneys which may be received from any source, including income from the authority's operations for effectuating its purpose, including, without limitation, the payment of the expenses of administration and operation.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 359, sec. 7, effective July 14, 1992.

154.26-070 Interest in contract with authority by director, officer, or employee.

(1) No director, officer, or employee of the authority shall be interested, directly or indirectly, or shall be an officer or employee, or have an ownership interest in any firm or corporation interested, directly or indirectly, in any contract with the authority.

(2) Should a director, officer, or employee of the authority have such an interest or be an officer or employee of or have an ownership interest in any such firm or corporation, then the director, officer, or employee of the authority shall:

(a) Disclose the interest and the office, employment, or ownership in the firm or corporation;

(b) Refrain from participating in discussions relating to any contract of the firm or corporation with the authority; and

(c) Refrain from voting or otherwise taking action on any contract or proposed contract of the authority with the firm or corporation.

(3) If any contract or agreement shall be made in violation of the provisions of this section, it shall be null and void and no action shall be maintained against the authority.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 450, sec. 23, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 8, effective July 14, 1992.

154.26-080 Standards for determination of eligibility -- Review of application -- Request for emergency declaration -- Authorizing resolution -- Application for and approval of supplemental projects -- Meetings.

(1) The authority shall establish standards for the determination and approval of eligible companies and their projects by the promulgation of administrative regulations in accordance with KRS Chapter 13A.

(2) The criteria for approval of eligible companies and economic revitalization projects or supplemental projects shall include but not be limited to the:

(a) Need for the project;

(b) New capital investment in the project or supplemental project that will result in financial stability for the manufacturing or coal mining and processing facility; and

(c) Retention or expansion of the greatest number of employees at the manufacturing or coal mining and processing facility.

(3) With respect to each eligible company making an application to the authority for inducements, and with respect to the project described in the application, the authority shall make inquiries and request materials of the applicant, including but not limited to written evidence that except for a substantial investment in the project, assisted by the inducements authorized by KRS 154.26-015 to 154.26-100, the eligible company will:

(a) Close its manufacturing or coal mining and processing facility; and

(b) Permanently lay off its employees and cease operations; or

(c) Not resume operations of a closed facility as permitted by KRS 154.26-010(9).

(4) The eligible company shall, in a manner acceptable to the authority, detail the condition of the facility, including but not limited to financial, efficiency, and productivity matters; explain in detail why the company intends to close the facility or not resume operations of the facility as permitted by KRS 154.26-010(9); and set out alternatives that are available to the company.

(5) As a part of its application, an eligible company as described in KRS 154.26-010(10)(b) may request an emergency declaration based upon the urgency of the request and its impact on the local or regional economy.

(6) A request for an emergency declaration shall be reviewed by the secretary of the Cabinet for Economic Development, the secretary of the Education and Labor Cabinet, and the secretary of the Finance and Administration Cabinet and their findings in connection with the emergency declaration shall be delivered to the authority.

(7) If the emergency declaration is granted in accordance with subsection (6) of this section, the eligible company shall not be subject to the requirements contained in subsection (8), (9), or (11) of this section.

(8) In accordance with, and after the adoption of a resolution under subsection

(10) of this section, the authority shall engage the services of a competent consulting firm or technical resource to analyze the data made available by the company, and to collect and analyze additional information necessary to determine that, in the independent judgment of the consultant, the company will close the facility or not resume operations of the facility as permitted by KRS 154.26-010(9) absent a substantial investment in the project, assisted by the inducements authorized by KRS 154.26-015 to 154.26-100. The company shall pay the cost of this evaluation.

(9) The company shall cooperate with the consultant and provide all of the data which could reasonably be required by the consultant to make a fair assessment of the company's intentions to close the facility or not resume operations of the facility as permitted by KRS 154.26-010(9).

(10) After a review of relevant materials and completion of inquiries, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily-approved company and authorizing the undertaking of the economic revitalization project.

(11) The authority shall review the report of the consultant and other information which has been made available to it in order to assist the authority in determining whether the company intends to close the facility for valid reasons or whether it intends or is able to resume operations of the facility in accordance with the requirements of KRS 154.26-010(10)(b) if inducements are granted. The authority shall determine the potential of the proposed revitalization project to make the facility stable, productive, and competitive in its market.

(12) After the review of the consultant's report or if an emergency declaration has been issued in accordance with subsection (6) of this section, the authority shall hold a public hearing to solicit public comment from any person, group, or interested party regarding the proposed project.

(13) After the public hearing, the authority, by resolution, may:

(a) Declare the jobs then existing at the facility to be lost or the company unable to resume operations as permitted by KRS 154.26-010(9);

(b) Give its final approval to the eligible company's application for a project; and

(c) Grant to the eligible company the status of an approved company. The decision reached by the authority shall be final and no appeal shall be granted.

(14) (a) During the initial term of an agreement, or within sixty (60) months after the expiration of the term, an eligible company may apply for, and the authority may approve, a supplemental project when the applicant:

1. Has expended approved costs of at least fifty million dollars ($50,000,000) on an approved economic revitalization project;

2. Employs a minimum of one hundred (100) employees at the site of the economic revitalization project;

3. Agrees to incur at least five million dollars ($5,000,000) in additional eligible costs for improvements to a blast furnace that:

a. Is located at the economic revitalization project;

b. Has burned at least one million (1,000,000) tons of Kentucky coal during the initial term of the agreement; and

c. Was idled due to unfairly traded imports of carbon steel, with resulting layoffs of more than five hundred fifty (550) employees; and

4. Is at risk of closure and carries a significant net loss carry forward for the last three (3) tax years as certified by the approved company.

(b) The authority may approve a supplemental project by resolution, authorizing the execution of a supplemental project agreement.

(15) All meetings of the authority shall be held in accordance with KRS 61.805 to 61.850. The authority may, pursuant to KRS 61.815, hold closed sessions of its meetings to discuss matters exempt from the open meetings law and pertaining to an eligible company.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 55, effective July 1, 2022. -- Amended 2016 Ky. Acts ch. 109, sec. 2, effective July 15, 2016. -- Amended 2014 Ky. Acts ch. 129, sec. 3, effective July 15, 2014. -- Amended 2012 Ky. Acts ch. 119, sec. 2, effective July 12, 2012. -- Amended 2009 Ky. Acts ch. 11, sec. 42, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 71, sec. 2, effective March 23, 2007. -- Amended 2006 Ky. Acts ch. 211, sec. 74, effective July 12, 2006. -- Amended 2001 Ky. Acts ch. 153, sec. 2, effective March 20, 2001. -- Amended 1996 Ky. Acts ch. 194, sec. 46, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 24, effective July 15, 1994; and ch. 499, sec. 25, effective July 15, 1994. Created 1992 Ky. Acts ch. 359, sec. 9, effective July 14, 1992.

Legislative Research Commission Note (7/12/2012). 2012 Ky. Acts ch. 119, sec. 4, provides that this statute, as amended by 2012 Ky. Acts ch. 119, sec. 2, "shall apply to taxable years beginning on or after January 1, 2014."

Legislative Research Commission Note (3/23/2007). Under the authority of KRS 7.136(1), the Reviser of Statutes in codification has changed the internal numbering system of subsections (2), (3), and (13) of this statute by inserting paragraph divisions (a), (b), and (c). The meaning of the text renumbered is not changed.

154.26-085 Options for companies with preliminary approval or final agreement before July 13, 2004.

(1) If, prior to July 13, 2004, the authority has given its preliminary approval designating an eligible company as a preliminarily approved company and authorizing the undertaking of an economic revitalization project, but has not entered into a final agreement with the company, the company shall have the one- time option to:

(a) Operate under the existing agreement as preliminarily approved; or

(b) Request the authority to amend the agreement to comply with the amendments to KRS 154.26-090, 154.26-100, and 141.310 in 2004 Ky. Acts ch. 105, secs. 12, 13, 14, and 21.

(2) If, prior to July 13, 2004, the authority has entered into a final agreement with an eligible company, and if the final agreement is still in effect, the company shall have the one-time option to:

(a) Operate under the existing final agreement; or

(b) Request the authority to amend only the employee assessment portion of the final agreement to comply with the amendment to KRS 154.26-100 in 2004 Ky. Acts ch. 105, sec. 13.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 66, effective June 27, 2019. -- Created 2004 Ky. Acts ch. 105, sec. 15, effective July 13, 2004.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 66 of that Act apply retroactively to April 14, 2018.

Legislative Research Commission Note (4/27/2018). KRS 136.0704 was repealed in 2018 Ky. Acts chs. 171 and 207, but a conforming amendment was not made to this statute to address the reference it contains to KRS 136.0704. The Reviser of Statutes has determined that making such a conforming change during the 2018 codification exceeds the permissible correction of manifest clerical or typographical errors under KRS 7.136(1)(h). Therefore, the reference to KRS 136.0704 remains unchanged and would have to be changed pursuant to future legislative action.

Legislative Research Commission Note (7/13/2004). This section, as enacted in 2004 Ky. Acts ch. 105, sec. 15, is substantially similar to KRS 154.26-115, as enacted in 2004 Ky. Acts ch. 18, sec. 3.

154.26-087 Final approval by authority restricted to eligible companies preliminarily approved on or before June 30, 2021.

If an eligible company has not received preliminary approval on or before June 30, 2021, the eligible company shall not receive final approval by the authority to become an approved company under this subchapter. Outstanding eligible companies with preliminary or final approval granted on or before June 30, 2021, shall continue to be governed by this subchapter and KRS 141.403.

Effective: June 29, 2021

History: Created 2021 Ky. Acts ch. 185, sec. 130, effective June 29, 2021.

154.26-090 Revitalization agreement -- Amended agreement -- Tax credits -- Occupational license fee termination -- Assessment fee -- Effect of excess in assessments.

(1) The authority, upon adoption of its final approval, may enter into, with any approved company, an agreement with respect to its project or a supplemental project agreement with respect to its supplemental project. The terms and provisions of each agreement and supplemental project agreement, including the amount of approved costs and any limitations the authority may deem necessary, shall be determined by negotiations between the authority and the approved company, except that each agreement and supplemental project agreement shall include the following provisions:

(a) The amount the approved company may recover through inducements under this subchapter shall not exceed seventy-five percent (75%) of approved costs;

(b) The date by which the approved company will have completed the original project and supplemental project. Within three (3) months of the completion date of the original project or supplemental project, the approved company shall document the actual cost of the project or supplemental project in a manner acceptable to the authority. The authority may employ an independent consultant or utilize technical resources to verify the cost of the project or supplemental project. The approved company shall reimburse the authority for the cost of the consultant;

(c) In consideration of the execution of the agreement or supplemental project agreement, the approved company may be permitted, during a period not to exceed ten (10) years commencing on the date of the agreement or supplemental project agreement and during which the agreement or supplemental project agreement is in effect, the following inducements:

1. A credit against the Kentucky tax imposed by KRS 141.020 or 141.040 on the income of the approved company generated by or arising out of the economic revitalization project or supplemental project, and a credit against the limited liability entity tax imposed by KRS 141.0401 on Kentucky gross profits or Kentucky gross receipts as determined under KRS 141.403. The ordering of credits shall be as provided in KRS 141.0205; and

2. The aggregate assessment withheld by the approved company in each year;

(d) The tax credits allowed to the approved company shall be equal to the lesser of the total amount of the tax liability or the amount that the company may recover under paragraph (a) of this subsection that has not yet been recovered, reduced by any recovery through the collection of assessments and appropriations made under any appropriation agreement. The credit shall be allowed for each fiscal year of the approved company during the term of the agreement and for which a tax return of the approved company is filed until the amount that the company may recover under paragraph (a) of this subsection has been received through a combination of credits, assessments, if assessments are elected to be imposed, and appropriations made under any appropriation agreement. The approved company shall not be required to pay estimated tax payments as prescribed under KRS 141.044 or 141.305 on income, Kentucky gross profits or Kentucky gross receipts from the economic revitalization project. Ninety (90) days after the filing of the tax return of the approved company, the Department of Revenue of the Commonwealth shall certify to the authority for the preceding fiscal year of an approved company for which a return was filed with respect to an economic revitalization project of the approved company the state tax liability of the approved company receiving inducements under KRS 154.26-015 to 154.26-100 and the amount of any tax credits taken pursuant to this section;

(e) The agreement shall provide that the term shall not be longer than the earlier of:

1. The date on which the approved company has received inducements or withheld assessments equal to the amount that the company may recover under paragraph (a) of this subsection; or

2. Ten (10) years from the date of the execution of the later of the agreement or supplemental project agreement;

(f) Prior to execution of the agreement or supplemental project agreement, the eligible company shall secure from all local governmental authorities responsible for collecting local occupational license fees one (1) of the following:

1. A resolution or order of the local governmental entities acknowledging and consenting to the termination or partial termination of the receipt of local occupational license fees paid by the approved company on behalf of its employees to the local government entities resulting from the execution of the agreement or supplemental project agreement; or

2. In lieu of the credit against the local occupational license fee, an appropriation agreement with the authority and the local governmental entities by which the local governmental entities will appropriate funds in an amount equal to the amount of the credit of the local occupational license fee for the benefit of the approved company in a manner consistent with the applicable state laws;

(g) If more than one (1) local occupational license fee is imposed upon the employees of the approved company, the assessment imposed upon the employees shall be credited against the local occupational license fee and shall be apportioned to each local occupational license fee according to each local occupational license fee's proportion to the total of all local occupational license fees for such employees. No credit, or portion thereof shall be allowed against any local occupational license fee imposed by or dedicated solely to a local board of education;

(h) If in any fiscal year of the approved company during which the agreement or supplemental project agreement is in effect the total of the tax credits granted to the approved company plus the assessment collected from the wages of the employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, the approved company shall pay the excess to the Commonwealth as income tax;

(i) If in any fiscal year of the approved company during which the agreement or supplemental project agreement is in effect the assessment collected from the wages of the employees exceeds the expended portion of the amount that the approved company may recover under paragraph (a) of this subsection, the assessment collected from the wages of the employees shall cease for the remainder of that fiscal year of the approved company, the approved company shall resume normal personal income tax and occupational license fee withholdings from the employees' wages for the remainder of that fiscal year, and the approved company shall remit to the Commonwealth and applicable local jurisdictions their respective shares of the excess assessment collected on the withholding filing date for employees' wages next succeeding the first date when the approved company collected excess assessments; and

(j) All proceeds of any loan or other financing incurred in connection with the economic revitalization project shall be expended by the approved company within five (5) years from the date of the agreement. In the event that all proceeds of any loan or other financing incurred in connection with the economic revitalization project are not fully expended within the five (5) year period, the authorized inducements shall automatically be reduced to and shall not be greater than the amount of proceeds actually expended by the approved company within the five (5) year period.

(2) If the approved company elects to utilize the assessment as prescribed in KRS 154.26-100, it shall not assess the wages of an employee who is party to an individual employment contract with the approved company.

(3) Neither the appropriation agreement, nor the agreement, nor the supplemental project agreement shall be transferable or assignable by the approved company without the expressed written consent of the authority.

(4) In addition to the inducements permitted by this section, an approved company with a supplemental project agreement executed pursuant to this section may also qualify for the sales and use tax exemption established by KRS 139.480 for its purchase and use of any property to be incorporated into the construction, rebuilding, modification, or expansion of a blast furnace or any of its components or appurtenant equipment or structures as part of the approved supplemental project.

Effective: July 15, 2014

History: Amended 2014 Ky. Acts ch. 129, sec. 4, effective July 15, 2014. -- Amended 2012 Ky. Acts ch. 119, sec. 3, effective July 12, 2012. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 57, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 582, effective June 20, 2005. -- Amended 2004 Ky. Acts ch. 18, sec. 1, effective July 13, 2004; and ch. 105, sec. 12, effective July 13, 2004. -- Amended 2000 Ky. Acts ch. 547, sec. 3, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 47, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 25, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 10, effective July 14, 1992.

Legislative Research Commission Note (7/12/2012). 2012 Ky. Acts ch. 119, sec. 4, provides that this statute, as amended by 2012 Ky. Acts ch. 119, sec. 3, "shall apply to taxable years beginning on or after January 1, 2014."

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.26-095 Authority and Department of Revenue to report to Interim Joint Committee on Appropriations and Revenue.

By July 1, 2019, and by each July 1 thereafter, the authority and the Department of Revenue shall jointly provide a report to the Interim Joint Committee on Appropriations and Revenue for each project approved under this subchapter. The report shall contain the following information:

(1) The name of each approved company and the location of each economic revitalization project;

(2) The amount of approved costs for each economic revitalization project;

(3) The date the agreement was approved;

(4) Whether an assessment fee authorized by KRS 154.26-100 was a part of the agreement;

(5) The number of employees employed in manufacturing, the number of employees employed in coal mining and processing, or the number of employees employed in agribusiness operations;

(6) Whether the project was a supplemental project; and

(7) By taxable year, the amount of tax credit claimed on the taxpayer's return, any amount denied by the department, and the amount of any tax credit remaining to be carried forward.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 67, effective June 27, 2019. -- Created 2018 Ky. Acts ch. 171, sec. 95, effective April 14, 2018; and ch. 207, sec. 95, effective April 27, 2018

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 67 of that Act apply retroactively to April 14, 2018.

Legislative Research Commission Note (4/27/2018). This statute was created by 2018 Ky. Acts ch. 171, sec. 95 and ch. 207, sec. 95, which are nearly identical and have been codified together.

154.26-100 Job revitalization assessment fee -- Certification of tax liability of approved company.

(1) The approved company may require that each employee subject to the income tax imposed by KRS 141.020, whose job was preserved or created as a result of the project or supplemental project, as a condition of employment or the retention of employment, agree to pay an assessment, not to exceed, during any fiscal year of the approved company, five percent (5%) of the gross wages of each employee subject to the income tax imposed by KRS 141.020 whose job was retained or created as a result of the project or supplemental project, unless:

(a) The appropriation agreement is consummated, in which case the assessment shall be four percent (4%) of each employee's gross wages subject to the income tax imposed by KRS 141.020;

(b) The local government or governments in which the project is located have a local occupational license fee of less than one percent (1%) and agree to forgo all of their local occupational license fee, in which case the assessment shall equal four percent (4%) plus the percentage of the local occupational license fee that the local government or governments have agreed to forgo; or

(c) The local government or governments in which the project is located have no occupational license fee, in which case the assessment shall be four percent (4%).

(2) Each assessed employee shall be entitled to a credit against his Kentucky income tax required to be withheld under KRS 141.310 in the form of a simultaneous adjustment equal to four-fifths (4/5) of the assessment, unless:

(a) The appropriation agreement is consummated, in which case the credit shall be equal to one hundred percent (100%) of the assessment;

(b) The local government or governments in which the project or supplemental project is located have a local occupational license fee of less than one percent (1%) and agree to forgo all of their local occupational license fee, in which case the credit shall be equal to the total assessment less the local occupational license fee; or

(c) If the local government or governments in which the project or supplemental project is located have no local occupational license fee, in which case the credit shall be equal to one hundred percent (100%) of the assessment.

(3) Each assessed employee also shall be entitled to a credit against his local occupational license fee in the form of a simultaneous adjustment of his local occupational license fee withholding equal to one-fifth (1/5) of the assessment, unless:

(a) The appropriation agreement is consummated; or

(b) The local occupational license fee is less than one percent (1%), in which case the credit shall equal the same amount as the local occupational license fee.

(4) If an approved company shall elect to impose the assessment as a condition of employment or the retention of employment, it shall deduct the assessment from each paycheck of each employee subject to subsections (2) and (3) of this section.

(5) Any approved company collecting an assessment as provided in subsection (1) of this section shall make its payroll books and records available to the authority at such reasonable times as the authority shall request, and shall file with the authority the documentation respecting the assessment the authority may require.

(6) Any assessment of the wages of the employees of an approved company pursuant to subsection (1) of this section shall permanently lapse upon expiration or termination of the agreement.

(7) By October 1 of each year, the Department of Revenue of the Commonwealth shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year and job revitalization assessment fees taken during the prior calendar year by approved companies with respect to their economic revitalization projects and supplemental projects under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state tax return, when an approved company has taken tax credits equal to its total inducements.

Effective: July 15, 2014

History: Amended 2014 Ky. Acts ch. 129, sec. 5, effective July 15, 2014. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 58, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 583, effective June 20, 2005. -- Amended 2004 Ky. Acts ch. 18, sec. 2, effective July 13, 2004; and ch. 105, sec. 13, effective July 13, 2004. -- Amended 2000 Ky. Acts ch. 300, sec. 22, effective July 14, 2000; and ch. 547, sec. 4, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 48, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 26, effective July 15, 1994. – Created 1992 Ky. Acts ch. 359, sec. 11, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.26-101 Short title for KRS 154.26-010 to 154.26-100.

KRS 154.26-010 to 154.26-100 shall be known as the Kentucky Industrial Revitalization Act.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 194, sec. 44, effective July 15, 1996.

154.26-110 Application to approved company of KRS 154.26-080 and 154.26-090.

If the authority gives its preliminary approval designating an eligible company and authorizing the undertaking of an economic revitalization project prior to July 15, 1996, and the authority by final approval approves the eligible company as an approved company and the project of the eligible company as an economic revitalization project, and the authority and the eligible company enter into a revitalization agreement no later than June 30, 1997, then the approved company shall not be subject to KRS 154.26-080 and 154.26-090(1) and shall be subject to KRS 154.26-080 and 154.26-090(1) as in effect prior to July 15, 1996.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 194, sec. 49, effective July 15, 1996.

154.26-115 Options for companies with preliminary approval or final agreement before July 13, 2004.

(1) If, prior to July 13, 2004, the authority has given its preliminary approval designating an eligible company as a preliminarily approved company and authorizing the undertaking of an economic revitalization project, but has not entered into a final agreement with the company, the company shall have the one- time option to:

(a) Operate under the existing agreement as preliminarily approved; or

(b) Request the authority to amend the agreement to comply with the amendments to KRS 154.26-090, 154.26-100, and 141.310 in 2004 Ky. Acts ch. 18, secs. 1, 2, 4, and 5.

(2) If, prior to July 13, 2004, the authority has entered into a final agreement with an eligible company, and if the final agreement is still in effect, the company shall have the one-time option to:

(a) Operate under the existing final agreement; or

(b) Request the authority to amend only the employee assessment portion of the final agreement to comply with the amendment to KRS 154.26-100 in 2004 Ky. Acts ch. 18, sec. 2.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 68, effective June 27, 2019. -- Created 2004 Ky. Acts ch. 18, sec. 3, effective July 13, 2004.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 68 of that Act apply retroactively to April 14, 2018.

Legislative Research Commission Note (4/27/2018). KRS 136.0704 was repealed in 2018 Ky. Acts chs. 171 and 207, but a conforming amendment was not made to this statute to address the reference it contains to KRS 136.0704. The Reviser of Statutes has determined that making such a conforming change during the 2018 codification exceeds the permissible correction of manifest clerical or typographical errors under KRS 7.136(1)(h). Therefore, the reference to KRS 136.0704 remains unchanged and would have to be changed pursuant to future legislative action.

Legislative Research Commission Note (7/13/2004). This section, as enacted in 2004 Ky. Acts ch. 18, sec. 3, is substantially similar to KRS 154.26-085, as enacted in 2004 Ky. Acts ch. 105, sec. 15.

154.26-120 Costs of remediation of property as eligible costs.

Costs incurred by an applicant in remediating a property in accordance with KRS 224.1- 510 to 224.1-532 shall be considered eligible costs for the purposes of KRS 154.26-010 to 154.26-100.

Effective: June 21, 2001

History: Created 2001 Ky. Acts ch. 128, sec. 13, effective June 21, 2001.

154.26-125 Costs of certain carbon steel-making operations considered eligible costs.

Costs incurred by an applicant required for the start-up of a blast furnace and related carbon steel-making operations that were idled due to unfairly traded imports of carbon steel shall be considered eligible costs for the purposes of KRS 154.26-010 to 154.26- 100.

Effective: July 15, 2016

History: Created 2016 Ky. Acts ch. 109, sec. 3, effective July 15, 2016.

Subchapter 27 Incentives for Energy-related Business Act Subchapter 27 Incentives for Energy-related Business Act

154.27-010 Definitions for subchapter.

(Effective July 1, 2021) As used in this subchapter:

(1) "Activation date" means the date on which an approved company begins incurring recoverable costs or engaging in recoverable activity pursuant to the tax incentive agreement. The activation date shall be set forth in the tax incentive agreement and shall be a date within five (5) years of the date of final approval of the tax incentive agreement. The authority may extend the five (5) year period to no more than seven (7) years upon written application for an extension by the approved company. To implement the activation date, the approved company shall notify the authority of its intent to activate the tax incentives authorized in the tax incentive agreement. The activation date shall apply to all incentives included in the tax incentive agreement regardless of whether the approved company has met the requirements to receive all incentives at that time. If the approved company does not implement the activation date before the date established in the tax incentive agreement, the activation date shall be the date established in the tax incentive agreement;

(2) "Affiliate" has the same meaning as in KRS 154.22-010;

(3) (a) "Alternative fuel facility" means a facility located in Kentucky that is newly constructed on or after August 30, 2007, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 30, 2007, and that, after the new construction, retrofit, or upgrade, primarily produces for sale alternative transportation fuels. For a retrofit of an existing facility, the new modification or addition within the facility shall primarily produce alternative transportation fuel for sale.

(b) The alternative fuel facility may produce electricity as a by-product if the primary purpose for which the facility is constructed, retrofitted, or upgraded, and the primary function of the facility remains the production and sale of alternative transportation fuels;

(4) "Alternative transportation fuels" has the same meaning as in KRS 152.715;

(5) "Approved company" means a corporation, limited liability company, partnership, registered limited liability partnership, sole proprietorship, business trust, or any other entity approved for incentives for an eligible project;

(6) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010;

(7) "Base amount" means the tons of coal, thousand (1000) cubic foot units (Mcf) of natural gas, or gallons of natural gas liquids purchased and used or severed and used by the approved company as feedstock for an eligible project during the twelve (12) months prior to the month in which the approved company first begins receiving incentives under KRS 143.024 or 143A.025, and 154.27-060, that were subject to the tax imposed by KRS 143.020 or 143A.020;

(8) "Blockchain technology" or "blockchain" means shared or distributed data structures or digital ledgers governed by consensus protocols and maintained by peer-to-peer networks that:

(a) Store digital transactions; and

(b) Verify and secure transactions cryptographically;

(9) "Biomass resources" has the same meaning as in KRS 152.715;

(10) (a) "Capital investment" means:

1. Obligations incurred for labor and to contractors, subcontractors, builders, and materialmen in connection with the acquisition, construction, installation, equipping, upgrading, or retrofitting of an eligible project;

2. The cost of acquiring land or rights in land and any cost incident thereto, including recording fees;

3. The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, installation, equipping, upgrading, or retrofitting of an eligible project which is not paid by the contractor or otherwise provided;

4. All costs of architectural and engineering services, including test borings, surveys, estimates, plans, specifications, preliminary investigations, supervision of construction, and the performance of all the duties required by or consequent upon the acquisition, construction, installation, equipping, upgrading, or retrofitting of an eligible project;

5. All costs required to be paid under the terms of any contract for the acquisition, construction, installation, equipping, upgrading, or retrofitting of an eligible project; and

6. All other costs of a nature comparable to those described in this subsection.

(b) "Capital investment" does not include costs described in paragraph (a) of this subsection that are paid for with funds received from the federal government or that are reimbursed by the federal government;

(11) "Carbon capture ready" means planning for or anticipating capture of carbon dioxide in a manner to facilitate continued operation of the facility in compliance with applicable federal requirements;

(12) "Carbon dioxide transmission pipeline" means the in-state portion of a pipeline, including appurtenant facilities, property rights, and easements, that is used exclusively for the purpose of transporting carbon dioxide to a point of sale, storage, or other carbon management applications;

(13) "Center for Applied Energy Research" means the University of Kentucky Center for Applied Energy Research;

(14) "Commercial mining of cryptocurrency" means the process through which blockchain technology is used to mine cryptocurrency at a cryptocurrency facility, and includes the process through which blockchain transactions are verified and accepted by adding the transactions to a blockchain ledger, which involves solving complex mathematical cryptographic problems associated with a block containing transaction data;

(15) "Commonwealth" means the Commonwealth of Kentucky;

(16) "Construction period" means the period beginning with the activation date of the eligible project and ending on a date set forth in the tax incentive agreement, which shall be no later than five (5) years from the activation date;

(17) "Consensus protocol" means a set of rules and procedures that control how and when blockchain transactions are verified, validated, recorded, and recognized;

(18) "Cryptocurrency" means a type of virtual currency that utilizes blockchain technology and that:

(a) Can be digitally traded between users; or

(b) Can be converted or exchanged for legal tender;

(19) "Cryptocurrency facility" means a facility located in the Commonwealth that is utilized in the commercial mining of cryptocurrency or in hosting persons engaged in the commercial mining of cryptocurrency through utilization of the facility's infrastructure, including servers and network hardware powered by Internet bandwidth, electricity, and other services generally required for such mining operations;

(20) "Department" means the Department of Revenue;

(21) "Eligible project" means:

(a) An alternative fuel facility or a gasification facility meeting the investment requirements of KRS 154.27-020;

(b) An energy-efficient alternative fuel facility meeting the investment requirements of KRS 154.27-020;

(c) A renewable energy facility meeting the investment requirements of KRS 154.27-020;

(d) A carbon dioxide transmission pipeline meeting the investment requirements of KRS 154.27-020; or

(e) A cryptocurrency facility meeting the investment requirements of KRS 154.27-20;

(22) "Energy-efficient alternative fuel facility" means a facility located in Kentucky that is newly constructed on or after August 30, 2010, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 30, 2010, and that, after the new construction, retrofit, or upgrade, will produce for sale energy-efficient alternative fuels. For a retrofit of an existing facility, the new modification or addition within the facility shall produce for sale energy-efficient alternative fuels;

(23) "Energy-efficient alternative fuels" means homogeneous fuels that:

(a) Are produced from processes designed to densify feedstock coal, waste coal, or biomass resources; and

(b) Have an energy content that is greater than the feedstock coal, waste coal, or biomass resource;

(24) "Estimated labor component" means the projected percentage of the total capital investment attributable to labor;

(25) (a) "Facility" means a single location within the Commonwealth at which machinery and equipment are used:

1. In a manufacturing process that transforms raw materials into a product with commercial value; or

2. In the commercial mining of cryptocurrency or in hosting persons engaged in the commercial mining of cryptocurrency.

(b) The facility shall include the physical plant structure where the manufacturing process occurs or where the commercial mining of cryptocurrency occurs and machinery and equipment within the physical plant structure.

(c) The facility may include:

1. On-site machinery and equipment used exclusively for processing coal or other raw materials for use in the manufacturing process at the facility;

2. For an alternative fuel facility or gasification facility, on-site power station operations, if those operations are primarily used to produce electricity for the facility;

3. On-site refining operations, if those operations are used exclusively to refine and blend fuels produced by the facility; and

4. The in-state portion of a pipeline, including appurtenant facilities, property rights, and easements, if the exclusive purpose of the pipeline is to transport carbon dioxide from the facility to a point of sale, storage, or other carbon management applications.

(d) "Facility" shall not include any mining operations, or drilling and production operations for natural gas, unless such coal, natural resource, or natural gas operations are being used for purposes of, or are hosting, the commercial mining of cryptocurrency, in which case such operations shall be a facility;

(26) "Gasification process" means a process that converts any carbon-containing material into a synthesis gas composed primarily of carbon monoxide and hydrogen;

(27) (a) "Gasification facility" means a facility located in Kentucky that is newly constructed on or after August 30, 2007, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 30, 2007, and that, after the new construction, retrofit, or upgrade, primarily produces for sale:

1. Alternative transportation fuels;

2. Synthetic natural gas;

3. Chemicals;

4. Chemical feedstocks; or

5. Liquid fuels; from coal, waste coal, coal-processing waste, or biomass resources, through a gasification process. For a retrofit of an existing facility, the new modification or addition within the facility shall primarily produce one (1) or more of the products set forth in this paragraph.

(b) The gasification facility may produce electricity as a by-product if the primary purpose for which the facility is constructed, retrofitted, or upgraded, and the primary function of the facility remains the production and sale of alternative transportation fuels, synthetic natural gas, chemicals, chemical feedstocks, or liquid fuels;

(28) "Kentucky gross profits" has the same meaning as in KRS 141.0401;

(29) "Kentucky gross receipts" has the same meaning as in KRS 141.0401;

(30) "Post-construction incentives" means the incentives available under KRS 154.27-060 and 154.27-080;

(31) "Renewable energy facility" means a facility located in Kentucky that is newly constructed on or after August 30, 2007, or an existing facility located in Kentucky that is retrofitted or upgraded after August 30, 2007, and that, after the new construction, retrofit, or upgrade, utilizes:

(a) Wind power, biomass resources, landfill methane gas, hydropower, or other similar renewable resources to generate electricity in excess of one

(1) megawatt for sale to unrelated entities; or

(b) Solar power to generate electricity in excess of fifty (50) kilowatts for sale to unrelated entities. For a retrofit of an existing facility, the modification or addition shall primarily result in the production of electricity as described in paragraph (a) or (b) of this subsection;

(32) "Resident" has the same meaning as in KRS 141.010;

(33) (a) "Retrofit" means a modification or addition to an existing facility that results in the production of a new and different product or services or uses a new or different process to produce the same product or services at the facility.

(b) Modifications or additions to a facility that maintain, restore, mend, or repair a facility shall not be considered a retrofit of the facility, and shall not be considered part of the capital investment if undertaken at the same time as a retrofit;

(34) "Synthetic natural gas" has the same meaning as in KRS 152.715;

(35) "Tax incentive agreement" means an agreement entered into in accordance with KRS 154.27-040;

(36) "Termination date" means a date established by the tax incentive agreement that is no more than twenty-five (25) years from the activation date; and

(37) "Upgrade" means an investment in an existing facility that results in an increase in the productivity of the facility. Increased productivity shall be measured in relation to the type of products or services that are required to be produced or performed by that facility to be an eligible project.

Effective:July 1, 2021

History: Amended 2021 Ky. Acts ch. 141, sec. 1, effective July 1, 2021. -- Amended 2011 Ky. Acts ch.82, sec.2, effective June 8, 2011. -- Amended 2010 Ky. Acts ch. 24, sec. 199, effective July 15, 2010; ch. 60, sec. 1, effective July 15, 2010; and ch. 139, sec. 2, effective July 15, 2010. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 1, effective August 30, 2007.

154.27-020 Short title -- Legislative findings -- Purpose of subchapter -- Incentives.

(Effective July 1, 2021)

(1) This subchapter shall be known as the "Incentives for Energy-related Business Act."

(2) The General Assembly hereby finds and declares that it is in the best interest of the Commonwealth to induce the location of innovative energy-related businesses in the Commonwealth in order to advance the public purposes of achieving energy independence, creating new and advanced technologies, creating new jobs and new investment, and creating new sources of tax revenues that but for the inducements to be offered by the authority to approved companies would not exist.

(3) The purpose of this subchapter is to assist the Commonwealth in moving to the forefront of national efforts to achieve energy independence by reducing the Commonwealth's reliance on imported energy resources, and to become a national leader in emerging industries which use substantial amounts of energy. The provisions of this subchapter seek to accomplish this purpose by providing incentives for companies that, in a carbon capture ready manner, construct, retrofit, or upgrade facilities for the purpose of:

(a) Increasing the production and sale of alternative transportation fuels;

(b) Increasing the production and sale of synthetic natural gas, chemicals, chemical feedstocks, or liquid fuels, from coal, biomass resources, or waste coal through a gasification process;

(c) Increasing the production and sale of energy-efficient alternative fuels;

(d) Generating electricity for sale through alternative methods such as solar power, wind power, biomass resources, landfill methane gas, hydropower, or other similar renewable resources; or

(e) Increasing the usage of electricity in areas which have an abundant supply due to the loss of manufacturing businesses across the state.

(4) To qualify for the incentives provided in this subchapter, the following requirements shall be met:

(a) For an alternative fuel facility or gasification facility that uses oil shale, tar sands, or coal as the primary feedstock, the minimum capital investment shall be one hundred million dollars ($100,000,000);

(b) For an alternative fuel facility or gasification facility that uses biomass resources as the primary feedstock, the minimum capital investment shall be twenty-five million dollars ($25,000,000);

(c) For an energy-efficient alternative fuel facility, the minimum capital investment shall be twenty-five million dollars ($25,000,000);

(d) For an alternative fuel facility located in Kentucky that is newly constructed on or after August 1, 2010, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 1, 2010, and that, after the new construction, retrofit, or upgrade, primarily produces for sale alternative transportation fuels using natural gas or natural gas liquids as the primary feedstock, the minimum capital investment shall be one million dollars ($1,000,000); provided that the authority may approve a maximum of five (5) projects that meet the requirements of this paragraph;

(e) For a renewable energy facility, the minimum capital investment shall be one million dollars ($1,000,000);

(f) For a carbon dioxide transmission pipeline, the minimum capital investment shall be fifty million dollars ($50,000,000); and

(g) For a cryptocurrency facility, the minimum capital investment shall be one million dollars ($1,000,000).

(5) The incentives under the Incentives for Energy-related Business Act are as follows:

(a) An advance disbursement of post-construction incentives for which an approved company has been approved, the maximum amount of which is based upon the estimated labor component of the total capital investment of the eligible project, and the utilization of Kentucky residents during the construction period as set forth in KRS 154.27-090;

(b) Sales and use tax incentives of up to one hundred percent (100%) of the taxes paid on purchases of tangible personal property made to construct, retrofit, or upgrade an eligible project, including commercial cryptocurrency mining equipment at a facility, as set forth in KRS 139.517 and 154.27-070;

(c) Up to eighty percent (80%) of the severance taxes paid on the purchase or severance of:

1. Coal that is subject to the tax imposed under KRS 143.020 and that is specifically used by an alternative fuel facility, energy-efficient alternative fuel facility, or a gasification facility as feedstock for an eligible project, as set forth in KRS 143.024 and 154.27-060; or

2. Natural gas or natural gas liquids that are subject to the tax imposed under KRS 143A.020 and that are specifically used in an alternative fuel facility described in subsection (4)(d) of this section as feedstock for an eligible project, as set forth in KRS 143A.025 and 154.27-060;

(d) Up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.040 or 141.020, and the limited liability entity tax imposed under KRS 141.0401 on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the eligible project, as set forth in KRS 141.421 and 154.27-080; and

(e) Authorization for the approved company to impose a wage assessment of up to four percent (4%) of the gross wages of each employee subject to the Kentucky income tax:

1. Whose job was created as a result of the eligible project;

2. Who is employed by the approved company to work at the facility; and

3. Who is on the payroll of the approved company or an affiliate of the approved company; as set forth in KRS 154.27-080.

(6) The maximum recovery from all incentives approved under this subchapter for an eligible project shall not exceed fifty percent (50%) of the capital investment in the eligible project.

(7) The incentives available to an approved company shall be negotiated with and approved by the authority.

(8) If a newly constructed facility that qualifies for incentives under this subchapter is later upgraded or retrofitted in a manner that would qualify for incentives under this subchapter, the retrofit or upgrade shall be a separate eligible project, and the minimum investment requirements and carbon capture readiness requirements, if required, shall be met for the retrofit or upgrade to qualify for incentives under this subchapter.

(9) The General Assembly finds that the authorities granted by this subchapter are proper governmental and public purposes for which public moneys may be expended.

Effective:July 1, 2021

History: Amended 2021 Ky. Acts ch. 141, sec. 2, effective July 1, 2021. -- Amended 2011 Ky. Acts ch.82, sec.3, effective June 8, 2011. -- Amended 2010 Ky. Acts ch. 60, sec. 2, effective July 15, 2010; and ch. 139, sec 3, effective July 15, 2010. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 101, effective June 26, 2009. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 2, effective August 30, 2007.

Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 139, sec. 3, amended KRS 154.27-020 to add a new paragraph (d) to subsection (4) of the statute. This statute was also amended in 2010 Ky. Acts ch. 60, sec. 2, and that amendment added a new paragraph (c) to subsection (4). In codification, the lettering of the former paragraph (4)(c) has been changed to (4)(e) by the Reviser of Statutes under the authority of KRS 7.136 (1).

Legislative Research Commission Note (8/30/2007). A manifest clerical or typographical error in subsection (5)(a) of this section has been corrected by the Reviser of Statutes during codification pursuant to the authority of KRS 7.136.

154.27-030 Application for incentives -- Review -- Approval -- Approval of projects involving new, retrofitted, or upgraded alternative fuel facilities.

(Effective July 1, 2021)

(1) A company with an eligible project may submit an application for incentives to the authority prior to making any capital investment it will seek to recover.

(2) The application shall include:

(a) The name of the applicant and identification of any affiliates of the applicant;

(b) The type of eligible project;

(c) A description of the location;

(d) A full description of the eligible project scope, including but not limited to:

1. A list and the status of permits, certificates, or approvals required by the federal government, the Commonwealth, or any jurisdiction within the Commonwealth;

2. A description of the carbon capture readiness of the facility, if the proposed eligible project is an alternative fuel facility or a gasification facility;

3. Any feasibility studies, including supporting documents;

4. Anticipated sources of eligible project funding;

5. The total anticipated capital investment and the time period over which the capital investment will occur;

6. The proposed feedstock and the estimated volume of feedstock use per year;

7. A description of the proposed products or services to be produced by the facility and the process that will be used to produce the products;

8. The planned capacity of the facility after construction, retrofit, or upgrade;

9. The estimated output of the facility upon completion; and

10. A plan for and description of how the company will employ Kentucky residents at the facility and how the company will ensure, to the extent possible, that workers employed during construction, retrofit, or upgrade of the facility are Kentucky residents. The plan shall include projected numbers;

(e) Identification of the specific incentives sought;

(f) Payment of any applicable application fees required by the authority to offset reasonable costs of reviewing and processing the application; and

(g) Other information as required by the authority.

(3) The authority shall forward the application to the Department of Revenue and the Office of Energy Policy, if applicable, for review and comment with a date by which comments shall be provided back to the authority. The authority may forward the application to the Center for Applied Energy Research for review and comment as well.

(4) (a) The authority shall review the application and shall verify that:

1. The applicant has met all of the statutory and regulatory requirements established by this subchapter and regulations promulgated thereunder;

2. The applicant has secured or is in the process of securing all necessary permits, certificates, or approvals required by the federal government, the Commonwealth, or any jurisdiction within the Commonwealth;

3. The proposed facility is carbon capture ready, if the proposed facility is an alternative fuel facility or gasification facility;

4. The company has a plan that includes a projected number of Kentucky residents that will be employed during the construction, retrofit, or upgrade of the facility and at the facility upon completion; and

5. Any other requirements established by the authority.

(b) The Department of Revenue and the Office of Energy Policy, if applicable, shall review the application and shall verify that the company seeking approval and all affiliate companies are in good standing with the department.

(c) The authority may engage the services of outside consultants to assist in the review of the application. Costs associated with the engagement of outside consultants shall be borne by the applicant.

(5) (a) Upon the earlier of:

1. The receipt of comments and recommendations from the Office of Energy Policy, the Department of Revenue, and the Center for Applied Energy Research, if applicable; or

2. The expiration of the time period established by the authority for receiving comments pursuant to subsection (3) of this section; the authority may, through the adoption of a resolution, preliminarily approve an applicant for incentives under this subchapter.

(b) Preliminary approval shall be based upon representations of the applicant in the application and attachments as well as other information submitted with the application. The authority shall make a finding that, based upon the applicant's representations, the project appears to be eligible for incentives pursuant to this subchapter.

(c) Prior to final approval:

1. The applicant shall:

a. Provide all supportive data requested by the authority;

b. Secure all required permits or take appropriate steps to do so; and

c. Cooperate with the authority to obtain opinions or recommendations from any outside consultants; and

2. The authority shall, in consultation with the Office of Energy Policy or any other entity, verify the representations of the applicant.

(d) 1. A preliminarily approved company seeking an advance disbursement employment incentive under KRS 154.27-090 shall, prior to receiving final approval from the authority, provide to the authority a labor market analysis prepared by a public postsecondary education institution in the Commonwealth with knowledge of the labor market in the region in which the eligible project will be located.

2. The labor market analysis shall evaluate the construction market in the region where the proposed project is to be located and the estimated labor component of the proposed project. The public postsecondary education institution may consult with the Center for Applied Energy Research or the Office of Energy Policy in determining the types of laborers required for the construction, retrofit, or upgrade of the eligible facility.

3. The labor market analysis shall include an estimate of the percentage of the estimated labor component that constitutes wages to be paid to Kentucky residents.

(e) Based upon all of the information available, the authority may, through adoption of a resolution, give its final approval and authorize the execution of a tax incentive agreement to be negotiated pursuant to KRS 154.27-040.

(6) The authority may request any materials and make any inquiries concerning an application that the authority deems necessary.

(7) The actual capital investment that may be recovered and percentages of each incentive that an approved company may receive shall be negotiated between the approved company and the authority and shall not exceed the limitations established by KRS 154.27-020.

(8) The General Assembly recognizes that the incentives offered under this subchapter include the possibility of the release of incentives to approved companies prior to construction completion, and that the release of these incentives may present more risk for the Commonwealth. The authority is directed to consider the possible increased risk to the Commonwealth when negotiating tax incentive agreements that include incentives prior to construction completion, and to incorporate repayment or similar remedy provisions in the tax incentive agreement to the extent the authority determines such provisions are necessary to protect the investment made by the Commonwealth if the approved company fails to comply with the terms of the tax incentive agreement.

(9) The authority and the approved company shall enter into a tax incentive agreement in accordance with KRS 154.27-040.

(10) The authority, with input from the Office of Energy Policy, if applicable, and the Department of Revenue, shall establish additional standards and requirements for the application process through the promulgation of administrative regulations in accordance with KRS Chapter 13A. The standards shall include but not be limited to the creditworthiness of eligible companies and the likelihood of economic success of the economic development project.

(11) Notwithstanding any other provision of this subchapter, the authority may approve a maximum of five (5) projects under this subchapter that involve an alternative fuel facility located in Kentucky that:

(a) Is newly constructed on or after August 1, 2010, or an existing facility located in Kentucky that is retrofitted or upgraded on or after August 1, 2010;

(b) After the new construction, retrofit, or upgrade, primarily produces for sale alternative transportation fuels using natural gas or natural gas liquids as the primary feedstock; and

(c) Has a minimum capital investment of one million dollars ($1,000,000).

Effective:July 1, 2021

History: Amended 2021 Ky. Acts ch. 141, sec. 3, effective July 1, 2021. -- Amended 2018 Ky. Acts ch. 29, sec. 55, effective July 14, 2018. -- Amended 2010 Ky. Acts ch. 24, sec. 200, effective July 15, 2010; and ch. 139, sec. 7, effective July 15, 2010. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 3, effective August 30, 2007.

Legislative Research Commission Note (7/14/2018). 2018 Ky. Acts ch. 171, sec. 140 directed that this statute be repealed. However, 2018 Ky. Acts ch. 207, sec. 149 subsequently directed that the repeal of this statute in 2018 Ky. Acts ch. 171 itself be repealed. Therefore, no repeal was given effect.

154.27-040 Tax incentive agreement -- Required provisions.

The terms and conditions of the tax incentive agreement shall be negotiated between the authority and the approved company. The tax incentive agreement may include one (1) or more of the incentives available under this subchapter or any combination of the incentives as negotiated between the authority and the approved company. The tax incentive agreement shall include but not be limited to the following provisions:

(1) The duties and responsibilities of the parties;

(2) The specific identification of incentives included in the tax incentive agreement, including the permissible percentage recovery under each included incentive;

(3) A detailed description of the eligible project, including an estimate of the capital investment;

(4) If the eligible project is an alternative fuel facility or a gasification facility, a requirement that the facility be carbon capture ready;

(5) The minimum capital investment required and the maximum capital investment that may be recovered;

(6) The time within which the minimum capital investment shall be made;

(7) The activation date and the termination date. The agreement shall commence on the activation date and shall terminate upon the earlier of full receipt of the maximum amount of incentives by the approved company or twenty-five (25) years from the activation date;

(8) A target percentage of the workforce that is Kentucky residents during the construction, retrofit, or upgrade of the facility, and at the facility upon completion of construction;

(9) If the wage assessment permitted by KRS 154.27-080 is included, the percentage rate at which the assessment shall be imposed;

(10) If the advance disbursement employment incentive permitted by KRS 154.27-090 is included:

(a) The estimated labor component and the estimated Kentucky resident factor as determined under KRS 154.27-090;

(b) A schedule for the disbursement of funds during the construction period;

(c) A provision that requires a reduction or adjustment in the receipt of post- construction incentives for which the approved company is eligible under the tax incentive agreement until the advance disbursement has been repaid by the approved company;

(d) A provision addressing an alternate payment method if the incentives are not sufficient to repay the advance disbursement; and

(e) A repayment schedule that includes the amount of reduction, the incentives the reduction shall apply to, the amount of interest due, the time period over which the advance disbursement amount shall be recouped, and the amount that shall be recouped in each year. To the extent possible, the repayment schedule shall include uniform incremental payments;

(11) That the approval of the company is not a guarantee of incentives and that actual receipt of the incentives shall be contingent on the approved company filing the required requests for incentives and meeting the requirements established by the tax incentive agreement and by KRS 139.517, 141.421, 143.024, 154.27-060, 154.27- 070, 154.27-080, and 154.27-090 that apply to the incentives included;

(12) That the approved company shall provide the authority with documentation of capital expenditures in a manner acceptable to the authority;

(13) Negotiated terms relating to repayment or similar remedies for incentives received prior to the completion of construction if the approved company fails to comply with the terms of the tax incentive agreement;

(14) That, if the authority determines that the approved company has failed to comply with any of its obligations under the tax incentive agreement:

(a) The authority shall have the right to suspend the incentives available to the approved company;

(b) Both the authority and the department shall have the right to pursue any remedy provided under the tax incentive agreement;

(c) The authority may terminate the tax incentive agreement; and

(d) Both the authority and the department may pursue any other remedy at law to which it may be entitled;

(15) A requirement that the authority monitor the tax incentive agreement;

(16) A requirement that the approved company provide to the authority the information necessary to monitor the tax incentive agreement and authorization for the authority to share that information with the Department of Revenue, the Office of Energy Policy, or any other entity the authority determines is necessary for the purposes of monitoring and enforcing the terms of the tax incentive agreement; and

(17) Any other provisions not inconsistent with this subchapter and determined to be necessary or appropriate by the parties to the tax incentive agreement.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 29, sec. 56, effective July 14, 2018. -- Amended 2010 Ky. Acts ch. 24, sec. 201, effective July 15, 2010. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 4, effective August 30, 2007.

Legislative Research Commission Note (7/14/2018). 2018 Ky. Acts ch. 171, sec. 140 directed that this statute be repealed. However, 2018 Ky. Acts ch. 207, sec. 149 subsequently directed that the repeal of this statute in 2018 Ky. Acts ch. 171 itself be repealed. Therefore, no repeal was given effect.

Legislative Research Commission Note (8/30/2007). A manifest clerical or typographical error in subsection (10) of this section has been corrected by the Reviser of Statutes during codification pursuant to the authority of KRS 7.136.

154.27-050 Release of sales tax incentives under tax incentive agreement -- Monitoring, tracking, and reporting requirements.

(1) The department may release to an approved company any sales tax incentives under KRS 139.517 and 154.27-070 after review of the request for incentives required by KRS 139.517 and determination of the amount due regardless of whether the minimum capital investment has been made as required by the tax incentive agreement.

(2) The authority shall monitor all tax incentive agreements. The authority may seek assistance from the Office of Energy Policy, the Department of Revenue, the Center for Applied Energy Research, or other entities or individuals in performing its monitoring functions.

(3) The department shall track the amount of revenues released and incentives received for each eligible project under each tax incentive agreement and shall provide the authority the information upon request.

(4) By November 1 of each year, the authority and the department shall jointly prepare an annual report and post it to the Cabinet for Economic Development Web site as required in KRS 154.12-2035. The report shall include a list of all companies with which tax incentive agreements have been entered into and a summary of the terms of each agreement, including the type of facility approved, product to be produced, estimated output upon completion, required minimum capital investment and maximum recovery, incentives approved by type of tax and amount, activation date, and termination date.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 29, sec. 57, effective July 14, 2018; and ch. 199, sec. 25, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 134, sec. 8, effective July 15, 2014. -- Amended 2010 Ky. Acts ch. 24, sec. 202, effective July 15, 2010. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 5, effective August 30, 2007.

Legislative Research Commission Note (7/14/2018). This statute was amended by 2018 Ky. Acts chs. 29 and 199, which do not appear to be in conflict and have been codified together.

Legislative Research Commission Note (7/14/2018). 2018 Ky. Acts ch. 171, sec. 140 directed that this statute be repealed. However, 2018 Ky. Acts ch. 207, sec. 149 subsequently directed that the repeal of this statute in 2018 Ky. Acts ch. 171 itself be repealed. Therefore, no repeal was given effect.

154.27-060 Severance tax incentives.

(1) (a) Notwithstanding any other provision of KRS 134.580 or KRS Chapter 143, an approved company that purchases or severs coal that:

1. Is subject to the tax imposed under KRS 143.020; and

2. Is used by the approved company exclusively as feedstock for an alternative fuel facility, energy-efficient alternative fuel facility, or a gasification facility; may be eligible for an incentive in an amount up to eighty percent (80%) of the taxes paid pursuant to KRS 143.020 on coal purchased or severed by the approved company that is above the base amount.

(b) Notwithstanding any other provision of KRS 134.580 or KRS Chapter 143A, an approved company that purchases or severs natural gas or natural gas liquids on or after August 1, 2010, that:

1. Is subject to the tax imposed under KRS 143A.020; and

2. Is used by the approved company exclusively as feedstock for an alternative fuel facility described in KRS 154.27-020(4)(d); may be eligible for an incentive in an amount up to eighty percent (80%) of the taxes paid pursuant to KRS 143A.020 on natural gas or natural gas liquids purchased or severed by the approved company that is above the base amount.

(2) An approved company that has purchased or severed coal subject to the tax imposed under KRS 143.020 or purchased or severed natural gas or natural gas liquids subject to the tax imposed under KRS 143A.020 prior to the execution of a tax incentive agreement shall not create an affiliate, subsidiary, corporation, or other related entity that would result in a base amount of zero (0).

(3) The incentive may be requested beginning in the first calendar year after the construction of a new facility or the upgrade or retrofit of an existing facility is completed.

(4) Upon completion of the construction of a new alternative fuel facility, energy- efficient alternative fuel facility, or gasification facility or the retrofit or upgrade of an existing facility, an approved company shall notify the authority and the department.

(5) The approved company may obtain the incentive on an annual basis by filing a request for the incentive with the department as provided in KRS 143.024.

(6) The department shall notify the authority of the incentives requested and the incentives distributed, upon request of the authority.

Effective: July 15, 2010

History: Amended 2010 Ky. Acts ch. 60, sec. 3, effective July 15, 2010; and ch. 139, sec. 4, effective July 15, 2010. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 6, effective August 30, 2007.

Legislative Research Commission Note (7/15/2010). This section was amended by 2010 Ky. Acts chs. 60 and 139, which do not appear to be in conflict and have been codified together.

154.27-070 Sales and use tax incentives.

(1) Notwithstanding KRS 134.580(3) and 139.770, on or after January 1, 2008, an approved company is eligible for an incentive in an amount up to one hundred percent (100%) of the Kentucky sales and use tax paid, reduced by the vendor compensation provided under KRS 139.570, on the purchase of tangible personal property, including but not limited to materials, machinery, and equipment used to construct, retrofit, or upgrade an eligible project.

(2) The incentive shall not include tangible personal property purchased before the activation date or purchases of operating supplies, or repair, replacement, or spare parts as defined in KRS 139.010.

(3) Upon the activation date, an approved company may be eligible for the incentive offered under this section. The approved company shall file a request for the incentive payment with the department as provided in KRS 139.517.

(4) The incentive provided in this section shall expire upon the completion of the construction, retrofit, or upgrade of the eligible project, or five (5) years from the activation date, whichever is earlier.

Effective: August 1, 2008

History: Amended 2008 Ky. Acts ch. 95, sec. 19, effective August 1, 2008. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 7, effective August 30, 2007.

154.27-080 Income and limited liability entity tax incentives -- Assessment on employees' wages.

An approved company may be eligible for income tax-related incentives as follows:

(1) A credit of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.040 or 141.020, and the limited liability entity tax imposed under KRS 141.0401 that would otherwise be owed by the approved company to the Commonwealth for the approved company's tax year, on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the eligible project, with the ordering of credits as provided in KRS 141.0205.

(a) The credit allowed the approved company shall be applied against both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with credit ordering as provided in KRS 141.0205, for the tax year for which the tax return of the approved company is filed.

(b) The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross receipts, or Kentucky gross profits generated by or arising from the eligible project.

(c) The credit provided by this subsection shall be determined as provided in KRS 141.421.

(2) The approved company or, with the authority's consent, an affiliate of the approved company may require that each employee subject to the state income tax imposed by KRS 141.020, as a condition of employment, agree to pay an assessment of up to four percent (4%) of his or her gross wages. The assessment shall be uniform against all employees against whom it is assessed and shall be imposed at a percentage rate that is negotiated as part of the tax incentive agreement.

(a) 1. The assessment may be imposed against each employee:

a. Whose job was created as a result of the eligible project;

b. Who is employed by the approved company to work at the facility; and

c. Who is on the payroll of the approved company or, with the authority's consent, is on the payroll of an affiliate of the approved company.

2. Construction workers, employees of the approved company directly employed in the construction, retrofit, or upgrade of the eligible facility, contract workers, and leased workers shall not be considered employees of the approved company for purposes of the assessment permitted by this subsection.

(b) Each employee so assessed shall be entitled to credits against Kentucky income tax equal to the assessment withheld from wages during the calendar year as provided by KRS 141.310 and 141.421.

(c) An approved company that elects to impose the assessment as a condition of employment is authorized to deduct the assessment from each paycheck of each employee.

(d) The approved company shall provide to the authority the information necessary to monitor the tax incentive agreement and the authorization for the authority to share the information with the department as necessary for purposes of enforcing the terms of the tax incentive agreement.

(e) Any assessment imposed pursuant to this subsection shall permanently expire upon termination or expiration of the tax incentive agreement.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 69, effective June 27, 2019. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 8, effective August 30, 2007.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 69 of that Act apply retroactively to April 14, 2018.

154.27-090 Advance disbursement of incentives -- Computation of maximum disbursement amount -- Schedule for disbursement -- Repayment.

(1) An approved company may be eligible for the advance disbursement of a portion of the post-construction period incentives for which it has been approved. The amount of the advance disbursement shall be based on the employment of Kentucky residents during the construction of the facility, shall be negotiated with the authority as part of the tax incentive agreement, and shall not exceed the limitations established by this section.

(2) The authority shall compute the maximum amount of the advance disbursement employment incentive as follows:

(a) The base amount shall equal the total capital investment specified in the tax incentive agreement multiplied by the labor intensity factor as determined in paragraph (c) of this subsection;

(b) The base amount shall then be multiplied by the Kentucky resident factor as determined in paragraph (d) of this subsection. The resulting amount shall be the maximum advance disbursement employment incentive that the authority may approve;

(c) The labor intensity factor shall be:

1. Twenty-five percent (25%), if the estimated labor component for the eligible project is greater than thirty percent (30%) of the total capital investment;

2. Twenty percent (20%), if the estimated labor component for the eligible project is greater than twenty-five percent (25%) but less than or equal to thirty percent (30%) of the total capital investment; or

3. Fifteen percent (15%), if the estimated labor component for the eligible project is equal to or less than twenty-five percent (25%) of the total capital investment; and

(d) The Kentucky resident factor shall be four percent (4%) multiplied by a fraction, the numerator of which shall be the estimated total gross wages that will be paid to Kentucky residents who are working on the construction, retrofit, or upgrade of the eligible project, and the denominator of which shall be the estimated total gross wages that will be paid to all workers working on the construction, retrofit, or upgrade of the eligible project.

(3) The tax incentive agreement shall include a schedule for the disbursement of the advance disbursement employment incentive during the construction period. In negotiating the disbursement schedule, the authority shall consider the possible increased risk to the Commonwealth associated with the disbursement of funds prior to construction completion.

(4) (a) The approved company shall repay the advance disbursement through a reduction in the post-construction period incentive amounts it would otherwise receive. The amount by which the post-construction period incentive amounts are reduced shall be applied as a credit against the amount owed by the approved company.

(b) The amount of the annual reduction, the incentives the reduction shall apply to, interest due, the time period over which the advance disbursement amount shall be recouped, and alternate payment methods if incentives are not sufficient to repay the advance disbursement shall be negotiated between the authority and the approved company as part of the tax incentive agreement.

(c) The repayment schedule included in the tax incentive agreement shall require uniform incremental payments, to the extent possible, and shall continue until the entire advance disbursement amount has been repaid by the approved company.

(d) The tax incentive agreement shall include a provision addressing an alternate method for payment if incentives are not sufficient to repay the advance disbursement.

(e) The total post-construction incentive payments for which an approved company is eligible shall be tracked by the department. That portion of the incentive amounts identified in the tax incentive agreement as being devoted to the repayment of the advance disbursement amount shall be credited against the balance due from the approved company and shall not be paid to or retained by the approved company.

(f) The department shall forward the amounts credited to the repayment of the advance disbursement amount to the Cabinet for Economic Development, Department of Financial Incentives for deposit in the Energy Projects Economic Development Bond Pool.

(g) During the period for which any portion of the post-construction incentive payments are being credited toward the advance disbursement amount, the approved company shall, at the direction of the authority or the department, file all required requests for incentives, submit all required remittances, make all required tax payments, and provide to the department and the authority any information that would normally be required for the approved company to receive the incentives.

(5) The authority may, for purposes of administering the provisions of this section, solicit information or consultation from one (1) or more of the following sources:

(a) The Office of Energy Policy;

(b) The Center for Applied Energy Research;

(c) The Department of Workforce Development; or

(d) Any public postsecondary education institution within the Commonwealth.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 56, effective July 1, 2022. -- Amended 2018 Ky. Acts ch. 29, sec. 58, effective July 14, 2018. -- Amended 2010 Ky. Acts ch. 24, sec. 203, effective July 15, 2010. -- Created 2007 (2d Extra. Sess.) Ky. Acts ch. 1, sec. 9, effective August 30, 2007.

Legislative Research Commission Note (7/14/2018). 2018 Ky. Acts ch. 171, sec. 140 directed that this statute be repealed. However, 2018 Ky. Acts ch. 207, sec. 149 subsequently directed that the repeal of this statute in 2018 Ky. Acts ch. 171 itself be repealed. Therefore, no repeal was given effect.

Legislative Research Commission Note (8/30/2007). A manifest clerical or typographical error in subsection (4)(b) of this section has been corrected by the Reviser of Statutes during codification pursuant to the authority of KRS 7.136.

154.27-095 Applications for incentives not accepted after August 1, 2018.

(Effective July 1, 2021) No application for incentives found in KRS 154.27-010 to 154.27-100 shall be accepted by the authority for alternative fuel facilities, gasification facility, energy-efficient facility, renewable energy facility, or a carbon dioxide transmission pipeline after August 1, 2018. All outstanding projects with preliminary or final approval shall continue to be governed by the provisions of this subchapter.

Effective:July 1, 2021

History: Amended 2021 Ky. Acts ch. 141, sec. 4, effective July 1, 2021. -- Created 2018 Ky. Acts ch. 199, sec. 27, effective July 14, 2018.

154.27-100 Construction of carbon dioxide transmission pipeline -- Proceedings for condemnation under Eminent Domain Act -- Legislative determination of essential public use.

(1) For the purposes of this section, "carbon dioxide transmission pipeline" has the same meaning as in KRS 154.27-010.

(2) If a carbon dioxide transmission pipeline company has received a construction certificate from the Kentucky State Board on Electric Generation and Siting under KRS 278.714 and is unable to contract or agree with the owner after a good-faith effort to do so, the company may condemn the lands and material for the use and occupation of the lands that are necessary for:

(a) Constructing, maintaining, utilizing, operating, and gaining access to a carbon dioxide transmission pipeline and all necessary machinery, equipment, pumping stations, appliances, and fixtures for use in connection with a carbon dioxide transmission pipeline; and

(b) Obtaining all necessary rights of ingress and egress to construct, examine, alter, repair, maintain, operate, or remove a carbon dioxide transmission pipeline and all of its component parts.

(3) The proceedings for condemnation shall be as provided in the Eminent Domain Act of Kentucky.

(4) Carbon dioxide transmission pipelines, and the routing, construction, maintenance, and operation of them are, as a matter of legislative determination, declared to be a public use essential to the fulfillment of the purposes of this chapter.

Effective: June 8, 2011

History: Created 2011 Ky. Acts ch. 82, sec. 1, effective June 8, 2011.

Subchapter 28 Financing of New Industry Development Subchapter 28 Financing of New Industry Development

154.28-010 Definitions for KRS 154.28-010 to 154.28-100.

As used in KRS 154.28-010 to 154.28-100, unless the context clearly indicates otherwise:

(1) "Activation date" means a date selected by an approved company in the agreement at any time within the two (2) year period after the date of final approval of the agreement by the authority;

(2) "Affiliate" has the same meaning as in KRS 154.22-010;

(3) "Agreement" means the tax incentive agreement entered into, pursuant to KRS 154.28-090, between the authority and an approved company with respect to an economic development project;

(4) "Agribusiness" means any activity involving the processing of raw agricultural products, including timber, or the providing of value-added functions with regard to raw agricultural products;

(5) "Approved company" means any eligible company, approved by the authority pursuant to KRS 154.28-080, requiring an economic development project;

(6) "Approved costs" means:

(a) Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and materialmen in connection with the acquisition, construction, rehabilitation, and installation of an economic development project;

(b) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, rehabilitation, and installation of an economic project which is not paid by the vendor, supplier, deliverymen, contractors, or otherwise else provided;

(c) All costs of architectural and engineering services, including estimates, plans and specifications, preliminary investigations, and supervision of construction, rehabilitation, and installation, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, rehabilitation, and installation of an economic development project;

(d) All costs which shall be required to be paid under the terms of any contract for the acquisition, construction, rehabilitation, and installation of an economic development project;

(e) All costs which shall be required for the installation of utilities such as water, sewer, sewer treatment, gas, electricity, communications, railroads, and similar facilities, and including offsite construction of the facilities paid for by the approved company; and

(f) All other costs comparable to those described above;

(7) "Assessment" means the job development assessment fee authorized by KRS 154.28-010 to 154.28-100;

(8) "Authority" means the Kentucky Economic Development Finance Authority created by KRS 154.20-010;

(9) "Average hourly wage" means the wage and employment data published by the Department of Workforce Development in the Education and Labor Cabinet collectively translated into wages per hour based on a two thousand eighty (2,080) hour work year for the following sectors:

(a) Manufacturing;

(b) Transportation, communications, and public utilities;

(c) Wholesale and retail trade;

(d) Finance, insurance, and real estate; and

(e) Services;

(10) "Commonwealth" means the Commonwealth of Kentucky;

(11) (a) "Economic development project" or "project" means and includes:

1. The acquisition of ownership in any real estate by the approved manufacturing or agribusiness company or its affiliate;

2. The present ownership of real estate by the approved manufacturing or agribusiness company or its affiliate;

3. The acquisition or present ownership of improvements or facilities, as described in paragraph (b) of this subsection, on land which is possessed or is to be possessed by the approved company pursuant to a ground lease having a term of sixty (60) years or more; and

4. The legal possession of facilities by an approved company or its affiliate pursuant to a lease having a term equal to or greater than ten (10) years with a third-party entity, negotiated at arm's length, if the facility will be used by the approved company to conduct the approved activity for which the inducement has been granted. An economic development project qualifying under this subparagraph shall only be eligible for credits against equipment and costs related to installation of equipment and for purposes of the tax credits provided under the provisions of KRS 154.28-010 to 154.28-090 only to the extent of twenty thousand dollars ($20,000) per job created by and maintained at the economic development project. Notwithstanding KRS 154.28-090, an economic development project qualifying under this subparagraph shall be eligible only for the aggregate assessments pursuant to KRS 154.28-110 withheld by the approved company each year and shall not be eligible for credit against Kentucky income tax and limited liability entity tax.

(b) For purposes of paragraph (a)1. and 2. of this subsection, ownership of real estate shall only include fee ownership of real estate and possession of real estate pursuant to a capital lease as determined in accordance with Statement of Financial Accounting Standards No. 13, Accounting for Leases, issued by the Financial Accounting Standards Board, November 1976. With respect to paragraph (a)1., 2., and 3. of this subsection, the construction, installation, equipping, and rehabilitating of improvements, including fixtures and equipment directly involved in the manufacturing process, and facilities necessary or desirable for improvement of the real estate shall include: surveys, site tests, and inspections; subsurface site work and excavation; removal of structures, roadways, cemeteries, and other site obstructions; filling, grading, provision of drainage, and storm water retention; installation of utilities such as water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; offsite construction of utility extensions to the boundaries of the real estate; and the acquisition, installation, equipping, and rehabilitation of manufacturing facilities or agribusiness operations on the real estate for the use of the approved company or its affiliates for manufacturing or agribusiness operational purposes. Pursuant to paragraph (a)3. and 4. of this subsection and this paragraph, an economic development project shall not include lease payments made pursuant to a ground lease for purposes of the tax credits provided under the provisions of KRS 154.28-010 to 154.28-100. An economic development project shall include the equipping of a facility with equipment but, for purposes of the tax credits provided under the provisions of KRS 154.28-010 to 154.28-090, only to the extent of twenty thousand dollars ($20,000) per job created by and maintained at the economic development project;

(12) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, trust, or any other entity engaged in manufacturing or agribusiness operations;

(13) "Employee benefits" means nonmandated costs paid by an eligible company for its full-time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k), or similar plans;

(14) "Full-time employee" means a person employed by an approved company for a minimum of thirty-five (35) hours per week and subject to the state income tax imposed by KRS 141.020;

(15) "Inducement" means the assessment or the Kentucky income tax credit as set forth in KRS 154.28-090;

(16) "Manufacturing" means any activity involving the manufacturing, processing, assembling, or production of any property, including the processing resulting in a change in the conditions of the property, and any activity functionally related to it, together with storage, warehousing, distribution, and related office facilities; however, "manufacturing" shall not include mining, coal or mineral processing, or extraction of minerals;

(17) "State agency" shall have the meaning assigned to the term in KRS 56.440(8);

(18) "Kentucky gross profits" means "Kentucky gross profits" as defined in KRS 141.0401; and

(19) "Kentucky gross receipts" means "Kentucky gross receipts" as defined in KRS 141.0401.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 57, effective July 1, 2022 . -- Amended 2019 Ky. Acts ch. 146, sec. 24, effective June 27, 2019. -- Amended 2009 Ky. Acts ch. 11, sec. 43, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 75, sec. 2, effective June 26, 2007. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 59, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 220, effective July 12, 2006; and ch. 211, sec. 75, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 105, sec. 16, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 37, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 321, sec. 5, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 51, effective July 15, 1996; and ch. 337, sec. 1, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 8, effective July 15, 1994; ch. 450, sec. 27, effective July 15, 1994; and ch. 499, sec. 26, effective July 15, 1994. Created 1992 Ky. Acts ch. 363, sec. 1, effective July 14, 1992.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.28-015 Legislative findings.

The General Assembly hereby finds and declares that the general welfare and material well-being of the citizens of the Commonwealth depends in large measure upon the development and growth of industry in the Commonwealth, and that it is in the best interest of the Commonwealth to induce the location of agribusiness, electric generation, or manufacturing facilities within the Commonwealth in order to advance the public purposes of relieving unemployment by creating new jobs that would not exist if not for the inducements to be offered by the authority to approved companies, and by creating sources of tax revenues for the support of the public services provided by the Commonwealth, and that the authority prescribed by KRS 154.28-015 to 154.28-100, and the purposes to be accomplished under the provisions of KRS 154.28-015 to 154.28-100, are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the location of agribusiness, electric generation, or manufacturing facilities is of paramount importance, mandating that the provisions of KRS 154.28-015 to 154.28-100 be liberally construed and applied in order to advance the public purposes.

Effective: July 14, 2000

History: Amended 2000 Ky. Acts ch. 321, sec. 6, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 52, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 9, effective July 15, 1994. – Created 1992 Ky. Acts ch. 363, sec. 2, effective July 14, 1992.

154.28-020 Repealed, 1994.

[Repealed]

154.28-030 Repealed, 1996.

[Repealed]

154.28-040 Staff.

The secretary of the Cabinet for Economic Development shall provide sufficient personnel to serve as staff for the authority in order to permit the authority to adequately discharge its duties and responsibilities prescribed in KRS 154.28-015 to 154.28-090 and 141.400.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 363, sec. 5, effective July 14, 1992.

154.28-050 Personal liability of director or officer.

No director or officer of the authority shall be subject to any personal liability or accountability by reason of his execution of any obligation duly authorized by the authority.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 363, sec. 6, effective July 14, 1992.

154.28-060 Funding for authority.

The authority may accept and expend moneys which may be appropriated from time to time by the General Assembly, or moneys which may be received from any source, including income from the authority's operations, for effectuating its purpose, including, but not limited to, the payment of the expenses of administration and operation.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 363, sec. 7, effective July 14, 1992.

154.28-070 Personal interest of director, officer, or employee in contract with authority.

(1) No director, officer, or employee of the authority shall be interested, directly or indirectly, or shall be an officer or employee of or have an ownership interest in any firm or corporation interested, directly or indirectly, in any contract with the authority.

(2) Should a director, officer, or employee of the authority have such an interest or be an officer or employee of or have an ownership interest in any such firm or corporation, then the director, officer, or employee of the authority shall:

(a) Disclose the interest and the office, employment, or ownership in such firm or corporation;

(b) Refrain from participating in discussions relating to any contract of the firm or corporation with the authority; and

(c) Refrain from voting or otherwise taking action on any contract or proposed contract of the authority with the firm or corporation.

(3) If any contract or agreements shall be made in violation of the provisions of this section, it shall be null and void and no action shall be maintained against the authority.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 450, sec. 30, effective July 15, 1994. – Created 1992 Ky. Acts ch. 363, sec. 8, effective July 14, 1992.

154.28-080 Standards for approval of eligible companies and projects -- Authorizing resolution.

(1) The authority shall promulgate standards for the determination and approval of eligible companies and their economic development projects in accordance with KRS Chapter 13A.

(2) The standards for approval of eligible companies and economic development projects shall include but not be limited to: the creditworthiness of eligible companies; the number of new jobs to be provided by an economic development project to the residents of the Commonwealth; and the likelihood of the economic success of the economic development project.

(3) The economic development project shall involve a minimum investment of one hundred thousand dollars ($100,000) by the eligible company and shall result in the creation by the eligible company, within two (2) years from the date of the final resolution authorizing the economic development project, of a minimum of fifteen

(15) new full-time jobs at the site of the economic development projects for Kentucky residents to be employed by the eligible company and to be held by persons subject to the personal income tax of the Commonwealth. The authority may extend this two (2) year period upon the written application of an eligible company requesting an extension.

(4) (a) Within six (6) months after the activation date, the approved company shall compensate a minimum of ninety percent (90%) of its full-time employees whose jobs were created with base hourly wages equal to either:

1. Seventy-five percent (75%) of the average hourly wage for the Commonwealth; or

2. Seventy-five percent (75%) of the average hourly wage for the county in which the project is to be undertaken.

(b) If the base hourly wage calculated in paragraph (a)1. or 2. of this subsection is less than one hundred fifty percent (150%) of the federal minimum wage, then the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage. However, for projects receiving preliminary approval of the authority prior to July 1, 2008, the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage existing on January 1, 2007. In addition to the applicable base hourly wage calculated above, the eligible company shall provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage; however, if the eligible company does not provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage, the eligible company may qualify under this section if it provides the employees hired by the eligible company as a result of the economic development project total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the applicable base hourly wage through increased hourly wages combined with employee benefits.

(5) No economic development project which will result in the replacement of a manufacturing or agribusiness facility existing within the Commonwealth shall be approved by the authority; however, the authority may approve an economic development project that:

(a) Rehabilitates a manufacturing or agribusiness facility:

1. Which has not been in operation for a period of ninety (90) or more consecutive days;

2. For which the current occupant of the facility has published a notice of closure so long as the eligible company intending to acquire the facility is not an affiliate of the current occupant; or

3. To which the title is vested in other than the eligible company or an affiliate of the eligible company and that is sold or transferred pursuant to a foreclosure ordered by a court of competent jurisdiction or an order of a bankruptcy court of competent jurisdiction;

(b) Replaces a manufacturing or agribusiness facility existing in the Commonwealth:

1. To which the title shall have been taken under the exercise of the power of eminent domain, or to which the title shall be the subject of a nonappealable judgment granting the authority to exercise the power of eminent domain, in either event to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or

2. Which has been damaged or destroyed by fire or other casualty to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or

(c) Replaces an existing manufacturing or agribusiness facility located in the same county that cannot be expanded due to the unavailability of real estate at or adjacent to the manufacturing or agribusiness facility to be replaced. Any economic development project satisfying the requirements of this subsection shall be eligible only for inducements to the extent of the expansion, and no inducements shall be available for the equivalent of the manufacturing or agribusiness facility to be replaced. No economic development project otherwise satisfying the requirements of this subsection shall be approved by the authority that results in a lease abandonment or lease termination by the eligible company without the consent of the lessor.

(6) With respect to each eligible company making an application to the authority for inducements, and with respect to these economic development projects described in the application which do not involve an expansion, the authority shall make inquiries and request materials of the applicant, including but not limited to written evidence that except for the receipt of inducements authorized by KRS 154.28-015 to 154.28-090 and KRS 141.400, the eligible company will not locate its economic development project within the Commonwealth. Upon the review of the application and completion of initial inquiries, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and authorizing the undertaking of the economic development project.

(7) After a diligent review of the relevant materials and completion of its inquiries, the authority, by resolution of its board of directors, may designate an eligible company to be an approved company.

(8) All meetings of the board of directors of the authority shall be held in accordance with KRS 61.805 to 61.850. The board of directors of the authority may, pursuant to KRS 61.815, hold closed sessions of its meetings to discuss matters exempt from the open meetings law and pertaining to an eligible company.

Effective: June 26, 2007

History: Amended 2007 Ky. Acts ch. 69, sec. 5, effective June 26, 2007. -- Amended 2002 Ky. Acts ch. 338, sec. 38, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 321, sec. 7, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 584, sec. 2, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 194, sec. 53, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 10, effective July 15, 1994; and ch. 450, sec. 31, effective July 15, 1994. – Created 1992 Ky. Acts ch. 363, sec. 9, effective July 14, 1992.

154.28-090 Agreements between authority and approved companies -- Time limits -

• Tax credits and assessments as inducements for approved companies -- Assignment of agreement -- Documentation of expenditures -- Suspension of inducements -- Authority's remedies in case of failure to comply -- Activation date -- Duties of Department of Revenue. The authority, upon adoption of an authorizing resolution, may enter into, with any approved company, an agreement with respect to its economic development project. The terms and provisions of each agreement, including the amount of approved costs, shall be determined by negotiations between the authority and the approved company, except that each agreement shall include the following provisions:

(1) The agreement shall set forth the maximum amount of inducements available to the approved company for recovery of the approved costs authorized by the authority and expended by the approved company.

(2) The approved company shall expend the authorized approved costs within three (3) years of the date of the final approval by the authority.

(3) The approved company shall provide the authority with documentation as to the expenditures for approved costs in a manner acceptable to the authority.

(4) The agreement shall include the activation date and will terminate upon the earlier of the full receipt of the maximum amount of inducements by the approved company or ten (10) years from the activation date. To implement the activation date, the approved company shall notify the authority, the Kentucky Department of Revenue, and the approved company's employees of the activation date on which implementation of the inducements authorized in the agreement shall occur. The activation date shall be the time when the maximum dollar value of equipment that constitutes a portion of the economic development project under KRS 154.28- 010(11) shall be determined. If the approved company does not satisfy the minimum investment and minimum employment requirements of KRS 154.28- 080(3) by the activation date, the approved company shall not be entitled to receive inducements pursuant to this subchapter until the approved company satisfies the requirements; however, the ten (10) year period for the term of the agreement shall begin from the activation date. Notwithstanding the previous sentence, if the approved company does not satisfy the minimum investment and minimum employment requirements of KRS 154.28-080(3) within two (2) years from the date of final approval of the agreement, then the approved company shall be ineligible to receive inducements under this subchapter unless an extension is approved by the authority.

(5) The tax agreement shall also state that if the total number of new full-time employees at the site of the economic development project who are residents of the Commonwealth and subject to the Kentucky income tax is less than fifteen (15) at any time after activation, the authorized inducements shall be suspended for a period of up to one (1) year. If the company does not have at least fifteen (15) new full-time employees at the site who are residents of the Commonwealth and subject to Kentucky income tax within one (1) year from the date of the initial suspension, the inducements may be terminated at the discretion of the authority.

(6) The approved company shall comply with the wage criteria set forth in KRS 154.28-080(4) and provide documentation in connection with wages paid to its full- time employees hired as a result of the economic development project in a manner acceptable to the authority.

(7) The approved company may be permitted one of the following inducements during the term of the agreement and shall select the applicable inducement at the time of final approval by the authority:

(a) A one hundred percent (100%) credit against the Kentucky income tax and the limited liability entity tax imposed under KRS 141.0401 that would otherwise be owed in the approved company's fiscal year, as determined under KRS 141.400, to the Commonwealth by the approved company on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the economic development project, with the ordering of credits as provided in KRS 141.0205; or

(b) The aggregate assessments pursuant to KRS 154.28-110 withheld by the approved company each year.

(8) Either the total tax credit or assessments may not exceed authorized cumulative approved costs paid by the approved company in the three (3) year period commencing with the date of final approval.

(9) If the approved company elects to use the tax credit, the income tax and limited liability entity tax imposed under KRS 141.0401 credited to the approved company shall be credited for the fiscal year for which the tax return of the approved company is filed. The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross profits, or Kentucky gross receipts generated by or arising from the economic development project.

(10) The agreement may be assigned by the approved company only upon the prior written consent of the authority following the adoption of a resolution by the authority to that effect.

(11) The agreement shall provide that if an approved company fails to comply with its obligations under the agreement then the authority shall have the right, at its option, to:

(a) Suspend either the income tax credits or assessments available to the approved company, pursuant to subsection (5) of this section;

(b) Pursue any remedy provided under the agreement, including termination thereof; and

(c) Pursue any other remedy at law to which it may be entitled.

(12) All remedies provided in subsection (11) of this section shall be deemed to be cumulative.

(13) By October 1 of each year, the Department of Revenue shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year and assessments taken during the prior calendar year by approved companies with respect to their economic development projects under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state income tax return, when an approved company has taken tax credits or assessments equal to its total inducements.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 70, effective June 27, 2019. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 60, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 584, effective June 20, 2005. -- Amended 2004 Ky. Acts ch. 105, sec. 17, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 39, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 23, effective July 14, 2000; and ch. 321, sec. 8, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 54, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 32, effective July 15, 1994. – Created 1992 Ky. Acts ch. 363, sec. 10, effective July 14, 1992.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 70 of that Act apply retroactively to April 14, 2018.

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.28-100 Application of law prior to July 15, 1994, in certain circumstances.

If the authority adopts a preliminary resolution designating an eligible company as an approved company and preliminarily approving the project of the eligible company as an economic development project prior to July 15, 1994, and the authority adopts a final resolution approving the eligible company as an approved company and the project of the eligible company as an economic development project, and the authority and the eligible company enter into a financing agreement no later than June 30, 1995, then the approved company thereafter shall be subject to KRS 154.28-010 to 154.28-090 as it existed prior to July 15, 1994.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 450, sec. 33, effective July 15, 1994.

154.28-101 Short title for KRS 154.28-010 to 154.28-100.

KRS 154.28-010 to 154.28-100 shall be known as the Kentucky Industrial Development Act.

Effective: July 15, 1996

History: Created 1996 Ky. Acts ch. 194, sec. 50, effective July 15, 1996.

154.28-105 Deadline for new applications -- Governing law for outstanding approved projects.

New applications shall not be accepted or considered under this subchapter on or after June 26, 2009. All outstanding projects with preliminary or final approval under this subchapter as of June 26, 2009, shall continue to be governed by the provisions of this subchapter.

Effective: June 26, 2009

History: Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 28, effective June 26, 2009.

154.28-110 Assessment based on employee's gross wages -- Employee tax credits.

(1) The approved company or, with the authority's consent, an affiliate of the approved company may require, in lieu of receiving the income tax credits described in KRS 154.28-090, that each employee subject to state tax imposed by KRS 141.020, as a condition of employment, agree to pay an assessment, equal to three percent (3%) of the gross wages of each employee whose job was created as a result of the economic development project, for the purpose of recovering authorized approved costs as set forth in the agreement.

(2) Each employee so assessed shall be entitled to a credit against Kentucky income tax withheld as provided by KRS 141.310 and 141.350 equal to the assessment withheld from his or her wages during the calendar year.

(3) If an approved company shall elect to impose the assessment as a condition of employment, it shall be authorized to deduct the assessment from each paycheck of each employee.

(4) Any approved company collecting an assessment as provided in subsection (1) of this section shall make its payroll books and records available to the authority at such reasonable times as the authority shall request and shall file with the authority documentation respecting the assessment as the authority may require.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 338, sec. 40, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 466, sec. 3, effective April 21, 2000. -- Created 1996 Ky. Acts ch. 194, sec. 55, effective July 15, 1996.

154.28-120 Repealed, 2002.

[Repealed]

154.28-130 Costs of remediation of property as eligible costs.

Costs incurred by an applicant in remediating a property in accordance with KRS 224.1- 510 to 224.1-532 shall be considered eligible costs for the purposes of KRS 154.28-010 to 154.28-100.

Effective: June 21, 2001

History: Created 2001 Ky. Acts ch. 128, sec. 14, effective June 21, 2001.

154.28-140 Application of subchapter to companies that are approved and that enter into agreements by certain dates.

If the authority adopts a preliminary resolution designating an eligible company as an approved company and preliminarily approving the project of the eligible company as an economic development project prior to July 15, 2002, and the authority adopts a final resolution approving the eligible company as an approved company and the project of the eligible company as an economic development project, and the authority and the eligible company enter into an agreement no later than June 30, 2003, then the approved company thereafter shall be subject to Subchapter 28 of KRS Chapter 154 effective prior to July 15, 2002.

Effective: July 15, 2002

History: Created 2002 Ky. Acts ch. 338, sec. 41, effective July 15, 2002.

Subchapter 29 Financing of Tourism Development Subchapter 29 Financing of Tourism Development

154.29-010 Renumbered as KRS 148.851.

[Renumbered as KRS 148.851.]

154.29-020 Renumbered as KRS 148.853.

[Renumbered as KRS 148.853.]

154.29-030 Renumbered as KRS 148.855.

[Renumbered as KRS 148.855.]

154.29-040 Renumbered as KRS 148.857.

[Renumbered as KRS 148.857.]

154.29-050 Renumbered as KRS 148.859.

[Renumbered as KRS 148.859.]

154.29-060 Renumbered as KRS 148.860.

[Renumbered as KRS 148.860.]

Subchapter 30 Tax Increment Financing Subchapter 30 Tax Increment Financing

154.30-010 Definitions for subchapter. (Effective until January 1, 2027)

As used in this subchapter:

(1) "Activation date" means:

(a) For all projects except those described in paragraph (b) of this subsection, the date established any time within a two (2) year period after the commencement date. The Commonwealth may extend the two (2) year period to no more than four (4) years upon written application by the agency requesting the extension; and

(b) For signature projects approved under KRS 154.30-050(3)(a), the date established any time within a ten (10) year period after the commencement date. For all projects established after July 14, 2018, the activation date is the date on which the time period for the pledge of incremental revenues shall commence. To implement the activation date, the minimum capital investment must be met and the agency that is a party to the tax incentive agreement shall notify the office;

(2) "Agency" means:

(a) An urban renewal and community development agency established under KRS Chapter 99;

(b) A development authority established under KRS Chapter 99;

(c) A nonprofit corporation;

(d) A housing authority established under KRS Chapter 80;

(e) An air board established under KRS 183.132 to 183.160;

(f) A local industrial development authority established under KRS 154.50-301 to 154.50-346;

(g) A riverport authority established under KRS 65.510 to 65.650; or

(h) A designated department, division, or office of a city or county;

(3) (a) "Approved public infrastructure costs" means costs associated with the acquisition, installation, construction, or reconstruction of public works, public improvements, and public buildings, including planning and design costs associated with the development of the public amenities.

(b) "Approved public infrastructure costs" includes but is not limited to costs incurred for the following:

1. Land preparation, including demolition and clearance work;

2. Buildings;

3. Sewers and storm drainage;

4. Curbs, sidewalks, promenades, and pedways;

5. Roads;

6. Street lighting;

7. The provision of utilities;

8. Environmental remediation;

9. Floodwalls and floodgates;

10. Public spaces or parks;

11. Parking;

12. Easements and rights-of-way;

13. Transportation facilities;

14. Public landings;

15. Amenities, including fountains, benches, and sculptures; and

16. Riverbank modifications and improvements;

(4) "Approved signature project costs" means:

(a) The acquisition of land for portions of the project that are for infrastructure; and

(b) Costs associated with the acquisition, installation, development, construction, improvement, or reconstruction of infrastructure, including planning and design costs associated with the development of infrastructure, including but not limited to parking structures, including portions of parking structures that serve as platforms to support development above; that have been determined by the commission to represent a unique challenge in the financing of a project such that the project could not be developed without incentives intended by this chapter to foster economic development;

(5) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010;

(6) "Capital investment" means:

(a) Obligations incurred for labor and to contractors, subcontractors, builders, and materialmen in connection with the acquisition, construction, installation, equipping, and rehabilitation of a project;

(b) The cost of acquiring land or rights in land within the development area on the footprint of the project, and any cost incident thereto, including recording fees;

(c) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, installation, equipping, and rehabilitation of a project which is not paid by the contractor or contractors or otherwise provided;

(d) All costs of architectural and engineering services, including test borings, surveys, estimates, plans, specifications, preliminary investigations, supervision of construction, and the performance of all the duties required by or consequent upon the acquisition, construction, installation, equipping, and rehabilitation of a project;

(e) All costs that are required to be paid under the terms of any contract for the acquisition, construction, installation, equipping, and rehabilitation of a project; and

(f) All other costs of a nature comparable to those described in this subsection that occur after preliminary approval;

(7) "City" means any city, consolidated local government, or urban-county government;

(8) "Commencement date" means the final approval date or the date on which a tax incentive agreement is executed;

(9) "Commonwealth" means the Commonwealth of Kentucky;

(10) "County" means any county, consolidated local government, charter county, unified local government, or urban-county government;

(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban consumers, all items, base year computed for 1982 to 1984 equals one hundred (100), published by the United States Department of Labor, Bureau of Labor Statistics;

(12) "Department" means the Department of Revenue;

(13) "Development area" means an area established under KRS 65.7049, 65.7051, and 65.7053;

(14) "Economic development projects" means projects which are approved for tax credits under Subchapter 20, 22, 23, 24, 25, 26, 27, 28, 34, or 48 of KRS Chapter 154;

(15) "Financing costs" means principal, interest, costs of issuance, debt service reserve requirements, underwriting discount, costs of credit enhancement or liquidity instruments, and other costs directly related to the issuance of bonds or debt for approved public infrastructure costs or approved signature project costs for projects approved pursuant to KRS 154.30-050;

(16) "Footprint" means the actual perimeter of a discrete, identified project within a development area. The footprint shall not include any portion of a development area outside the area for which actual capital investments are made and must be contiguous;

(17) "Governing body" means the body possessing legislative authority in a city or county;

(18) "Increment bonds" means bonds and notes issued for the purpose of paying the costs of one (1) or more projects;

(19) "Incremental revenues" means:

(a) The amount of revenues received by a taxing district, as determined by subtracting old revenues from new revenues in a calendar year with respect to a development area, or a project within a development area; or

(b) The amount of revenues received by the Commonwealth as determined by subtracting old revenues from new revenues in a calendar year with respect to the footprint;

(20) "Local participation agreement" means the agreement entered into under KRS 65.7063;

(21) "Local tax revenues" has the same meaning as in KRS 65.7045;

(22) "Modified new revenues for income tax" means the amount of individual income tax included in state tax revenues that is:

(a) The result of multiplying the portion of state tax revenues from individual income taxes by the modifier;

(b) Used for calculating state tax revenues in calendar years 2023 to 2026; and

(c) For projects approved prior to January 1, 2023;

(23) "Modifier" means the result of dividing the individual income tax rate of five percent (5%), in effect as of December 31, 2022, by the individual income tax rate under KRS 141.020 for the calendar year in which the new revenues for income tax are being computed;

(24) "New revenues" means:

(a) The amount of local tax revenues received by a taxing district with respect to a development area in any calendar year beginning with the year in which the activation date occurred; and

(b) The amount of state tax revenues received by the Commonwealth with respect to the footprint in any calendar year beginning with the year in which the activation date occurred. For projects approved prior to January 1, 2023, any state tax revenues received by the Commonwealth from individual income tax shall be computed using modified new revenues for income tax;

(25) "Old revenues" means:

(a) The amount of local tax revenues received by a taxing district with respect to a development area as of December 31 of the year of preliminary approval; or

(b) 1. The amount of state tax revenues received by the Commonwealth within the footprint as of December 31 of the year of preliminary approval. If the authority determines that the amount of state tax revenues received as of December 31 of the last calendar year prior to the commencement of preliminary approval does not represent a true and accurate depiction of revenues, the authority may consider revenues for a period of no longer than three (3) calendar years prior to the year of preliminary approval, so as to determine a fair representation of state tax revenues. The amount determined by the authority shall be specified in the tax incentive agreement. If state tax revenues were derived from the footprint prior to the year of preliminary approval, old revenues shall increase each calendar year by:

a. The percentage increase, if any, of the CPI or a comparable index; or

b. An alternative percentage increase that is determined to be appropriate by the authority. The method for increasing old revenues shall be set forth in the tax incentive agreement.

2. If state revenues were derived from the footprint prior to the year of preliminary approval, the calculation of incremental revenues shall be based on the value of old revenues as increased using the method prescribed in subparagraph 1. of this paragraph to reflect the same calendar year as is used in the determination of new revenues;

(26) "Outstanding" means increment bonds that have been issued, delivered, and paid for by the purchaser, except any of the following:

(a) Increment bonds canceled upon surrender, exchange, or transfer, or upon payment or redemption;

(b) Increment bonds in replacement of which or in exchange for which other increment bonds have been issued; or

(c) Increment bonds for the payment, redemption, or purchase for cancellation prior to maturity, of which sufficient moneys or investments, in accordance with the ordinance or other proceedings or any applicable law, by mandatory sinking fund redemption requirements, or otherwise, have been deposited, and credited in a sinking fund or with a trustee or paying or escrow agent, whether at or prior to their maturity or redemption, and, in the case of increment bonds to be redeemed prior to their stated maturity, notice of redemption has been given or satisfactory arrangements have been made for giving notice of that redemption, or waiver of that notice by or on behalf of the affected bond holders has been filed with the issuer or its agent;

(27) "Preliminary approval" means the action taken by the authority preliminarily approving an eligible project for incentives under this subchapter;

(28) "Project" means any property, asset, or improvement located in a development area and certified by the governing body as:

(a) Being for a public purpose; and

(b) Being for the development of facilities for residential, commercial, industrial, public, recreational, or other uses, or for open space, including the development, rehabilitation, renovation, installation, improvement, enlargement, or extension of real estate and buildings; and

(c) Contributing to economic development or tourism; and

(d) Meeting the additional requirements established by KRS 154.30-040, 154.30- 050, or 154.30-060;

(29) "Signature project" means a project approved under KRS 154.30-050;

(30) "State real property ad valorem tax" means real property ad valorem taxes levied under KRS 132.020(1)(a);

(31) "State tax revenues" means revenues received by the Commonwealth from one (1) or more of the following sources:

(a) State real property ad valorem taxes;

(b) Individual income taxes levied under KRS 141.020, other than individual income taxes that have already been pledged to support an economic development project within the development area;

(c) Corporation income taxes levied under KRS 141.040, other than corporation income taxes that have already been pledged to support an economic development project within the development area;

(d) Limited liability entity taxes levied under KRS 141.0401, other than limited liability entity taxes that have already been pledged to support an economic development project within the development area; and

(e) Sales taxes levied under KRS 139.200, excluding sales taxes already pledged for:

1. Approved tourism attraction projects, as defined in KRS 148.851, within the development area; and

2. Projects which are approved for sales tax refunds under Subchapter 20 of KRS Chapter 154 within the development area;

(32) "Tax incentive agreement" means an agreement entered into in accordance with KRS 154.30-070; and

(33) "Termination date" means:

(a) For a tax incentive agreement satisfying the requirements of KRS 154.30-040 or 154.30-060, a date established by the tax incentive agreement that is no more than twenty (20) years from the activation date. However, the termination date for a tax incentive agreement shall in no event be more than forty (40) years from the establishment date of the development area to which the tax incentive agreement relates; and

(b) For a project grant agreement satisfying the requirements of KRS 154.30-050, a date established by the tax incentive agreement that is no more than thirty

(30) years from the activation date. However, the termination date for a tax incentive agreement shall in no event be more than forty (40) years from the establishment date of the development area to which the tax incentive agreement relates.

Effective: June 27, 2025

History: Amended 2025 Ky. Acts ch. 98, sec. 17, effective June 27, 2025. -- Amended 2024 Ky. Acts ch. 166, sec. 29, effective July 15, 2024. -- Amended 2023 Ky. Acts ch. 92, sec. 26, effective March 24, 2023. -- Amended 2018 Ky. Acts ch. 199, sec. 26, effective July 14, 2018. -- Amended 2011 Ky. Acts ch. 62, sec. 7, effective June 8, 2011. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 102, effective June 26, 2009. -- Created 2008 Ky. Acts ch. 178, sec. 14, effective July 15, 2008.

Legislative Research Commission Note (6/8/2011). 2011 Ky. Acts. ch. 62, sec. 8, provides that "the provisions of Section 7 of this Act (KRS 154.30-010) shall apply retroactively and any agreements entered into prior to the effective date of this Act, for projects approved under KRS 154.30-050(2)(a) that have not been activated as of the effective date of this Act, shall be amended to reflect the revised activation date provided for in Section 7 of this Act."

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 103, provided that, notwithstanding KRS 65.7044(6), the amendments made to this statute in 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 102, "shall apply retroactively and any agreements entered into prior to the effective date of this Act for projects approved under KRS 154.30-050(2)(a) that have not been activated as of the effective date of this Act shall be amended to reflect the revised activation date provided for in Section 102 of this Act."

Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 178, sec. 14 established a new Subchapter 30 of KRS Chapter 154 concerning tax increment financing projects and provided further that "KRS 65.7045 is repealed, reenacted, and amended as a new section thereof to read as follows." Since KRS 65.7045 was also amended in sec. 2 of that Act, inquiry was made of the drafter as to the intent of sec. 14. The drafter explained that statutes dealing with both area development projects and tax increment financing projects were blended together in KRS Chapter 65 with no easy distinguishing elements, and the intent of creating Subchapter 30 of KRS Chapter 154 was to separate them appropriately. The intent of sec. 14 was to create a definitions section for the new Subchapter 30 of KRS Chapter 154, using the text of KRS 65.7045 as a base starting point, removing definitions specific to KRS Chapter 65 area development projects, retaining definitions that were common to both area development projects and tax increment financing projects, and adding definitions specific to tax increment financing projects. As such, the Reviser of Statutes has treated sec. 14 in codification as creating a new section of Subchapter 30 of KRS Chapter 154 (this statute) to effectuate that intent.

154.30-010 Definitions for subchapter. (Effective January 1, 2027)

As used in this subchapter:

(1) "Activation date" means:

(a) For all projects except those described in paragraph (b) of this subsection, the date established any time within a two (2) year period after the commencement date. The Commonwealth may extend the two (2) year period to no more than four (4) years upon written application by the agency requesting the extension; and

(b) For signature projects approved under KRS 154.30-050(3)(a), the date established any time within a ten (10) year period after the commencement date. For all projects established after July 14, 2018, the activation date is the date on which the time period for the pledge of incremental revenues shall commence. To implement the activation date, the minimum capital investment must be met and the agency that is a party to the tax incentive agreement shall notify the office;

(2) "Agency" means:

(a) An urban renewal and community development agency established under KRS Chapter 99;

(b) A development authority established under KRS Chapter 99;

(c) A nonprofit corporation;

(d) A housing authority established under KRS Chapter 80;

(e) An air board established under KRS 183.132 to 183.160;

(f) A local industrial development authority established under KRS 154.50-301 to 154.50-346;

(g) A riverport authority established under KRS 65.510 to 65.650; or

(h) A designated department, division, or office of a city or county;

(3) (a) "Approved public infrastructure costs" means costs associated with the acquisition, installation, construction, or reconstruction of public works, public improvements, and public buildings, including planning and design costs associated with the development of the public amenities.

(b) "Approved public infrastructure costs" includes but is not limited to costs incurred for the following:

1. Land preparation, including demolition and clearance work;

2. Buildings;

3. Sewers and storm drainage;

4. Curbs, sidewalks, promenades, and pedways;

5. Roads;

6. Street lighting;

7. The provision of utilities;

8. Environmental remediation;

9. Floodwalls and floodgates;

10. Public spaces or parks;

11. Parking;

12. Easements and rights-of-way;

13. Transportation facilities;

14. Public landings;

15. Amenities, including fountains, benches, and sculptures; and

16. Riverbank modifications and improvements;

(4) "Approved signature project costs" means:

(a) The acquisition of land for portions of the project that are for infrastructure; and

(b) Costs associated with the acquisition, installation, development, construction, improvement, or reconstruction of infrastructure, including planning and design costs associated with the development of infrastructure, including but not limited to parking structures, including portions of parking structures that serve as platforms to support development above; that have been determined by the commission to represent a unique challenge in the financing of a project such that the project could not be developed without incentives intended by this chapter to foster economic development;

(5) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010;

(6) "Capital investment" means:

(a) Obligations incurred for labor and to contractors, subcontractors, builders, and materialmen in connection with the acquisition, construction, installation, equipping, and rehabilitation of a project;

(b) The cost of acquiring land or rights in land within the development area on the footprint of the project, and any cost incident thereto, including recording fees;

(c) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, installation, equipping, and rehabilitation of a project which is not paid by the contractor or contractors or otherwise provided;

(d) All costs of architectural and engineering services, including test borings, surveys, estimates, plans, specifications, preliminary investigations, supervision of construction, and the performance of all the duties required by or consequent upon the acquisition, construction, installation, equipping, and rehabilitation of a project;

(e) All costs that are required to be paid under the terms of any contract for the acquisition, construction, installation, equipping, and rehabilitation of a project; and

(f) All other costs of a nature comparable to those described in this subsection that occur after preliminary approval;

(7) "City" means any city, consolidated local government, or urban-county government;

(8) "Commencement date" means the final approval date or the date on which a tax incentive agreement is executed;

(9) "Commonwealth" means the Commonwealth of Kentucky;

(10) "County" means any county, consolidated local government, charter county, unified local government, or urban-county government;

(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban consumers, all items, base year computed for 1982 to 1984 equals one hundred (100), published by the United States Department of Labor, Bureau of Labor Statistics;

(12) "Department" means the Department of Revenue;

(13) "Development area" means an area established under KRS 65.7049, 65.7051, and 65.7053;

(14) "Economic development projects" means projects which are approved for tax credits under Subchapter 20, 22, 23, 24, 25, 26, 27, 28, 34, or 48 of KRS Chapter 154;

(15) "Financing costs" means principal, interest, costs of issuance, debt service reserve requirements, underwriting discount, costs of credit enhancement or liquidity instruments, and other costs directly related to the issuance of bonds or debt for approved public infrastructure costs or approved signature project costs for projects approved pursuant to KRS 154.30-050;

(16) "Footprint" means the actual perimeter of a discrete, identified project within a development area. The footprint shall not include any portion of a development area outside the area for which actual capital investments are made and must be contiguous;

(17) "Governing body" means the body possessing legislative authority in a city or county;

(18) "Increment bonds" means bonds and notes issued for the purpose of paying the costs of one (1) or more projects;

(19) "Incremental revenues" means:

(a) The amount of revenues received by a taxing district, as determined by subtracting old revenues from new revenues in a calendar year with respect to a development area, or a project within a development area; or

(b) The amount of revenues received by the Commonwealth as determined by subtracting old revenues from new revenues in a calendar year with respect to the footprint;

(20) "Local participation agreement" means the agreement entered into under KRS 65.7063;

(21) "Local tax revenues" has the same meaning as in KRS 65.7045;

(22) "Modified new revenues for income tax" means the amount of individual income tax included in state tax revenues that is:

(a) The result of multiplying the portion of state tax revenues from individual income taxes by the modifier;

(b) Used for calculating state tax revenues in calendar years 2023 to 2048; and

(c) For projects approved prior to January 1, 2023;

(23) "Modifier" means the result of:

(a) 1. Dividing the individual income tax rate of five percent (5%), in effect as of December 31, 2022, by:

2. The individual income tax rate under KRS 141.020 for the calendar year in which the new revenues for income tax are being computed; and

(b) Beginning in calendar year 2026, reducing the result of paragraph (a) of this subsection by three and three-tenths percent (3.3%) and in every subsequent calendar year after 2026 to 2048, further reducing the result by an additional one and one-tenth percent (1.1%);

(24) "New revenues" means:

(a) The amount of local tax revenues received by a taxing district with respect to a development area in any calendar year beginning with the year in which the activation date occurred; and

(b) The amount of state tax revenues received by the Commonwealth with respect to the footprint in any calendar year beginning with the year in which the activation date occurred. For projects approved prior to January 1, 2023, any state tax revenues received by the Commonwealth from individual income tax shall be computed using modified new revenues for income tax;

(25) "Old revenues" means:

(a) The amount of local tax revenues received by a taxing district with respect to a development area as of December 31 of the year of preliminary approval; or

(b) 1. The amount of state tax revenues received by the Commonwealth within the footprint as of December 31 of the year of preliminary approval. If the authority determines that the amount of state tax revenues received as of December 31 of the last calendar year prior to the commencement of preliminary approval does not represent a true and accurate depiction of revenues, the authority may consider revenues for a period of no longer than three (3) calendar years prior to the year of preliminary approval, so as to determine a fair representation of state tax revenues. The amount determined by the authority shall be specified in the tax incentive agreement. If state tax revenues were derived from the footprint prior to the year of preliminary approval, old revenues shall increase each calendar year by:

a. The percentage increase, if any, of the CPI or a comparable index; or

b. An alternative percentage increase that is determined to be appropriate by the authority. The method for increasing old revenues shall be set forth in the tax incentive agreement.

2. If state revenues were derived from the footprint prior to the year of preliminary approval, the calculation of incremental revenues shall be based on the value of old revenues as increased using the method prescribed in subparagraph 1. of this paragraph to reflect the same calendar year as is used in the determination of new revenues;

(26) "Outstanding" means increment bonds that have been issued, delivered, and paid for by the purchaser, except any of the following:

(a) Increment bonds canceled upon surrender, exchange, or transfer, or upon payment or redemption;

(b) Increment bonds in replacement of which or in exchange for which other increment bonds have been issued; or

(c) Increment bonds for the payment, redemption, or purchase for cancellation prior to maturity, of which sufficient moneys or investments, in accordance with the ordinance or other proceedings or any applicable law, by mandatory sinking fund redemption requirements, or otherwise, have been deposited, and credited in a sinking fund or with a trustee or paying or escrow agent, whether at or prior to their maturity or redemption, and, in the case of increment bonds to be redeemed prior to their stated maturity, notice of redemption has been given or satisfactory arrangements have been made for giving notice of that redemption, or waiver of that notice by or on behalf of the affected bond holders has been filed with the issuer or its agent;

(27) "Preliminary approval" means the action taken by the authority preliminarily approving an eligible project for incentives under this subchapter;

(28) "Project" means any property, asset, or improvement located in a development area and certified by the governing body as:

(a) Being for a public purpose; and

(b) Being for the development of facilities for residential, commercial, industrial, public, recreational, or other uses, or for open space, including the development, rehabilitation, renovation, installation, improvement, enlargement, or extension of real estate and buildings; and

(c) Contributing to economic development or tourism; and

(d) Meeting the additional requirements established by KRS 154.30-040, 154.30- 050, or 154.30-060;

(29) "Signature project" means a project approved under KRS 154.30-050;

(30) "State real property ad valorem tax" means real property ad valorem taxes levied under KRS 132.020(1)(a);

(31) "State tax revenues" means revenues received by the Commonwealth from one (1) or more of the following sources:

(a) State real property ad valorem taxes;

(b) Individual income taxes levied under KRS 141.020, other than individual income taxes that have already been pledged to support an economic development project within the development area;

(c) Corporation income taxes levied under KRS 141.040, other than corporation income taxes that have already been pledged to support an economic development project within the development area;

(d) Limited liability entity taxes levied under KRS 141.0401, other than limited liability entity taxes that have already been pledged to support an economic development project within the development area; and

(e) Sales taxes levied under KRS 139.200, excluding sales taxes already pledged for:

1. Approved tourism attraction projects, as defined in KRS 148.851, within the development area; and

2. Projects which are approved for sales tax refunds under Subchapter 20 of KRS Chapter 154 within the development area;

(32) "Tax incentive agreement" means an agreement entered into in accordance with KRS 154.30-070; and

(33) "Termination date" means:

(a) For a tax incentive agreement satisfying the requirements of KRS 154.30-040 or 154.30-060, a date established by the tax incentive agreement that is no more than twenty (20) years from the activation date. However, the termination date for a tax incentive agreement shall in no event be more than forty (40) years from the establishment date of the development area to which the tax incentive agreement relates; and

(b) For a project grant agreement satisfying the requirements of KRS 154.30-050, a date established by the tax incentive agreement that is no more than thirty

(30) years from the activation date. However, the termination date for a tax incentive agreement shall in no event be more than forty (40) years from the establishment date of the development area to which the tax incentive agreement relates.

Effective: January 1, 2027

History: Amended 2026 Ky. Acts ch. 161, sec. 107, effective January 1, 2027; and ch. 198, sec. 53, effective January 1, 2027. -- Amended 2025 Ky. Acts ch. 98, sec. 17, effective June 27, 2025. -- Amended 2024 Ky. Acts ch. 166, sec. 29, effective July 15, 2024. -- Amended 2023 Ky. Acts ch. 92, sec. 26, effective March 24, 2023. -- Amended 2018 Ky. Acts ch. 199, sec. 26, effective July 14, 2018. -- Amended 2011 Ky. Acts ch. 62, sec. 7, effective June 8, 2011. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 102, effective June 26, 2009. -- Created 2008 Ky. Acts ch. 178, sec. 14, effective July 15, 2008.

Legislative Research Commission Note (1/1/2027). This statute was amended by 2026 RS HB 757 (2026 Ky. Acts ch. 161, sec. 107), which was subsequently amended by 2026 RS HB 869 (2026 Ky. Acts ch. 198, sec. 53), and the amendments have been codified together.

Legislative Research Commission Note (6/8/2011). 2011 Ky. Acts. ch. 62, sec. 8, provides that "the provisions of Section 7 of this Act (KRS 154.30-010) shall apply retroactively and any agreements entered into prior to the effective date of this Act, for projects approved under KRS 154.30-050(2)(a) that have not been activated as of the effective date of this Act, shall be amended to reflect the revised activation date provided for in Section 7 of this Act."

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 103, provided that, notwithstanding KRS 65.7044(6), the amendments made to this statute in 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 102, "shall apply retroactively and any agreements entered into prior to the effective date of this Act for projects approved under KRS 154.30-050(2)(a) that have not been activated as of the effective date of this Act shall be amended to reflect the revised activation date provided for in Section 102 of this Act."

Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 178, sec. 14 established a new Subchapter 30 of KRS Chapter 154 concerning tax increment financing projects and provided further that "KRS 65.7045 is repealed, reenacted, and amended as a new section thereof to read as follows." Since KRS 65.7045 was also amended in sec. 2 of that Act, inquiry was made of the drafter as to the intent of sec. 14. The drafter explained that statutes dealing with both area development projects and tax increment financing projects were blended together in KRS Chapter 65 with no easy distinguishing elements, and the intent of creating Subchapter 30 of KRS Chapter 154 was to separate them appropriately. The intent of sec. 14 was to create a definitions section for the new Subchapter 30 of KRS Chapter 154, using the text of KRS 65.7045 as a base starting point, removing definitions specific to KRS Chapter 65 area development projects, retaining definitions that were common to both area development projects and tax increment financing projects, and adding definitions specific to tax increment financing projects. As such, the Reviser of Statutes has treated sec. 14 in codification as creating a new section of Subchapter 30 of KRS Chapter 154 (this statute) to effectuate that intent.

154.30-020 Findings of General Assembly relative to development areas and projects.

(1) The General Assembly finds that the establishment of development areas and projects which result in increased property values, increased employment opportunities, and increased economic activity in communities within the Commonwealth serves a public purpose.

(2) The General Assembly further finds and declares that the authority prescribed in this subchapter, and the purposes to be accomplished thereunder are proper.

Effective: July 15, 2008

History: Created 2008 Ky. Acts ch. 178, sec. 15, effective July 15, 2008.

154.30-030 State tax increment financing participation programs -- Sunset -- Application requirements for a local government to request state participation -- Authority review requirements -- Pledge limitations -- Tax incentive agreements required -- Independent consultant's report.

(1) (a) The Commonwealth shall offer three (3) tax increment financing participation programs. The first program, the criteria and details of which are set forth in KRS 154.30-040, relates to a pledge of state real property ad valorem taxes

only. The second program, the criteria and details of which are set forth in KRS 154.30-050, is the Signature Projects Program. The third program, the criteria and details of which are set forth in KRS 154.30-060, relates to the pledge of state tax revenues to support mixed-use development in blighted urban areas.

(b) 1. The first and third programs identified in paragraph (a) of this subsection shall sunset on July 15, 2026, and new applications shall not be submitted or considered for approval after July 15, 2026.

2. The Signature Projects Program shall sunset on December 31, 2028, and new applications shall not be submitted or considered for approval after December 31, 2028.

3. Projects approved for a program prior to the date the program shall sunset under subparagraph 1. or 2. of this paragraph shall continue to be governed in accordance with the tax incentive agreement's terms and conditions as set forth in KRS 154.30-070.

4. Tax incentive agreements related to the programs under paragraph (a) of this subsection and in effect on July 15, 2026, shall not be amended or have activation date extensions approved by the Commonwealth after July 15, 2026.

(2) (a) Except as provided in subsection (1)(b)3. of this section, a city or county that has established a development area pursuant to KRS 65.7049, 65.7051, and 65.7053, or an agency designated as the entity managing a development area established pursuant to KRS 65.7049, 65.7051, and 65.7053, may submit an application to the authority requesting that the Commonwealth participate in a project, before July 15, 2026.

1. The application shall identify the specific program under which state participation is being requested and shall include the following attachments, in addition to any requirements developed by the authority pursuant to paragraph (b) of this subsection:

a. A copy of the ordinance adopted by the city or county establishing the development area;

b. A copy of the local participation agreement; and

c. Data and information supporting the determinations and findings required by KRS 65.7049.

2. The staff of the authority shall review the application to determine if the applicant has met all of the statutory and regulatory requirements established by this subchapter and shall notify the applicant in writing of its determination. This review shall be preliminary in nature and shall not constitute approval of the request. All applications for participation by the Commonwealth shall be reviewed by the authority for approval.

3. a. Applications meeting all statutory and regulatory requirements requesting participation by the Commonwealth pursuant to KRS 154.30-040, along with any supporting materials, shall be referred by the staff of the authority to the authority for consideration.

b. i. Applicants meeting all statutory and regulatory requirements requesting participation by the Commonwealth pursuant to KRS 154.30-050(3)(b) or 154.30-060 shall be required to submit a report prepared by an independent consultant or financial adviser as described in subsection (6) of this section for the application to be complete. The staff of the authority shall notify the applicants of the report requirements and shall provide information regarding the contents and requirements for the report at the same time it notifies the applicant of the results of its preliminary review.

ii. Upon receipt and review of the report, the staff of the authority shall refer the application and supporting information to the authority for consideration.

(b) Additional standards and requirements for the application process shall be established by the authority through the promulgation of administrative regulations in accordance with KRS Chapter 13A.

(3) (a) The authority may request any materials and make any inquiries concerning an application that the authority deems necessary.

(b) The authority shall, through the promulgation of administrative regulations in accordance with KRS Chapter 13A, establish commercially reasonable limitations on the financing costs that may be recovered under the provisions of KRS 154.30-050.

(4) Upon review of an application and other information available, the authority may pledge all or a portion of the state real property ad valorem tax incremental revenue of the Commonwealth or state tax revenues attributable to the footprint of the project, as limited by KRS 154.30-040, 154.30-050, or 154.30-060, whichever is applicable.

(a) If incremental revenues are pledged from less than one hundred percent (100%) of the footprint of the project, a description of the included portion of the development area shall be provided.

(b) State tax revenues from the development area that have not been pledged to projects within the development area may be used to support other economic development projects or tourism projects approved under KRS 139.536 and 148.851 to 148.860, provided that state tax revenues shall not be pledged more than once during the existence of the development area. Thus, state tax revenues pledged to support increment bonds issued for the development area, or a project in the development area shall not be pledged to support any other development area, project, program, development, or undertaking during the life of the development area. If less than one hundred percent (100%) of incremental revenues are pledged pursuant to the provisions of this subchapter, the remaining incremental revenues shall not be used to support other economic development projects or tourism projects approved under KRS 139.536 and 148.851 to 148.860.

(5) The pledge of incremental state real property ad valorem tax revenues or state tax revenues of the Commonwealth by the authority shall be implemented through the execution of a tax incentive agreement between the Commonwealth and the agency, city, or county, as the case may be, in accordance with KRS 154.30-070.

(6) (a) The authority shall engage the services of a qualified independent outside consultant or financial adviser to analyze the data related to the project and the development area and prepare the report required by subsection (2) of this section. The report shall include the following:

1. The estimated approved public infrastructure costs for the project and, if relevant, approved signature project costs, financing costs, and costs associated with land preparation, demolition, and clearance;

2. The feasibility of the project, taking into account the scope and location of the project;

3. The estimated amount of local tax revenues and state tax revenues, as applicable, that would be generated by the project over the period, which may be up to twenty (20) years or thirty (30) years, as applicable, from the activation date;

4. The estimated amount of local tax revenues and state tax revenues, as applicable, that would be displaced within the Commonwealth, for the purpose of quantifying economic activity which is being shifted over the same period as that set forth in subparagraph 3. of this paragraph. The projections for displaced activity shall include economic activity that is lost to the Commonwealth as a result of the project, as well as economic activity that is diverted to the project that formerly took place at existing establishments within the Commonwealth prior to the commencement date of the project;

5. The estimated amount of local and state old revenues that would have been generated in the footprint of the project in the absence of the project, computed over the same time period as set forth in subparagraph

6. of this paragraph;

7. In the process of estimating the revenues and impacts prescribed in subparagraphs 3. and 4. of this paragraph, the independent outside consultant shall not consider any of the following:

a. Revenues or economic impacts associated with any projects within the development area where the new project will be located; and

b. Revenues or economic impacts associated with economic development projects and approved Kentucky Tourism Development Act projects under KRS Chapter 148;

7. The relationship of the estimated incremental revenues to the financing needs, including any increment bonds, of the project;

8. When estimating the fiscal impact of the project, the consultant shall evaluate the amount of revenue estimated in subparagraph 3. of this paragraph and shall deduct the amounts estimated in subparagraphs 4. and 5. of this paragraph. The resulting difference shall be compared to the estimated incremental revenues to determine the presence or absence of a positive fiscal impact; and

9. A determination that the project will not occur if not for the designation of the development area, the granting of incremental revenues by the taxing district or districts, other than the Commonwealth, and the granting of the state tax incremental revenues.

(b) 1. The independent consultant or financial advisor shall consult with the Office of State Budget Director, and the Finance and Administration Cabinet in the development of the report.

2. The Office of State Budget Director and the staff of the authority, in collaboration with the independent consultant or financial advisor, shall agree on a methodology to be used and assumptions to be made by the independent consultant or financial consultant in preparing its report.

3. On the basis of the independent consultant's report and the other materials provided, prior to any approval of a project by the authority, the Office of State Budget Director and the Finance and Administration Cabinet shall certify to the authority whether there is a projected net positive economic impact to the Commonwealth and the expected amount of state tax incremental revenues from the project.

4. The city, county, or agency making the application shall pay all costs associated with the independent consultant's or financial advisor's report.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 161, sec. 5, effective July 15, 2026; and ch. 198, sec. 52, effective July 15, 2026. -- Amended 2025 Ky. Acts ch. 98, sec. 18, effective June 27, 2025. -- Repealed, reenacted, and amended 2008 Ky. Acts ch. 178, sec. 16, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 95, sec. 16, effective March 23, 2007.

Legislative Research Commission Note (7/15/2026). This statute was amended by 2026 RS HB 757 (2026 Ky. Acts ch. 161, sec. 5), which was subsequently amended by 2026 RS HB 869 (2026 Ky. Acts ch. 198, sec. 52), and the amendments have been codified together. Formerly codified as KRS 65.7071.

154.30-040 Commonwealth Participation Program for State Real Property Ad Valorem Tax Revenues -- Criteria for state participation -- Qualifying expenditures -- Pledge limitations -- Authority review -- Required determinations by the authority -- Tax incentive agreement required.

(1) The Commonwealth Participation Program for State Real Property Ad Valorem Tax Revenues is hereby established.

(2) State participation under this program shall be limited to the support of approved public infrastructure costs determined to be necessary to support private investment or private development projects that benefit the public, where project economics are unable to support or secure necessary financing to undertake the public improvements.

(3) A project shall meet all of the following criteria to be considered for state participation under this program:

(a) The project shall represent new economic activity in the Commonwealth;

(b) The project shall result in a minimum capital investment of ten million dollars ($10,000,000); and

(c) Not more than twenty percent (20%) of the capital investment or twenty percent (20%) of the finished square footage shall be devoted to the support or development of assets that will be utilized for the retail sale of tangible personal property.

(4) The authority shall review the application and supporting information as provided in KRS 154.30-030.

(5) The authority may pledge up to one hundred percent (100%) of the Commonwealth's state real property ad valorem tax incremental revenue from the footprint of a project, provided that the maximum amount of incremental revenues that may be pledged during the term of the state participation agreement for a project shall not exceed one hundred percent (100%) of approved public infrastructure costs.

(6) As part of the approval process, the authority shall determine the following:

(a) The footprint of the project;

(b) The maximum amount of approved public infrastructure costs;

(c) That the local revenues pledged to support the public infrastructure of the project, and local revenues pledged to support the overall project are of a sufficient amount to warrant participation of the Commonwealth in the project;

(d) The termination date of the project grant agreement, not to exceed twenty (20) years from the activation date; and

(e) Any adjustments to be made to old revenues in determining incremental revenues during each year of the term of the project grant agreement.

(7) The pledge of incremental state real property ad valorem tax revenues of the Commonwealth by the authority shall be implemented through the execution of a tax incentive agreement between the Commonwealth and the agency, city, or county, in accordance with KRS 154.30-070.

Effective: July 15, 2008

History: Repealed, reenacted, and amended 2008 Ky. Acts ch. 178, sec. 17, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 95, sec. 17, effective March 23, 2007. Formerly codified as KRS 65.7073.

154.30-050 Signature Project Program -- Purpose -- Two initiatives -- Criteria for state participation -- Qualifying expenditures -- Authority review -- Required determinations by the authority -- Pledge limitations -- Tax incentive agreement required.

(1) The Signature Project Program is hereby established. The purpose of this program is to encourage private investment in the development of major projects that will have a significant impact on the Commonwealth of Kentucky and are judged to be of such a magnitude that the effect upon the location of the project warrants extraordinary public support.

(2) (a) There shall be two (2) separate initiatives under this program. The first initiative, the criteria and details of which are set forth in subsection (3)(a) of this section, shall apply to:

1. Qualifying projects that are not the subject of a contract under KRS 65.495 in effect on or before the March 23, 2007, but that have a project grant agreement executed pursuant to KRS 154.30-070 prior to January 1, 2008; or

2. Revised projects if the original project was not the subject of a contract under KRS 65.495 on or before March 23, 2007, and had a project grant agreement executed pursuant to KRS 154.30-070 prior to January 1, 2008, but the agreement was withdrawn voluntarily before the project was completed.

(b) The second initiative, the criteria and details of which are set forth in subsection (3)(b) of this section, shall apply to projects that meet the specified requirements on or after January 1, 2008.

(3) (a) 1. The criteria for qualification shall be as follows:

a. The project shall represent new economic activity in the Commonwealth; and

b. The project shall result in a minimum capital investment of two hundred million dollars ($200,000,000).

2. The following provisions shall apply to projects that meet the criteria established in subparagraph 1. of this paragraph:

a. KRS 65.7051 shall not apply to the establishment of a development area;

b. The city or county in which the project is located shall adopt an ordinance establishing the development area. The ordinance shall be adopted in accordance with KRS 65.7053(1)(a), (b), (c), (d), (e), (h), (i), (j), (k), (l), and (m);

c. KRS 65.7049, 65.7053(2) and (3), 65.7057, 65.7059, 65.7061, 65.7063, 65.7065, and 65.7067, relating to local development areas, shall apply;

d. An application for state participation shall have been submitted as provided in KRS 154.30-030. The application shall include the information required by KRS 154.30-030(2)(a)1.a. and b.;

e. The report provided for in KRS 154.30-030(2)(a)3.b. shall not be required, and the certification required by KRS 154.30-030(6)(b) shall not be required;

f. A project grant agreement shall be executed in accordance with KRS 154.30-070; and

g. KRS 154.30-080 and 154.30-090 shall apply.

3. Projects that meet the criteria established in subparagraph 1. of this paragraph shall be eligible for the following:

a. Up to one hundred percent (100%) of approved public infrastructure costs, excluding any sales and use tax paid, may be recovered;

b. Up to one hundred percent (100%) of the financing costs associated with approved public infrastructure costs may be recovered;

c. In a county containing a city of the first class, the local participation agreement may provide for the release of up to eighty percent (80%) of the increment from the tax levied under KRS 91A.390 derived by the governing body within the project development area. The amount released shall not exceed a base amount of four hundred thousand dollars ($400,000) in the first year of the local participation agreement, which base amount shall be increased in each subsequent year of the grant agreement by four percent (4%); and

d. Up to one hundred percent (100%) of approved signature project costs, excluding any sales and use taxes paid, subject to the following:

i. The authority shall review proposed expenditures for inclusion in the tax incentive agreement. The authority may approve the type of expenditures it determines are necessary for completion of the private development; and

ii. Approved signature project costs shall be detailed in the tax incentive agreement.

(b) Beginning on April 27, 2026:

1. A project shall meet all of the following criteria to be considered for state participation under this program:

a. The project shall represent new economic activity in the Commonwealth;

b. The project shall result in a minimum capital investment of five hundred million dollars ($500,000,000);

c. The project shall be owned by a resident or nonresident, nonprofit educational, charitable, or religious institution which has qualified for an exemption from income tax under Section 501(c)(3) of the Internal Revenue Code;

d. The project shall result in a net positive economic impact to the Commonwealth, taking into consideration any substantial adverse impact on existing Commonwealth businesses. The net positive impact shall be certified to the commission as required by KRS 154.30-030(6)(b); and

e. Not more than twenty percent (20%) of the capital investment or twenty percent (20%) of the finished square footage shall be devoted to the support or development of assets that will be utilized for the retail sale of tangible personal property;

2. Projects that meet the criteria established by subparagraph 1. of this paragraph shall comply with all relevant provisions of this subchapter;

3. Projects that meet the criteria established by subparagraphs 1. and 2. of this paragraph shall be eligible to recover:

a. Up to one hundred percent (100%) of approved public infrastructure costs, excluding any sales and use taxes paid;

b. Up to one hundred percent (100%) of the financing costs associated with approved public infrastructure costs; and

c. Up to one hundred percent (100%) of approved signature project costs, excluding sales and use taxes paid subject to the following:

i. The authority shall review proposed expenditures for inclusion in the tax incentive agreement. The authority may approve the type of expenditures it determines are necessary for completion of the private development; and

ii. Approved signature project costs shall be detailed in the tax incentive agreement; and

4. Notwithstanding any provision of this section to the contrary, if a project has a residential use that comprises at least fifty percent (50%) of the total finished square footage of the proposed project:

a. The report required in KRS 154.30-030(2)(a)3.b. shall not be required; and

b. The certification required in KRS 154.30-030(6)(b) and subparagraph 1.c. of this paragraph shall not be required.

(4) The authority shall review the application, the certification required by KRS 154.30-030, if applicable, and supporting information as provided in KRS 154.30- 030.

(5) The authority shall specifically identify the state taxes from which incremental revenues will be pledged. The authority may pledge up to eighty percent (80%) of the incremental revenues from the identified state tax revenues from the footprint, provided that the maximum amount of incremental revenues that may be pledged for a project during the term of the tax incentive agreement from all approved state taxes shall not exceed one hundred percent (100%) of approved public infrastructure costs, approved signature project costs, and financing costs.

(6) As part of the approval process, the authority shall determine the following:

(a) The footprint of the project;

(b) The maximum amount of approved public infrastructure costs, approved signature project costs, and financing costs;

(c) That the local revenues pledged to support the public infrastructure of the project, and local revenues pledged to support the overall project are of a sufficient amount to warrant participation of the Commonwealth in the project;

(d) The termination date of the tax incentive agreement, not to exceed thirty (30) years from the activation date;

(e) Any adjustments to be made to old revenues, in determining incremental revenues during each year of the term of the project grant agreement; and

(f) Any approved signature project costs.

(7) For the purpose of making the determination required by KRS 139.515(2), the authority shall review the projected expenditures for tangible personal property used in the construction of a signature project, as defined in KRS 139.515(1), and shall establish an approximate percentage of the total anticipated expenditures that are not included in the tax incentive agreement as approved public infrastructure costs or approved signature project costs. This percentage shall be communicated by the authority to the Department of Revenue, which shall use the information in administering the sales tax refund permitted by KRS 139.515.

(8) If state income taxes or local occupational license taxes are included for a project that includes office space, the authority shall consider the impact of pledging theses taxes on the ability to utilize other economic development projects at a later date.

(9) The pledge of state incremental tax revenues of the Commonwealth by the authority shall be implemented through the execution of a tax incentive agreement between the Commonwealth and the agency, city, or county in accordance with KRS 154.30-070.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 37, effective April 27, 2026. -- Amended 2025 Ky. Acts ch. 56, sec. 5, effective June 27, 2025; and ch. 98, sec. 15, effective June 27, 2025. -- Amended 2013 Ky. Acts ch. 36, sec. 1, effective June 25, 2013. -- Repealed, reenacted, and amended 2008 Ky. Acts ch. 178, sec. 18, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 95, sec. 18, effective March 23, 2007. Formerly codified as KRS 65.7075.

154.30-052 Repealed, 2018.

[Repealed]

154.30-060 Commonwealth Participation Program for Mixed-Use Redevelopment in Blighted Urban Areas -- Definitions -- Criteria for state participation -- Qualifying expenditures -- Authority review -- Required determinations by the authority -- Pledge limitations -- Tax incentive agreement required.

(1) The Commonwealth Participation Program for Mixed-Use Redevelopment in Blighted Urban Areas is hereby established.

(2) State participation under this program shall be limited to the support of approved public infrastructure costs and costs associated with land preparation, demolition, and clearance determined to be necessary to support private investment or private development projects that benefit the public, where project economics are unable to support or secure necessary financing to undertake the public improvements, land preparation, demolition, and clearance.

(3) As used in this section:

(a) "Mixed-use" means a project:

1. That includes at least two (2) qualified uses, each of which comprises at least twenty percent (20%) of the total finished square footage of the proposed project or represents at least twenty percent (20%) of the total capital investment; or

2. That includes at least three (3) qualified uses:

a. One (1) of which comprises at least twenty percent (20%) of the total finished square footage of the proposed project or represents at least twenty percent (20%) of the total capital investment; and

b. The remainder of which, when combined, jointly comprise at least twenty percent (20%) of the total finished square footage of the proposed project or represent at least twenty percent (20%) of the total capital investment;

(b) "Qualified use" means:

1. Retail;

2. Residential;

3. Office;

4. Restaurant; or

5. Hospitality; and

(c) "Retail" means an establishment predominantly engaged in the sale of tangible personal property subject to the tax imposed by KRS Chapter 139, but shall not include restaurants.

(4) To be considered for state participation under this program, a project shall:

(a) Be located in an area that has three (3) or more of the conditions listed in KRS 65.7049(3)(a), or be a project described in KRS 65.7049(3)(b);

(b) Be a mixed-use project;

(c) Represent new economic activity in the Commonwealth;

(d) Result in a capital investment between twenty million dollars ($20,000,000) and two hundred million dollars ($200,000,000);

(e) Not include any retail establishment that exceeds twenty thousand (20,000) square feet of finished square footage;

(f) Include pedestrian amenities and public space;

(g) Result in a net positive economic impact to the Commonwealth, taking into consideration any substantial adverse impact on existing Commonwealth businesses. The net positive impact shall be certified to the authority as required by KRS 154.30-030(6)(b); and

(h) Notwithstanding any provision of this section to the contrary, if a project has a residential use that comprises at least fifty percent (50%) of the total finished square footage of the proposed project:

1. The report required in KRS 154.30-030(2)(a)3.b. shall not be required; and

2. The certification required in KRS 154.30-030(6)(b) and paragraph (g) of this subsection shall not be required.

(5) The following costs may be recovered pursuant to this section:

(a) Up to one hundred percent (100%) of approved public infrastructure costs; and

(b) Up to one hundred percent (100%) of expenses for land preparation, demolition, and clearance necessary for the development to occur.

(6) The commission shall review the application, the certification required by KRS 154.30-030, and supporting information as provided in KRS 154.30-030.

(7) The authority shall specifically identify the state taxes from which incremental revenues will be pledged. The authority may pledge up to eighty percent (80%) of the incremental revenues from the identified state tax revenues from the footprint of the project, provided that the maximum amount of incremental revenues that may be pledged for a project during the term of the tax incentive agreement from all approved state taxes shall not exceed the costs and expenses determined under subsection (5) of this section.

(8) As part of the approval process, the authority shall determine the following:

(a) The footprint of the project;

(b) That the proposed project meets the requirements established by subsection

(4) of this section;

(c) The maximum amount of approved public infrastructure costs and expenses for land preparation, demolition, and clearance;

(d) That the local revenues pledged to support the public infrastructure of the project and local revenues pledged to support the overall project are of a sufficient amount to warrant participation of the Commonwealth in the project;

(e) The termination date of the tax incentive agreement; and

(f) Any adjustments to be made to old revenues, in determining incremental revenues during each year of the term of the tax incentive agreement.

(9) If state income taxes or local occupational licenses taxes are included for a project that includes office space, the authority shall consider the impact of pledging these taxes on the ability to utilize other economic development projects at a later date.

(10) The pledge of state incremental tax revenues of the Commonwealth by the authority shall be implemented through the execution of a tax incentive agreement between the Commonwealth and the agency, city, or county in accordance with KRS 154.30-070.

Effective: June 27, 2025

History: Amended 2025 Ky. Acts ch. 56, sec. 6, effective June 27, 2025. -- Amended 2017 Ky. Acts ch. 174, sec. 2, effective April 10, 2017. -- Amended 2014 Ky. Acts ch. 105, sec. 1, effective July 15, 2014. -- Amended 2011 Ky. Acts ch. 62, sec. 4, effective June 8, 2011. -- Repealed, reenacted, and amended 2008 Ky. Acts ch. 178, sec. 19, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 95, sec. 19, effective March 23, 2007. Formerly codified as KRS 65.7077.

Legislative Research Commission Note (4/10/2017). 2017 Ky. Acts ch. 174, sec. 5 provided that amendments made to subsection (3) of this statute in 2017 Ky. Acts ch. 174, sec. 2 shall apply to applications for which a Tax Incentive Agreement has not been approved prior to April 10, 2017 (the effective date of that section of that Act).

154.30-070 Terms and conditions of tax incentive agreements to be negotiated between authority and agency -- Provisions of agreement -- Pledge of incremental revenues superior to other pledges of revenues -- Renewal and discontinuance of agreement.

(1) The terms and conditions of the tax incentive agreement shall be negotiated between the authority and the agency. The tax incentive agreement shall include but not be limited to the following provisions:

(a) Identification of the parties to the tax incentive agreement and the duties and responsibilities of each party to the tax incentive agreement;

(b) The specific identification of the state tax revenues, by type of tax, to be released or pledged by the Commonwealth for the project;

(c) 1. A detailed summary of old revenues collected and projected new revenues for the Commonwealth on an annual basis for the term of the tax incentive agreement; and

2. The maximum amount of incremental revenue to be released by the Commonwealth and the maximum number of years the pledge of incremental revenues will be effective;

(d) A detailed description of each project that is the subject of the tax incentive agreement, including an estimate of the costs of construction or acquisition and development;

(e) Identification of the project footprint from which the state incremental revenues pledged by the Commonwealth are to be derived;

(f) The approved public infrastructure costs and, when applicable, approved signature project costs, approved financing costs, and approved costs relating to land preparation, demolition, and clearance that may be recovered;

(g) The minimum capital investment required, the date by which the minimum capital investment is expected to occur, and a provision stating that failure of the approved company to meet the minimum capital investment established by KRS 154.30-040, 154.30-050, or 154.30-060 on or before the activation date shall result in cancellation of the tax incentive agreement;

(h) Terms of default and remedies, provided that no remedy shall permit the withholding by any party to the tax incentive agreement of any incremental revenues if increment bonds are outstanding that are secured by a pledge of those incremental revenues;

(i) The termination date;

(j) A requirement that the agency, city, or county annually certify to the authority the use of incremental revenues for the payment of approved project costs within the development area;

(k) A requirement that the agency shall utilize the portion of incremental revenues pledged pursuant to a tax incentive agreement that exceeds, in a given year, the amounts needed to:

1. Pay the current financing costs; and

2. Maintain a fully funded reserve; to provide for the retirement or defeasance of all or a portion of the remaining financing costs related to approved public infrastructure costs, and approved signature project costs secured by the incremental revenues;

(l) A requirement that the agency, city, or county make periodic accountings to the authority;

(m) A requirement that the authority monitor and verify approved public infrastructure costs, financing costs and approved signature project costs and minimum capital investment; and

(n) For a signature project, the eligible refund amount or percentage for the sales tax as permitted under KRS 139.515, and as determined by the authority pursuant to KRS 65.7075(6); and

(o) Any other provisions not inconsistent with this subchapter deemed necessary or appropriate by the parties to the tax incentive agreement.

(2) Any pledge of incremental revenues in a tax incentive agreement shall be superior to any other pledge of revenues for any other purpose and shall, from the activation date to the termination date, supersede any statute or ordinance regarding the application or use of incremental revenues. An ordinance in conflict with a tax incentive agreement shall not be adopted while any increment bonds secured by that pledge remain outstanding. Ordinances pledging increments on a subordinate basis to any existing pledges may be adopted.

(3) Any tax incentive agreement shall be made on the basis of automatic year-to-year renewals, with the option to discontinue upon sixty (60) days' notice before the end of any annual termination date of the tax incentive agreement.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 28, effective July 14, 2018. -- Repealed, reenacted, and amended 2008 Ky. Acts ch. 178, sec. 20, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 95, sec. 20, effective March 23, 2007.

Legislative Research Commission Note (7/15/2008). 2008 Ky. Acts ch. 178, sec. 14 established a new Subchapter 30 of Chapter 154 concerning tax increment financing projects and secs. 16 through 19 and 21 of that Act repealed, reenacted, and amended existing sections of KRS Chapter 65 as new sections of the new Subchapter 30 of KRS Chapter 154. Inquiry was made of the drafter as to the intent of those actions. The drafter explained that statutes dealing with both area development projects and tax increment financing projects were blended together in KRS Chapter 65 with no easy distinguishing elements, and the intent of creating Subchapter 30 of KRS Chapter 154 was to separate them appropriately. Therefore, the intent of secs. 16 through 19 and 21 was to move those sections contained in KRS Chapter 65 that relate to only tax increment financing projects into the new Subchapter 30 of KRS Chapter 154, with necessary conforming amendments to the language. The Reviser of Statutes inquired about the treatment of sec. 20 of that Act purporting to amend KRS 65.7079, which appeared to the Reviser to require the same treatment as other statutes in that range moved into new Subchapter 30 of KRS Chapter 154 in secs. 16 through 19 and 21. The drafter confirmed that the intent was to treat that statute in the same manner as those statutes addressed in secs. 16 through 19 and 21. As such, the Reviser of Statutes has treated sec. 20 in codification as repealing and reenacting this statute as a new section of Subchapter 30 of KRS Chapter 154 to effectuate that intent. Formerly codified as KRS 65.7079.

154.30-080 Requirement that minimal capital investment be made prior to the release of incremental revenues -- Escrow account -- Cancellation if agency fails to meet minimum investment -- Duties of authority to monitor agreements and track revenues.

(1) (a) Prior to any incremental revenues being released by the Commonwealth for any project, the authority shall certify that the minimum capital investment has been made as required by the tax incentive agreement.

(b) Incremental revenues received after the activation date but prior to certification of the minimum capital investment shall be retained by the Commonwealth until the minimum capital investment is certified by the authority. The incremental revenues shall be released to the agency upon certification. If the minimum capital investment is not certified within the time period established by the authority, the incremental revenues shall be forfeited to the Commonwealth.

(c) The tax incentive agreement shall be canceled and the approved agency shall not be eligible for incentives if the agency fails to meet the minimum capital investment established by KRS 154.30-040, 154.30-050, or 154.30-060 on the activation date.

(2) The authority shall monitor all tax incentive agreements and shall verify for each project expenditure identified as approved public infrastructure costs and where applicable, financing costs, approved signature project costs and expenses for land preparation, demolition and clearance.

(3) The authority and the department shall track the amount of incremental revenues released to each agency under each tax incentive agreement.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 29, effective July 14, 2018. -- Repealed, reenacted, and amended 2008 Ky. Acts ch. 178, sec. 21, effective July 15, 2008. -- Created 2007 Ky. Acts ch. 95, sec. 21, effective March 23, 2007. Formerly codified as KRS 65.7081.

154.30-090 Annual disbursement of tax incremental revenues.

(1) (a) Any agency that enters into a tax incentive agreement for the release of incremental revenues shall, after each calendar year, in which a tax incentive agreement is in effect, notify the authority that incremental revenues are due, and in consultation with the authority, the agency shall determine the amount of the incremental revenues due from the Commonwealth.

(b) The agency shall present to the authority the total increment due from the Commonwealth. The authority shall review and verify the information submitted and shall certify the verified amount.

(2) Upon certification of the total incremental revenues due from the Commonwealth by the authority, the Department of Revenue shall transfer the incremental revenues to a tax increment financing account established and administered by the Finance and Administration Cabinet for payment of the Commonwealth's portion of the incremental revenues. Prior to disbursement by the Finance and Administration Cabinet of the funds from the tax increment financing account, the authority shall notify the Finance and Administration Cabinet that the agency is in compliance with the terms of the tax incentive agreement. Upon notification, the Finance and Administration Cabinet shall release to the agency the Commonwealth's portion of the total incremental revenues due under the tax incentive agreement.

(3) The Department of Revenue shall have no obligation to refund or otherwise return any of the incremental revenues to the taxpayer from whom the incremental revenues arose or are attributable. Further, no additional incremental revenues resulting from audit, amended returns, or other activity for any period shall be transferred to the tax increment financing account after the initial release to the agency of the Commonwealth's increment for that period.

Effective: July 15, 2008

History: Created 2008 Ky. Acts ch. 178, sec. 22, effective July 15, 2008.

Subchapter 31 The Kentucky Investment Act Subchapter 31 The Kentucky Investment Act

154.31-010 Definitions for subchapter.

As used in this subchapter:

(1) "Agreement" means an agreement entered into pursuant to KRS 154.31-030 between the authority and an approved company;

(2) "Alternative fuel production" has the same meaning as in KRS 154.32-010;

(3) "Approved company" means an eligible company that has received approval from the authority for a sales and use tax incentive under this subchapter;

(4) "Approved recovery amount" means the maximum sales and use tax incentive recoverable by an approved company as established in the agreement;

(5) "Authority" means the Kentucky Economic Development Finance Authority;

(6) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in KRS 154.32-010;

(7) "Coal severing and processing" means activities resulting in the eligible company being subject to the tax imposed by KRS Chapter 143;

(8) "Department" means the Department of Revenue;

(9) "Economic development project" means:

(a) 1. The acquisition or construction of a new facility; or

2. The expansion or rehabilitation of an existing facility; or

(b) The installation and equipping of a facility; by an eligible company at a specific site in the Commonwealth to be used in an activity conducted by the approved company;

(10) "Electronic processing" means the use of technology having electronic, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities, now in existence or later developed to perform a service or technology activity;

(11) (a) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or other legal entity with a proposed economic development project that is primarily engaged in or planning to be engaged in one (1) or more of the following activities within the Commonwealth:

1. Manufacturing;

2. Nonretail service or technology activities;

3. Agribusiness;

4. Headquarters operations;

5. Alternative fuel, gasification, energy-efficient alternative fuel or renewable energy production;

6. Carbon dioxide or hydrogen transmission pipelines;

7. Coal severing and processing;

8. Hospital operations; or

9. In operating or developing a tourism attraction.

(b) "Eligible company" does not include any company whose primary activity to be conducted within the Commonwealth is forestry, fishing, the provision of utilities, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, food services, or public administration services;

(12) "Eligible expenses" means the amount expended for:

(a) Building and construction materials permanently incorporated as an improvement to real property as part of an economic development project; or

(b) Equipment used for research and development or electronic processing at an economic development project; if the Kentucky sales and use tax imposed by KRS Chapter 139 is paid on the purchase of the materials or equipment at the time of purchase;

(13) "Energy-efficient alternative fuel production" has the same meaning as in KRS 154.32-010;

(14) (a) "Equipment" means tangible personal property which is subject to depreciation under Sections 167 and 168 of the Internal Revenue Code, including assets which are expensed under Section 179 of the Internal Revenue Code, and that is used in the operation of a business.

(b) "Equipment" does not include any tangible personal property used to maintain, restore, mend, or repair machinery or equipment, consumable operating supplies, office supplies, or maintenance supplies;

(15) "Gasification process" has the same meaning as in KRS 154.32-010;

(16) "Headquarters" means the principal office where the principal executives of the entity are located and from which other personnel, branches, affiliates, offices, or entities are controlled;

(17) "Hospital" has the same meaning as in KRS 154.32-010;

(18) "Manufacturing" has the same meaning as in KRS 154.32-010;

(19) "Nonretail service and technology" has the same meaning as in KRS 154.32-010;

(20) "Project term" means the time for which an agreement shall be in effect. The project term shall be established in the agreement and shall not exceed seven (7) years;

(21) "Renewable energy production" has the same meaning as in KRS 154.32-010;

(22) (a) "Research and development" means experimental or laboratory activity that has as its ultimate goal the development of new products, the improvement of existing products, the development of new uses for existing products, or the development or improvement of methods for producing products.

(b) "Research and development" does not include testing or inspection of materials or products for quality control purposes, efficiency surveys, management studies, consumer surveys or other market research, advertising or promotional activities, or research in connection with literary, historical, or similar projects; and

(23) "Tourism attraction" has the same meaning as tourism attraction project in KRS 148.851.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 21, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 117, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 30, effective July 14, 2018. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 20, effective June 26, 2009.

154.31-020 Annual incentive cap established -- Requirements for qualification for incentives -- Maximum incentives available to an approved company.

(1) The maximum amount of sales and use tax incentives that may be committed in each fiscal year by the authority shall be capped at twenty million dollars ($20,000,000) for building and construction materials, and five million dollars ($5,000,000) for equipment used for research and development, electronic processing, or flight simulation.

(2) (a) To qualify for the sales and use tax incentives available under this subchapter, an eligible company shall make a minimum investment of at least five hundred thousand dollars ($500,000) in an economic development project, including the cost of land, but excluding the cost of labor.

(b) To qualify for the sales and use tax incentive available under this subchapter for electronic processing equipment, in addition to the requirements of paragraph (a) of this subsection, the eligible company shall spend an aggregate amount of at least fifty thousand dollars ($50,000) on electronic processing equipment installed as part of the economic development project.

(3) (a) The maximum sales and use tax incentive available to an approved company under this subchapter is the total amount of sales and use tax paid on purchases made on the following items, up to the approved recovery amount after approval by the authority:

1. Building and construction materials;

2. Research and development equipment;

3. Electronic processing equipment; and

4. Flight simulation equipment.

(b) An approved company may qualify for a sales and use tax incentive in more than one (1) category listed in paragraph (a) of this subsection for the same economic development project. If the authority approves an eligible company to receive the sales and use tax incentives in more than one (1) category, the authority shall allocate the incentives to the appropriate cap established by subsection (1) of this section.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 31, effective July 14, 2018. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 21, effective June 26, 2009.

154.31-030 Application, approval, and monitoring process for sales and use tax incentive -- Standards and criteria for approval -- Execution of agreement -- Annual report.

(1) The application, approval, and monitoring process under this subchapter shall be as follows:

(a) An eligible company with a proposed economic development project may submit an application to the authority. The application shall include the information required by subsection (3) of this section;

(b) Upon review of the application and any additional information submitted, the authority may, by resolution, approve an economic development project and authorize the negotiation and execution of an agreement pursuant to subsection (4) of this section. Approval granted pursuant to this subsection shall apply to a specific economic development project at a specific location within the Commonwealth;

(c) Upon approval, the authority shall notify the department that an approved company is eligible for a sales and use tax incentive under this subchapter and shall provide the department with the information necessary to monitor the use of incentives by the approved company. The authority shall notify the department if the agreement is extended or amended, or if the incentives are transferred, and shall provide the department with the information necessary to update its records; and

(d) The approved company shall be eligible to receive the sales and use tax incentives authorized by the agreement upon the earlier of the completion of the economic development project or expiration of the project term. The approved company shall apply to the department for the sales and use tax incentives as provided in KRS 139.535, and shall, during the project term, submit all information required by the department as provided in KRS 139.535.

(2) The authority may establish standards for the review of applications and the approval of eligible companies through the promulgation of administrative regulations in accordance with KRS Chapter 13A. In reviewing applications and establishing standards, the authority shall consider the creditworthiness of the eligible company, employment opportunities for Kentucky residents, wages to be paid, whether the eligible company is participating in other incentive programs pursuant to KRS Chapter 154 for the project, the likelihood that the project will be an economic success, and any other factors the authority determines to be relevant.

(3) The application submitted by an eligible company shall include but not be limited to the following:

(a) A description of the proposed economic development project;

(b) The anticipated minimum investment in the proposed economic development project;

(c) An estimate of the approved recovery amount that the company will seek;

(d) A timeline for completion of the proposed economic development project;

(e) Supporting documentation, as requested by the authority;

(f) Payment of any applicable application fee required by the authority; and

(g) Any other information requested by the authority.

(4) (a) Upon approval of an eligible company, the authority may enter into an agreement with the approved company. The terms of the agreement shall be determined by negotiations between the authority and the approved company, and shall include but not be limited to the following provisions:

1. The project term;

2. A description of the economic development project;

3. The total approved recovery amount in each category for which the approved company is eligible;

4. That the approved company shall maintain all records and documentation relating to eligible expenditures and the Kentucky sales and use tax paid, and shall provide those records and documentation to the authority or the department upon request;

5. That the approved company shall execute information-sharing agreements prescribed by the department with contractors, vendors, and other related parties to verify the costs of and payment of sales and use tax on the tangible personal property eligible for the sales and use tax incentive under this subchapter;

6. That the sales and use tax incentives shall not be assignable or transferable without written notice to the authority and approval of the authority; and

7. Any other provisions not inconsistent with this subchapter.

(b) The project term established in the agreement may be extended by approval of the authority for good cause shown; however, the term shall not be extended beyond seven (7) years from the date of approval.

(c) An approved company may transfer or assign its designation as an approved company upon prior notification to the authority and approval of the authority in a manner prescribed by the authority.

(5) The contents of a company's filings under this subchapter shall be subject to the Kentucky Open Records Act, KRS 61.870 to 61.884.

(6) By November 1 of each year, the authority shall prepare an annual report and make it available on the Cabinet for Economic Development Web site as required in KRS 154.12-2035.

Effective: July 14, 2018

History: Amended 2018 Ky. Acts ch. 199, sec. 32, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 134, sec. 9, effective July 15, 2014. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 22, effective June 26, 2009.

Subchapter 32 The Kentucky Business Investment Program Subchapter 32 The Kentucky Business Investment Program

154.32-010 Definitions for subchapter.

As used in this subchapter:

(1) "Activation date" means the date established in the tax incentive agreement that is within two (2) years of final approval;

(2) "Affiliate" means the following:

(a) Members of a family, including only brothers and sisters of the whole or half blood, spouse, ancestors, and lineal descendants of an individual;

(b) An individual, and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for that individual;

(c) An individual, and a limited liability company of which more than fifty percent (50%) of the capital interest or profits are owned or controlled, directly or indirectly, by or for that individual;

(d) Two (2) corporations which are members of the same controlled group, which includes and is limited to:

1. One (1) or more chains of corporations connected through stock ownership with a common parent corporation if:

a. Stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned by one (1) or more of the other corporations; and

b. The common parent corporation owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of at least one (1) of the other corporations, excluding, in computing the voting power or value, stock owned directly by the other corporations; or

2. Two (2) or more corporations if five (5) or fewer persons who are individuals, estates, or trusts own stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each person only to the extent the stock ownership is identical with respect to each corporation;

(e) A grantor and a fiduciary of any trust;

(f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts;

(g) A fiduciary of a trust and a beneficiary of that trust;

(h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts;

(i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;

(j) A fiduciary of a trust and a limited liability company more than fifty percent (50%) of the capital interest, or the interest in profits, of which is owned directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust;

(k) A corporation, a partnership, or a limited partnership if the same persons own:

1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and

2. More than fifty percent (50%) of the capital interest, or the profits interest, in the partnership or limited partnership;

(l) A corporation and a limited liability company if the same persons own:

1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and

2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company;

(m) A partnership or limited partnership and a limited liability company if the same persons own:

1. More than fifty percent (50%) of the capital interest or profits in the partnership or limited partnership; and

2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company;

(n) An S corporation and another S corporation if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation; S corporation designation being the same as that designation under the Internal Revenue Code of 1986, as amended;

(o) An S corporation and a C corporation, if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation; S and C corporation designations being the same as those designations under the Internal Revenue Code of 1986, as amended; or

(p) Two (2) or more limited liability companies, if the same persons own more than fifty percent (50%) of the capital interest or are entitled to more than fifty percent (50%) of the capital profits in the limited liability companies;

(3) "Agribusiness" means the processing of raw agricultural products, including but not limited to timber and industrial hemp, or the performance of value-added functions with regard to raw agricultural products;

(4) "Alternative fuel production" means a Kentucky operation that primarily produces alternative transportation fuels for sale. The alternative fuel production may produce electricity as a by-product if the primary function of the operations remains the production and sale of alternative transportation fuels;

(5) "Alternative transportation fuels" has the same meaning as in KRS 152.715;

(6) "Approved company" means an eligible company that has received final approval to receive incentives under this subchapter;

(7) "Approved costs" means the amount of eligible costs approved by the authority at final approval;

(8) "Authority" means the Kentucky Economic Development Finance Authority established by KRS 154.20-010;

(9) "Biomass resources" has the same meaning as in KRS 152.715;

(10) "Capital lease" means a lease classified as a capital lease by the Statement of Financial Accounting Standards No. 13, Accounting for Leases, issued by the Financial Accounting Standards Board, November 1976, as amended;

(11) "Carbon dioxide or hydrogen transmission pipeline" means the in-state portion of a pipeline, including appurtenant facilities, property rights, and easements, that is used exclusively for the purpose of transporting carbon dioxide or hydrogen to the point of sale, storage, or other carbon or hydrogen management applications;

(12) "Coal severing and processing" means activities resulting in the eligible company being subject to the tax imposed by KRS Chapter 143;

(13) "Commonwealth" means the Commonwealth of Kentucky;

(14) "Confirmed approved costs" means:

(a) For owned economic development projects, the documented eligible costs incurred on or before the activation date; or

(b) For leased economic development projects:

1. The documented eligible costs incurred on or before the activation date; and

2. Estimated rent to be incurred by the approved company throughout the term of the tax incentive agreement. For both owned and leased economic development projects, "confirmed approved costs" may be less than approved costs, but shall not be more than approved costs;

(15) "Department" means the Department of Revenue;

(16) "Economic development project" means:

(a) The acquisition, leasing, or construction of a new facility;

(b) The acquisition, leasing, rehabilitation, or expansion of an existing facility; or

(c) The installation and equipping of a facility; by an eligible company. "Economic development project" does not include any economic development project that will result in the replacement of facilities existing in the Commonwealth, except as provided in KRS 154.32-060;

(17) (a) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity with a proposed economic development project that is engaged in or is planning to be engaged in one (1) or more of the following activities within the Commonwealth:

1. Manufacturing;

2. Agribusiness;

3. Nonretail service or technology;

4. Headquarters operations, regardless of the underlying business activity of the company;

5. Alternative fuel, gasification, energy-efficient alternative fuel, or renewable energy production;

6. Carbon dioxide or hydrogen transmission pipeline;

7. Coal severing and processing;

8. Hospital operations;

9. Development of the nuclear energy ecosystem, including but not limited to nuclear energy generating facility siting and development; or

10. Research and development.

(b) "Eligible company" does not include companies where the primary activity to be conducted within the Commonwealth is forestry, fishing, the provision of utilities, except as provided in paragraph (a)9. of this subsection, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, accommodation and food services, or public administration services;

(18) "Eligible costs" means:

(a) For owned economic development projects:

1. Start-up costs to furnish and equip a facility, including:

a. Office and manufacturing equipment;

b. Software;

c. Computers;

d. Fixtures; and

e. Fixed telecommunications equipment;

2. Nonrecurring obligations incurred for labor and nonrecurring payments to contractors, subcontractors, builders, and materialmen in connection with the economic development project;

3. The cost of acquiring land or rights in land and any cost incidental thereto, including recording fees;

4. The cost of contract bonds and of insurance of all kinds that may be required or necessary for completion of an economic development project which is not paid by a contractor or otherwise provided for;

5. All costs of architectural and engineering services, including test borings, surveys, estimated plans and specifications, preliminary investigations, and supervision of construction, as well as for the performance of all the duties required for construction of the economic development project;

6. All costs which are required to be paid under the terms of any contract for the economic development project;

7. All costs incurred for construction activities, including site tests and inspections; subsurface site work; excavation; removal of structures, roadways, cemeteries, and other surface obstructions; filling, grading, and providing drainage and storm water retention; installation of utilities such as water, sewer, sewage treatment, gas, electric, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the real estate; construction and installation of railroad spurs as needed to connect the economic development project to existing railways; or similar activities as the authority may determine necessary for construction of the economic development project; and

8. All other costs of a nature comparable to those described in this paragraph, including but not limited to investments in:

a. Laboratory equipment;

b. Computer servers;

c. Software;

d. Capitalized leases; and

e. Leasehold improvements; when the costs are integral to the operation of research and development, headquarters, high-technology operations, or service sector facilities; and

(b) For leased economic development projects:

1. Start-up costs to furnish and equip a facility, including:

a. Office and manufacturing equipment;

b. Software;

c. Computers;

d. Fixtures; and

e. Fixed telecommunications equipment;

2. Building/leasehold improvements;

3. Fifty percent (50%) of the estimated annual rent for each year of the tax incentive agreement; and

4. Investments in:

a. Laboratory equipment;

b. Computer servers;

c. Software; and

d. Capitalized leases; when the costs are directly related to the establishment or expansion of research and development, headquarters, high-technology operations, or service sector facilities;

(19) "Employee benefits" means payments by an approved company for its full-time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k), or similar plans;

(20) "Energy-efficient alternative fuel production" means a Kentucky operation that produces for sale energy-efficient alternative fuels;

(21) "Energy-efficient alternative fuels" means homogeneous fuels that:

(a) Are produced from processes designed to densify feedstock coal, waste coal, or biomass resources; and

(b) Have an energy content that is greater than the feedstock coal, waste coal, or biomass resource;

(22) "Final approval" means the action taken by the authority authorizing the eligible company to receive incentives under this subchapter;

(23) (a) "Full-time job" means a job held by a person who:

1. Is required to work a minimum of thirty-five (35) hours per week; and

2. a. Is subject to the Kentucky individual income tax imposed by KRS 141.020; or

b. Works remotely away from the economic development project if the job meets all of the following conditions:

i. Is held by a Kentucky resident;

ii. Was created as a result of the economic development project; and

iii. The payroll of this job is expensed to the economic development project.

(b) "Full-time job" does not include a job held by a resident of any state with a reciprocal agreement between the Commonwealth and the other state as described in KRS 141.070;

(24) "Gasification process" means a process that converts any carbon-containing material into a synthesis gas composed primarily of carbon monoxide and hydrogen;

(25) "Gasification production" means a Kentucky operation that primarily produces for sale:

(a) Alternative transportation fuels;

(b) Synthetic natural gas;

(c) Chemicals;

(d) Chemical feedstocks; or

(e) Liquid fuels; from coal, waste coal, coal-processing waste, or biomass resources, through a gasification process. The gasification production may produce electricity as a by- product if the primary function of the operations remains the production and sale of alternative transportation fuels, synthetic natural gas, chemicals, chemical feedstocks, or liquid fuels;

(26) "Headquarters" means the principal office where the principal executives of the entity are located and from which other personnel, branches, affiliates, offices, or entities are controlled;

(27) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(28) "Hospital" means a facility licensed by the Cabinet for Health and Family Services under KRS Chapter 216B for the operation of a hospital and the basic services provided by a hospital;

(29) "Incentives" means the incentives available under this subchapter, as listed in KRS 154.32-020(3);

(30) "Job target" means the annual average number of new full-time jobs that the approved company commits to create and maintain at the economic development project, which shall not be less than ten (10) new full-time jobs;

(31) "Kentucky gross profits" has the same meaning as in KRS 141.0401;

(32) "Kentucky gross receipts" has the same meaning as in KRS 141.0401;

(33) "Lease agreement":

(a) Means an agreement between:

1. An approved company and an unrelated entity conveying the right to use a facility, the terms of which reflect an arms' length transaction; or

2. An approved company and a related entity where the facility to be occupied by the approved company was conveyed by unrelated entity after the approved company received preliminary approval; and

(b) Does not include a capital lease;

(34) "Leased project" means an economic development project site occupied by an approved company pursuant to a lease agreement;

(35) "Manufacturing" means any activity involving:

(a) Processing, assembling, or production of any property, including the processing resulting in a change in the conditions of the property and any activity related to the processing, assembling, or production of property, together with the storage, warehousing, distribution, and related office facilities; or

(b) Production of vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment;

(36) (a) "Nonretail service or technology" means any activity where service or technology is provided predominantly outside the Commonwealth and designed to serve a multistate, national, or international market.

(b) "Nonretail service or technology" includes but is not limited to call centers, centralized administrative or processing centers, telephone or internet sales order or processing centers, distribution or fulfillment centers, data processing centers, research and development facilities, and other similar activities;

(37) "Owned project" means an economic development project owned in fee simple by the approved company or an affiliate, or possessed by the approved company or an affiliate pursuant to a capital lease;

(38) "Personal protective equipment" means protective clothing, helmets, gloves, face shields, goggles, face masks, respirators, and other equipment designed to protect the user from injury or the spread of infection or illness;

(39) "Preliminary approval" means the action taken by the authority preliminarily approving an eligible company for incentives under this subchapter;

(40) "Renewable energy production" means a Kentucky operation that utilizes wind power, biomass resources, landfill methane gas, hydropower, solar power, or other similar renewable resources to generate electricity for sale to unrelated entities;

(41) "Rent" means the actual annual rent or fee paid by an approved company under a lease agreement;

(42) "Start-up costs" means nonrecurring costs, with the exception of paragraphs (d) and

(e) of this subsection, incurred to furnish and equip a facility for an economic development project, including costs incurred for:

(a) Computers, furnishings, office equipment, manufacturing equipment, and fixtures;

(b) The relocation of out-of-state equipment;

(c) Recurring software subscription or licensing fees covering a period not to exceed one (1) year form activation of the project;

(d) The initial software and licensing costs association with each new full-time job created;

(e) Cost of fixed telecommunications equipment; and

(f) Investments in:

1. Laboratory equipment;

2. Computer servers;

3. Software;

4. Capitalized leases; and

5. Leasehold improvements; when the costs are necessary to accommodate research and development, headquarters, high-technology operations, or service sector facilities; as certified to the authority in accordance with KRS 154.32-030;

(43) "Synthetic natural gas" means the same thing as in KRS 152.715;

(44) "Tax incentive agreement" means the agreement entered into pursuant to KRS 154.32-040 between the authority and an approved company;

(45) "Term," subject to KRS 154.32-040, means the period of time for which a tax incentive agreement may be in effect, which shall not exceed fifteen (15) years for an economic development project located in a heritage county, or ten (10) years for an economic development project not located in any other county;

(46) "Vital medications" means any drug or biologic used to prevent or treat a serious life-threatening disease or medical condition for which there is no other available source with sufficient supply of that drug or biologic or alternative drug or biologic;

(47) "Wage" means the per hour earnings of a full-time employee, including wages, tips, overtime, bonuses, and commissions, as reflected on the employee's federal form W-2 wage and tax statement, but excludes employee benefits; and

(48) "Wage target" means the average total hourly compensation amount, including the minimum wage and employee benefits, that the approved company commits to meet for all new full-time jobs created and maintained as a result of the economic development project, which shall not be less than:

(a) Two hundred percent (200%) of the federal minimum wage in heritage counties; or

(b) Three hundred percent (300%) of the federal minimum wage in any other counties.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 56, sec. 3, effective July 15, 2026; ch. 161, sec. 126, effective July 15, 2026; and ch. 198, sec. 13, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 22, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 118, effective June 29, 2021. -- Amended 2018 Ky. Acts ch. 199, sec. 33, effective July 14, 2018. -- Amended 2013 Ky. Acts ch. 134, sec. 16, effective June 25, 2013. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 9, effective June 26, 2009.

Legislative Research Commission Note (4/27/2026). Under the authority of KRS 7.136(1), the reviser of statutes has altered the internal numbering of this statute during codification to place the terms in alphabetical order. The words in the text were not changed.

Legislative Research Commission Note (7/15/2026). This statute was amended by 2026 Ky. Acts chs. 56, 161, and 198, which do not appear to be in conflict and have been codified together.

Legislative Research Commission Note (4/27/2018). KRS 154.48-010 was repealed in 2018 Ky. Acts chs. 171, 199, and 207, but a conforming amendment was not made to this statute to address the reference it contains to KRS 154.48-010. The Reviser of Statutes has determined that making such a conforming change during the 2018 codification exceeds the permissible correction of manifest clerical or typographical errors under KRS 7.136(1)(h). Therefore, the reference to KRS 154.48-010 remains unchanged and would have to be changed pursuant to future legislative action.

154.32-020 Incentives to induce location of economic development projects in the Commonwealth -- Purposes -- Requirements -- Summary of incentives available -- Legislative findings.

(1) The purposes of this subchapter are:

(a) To provide incentives for eligible companies and to encourage the location or expansion of manufacturing facilities, agribusiness operations, nonretail service or technology facilities, headquarters operations, alternative fuel production facilities, gasification production facilities, energy-efficient alternative fuel production facilities, renewable energy production facilities, carbon dioxide or hydrogen transmission pipelines, coal severing and processing, and hospital operations in the Commonwealth to advance the public purposes of:

1. Creation of new jobs that, but for the incentives offered by the authority, would not exist within the Commonwealth;

2. Creation of new sources of tax revenues for the support of public services provided by the Commonwealth;

3. Improvement in the quality of life for Kentucky citizens through the creation of sustainable jobs with higher salaries; and

4. Providing an economic stimulus to bolster in-state production of vital medications and personal protective equipment; and

(b) To provide balanced incentives for companies that locate in heritage counties in recognition of the depressed economic conditions in those counties and the increased need for the growth and development caused by the depressed economic conditions.

(2) To qualify for the incentives provided by subsection (3) of this section, an approved company shall:

(a) Incur eligible costs of at least one hundred thousand dollars ($100,000);

(b) Create at least ten (10) new full-time jobs and maintain an annual average number of at least ten (10) new full-time jobs; and

(c) 1. Pay at least ninety percent (90%) of all new full-time employees whose jobs were created as a result of the economic development project a minimum wage of at least two hundred percent (200%) of the federal minimum wage in heritage counties, and three hundred percent (300%) of the federal minimum wage in any other counties throughout the term of the economic development project; and

2. Provide employee benefits for all new full-time jobs equal to at least fifteen percent (15%) of the minimum wage requirement established by subparagraph 1. of this paragraph. If the eligible company does not provide employee benefits equal to at least fifteen percent (15%) of the minimum wage requirement established by subparagraph 1. of this paragraph, the eligible company may still qualify for incentives if it provides the full-time employees hired as a result of the economic development project total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the minimum wage requirement established in subparagraph 1. of this paragraph through increased hourly wages combined with employee benefits; or

(d) Produce vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment.

(3) (a) The incentives available under this subchapter are as follows:

1. Tax credits of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.020 or 141.040 and the limited liability entity tax imposed under KRS 141.0401 on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the economic development project, as set forth in KRS 141.415 and 154.32-070;

2. Authorization for the approved company to impose a wage assessment against the gross wages of each new employee subject to the Kentucky income tax as provided in KRS 154.32-090; and

3. An approved company receiving preliminary approval after July 1, 2026, may receive, in addition to the inducements provided under subparagraphs 1. and 2. of this paragraph, an income tax credit as provided under KRS 154.32-070.

(b) Notwithstanding any provision of law to the contrary, for any economic development project with an eligible investment of more than two hundred million dollars ($200,000,000), the authority may authorize approval to the economic development project based upon terms and incentives applicable to economic development project locating in a heritage county.

(4) The General Assembly hereby finds and declares that the authority granted in this subchapter and the purposes accomplished hereby are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the location of economic development projects within the Commonwealth is of paramount importance to the economic well-being of the Commonwealth.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 14, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 23, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 119, effective June 29, 2021. -- Amended 2019 Ky. Acts ch. 172, sec. 3, effective March 26, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 34, effective July 14, 2018. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 10, effective June 26, 2009.

154.32-030 Application, approval, and review process -- Memorandum of agreement -- Preliminary and final approval -- Tax incentive agreement -- Standards for approval -- Partial satisfaction of eligibility requirements.

(1) The application, approval, and review process under this subchapter shall be as follows:

(a) An eligible company with a proposed economic development project may submit an application to the authority. The application shall include the information required by subsection (3) of this section;

(b) Upon review of the application and any additional information submitted, the authority may, by resolution, give preliminary approval to an eligible company and authorize the negotiation and execution of a memorandum of agreement. The memorandum of agreement shall establish a preliminary job target, minimum wage target, including employee benefits, and maximum total approved cost for the economic development project, and shall only allow the recovery of eligible costs incurred ninety (90) days prior to receipt of preliminary approval. Upon preliminary approval, the preliminarily approved company may undertake the project in accordance with the memorandum of agreement, and may begin to hire employees that may be counted toward the minimum full-time job requirements established by the memorandum of agreement;

(c) After preliminary approval but before final approval, the authority shall post the preliminarily approved company's name, the location of the economic development project, and the incentives that have been preliminarily approved on the Cabinet for Economic Development's website;

(d) The preliminarily approved company shall submit any documentation required by the authority upon request of the authority;

(e) To obtain final approval, the preliminarily approved company shall submit:

1. Documentation required by the authority to confirm that the requirements established by the memorandum of agreement have been met; and

2. Documentation of official action taken by a local governmental entity detailing the manner and level of local contribution, if applicable. Upon review and confirmation of the documentation, the authority may, by resolution, give final approval to the preliminarily approved company, and authorize the execution of a tax incentive agreement between the authority and the approved company pursuant to KRS 154.32-040. The tax incentive agreement shall establish an activation date, which shall be within two (2) years of final approval;

(f) 1. On or before the activation date, the approved company shall notify the authority of its intention to activate the tax incentive agreement. The approved company shall submit:

a. Documentation that it has met the minimum full-time job, minimum investment, and minimum wage and employee benefits requirements established by KRS 154.32-020 as of the date of activation; and

b. The confirmed approved costs incurred as of the date of activation, which shall be the total eligible costs that may be recovered by the approved company.

2. If the approved company fails to meet any of the minimum investment, full-time job, or wage requirements, including employee benefits, established by KRS 154.32-020 on the activation date, the tax incentive agreement shall be canceled and the approved company shall not be eligible for incentives.

3. If an approved company meets the minimum investment, full-time job, and wage requirements, including employee benefits, established by KRS 154.32-020, but fails to meet higher job targets and minimum wage targets, including employee benefits, established in the tax incentive agreement, then the provisions of subsection (4) of this section shall apply in determining the incentives for which the approved company qualifies.

4. Upon activation of a tax incentive agreement, the authority shall notify the department, and shall provide the department with the information necessary to monitor and track the incentives taken by the approved company; and

(g) 1. The authority shall monitor the tax incentive agreement at least annually, and the approved company shall submit all documentation necessary for the authority to monitor the agreement.

2. The authority shall, based on the documentation provided, confirm that the approved company is in continued compliance with the provisions of the tax incentive agreement and, therefore, eligible for incentives.

3. Upon annual review, if the approved company meets the minimum job and wage requirements, including employee benefits, established by KRS 154.32-020, but fails to meet the job target and minimum wage target, including employee benefits, established in the tax incentive agreement, then the provisions of subsection (4) of this section shall apply in determining the incentives for which the approved company qualifies in any year.

4. Upon final approval, the authority shall notify the department that an approved company is eligible for incentives and shall provide the department with the information necessary to monitor the use of incentives by the approved company. If, at any time during the term of the tax incentive agreement, an approved company becomes ineligible for incentives, the authority shall notify the department, and the department shall discontinue the availability of incentives for the approved company.

(2) (a) The authority may establish procedures and standards for the review and approval of eligible companies and their economic development projects through the promulgation of administrative regulations in accordance with KRS Chapter 13A.

(b) Standards to be used by the authority in reviewing and approving an eligible company and its economic development project shall include but not be limited to:

1. The creditworthiness of the eligible company;

2. The proposed capital investment to be made;

3. The number of new full-time jobs to be provided for the residents of the Commonwealth and the wages to be paid;

4. Support of the local community; and

5. The likelihood of the economic success of the economic development project.

(3) The application shall include but not be limited to:

(a) The name of the applicant and identification of any affiliates of the applicant who will have some relation to the economic development project;

(b) A description of the economic development project, including its location, the total investment in the economic development project, and total proposed eligible costs;

(c) The projected number of new full-time jobs to be created as a result of the economic development project and identification of any affiliates who may employ persons hired to fill those jobs;

(d) The number of existing full-time jobs at the site of the economic development project on the date of the application and a description and breakdown of the relevant affiliated employers;

(e) Proposed wage and employee benefit amounts for the new full-time jobs to be created as a result of the proposed economic development project;

(f) For proposed economic development projects new to the Commonwealth, certification by the eligible company that the economic development project could reasonably and efficiently locate outside of the Commonwealth and, without the incentives offered by the authority, the eligible company would likely locate outside the Commonwealth;

(g) For eligible companies with an existing location in the Commonwealth considering an expansion, certification that the tax incentives are necessary for the expansion to occur;

(h) A letter of support from a local governmental entity in the city or county where the economic development project will be located; and

(i) Any other information the authority may require.

(4) (a) An approved company that meets the minimum job and wage requirements, including employee benefits established by KRS 154.32-020, but fails to meet the job target and minimum wage target, including employee benefits established by the tax incentive agreement, shall be eligible to receive the incentives authorized by the tax incentive agreement as provided in this subsection.

(b) If, upon activation or annual review, an approved company achieves at least ninety percent (90%) of both the job target and minimum wage target, including employee benefits established by the tax incentive agreement, and no other default has occurred, then the approved company shall be eligible to receive full incentives as provided in the tax incentive agreement.

(c) If, upon activation or annual review, an approved company achieves less than ninety percent (90%) of either the job target or minimum wage target, including employee benefits established in the tax incentive agreement, and no other default has occurred, then the incentives available to the approved company for the following year shall be reduced by a percentage equal to the percentage representing the difference between the job target or minimum wage target, including employee benefits established in the tax incentive agreement, and the actual average number of full-time jobs or average wage, including employee benefits, paid. If both the number of actual average full- time jobs and average wages paid, including employee benefits, are below ninety percent (90%) of the targets on the same measurement date, then the greater percentage reduction of the two (2) shall be applied rather than reducing the incentives available by the sum of the two (2).

(d) If, upon annual review, either the actual number of new full-time jobs or the average wages paid for those jobs, including employee benefits, is less than the minimum requirements established by KRS 154.32-020, then the economic development project may be suspended automatically or, with approval of the authority, terminated.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 15, effective April 27, 2026. -- Amended 2019 Ky. Acts ch. 172, sec. 4, effective March 26, 2019. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 11, effective June 26, 2009.

154.32-040 Tax incentive agreement between authority and approved company -- Contents.

The authority, upon final approval of a company, may enter into a tax incentive agreement with the approved company. The terms and conditions of the tax incentive agreement shall be negotiated between the authority and the approved company. The terms of the tax incentive agreement shall include but not be limited to the following provisions:

(1) The maximum approved costs that may be recovered over the term of the tax incentive agreement and the annual maximum for approved costs;

(2) That the approved company shall provide the authority with all documentation requested in a manner acceptable to the authority;

(3) Identification of the contribution of the local government to the economic development project, if any;

(4) The activation date, which shall be within two (2) years of final approval;

(5) That the approved company shall implement the activation date by notifying the authority;

(6) That the approved company shall provide documentation satisfactory to the authority within the timeframes required by the authority that it has met the minimum employment, minimum investment, and minimum wage requirements, including employee benefits, established by KRS 154.32-020;

(7) That failure of the approved company to meet any of the minimum job, minimum investment, or minimum wage requirements, including employee benefits, established by KRS 154.32-020, on the activation date shall result in cancellation of the tax incentive agreement;

(8) The term of the agreement, which shall not exceed fifteen (15) years for an economic development project located in a heritage county, or ten (10) years for an economic development project located in any other county;

(9) Notwithstanding subsection (8) of this section, an approved company that received preliminary approval of an economic development project prior to January 1, 2023, in which wage assessments were provided pursuant to KRS 154.32-090 may request a one (1) time extension for up to five (5) years under the following conditions:

(a) At the time the extension is granted, the approved company has received less than seventy-five percent (75%) of the incentives awarded under the tax incentive agreement; and

(b) The extension does not amend any provision of the tax incentive agreement impacting the scope of the project or the maximum amount of incentives awarded under the tax incentive agreement;

(10) That, if confirmed approved costs are less than the maximum approved costs included in the tax incentive agreement, the confirmed approved costs shall become the maximum amount that may be recovered by the approved company;

(11) If the economic development project is a leased project, that future rent payments that are included in eligible costs shall be included as confirmed approved costs upon submission of a valid lease agreement executed after preliminary approval;

(12) Establishment of a job target and minimum wage target, including employee benefits;

(13) A requirement that the job target and minimum wage target, including employee benefits, be measured:

(a) On the activation date, against the actual new full-time jobs created and the average wages, including employee benefits, paid for those jobs; and

(b) Annually during each year of the agreement, against the annual average of the new full-time jobs and the average wages paid for those jobs, including employee benefits;

(14) A provision requiring the approved company to notify the authority immediately if the approved company sells or otherwise transfers or disposes of the land on which an economic development project is located, if a lease relating to the economic development project is terminated or lapses, or if the approved company ceases or fundamentally alters operations at the economic development project;

(15) A provision detailing the reductions in incentives that will occur pursuant to KRS 154.32-030(4) if an approved company fails to meet its job target or minimum wage target, including employee benefits;

(16) That the agreement may be assigned by the approved company upon the adoption of a resolution by the authority to that effect;

(17) That the approved company shall make available to the authority all of its records pertaining to the economic development project, including but not limited to payroll records, records relating to eligible costs, and any other records pertaining to the economic development project that the authority may require;

(18) That the authority may share information with the department for the purposes of monitoring and enforcing the terms of the tax incentive agreement;

(19) That, if an approved company fails to comply with its obligations under the tax incentive agreement other than the jobs target or minimum wage target, the authority may take any or all of the following actions:

(a) Suspend the incentives available to the approved company;

(b) Terminate the incentives available to the approved company; or

(c) Pursue any other remedy set forth in the tax incentive agreement or to which it may be entitled by law; and

(20) Any other provisions not inconsistent with this subchapter and determined to be necessary or appropriate by the parties to the tax incentive agreement.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 16, effective April 27, 2026. -- Amended 2021 Ky. Acts ch. 185, sec. 120, effective June 29, 2021. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 12, effective June 26, 2009.

154.32-050 Repealed, 2026.

[Repealed]

154.32-060 Rehabilitation, replacement, or expansion of existing facilities -- Criteria for approval as economic development project.

(1) The authority shall not approve an economic development project that otherwise meets the requirements of this subchapter if the economic development project will result in the replacement of facilities existing in the state, except as provided in this section.

(2) The authority may approve an economic development project that:

(a) Rehabilitates an existing facility used for activities of an eligible company, if:

1. The facility has not been in operation for a period of ninety (90) or more consecutive days; or

2. a. The current occupant of the facility has advertised a notice of closure; and

b. The eligible company proposing the economic development project is not an affiliate of the current occupant of the facility; or

3. a. The facility is sold or transferred pursuant to a foreclosure ordered by a court of competent jurisdiction or an order of a bankruptcy court of competent jurisdiction; and

b. The title to the facility prior to the sale is not vested in the eligible company or an affiliate of the eligible company; or

4. The existing facility is rehabilitated to enable a business to produce vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment;

(b) Replaces an existing facility of an eligible company if:

1. a. Title to the facility:

i. Is held by exercise of the power of eminent domain; or

ii. May be taken pursuant to a nonappealable judgment granting authority to exercise the power of eminent domain; and

b. Normal operations at the facility cannot be resumed within twelve

(12) months; or

2. The facility has been damaged or destroyed by fire or other casualty to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or

3. The existing facility is replaced to enable a business to produce vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment; or

(c) Replaces an existing facility located in the same county if the existing facility cannot be expanded due to the unavailability of real estate at or adjacent to the facility to be replaced. Any economic development project satisfying the requirements of this paragraph shall be eligible for incentives under this subchapter only to the extent of the expansion. No incentives shall be available for the equivalent of the facility to be replaced or rehabilitated.

(3) The authority shall not approve an economic development project under this section which results in a lease abandonment or lease termination by the approved company without the consent of the lessor.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 121, effective June 29, 2021. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 14, effective June 26, 2009.

154.32-070 Tax credits for economic development project by approved company.

(1) For taxable years beginning after December 31, 2009, an approved company may be eligible for a credit of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.020 or 141.040, and the limited liability entity tax imposed under KRS 141.0401, that would otherwise be owed by the approved company to the Commonwealth for the approved company's taxable year, on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the economic development project.

(2) The credit allowed the approved company shall be applied against both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with credit ordering as provided in KRS 141.0205, for the taxable year for which the tax return of the approved company is filed, subject to the annual maximum set forth in the tax incentive agreement. Any credit not used in the year in which it was first available may be carried forward to subsequent years, provided that no credit may be carried forward beyond the term of the tax incentive agreement.

(3) The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross receipts, or Kentucky gross profits generated by or arising from the eligible project.

(4) The credit provided by this section shall be determined as provided in KRS 141.415.

(5) The amount of incentives allowed under subsections (1) to (4) of this section shall not exceed the lesser of the tax liability of the approved company related to the economic development project for that year or the annual maximum approved costs set forth in the tax incentive agreement in any year. The incentives shall be allowed for each fiscal year of the approved company during the term of the tax incentive agreement for which a tax return is filed by the approved company.

(6) (a) An approved company receiving preliminary approval after July 1, 2026, may receive, in addition to the inducements provided under subsections (1) to (4) of this section, a credit as provided under KRS 141.399 in an amount up to:

1. Two and one-quarter percent (2.25%) of the wages paid to full-time employees who are subject to the tax imposed by KRS 141.020 and maintained at an economic development project located in a heritage county; and

2. One and one-quarter percent (1.25%) of the wages paid to full-time employees who are subject to the tax imposed by KRS 141.020 and maintained at an economic development project located in any other county.

(b) The cumulative credits awarded:

1. To an approved company under this subsection for any year of the agreement shall not exceed the annual maximum approved costs of the economic development project as provided in the tax incentive agreement; and

2. Shall not exceed four million dollars ($4,000,000) per taxable year, of which no more than one million dollars ($1,000,000) shall be allowed for wages paid to full-time employees in counties other than heritage counties.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 17, effective April 27, 2026. -- Amended 2019 Ky. Acts ch. 151, sec. 71, effective June 27, 2019. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 16, effective June 26, 2009.

Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 71 of that Act apply retroactively to April 14, 2018.

154.32-080 Repealed, 2019.

[Repealed]

154.32-090 Wage assessments against employees -- Calculation of amount -- Credit against individual income tax for employees -- Assessment to cease at expiration of tax incentive agreement.

(1) An approved company or, with the authority's consent, an affiliate of an approved company may impose wage assessments against employees as provided in this section if a wage assessment is included in the incentives awarded to the approved company in the tax incentive agreement. The level of wage assessment shall be negotiated as part of the tax incentive agreement.

(2) If an economic development project is located in a heritage county, the approved company or, with the authority's consent, an affiliate of the approved company may require that each employee subject to the tax imposed by KRS 141.020, whose job is determined by the authority to be created as a result of the economic development project, as a condition of employment, agree to an assessment of up to one hundred percent (100%) of the individual income tax rate imposed by KRS 141.020, and that assessment shall operate as the Commonwealth's wage assessment. Although not required for an economic development project located in a heritage county, a local jurisdiction may agree to forgo all or a portion of its local occupational license fee as a local wage assessment.

(3) (a) If the economic development project is not located in a heritage county, and is located in a local jurisdiction where:

1. No local occupational license fee is imposed;

2. a. A local occupational license fee greater than or equal to twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo, as the local wage assessment, at least twenty percent (20%) of the individual income tax rate imposed by KRS 141.020 via credits against the local occupational license fee for the affected employees; or

3. a. A local occupational license fee less than twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo the total amount of the local occupational license fee as the local wage assessment; then

(b) An approved company or, with the authority's consent, an affiliate of an approved company may require that each employee subject to tax imposed by KRS 141.020, whose job is determined by the authority to be created as a result of the economic development project, as a condition of employment, agree to pay an assessment of up to sixty percent (60%) of the individual income tax rate imposed by KRS 141.020 and that assessment shall operate as the Commonwealth's wage assessment.

(4) (a) If the economic development project is not located in a heritage county, and is located in a local jurisdiction where:

1. a. A local occupational license fee greater than or equal to twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo an amount of the local occupational license fee that is less than twenty percent (20%) of the individual income tax rate in KRS 141.020 as the local wage assessment; or

2. a. A local occupational license fee of lesser than twenty percent (20%) of the individual income tax rate in KRS 141.020 is imposed; and

b. The local jurisdiction agrees to forgo only a portion of the total amount of the local occupational license fee as the local wage assessment; then

(b) An approved company or, with the authority's consent, an affiliate of an approved company may require that each employee subject to tax imposed by KRS 141.020, whose job is determined by the authority to be created as a result of the economic development project, as a condition of employment, agree to pay an assessment equal to three (3) times the forgone local wage assessment rate and that assessment shall operate as the Commonwealth's wage assessment.

(5) If the project is not located in a heritage county, and:

(a) Is located in a local jurisdiction that does not impose a local occupational license fee, the local jurisdiction shall be required to provide some alternative inducement satisfactory to the authority at the local level in order for a preliminarily approved company to receive final approval. However, the authority may waive this requirement if there are reasonable circumstances that prevent the local jurisdiction from providing a reasonable inducement; or

(b) Is located in a local jurisdiction that does impose a local occupational license fee, the jurisdiction may request that the authority waive the local occupational license fee requirements established by subsection (3) or (4) of this section if the local jurisdiction offers alternative inducements of similar value satisfactory to the authority. The authority shall review all requests for a waiver, and may waive the local occupational license fee requirements and instead require the local jurisdiction to provide alternative inducements of similar value if the authority determines that the circumstances warrant an alternative contribution by the local jurisdiction.

(6) Each employee paying the assessment shall simultaneously be entitled to a credit against the Kentucky individual income tax required to be withheld under KRS 141.310 equal to the state portion of the assessment and shall be entitled to a credit against the local occupational license tax equal to the local portion of the assessment.

(7) If more than one (1) local jurisdiction imposes an occupational license fee, the local jurisdiction portion of the assessment shall be prorated proportionately among the taxes imposed by the local jurisdictions unless one (1) local jurisdiction agrees to forgo the receipt of these taxes in an amount equal to the local jurisdiction portion of the wage assessment, in which case no proration shall be made.

(8) If a full-time employee subject to state tax imposed by KRS 141.020 is already employed by the approved company at a site other than the site of the economic development project, that full-time employee's job shall be deemed to have been created when the full-time employee is transferred to the site of the economic development project if the full-time employee's existing job is filled with a new full-time employee.

(9) If an approved company elects to impose the assessment as a condition of employment, it shall be authorized to deduct the assessment from each payment of wages to the employee.

(10) Notwithstanding any other provision of the Kentucky Revised Statutes, if an approved company elects not to deduct the assessment from each payment of wages to the employee, but rather requests a reimbursement of state tax imposed by KRS 141.020 or local occupational tax in the aggregate after they have been paid to the state or local jurisdiction, no interest shall be paid by the state or by the local jurisdiction on that reimbursement.

(11) No credit, or portion thereof, shall be allowed against any occupational license fee imposed by or dedicated solely to the board of education in a local jurisdiction.

(12) An approved company imposing an assessment shall make its payroll, books, and records available to the authority or the department upon request, and shall file with the authority or department documentation pertaining to the assessment as the authority or department may require.

(13) Any assessment of the wages of employees of an approved company in connection with their employment at an economic development project shall permanently cease at the expiration of the tax incentive agreement.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 18, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 25, effective June 29, 2023. -- Amended 2019 Ky. Acts ch. 172, sec. 5, effective March 26, 2019. -- Amended 2012 Ky. Acts ch. 43, sec. 1, effective July 12, 2012. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 18, effective June 26, 2009.

154.32-100 Annual report by department on tax credits and assessments -- Semiannual report by cabinet.

(1) (a) By October 1 of each year, the department shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year and aggregate assessments taken during the prior calendar year by approved companies with respect to their economic development projects under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state income tax return, when an approved company has taken tax credits or assessments equal to the total incentives available to the approved company.

(b) For the economic development credit provided under KRS 141.399, the department shall report to the authority the total amount of economic development credit awarded for each taxable year, by county, including the following:

1. Each approved company awarded a credit; and

2. The total amount of wages paid to a full-time employee by an approved company and included in the credit computation.

(2) On a semiannual basis, by May 1 and November 1 of each year, the cabinet shall prepare a report of the economic development credits provided under KRS 154.32- 070 to be submitted to the Governor and the Legislative Research Commission for referral to Interim Joint Committee on Appropriations and Revenue and made available on the cabinet's website. The report shall include but not be limited to the following:

(a) A summary of the economic development credits received and relevant statistics relating to actions taken by the cabinet, including:

1. The approved company;

2. The total amount of economic development credits awarded;

3. The number of full-time jobs created; and

4. The annual maximum approved costs of the economic development project;

(b) The annual total of the economic development credits received; and

(c) Recommendations for legislation or policy actions needed to increase the number of economic development projects.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 19, effective April 27, 2026. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 15, effective June 26, 2009.

Subchapter 33 Appalachian Development Subchapter 33 Appalachian Development

154.33-020 Repealed, 2007.

[Repealed]

Shaping Our Appalachian Region, Inc. Shaping Our Appalachian Region, Inc.

154.33-501 Repealed, 2015.

[Repealed]

154.33-510 Definitions for subchapter.

As used in this subchapter, unless the context otherwise requires:

(1) "Area" or "region" means the geographical area of Kentucky contained within the Appalachian region as defined by the federal Appalachian Regional Development Act of 1965, as amended;

(2) "Board" means the executive board of Shaping Our Appalachian Region, Inc., a Kentucky nonprofit 501(c)(3) corporation created and organized, as of June 24, 2015, to advance and promote a resilient and diverse eastern Kentucky by providing leadership, vision, and collaborative partnerships to support innovative regional practices and enhance public and private investments in areas such as job creation, entrepreneurship, tourism, education and lifelong learning, health and wellness, arts and heritage, and sustainable agricultural practices and food systems;

(3) "Commissioner" means the commissioner of the Department for Local Government;

(4) "Commonwealth" means the Commonwealth of Kentucky;

(5) "Executive director" means the chief administrator of Shaping Our Appalachian Region, Inc. having responsibility for its day-to-day operations, and possessing all duties, responsibilities, and authorities as specified by the board;

(6) "Fund" means the Kentucky Appalachian regional development fund as provided by KRS 154.33-550.

Effective:June 29, 2017

History: Amended 2017 Ky. Acts ch. 177, sec. 5, effective June 29, 2017. -- Amended 2015 Ky. Acts ch. 58, sec. 1, effective June 24, 2015. -- Amended 2000 Ky. Acts ch. 465, sec. 1, effective April 21, 2000. -- Amended 1992 Ky. Acts ch. 43, sec. 1, effective July 14, 1992. -- Created 1990 Ky. Acts ch. 105, sec. 1, effective March 20, 1990. Formerly codified as KRS 154B.100

154.33-515 Repealed, 2015.

[Repealed]

154.33-520 Repealed, 2015.

[Repealed]

154.33-525 Repealed, 2015.

[Repealed]

154.33-527 Repealed, 2015.

[Repealed]

154.33-530 Disclosure of conflict of interest of member, officer, or employee of the board.

If any member, officer or employee of the board shall be interested either directly or indirectly, or shall be an officer or employee of or have an ownership interest in any firm or corporation interested directly or indirectly in any grant, loan, or investment from the Kentucky Appalachian regional development fund, including any loan to any sponsor, builder, or developer, the interest shall be disclosed clearly in the application and shall be set forth in the minutes of the board, and the member, officer, or employee having an interest therein shall not participate in the application process.

Effective: June 24, 2015

History: Amended 2015 Ky. Acts ch. 58, sec. 6, effective June 24, 2015. -- Created 1990 Ky. Acts ch. 105, sec. 16, effective March 20, 1990. Formerly codified as KRS 154B.130

154.33-533 Repealed, 2015.

[Repealed]

154.33-535 Repealed, 2015.

[Repealed]

154.33-540 Repealed, 2015.

[Repealed]

154.33-545 Repealed, 2015.

[Repealed]

154.33-550 Kentucky Appalachian regional development fund.

(1) There is created and established a fund to be known as the Kentucky Appalachian regional development fund to be administered by the Department for Local Government.

(2) The Kentucky Appalachian regional development fund shall be comprised of state appropriations, repayment of loans and interest made from the funds, and interest earnings generated for the fund.

(3) The purpose of this fund is to provide a source from which the Department for Local Government may make loans, grants, and investments in accordance with the purposes and procedures established in KRS 154.33-552 and 154.33-554, at such interest rates and for such terms as may be determined by the commissioner or his or her designee, with security for repayment as deemed necessary and reasonable.

(4) The proceeds of any loan, grant, or investment shall be used solely for the purposes identified in KRS 154.33-552 and as may be further provided in the agreement; however, no moneys from this fund shall be used to carry on propaganda or otherwise used to influence legislation.

(5) Any unallotted or unencumbered balances in the fund shall be invested pursuant to KRS 42.500. Interest earned from the investment of these funds shall accrue to the Kentucky Appalachian regional development fund.

(6) The balance in the Kentucky Appalachian regional development fund shall be treated as a continuing appropriation and shall not lapse at the end of the fiscal year.

Effective: June 24, 2015

History: Amended 2015 Ky. Acts ch. 58, sec. 2, effective June 24, 2015. -- Created 1990 Ky. Acts ch. 105, sec. 9, effective March 20, 1990. Formerly codified as KRS 154B.116

154.33-552 Uses of Kentucky Appalachian regional development fund -- Applications for funding -- Criteria for approval -- Administrative regulations.

(1) The Kentucky Appalachian regional development fund shall be used only to support job creation and retention, entrepreneurship, tourism, broadband deployment, education and lifelong learning, workforce training, leadership development, public engagement, health and wellness, arts and heritage, infrastructure, economic diversity, and sustainable agricultural practices and food systems within and across counties in the region.

(2) The following entities may apply for loans, grants, or investments from the fund:

(a) Nonprofit corporations that have or are actively seeking 501(c)(3) status, are registered to do business in the Commonwealth, are established to conduct business in accordance with the purposes of the Shaping Our Appalachian Region initiative, and that have a physical presence within the region;

(b) Working groups or other formally designated entities representing Shaping Our Appalachian Region, Inc. as documented by resolution of the board or the board itself; and

(c) Departments, divisions, or offices of a county or city within the region.

(3) Applications shall be submitted to the executive director who shall confirm completeness and shall then submit applications to the board for consideration.

(4) The board shall consider whether and to what extent the applications are consistent with the purposes specified in subsection (1) of this section. It shall then forward the applications to the commissioner with recommendations for approval or disapproval, giving priority to initiatives that present the greatest likelihood of regionwide economic impact.

(5) The criteria to be used by the board in recommending applications to the commissioner shall include:

(a) The unemployment level in each community where the project will be located;

(b) The likelihood that the project will generate future revenue for the community or the Commonwealth;

(c) The number of new direct or indirect jobs to be provided for the residents of the Commonwealth and the wages to be paid;

(d) The degree to which the project will benefit the economies and communities in multiple jurisdictions within the region;

(e) Funding match from the local community and private sector persons or foundations; and

(f) The likelihood of the economic success of the project, including the ability of the project to sustain itself in the future.

(6) The commissioner shall have authority to approve the application and shall, in consultation with the secretary of the Cabinet for Economic Development, determine reasonable terms and conditions for the loan, grant, or investment.

(7) Money in the Kentucky Appalachian regional development fund may be disbursed by the applicant to any person or entity, public or private, organized for profit or not for profit, or any combination thereof with a geographical presence in the region as set forth in the application and approved by the commissioner, but the applicant shall be responsible for appropriate monitoring and reporting of the use of funds by the recipient.

(8) The Department for Local Government may promulgate administrative regulations in accordance with KRS Chapter 13A to implement the provisions of this section and KRS 154.33-554 and 154.33-556.

Effective: June 24, 2015

History: Created 2015 Ky. Acts ch. 58, sec. 3, effective June 24, 2015.

154.33-554 Contents of applications for loans, grants, or investments.

Applications for loans, grants, or investments submitted under KRS 154.33-552 shall include the following:

(1) The name of the applicant and identification of all parties contributing to or taking a leadership role with regard to the development project;

(2) A detailed description of the project, including its location and the total project cost;

(3) The projected number of jobs, if any, to be created as a result of the project and a description of the types of jobs;

(4) If the applicant is an entity other than a city or county, a letter of support from all local governmental entities affected by the project;

(5) A detailed description of any other funding sources that will be used to pay for the project;

(6) A plan for making the project self-sustaining if it is expected or intended that the initiative will have recurring expenses, and an explanation of the stream of revenue or other resources that will cover future costs, including operational costs, administrative costs, and upkeep on any property, buildings, equipment, or other capital assets funded; and

(7) Any other information that the commissioner may require.

Effective: June 24, 2015

History: Created 2015 Ky. Acts ch. 58, sec. 4, effective June 24, 2015.

154.33-555 Repealed, 2015.

[Repealed]

154.33-556 Annual report on status of Kentucky Appalachian regional development fund.

The Department for Local Government shall prepare and submit to the Office of the Governor and the Legislative Research Commission a report by November 1 of each year on the status of the Kentucky Appalachian regional development fund. The report shall include the operation and financial status of the fund, the initiatives supported by the fund, and the status of the measures of success identified for each funded initiative.

Effective: June 24, 2015

History: Created 2015 Ky. Acts ch. 58, sec. 5, effective June 24, 2015.

154.33-560 Repealed, 2015.

[Repealed]

154.33-565 Repealed, 2015.

[Repealed]

154.33-570 Repealed, 2015.

[Repealed]

154.33-575 Repealed, 2015.

[Repealed]

154.33-580 Repealed, 2015.

[Repealed]

154.33-585 Repealed, 2015.

[Repealed]

Red Fox Tri-County Cooperative Corporation Red Fox Tri-County Cooperative Corporation

154.33-600 Repealed, 2009.

[Repealed]

154.33-601 Repealed, 2009.

[Repealed]

154.33-603 Repealed, 2009.

[Repealed]

154.33-605 Repealed, 2009.

[Repealed]

154.33-607 Repealed, 2009.

[Repealed]

154.33-609 Repealed, 2009.

[Repealed]

Subchapter 34 Reinvestment of Manufacturing Facilities Subchapter 34 Reinvestment of Manufacturing Facilities

154.34-010 Definitions for subchapter.

As used in this subchapter:

(1) "Affiliate" has the same meaning as in KRS 154.32-010;

(2) "Agribusiness" has the same meaning as in KRS 154.32-010;

(3) "Alternative fuel production" has the same meaning as in KRS 154.32-010;

(4) "Approved company" means an eligible company approved under KRS 154.34-070 for a reinvestment project;

(5) "Approved costs" means the eligible equipment and related costs approved by the authority that may be recovered by an approved company through the incentives authorized by this subchapter;

(6) "Authority" means the Kentucky Economic Development Finance Authority created by KRS 154.20-010;

(7) "Capital lease" has the same meaning as in KRS 154.32-010;

(8) "Carbon dioxide or hydrogen transmission pipeline" has the same meaning as in KRS 154.32-010;

(9) "Coal severing and processing" means activities resulting in an eligible company being subject to the tax imposed by KRS Chapter 143;

(10) "Commonwealth" means the Commonwealth of Kentucky;

(11) "Department" means the Department of Revenue;

(12) (a) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity:

1. Employing or intending to employ a minimum of twenty-five (25) persons on a full-time bases; and

2. Engaged in or planning to engage in one (1) or more of the following activities:

a. Headquarter operations;

b. Manufacturing;

c. Agribusiness;

d. Nonretail service or technology;

e. Coal severing and processing;

f. Alternative fuel, gasification, energy-efficient alternative fuel, or renewable energy production;

g. Carbon dioxide or hydrogen transmission pipeline operations; or

h. Hospital operations; at the same facility located and operating within the Commonwealth on a permanent basis for a reasonable period of time preceding the request for approval of a reinvestment project by the authority, including facilities where operations have been temporarily suspended and which meet the standards under KRS 154.34-070 and related administrative regulations promulgated by the authority.

(b) "Eligible company" does not include any company for which the primary activity to be conducted within the Commonwealth is:

1. Forestry;

2. Fishing;

3. The provision of utilities;

4. Construction;

5. Wholesale trade;

6. Retail trade;

7. Real estate;

8. Rental and leasing;

9. Educational services;

10. Accommodation and food services; or

11. Public administration services;

(13) (a) "Eligible equipment and related costs" means:

1. Obligations incurred for labor and to vendors, contractors, subcontractors, builders, suppliers, deliverymen, and materialmen in connection with the acquisition, construction, equipping, rehabilitation, and installation of a reinvestment project;

2. The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, equipping, rehabilitation, and installation of a reinvestment project which is not paid by the vendor, supplier, deliveryman, contractor, or otherwise provided;

3. All costs of architectural and engineering services, including estimates, plans and specifications, preliminary investigations, and supervision of construction, rehabilitation and installation, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, equipping, rehabilitation, and installation of a reinvestment project;

4. All costs required to be paid under the terms of any contract for the acquisition, construction, equipping, rehabilitation, and installation of a reinvestment project;

5. All costs required for the installation of utilities, including but not limited to water, sewer, sewer treatment, gas, electricity, communications, and access to transportation, and including off-site construction of the facilities paid for by the approved company; and

6. All other costs of a nature comparable to those described in this paragraph.

(b) "Eligible equipment and related costs" does not include costs related to the replacement or repair of existing machinery or equipment resulting from normal wear and usage of the machinery or equipment;

(14) "Energy-efficient alternative fuel production" has the same meaning as in KRS 154.32-010;

(15) "Equipment" means manufacturing machinery equipment, computers, furnishings, fixtures, and other assets installed by the approved company as part of the reinvestment project;

(16) "Final approval" means the action taken by the authority designating a preliminarily approved eligible company as an approved company to receive incentives under this subchapter;

(17) "Full-time employee" means a person who:

(a) Is required to work a minimum of thirty-five (35) hours per week; or

(b) Works remotely away from the reinvestment project if all the following conditions are met:

1. Is a Kentucky resident;

2. Whose job was created or retained as a result of the reinvestment project; and

3. Whose payroll is expensed to the reinvestment project;

(18) "Gasification production" has the same meaning as in KRS 154.32-010;

(19) "Headquarters" has the same meaning as in KRS 154.32-010;

(20) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(21) "Hospital" has the same meaning as in KRS 154.32-010;

(22) "Incentives" means the Kentucky tax credit as prescribed in this subchapter;

(23) "Kentucky gross profits" has the same meaning as in KRS 141.0401;

(24) "Kentucky gross receipts" has the same meaning as in KRS 141.0401;

(25) "Leased project" has the same meaning as in KRS 154.32-010;

(26) "Manufacturing" has the same meaning as in KRS 154.32-010;

(27) "Nonretail service or technology" has the same meaning as in KRS 154.32-010;

(28) "Personal protective equipment" has the same meaning as in KRS 154.32-010;

(29) "Preliminary approval" means the action taken by the authority designating an eligible company as a preliminarily approved company;

(30) "Reinvestment agreement" means the agreement entered into pursuant to KRS 154.34-080 between the authority and an approved company with respect to a reinvestment project;

(31) "Reinvestment project" means:

(a) A reinvestment in the facility of an eligible company and in the full-time employees of an eligible company through the acquisition, construction, and installation of new equipment and, with respect thereto, the construction, rehabilitation, and installation of improvements to facilities necessary to house the new equipment, including surveys; installation of utilities, including water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; or off-site construction of utility extensions to the boundaries of the real estate on which the facilities are located;

(b) The expenditure of at least one million dollars ($1,000,000) in eligible equipment and related costs for leased projects and at least two million five hundred thousand dollars ($2,500,000) in eligible equipment and related costs for all other reinvestment projects; and

(c) A reinvestment in a facility in order to allow for the production of vital medications, personal protective equipment, or equipment necessary to produce personal protective equipment;

(32) "Renewable energy production" has the same meaning as in KRS 154.32-010; and

(33) "Vital medications" has the same meaning as in KRS 154.32-010.

Effective: April 27, 2026

History: Amended 2026 Ky. Acts ch. 198, sec. 28, effective April 27, 2026. -- Amended 2023 Ky. Acts ch. 75, sec. 26, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 122, effective June 29, 2021. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 1, effective June 26, 2009. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 61, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 221, effective July 12, 2006. -- Created 2003 Ky. Acts ch. 148, sec. 1, effective June 24, 2003.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 7, provides that, notwithstanding the amendments contained in Sections 1 to 6 of that Act (which includes this statute), "all reinvestment projects preliminarily approved on or after the effective date of this Act shall not be eligible for final approval until July 1, 2010"; and 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 8, provides that, notwithstanding the amendments in Sections 1 to 6 of that Act or the repeals in Section 114 of that Act, "all reinvestment projects preliminarily or finally approved prior to the effective date of this Act shall be governed by Subchapter 34 of KRS Chapter 154 as it existed prior to the effective date of this Act."

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.34-020 Repealed, 2009.

[Repealed]

154.34-030 Repealed, 2009.

[Repealed]

154.34-040 Repealed, 2009.

[Repealed]

154.34-050 Repealed, 2009.

[Repealed]

154.34-060 Repealed, 2009.

[Repealed]

154.34-070 Application and review process -- Memorandum of agreement -- Standards and criteria for approval -- Preliminary and final approval of company by authority -- Reinvestment agreement -- Notice to department -- Department to monitor use of incentives.

(1) The application and approval process under this subchapter shall be as follows:

(a) An eligible company with a proposed reinvestment project may submit an application to the authority. The application shall include the information required by subsection (4) of this section;

(b) Upon review of the application and any additional information submitted, the authority may, by resolution, give preliminary approval to a reinvestment project and authorize the negotiation and execution of a memorandum of agreement. The memorandum of agreement shall establish the minimum job retention requirements and maximum total approved cost for the reinvestment project, shall only allow the recovery of costs incurred after preliminary approval, and may include any other terms as agreed to by the parties to the agreement. Upon preliminary approval, the preliminarily approved company may undertake the project in accordance with the memorandum of agreement;

(c) The preliminarily approved company shall submit any documentation required by the authority upon request of the authority;

(d) The preliminarily approved company shall have up to three (3) years from the date of preliminary approval to complete the reinvestment project and obtain final approval. Upon the earlier of completion of the project or the passage of three (3) years from the date of preliminary approval, the preliminarily approved company shall submit documentation required by the authority, and the authority shall confirm that the minimum investment and job retention requirements established by the memorandum of agreement have been met. Upon review and confirmation of the documentation, the authority may, by resolution, give final approval to the preliminarily approved company and authorize the execution of a reinvestment agreement between the authority and the approved company pursuant to KRS 154.34-080. As part of the reinvestment agreement, the approved costs shall be finally determined, not to exceed the maximum approved costs as determined at preliminary approval, and the approved company shall be eligible to receive incentives in accordance with the provisions of the reinvestment agreement;

(e) The authority shall monitor the reinvestment agreement at least annually, and the approved company shall submit all documentation necessary for the authority to monitor the agreement. The authority shall, based on the documentation provided, confirm that the approved company is in continued compliance with the provisions of the reinvestment agreement and, therefore, eligible for incentives; and

(f) Upon final approval, the authority shall notify the department that an approved company is eligible for incentives and shall provide the department with the information necessary to monitor the use of incentives by the approved company. If, at any time during the term of the reinvestment agreement, an approved company becomes ineligible for incentives, the authority shall notify the department, and the department shall discontinue the availability of incentives for the approved company.

(2) The authority may establish standards for preliminary and final approval of eligible companies and their projects through the promulgation of administrative regulations in accordance with the provisions of KRS Chapter 13A.

(3) The criteria for preliminary and final approval of eligible companies and reinvestment projects shall include but not be limited to the need for the project, the eligible equipment and other costs to be expended by the eligible company, and the number of jobs created or preserved as a result of the project.

(4) The application shall include:

(a) The name of the applicant and identification of any affiliates who will have some relation to the reinvestment project;

(b) A description of the condition of the existing facility, including but not limited to the status of the physical plant or office space, the financial situation of the company, and the efficiency and productivity of the facility;

(c) A description of the proposed reinvestment project, including anticipated sources of funding, the total anticipated equipment and related costs and skills upgrade training costs, the impact of the proposed reinvestment project on full-time employment at the facility, and an explanation of why reinvestment in the facility and its full-time employees is necessary;

(d) The number of existing full-time jobs at the site of the reinvestment project on the date of the application and a description and breakdown of the relevant affiliated employers;

(e) A timeline for the proposed reinvestment project;

(f) A description of the other alternatives that are available to the eligible company, if incentives are not provided;

(g) The amount of incentives sought, and an explanation of why the requested incentives are needed;

(h) A certification from the company that the reinvestment project would not be economically feasible for the company, but for the incentives available under this subchapter;

(i) Payment of any applicable application fees required by the authority; and

(j) Any additional information relating to the proposed reinvestment project that the authority may require.

(5) The authority may request any materials and make any inquiries concerning an application that the authority deems necessary.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 123, effective June 29, 2021. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 3, effective June 26, 2009. -- Created 2003 Ky. Acts ch. 148, sec. 7, effective June 24, 2003.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 7, provides that, notwithstanding the amendments contained in Sections 1 to 6 of that Act (which includes this statute), "all reinvestment projects preliminarily approved on or after the effective date of this Act shall not be eligible for final approval until July 1, 2010"; and 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 8, provides that, notwithstanding the amendments in Sections 1 to 6 of that Act or the repeals in Section 114 of that Act, "all reinvestment projects preliminarily or finally approved prior to the effective date of this Act shall be governed by Subchapter 34 of KRS Chapter 154 as it existed prior to the effective date of this Act."

154.34-080 Reinvestment agreement -- Terms and provisions.

The authority, upon final approval of a company, may enter into a reinvestment agreement with the approved company. The terms and conditions of the reinvestment agreement shall be negotiated between the authority and the approved company. The terms of the reinvestment agreement shall include but not be limited to the following provisions:

(1) That the authority may employ an independent consultant or utilize technical resources to verify the cost of the project, and that the approved company shall reimburse the authority for the cost of a consultant or other technical resources employed by the authority;

(2) The maximum approved costs that may be recovered, and that the amount of incentives allowed in any year shall not exceed twenty percent (20%) of the total amount of the approved costs;

(3) A set employment retention goal, which shall be at least eighty-five percent (85%) of the number of full-time employees employed at the facility on the date the company receives preliminary approval;

(4) That approval of the company is not a guarantee of incentives and that eligibility for incentives shall be contingent on the approved company meeting the requirements established by the reinvestment agreement and this subchapter;

(5) The term of the reinvestment agreement, which shall not be longer than the earlier of:

(a) The date on which the approved company has received incentives equal to the approved costs of its reinvestment project; or

(b) Ten (10) years from the date of final approval granted by the authority;

(6) That the authority may reduce the incentives, suspend the incentives, or terminate the agreement if the approved company fails to comply with provisions of the reinvestment agreement;

(7) That both the authority and the department shall have the right to pursue any remedy provided under this reinvestment agreement and any other remedy at law to which it may be entitled;

(8) That the approved company shall make available to the department and the authority all of its records pertaining to the reinvestment project, including but not limited to payroll records, records relating to the expenditure of eligible equipment and related costs, and approved costs, and any other records pertaining to the project as the authority or the department may require;

(9) That the authority may share information with the department for the purposes of monitoring and enforcing the terms of the reinvestment agreement;

(10) That the agreement shall not be transferred or assigned by the approved company without the expressed written consent of the authority; and

(11) Any other provisions not inconsistent with this subchapter and determined to be necessary or appropriate by the parties to the reinvestment agreement.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 124, effective June 29, 2021. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 4, effective June 26, 2009. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 62, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 585, effective June 20, 2005. -- Created 2003 Ky. Acts ch. 148, sec. 8, effective June 24, 2003.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 7, provides that, notwithstanding the amendments contained in Sections 1 to 6 of that Act (which includes this statute), "all reinvestment projects preliminarily approved on or after the effective date of this Act shall not be eligible for final approval until July 1, 2010"; and 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 8, provides that, notwithstanding the amendments in Sections 1 to 6 of that Act or the repeals in Section 114 of that Act, "all reinvestment projects preliminarily or finally approved prior to the effective date of this Act shall be governed by Subchapter 34 of KRS Chapter 154 as it existed prior to the effective date of this Act."

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.34-090 Certification of the tax liability of approved company.

By October 1 of each year, the department shall certify to the authority, in the form of an annual report, aggregate tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year by approved companies with respect to their reinvestment projects under this subchapter and KRS 141.415 and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state tax return, when an approved company has taken incentives equal to its approved costs.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 125, effective June 29, 2021. -- Amended 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 6, effective June 26, 2009. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 63, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 586, effective June 20, 2005. -- Created 2003 Ky. Acts ch. 148, sec. 9, effective June 24, 2003.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 7, provides that, notwithstanding the amendments contained in Sections 1 to 6 of that Act (which includes this statute), "all reinvestment projects preliminarily approved on or after the effective date of this Act shall not be eligible for final approval until July 1, 2010"; and 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 8, provides that, notwithstanding the amendments in Sections 1 to 6 of that Act or the repeals in Section 114 of that Act, "all reinvestment projects preliminarily or finally approved prior to the effective date of this Act shall be governed by Subchapter 34 of KRS Chapter 154 as it existed prior to the effective date of this Act."

Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

154.34-100 Short title for KRS 154.34-010 to 154.34-100.

KRS 154.34-010 to 154.34-100 shall be known as the Kentucky Reinvestment Act.

Effective: June 24, 2003

History: Created 2003 Ky. Acts ch. 148, sec. 10, effective June 24, 2003.

154.34-110 Purpose of subchapter -- Expenditure and employment retention requirements for recovery of costs and tax incentives -- Legislative findings -- Annual report.

(1) The purpose of this subchapter is to provide a means for the Commonwealth to promote job retention by providing incentives for existing businesses to reinvest in existing operations in Kentucky for eligible companies.

(2) (a) To qualify for the incentives provided in this subchapter, an approved company shall:

1. Incur eligible equipment and related costs of at least one million dollars ($1,000,000) for leased projects and at least two million five hundred thousand dollars ($2,500,000) for all other reinvestment projects;

2. Agree to maintain a full-time employment base of at least eighty-five percent (85%) at the facility on the date of preliminary approval; and

3. Not have been awarded incentives under Subchapter 26 of this chapter for a period of at least five (5) years prior to applying for incentives under this subchapter.

(b) An approved company meeting the expenditure and employment retention requirements established by this subsection shall be eligible to recover up to fifty percent (50%) of the amount expended for eligible equipment and related costs. The actual amount that an approved company may recover shall be negotiated with the authority, and may be less than the maximum amount for which the approved company is eligible.

(3) An approved company shall be eligible for incentives under this subchapter as follows: tax incentives of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.020 or 141.040 and the limited liability entity tax imposed under KRS 141.0401 on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the eligible project, as set forth in KRS 154.34-120.

(4) The General Assembly finds and declares that:

(a) The general welfare and material well-being of the citizens of the Commonwealth depend in large measure upon the reinvestment and development of existing industry in the Commonwealth;

(b) It is in the best interest of the Commonwealth to induce reinvestment in existing facilities of eligible companies within the Commonwealth in order to advance the public purposes of relieving unemployment by preserving jobs that may be lost if not for the incentives to be offered by the authority to approved companies, and by preserving and creating sources of tax revenues for the support of public services provided by the Commonwealth; and

(c) The authority prescribed by this subchapter and the purposes to be accomplished under this subchapter are proper governmental and public purposes for which public moneys may be expended.

(5) On or before November 1, 2021, and each November 1 thereafter, the authority shall submit an overview report to the Interim Joint Committee on Appropriations and Revenue and the Governor on the success or failure of each completed project in order to determine the effectiveness of the program. The report shall include but not be limited to the following information:

(a) The number of applications receiving preliminary approval during the fiscal year;

(b) The number of final approvals issued during the fiscal year;

(c) The total amount of eligible equipment and other costs projected by the approved company at preliminary approval;

(d) The total amount of eligible equipment and other costs actually incurred by the approved company at final approval;

(e) The total number of full time jobs required to be preserved or retained as a result of the reinvestment project;

(f) The total actual number of full-time jobs reported by the reinvestment project as being preserved or retained on an annual basis;

(g) The maximum approved costs that may be recovered by the approved companies for the reinvestment projects; and

(h) The location of the reinvestment projects receiving preliminary and final approval during the fiscal year.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 126, effective June 29, 2021. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 2, effective June 26, 2009.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 7, provides that, notwithstanding the amendments contained in Sections 1 to 6 of that Act (which includes this statute), "all reinvestment projects preliminarily approved on or after the effective date of this Act shall not be eligible for final approval until July 1, 2010"; and 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 8, provides that, notwithstanding the amendments in Sections 1 to 6 of that Act or the repeals in Section 114 of that Act, "all reinvestment projects preliminarily or finally approved prior to the effective date of this Act shall be governed by Subchapter 34 of KRS Chapter 154 as it existed prior to the effective date of this Act."

154.34-120 Nonrefundable tax credit for reinvestment project by approved company.

(1) Except as provided in subsection (5) of this section, for taxable years beginning after December 31, 2009, an approved company may be eligible for a nonrefundable credit of up to one hundred percent (100%) of the Kentucky income tax imposed under KRS 141.020 or 141.040, and the limited liability entity tax imposed under KRS 141.0401 that would otherwise be owed by the approved company to the Commonwealth for the approved company's tax year, on the income, Kentucky gross profits, or Kentucky gross receipts of the approved company generated by or arising from the reinvestment project.

(2) The credit allowed the approved company shall be applied against both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with credit ordering as provided in KRS 141.0205, for the tax year for which the tax return of the approved company is filed. Any credit not used in the year in which it was first available may be carried forward to subsequent years, provided that no credit may be carried forward beyond the term of the reinvestment agreement.

(3) The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross receipts, or Kentucky gross profits generated by or arising from the eligible project.

(4) The credit provided by this section shall be determined as provided in KRS 141.415.

(5) (a) For an approved company which receives preliminary approval prior to February 1, 2010, the amount of incentives allowed in any year shall not exceed the lesser of the tax liability of the approved company related to the reinvestment project for that taxable year or the approved costs that have not yet been recovered.

(b) For an approved company which receives preliminary approval on or after February 1, 2010, the amount of incentives allowed in any year shall not exceed the lesser of the tax liability of the approved company related to the reinvestment project for that taxable year or twenty percent (20%) of the total amount of the approved costs.

(c) The incentives shall be allowed for each taxable year of the approved company during the term of the reinvestment agreement for which a tax return is filed by the approved company.

Effective: June 27, 2019

History: Amended 2019 Ky. Acts ch. 151, sec. 72, effective June 27, 2019. -- Amended 2010 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 8, effective June 4, 2010. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 5, effective June 26, 2009.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 7, provides that, notwithstanding the amendments contained in Sections 1 to 6 of that Act (which includes this statute), "all reinvestment projects preliminarily approved on or after the effective date of this Act shall not be eligible for final approval until July 1, 2010"; and 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 8, provides that, notwithstanding the amendments in Sections 1 to 6 of that Act or the repeals in Section 114 of that Act, "all reinvestment projects preliminarily or finally approved prior to the effective date of this Act shall be governed by Subchapter 34 of KRS Chapter 154 as it existed prior to the effective date of this Act."

Subchapter 35 Applied and Basic Research Development Subchapter 35 Applied and Basic Research Development

154.35-010 Definitions for subchapter.

As used in this subchapter, unless the context indicates otherwise:

(1) "Beneficiary of an economic incentive package" means any entity for which any assessment, incentive, inducement, or tax credit is issued or awarded pursuant to KRS 154.22-010 to 154.22-070, KRS 154.24-010 to 154.24-150, KRS 154.26-015 to 154.26-100, and KRS 154.28-010 to 154.28-090;

(2) "Board" means the governance board of the Kentucky Science and Technology Council, Inc.;

(3) "Cabinet" means the Cabinet for Economic Development;

(4) "Center" means either or both of the following as the context requires:

(a) "Basic research centers" which means centers under contract with the University of Kentucky and the University of Louisville; and

(b) "Applied research centers" which means centers for applied research and technologies development;

(5) "Commonwealth" means the Commonwealth of Kentucky;

(6) "Contracting university" means any of the following that contract with the council to operate a center: the University of Kentucky, the University of Louisville, Eastern Kentucky University, Western Kentucky University, Morehead State University, Northern Kentucky University, Murray State University, and Kentucky State University;

(7) "Council" means the Kentucky Science and Technology Council, Inc.;

(8) "Fund" means the Kentucky Research and Development Infrastructure fund created and established pursuant to KRS 154.35-040;

(9) "Infrastructure" means the Kentucky Research and Development Infrastructure;

(10) "Personal protective equipment" has the same meaning as in KRS 154.32-010;

(11) "Secretary" means the secretary of the Cabinet for Economic Development; and

(12) "Vital medications" has the same meaning as in KRS 154.32-010.

Effective: June 29, 2021

History: Amended 2021 Ky. Acts ch. 185, sec. 127, effective June 29, 2021. -- Created 1994 Ky. Acts ch. 508, sec. 48, effective July 15, 1994.

Legislative Research Commission Note (6/29/2021). Under the authority of KRS 7.136(1), the Reviser of Statutes has renumbered certain subsections in this statute during codification to place the terms in alphabetical order. The words in the text were not changed.

154.35-020 Kentucky Research and Development Infrastructure -- Location of research centers -- Integration of basic research centers and applied research centers.

(1) The Kentucky Science and Technology Council, Inc., is authorized to establish the Kentucky Research and Development Infrastructure in accordance with guidelines developed and adopted by the Cabinet for Economic Development and the council. The infrastructure, subject to qualification by the contracting universities in accordance with agreements between the council and the universities, shall consist of up to two (2) basic research centers and up to six (6) applied research centers located as follows:

(a) A basic research center under contract with the University of Kentucky;

(b) A basic research center under contract with the University of Louisville;

(c) An applied research center to serve the central Kentucky area under contract with the University of Kentucky and Eastern Kentucky University;

(d) An applied research center to serve the west central Kentucky area under contract with the University of Louisville and Kentucky State University;

(e) An applied research center to serve the eastern Kentucky area under contract with Morehead State University;

(f) An applied research center to serve the western Kentucky area under contract with Western Kentucky University;

(g) An applied research center to serve the far western Kentucky area under contract with Murray State University; and

(h) An applied research center to serve the northern Kentucky area under contract with Northern Kentucky University.

(2) The basic research centers under contract with the University of Kentucky and the University of Louisville may be integrated with the applied research centers under contract with those institutions.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 508, sec. 47, effective July 15, 1994.

154.35-030 Powers and authority of council.

The council shall have all the powers and authority, not explicitly prohibited by statute, necessary and convenient to carry out and effectuate the purposes of KRS 154.35-010 to 154.35-055, including, but not limited to:

(1) Entering into contracts or agreements necessary or incidental to the performance of its duties, functions, and responsibilities;

(2) Soliciting, borrowing, accepting, receiving, and expending funds from any public or private source, including, but not limited to, general fund appropriations of the Commonwealth of Kentucky, grants or contributions of money, property, labor, or other things of value to be used to carry out the infrastructure's operations, functions, and responsibilities; and

(3) Negotiating royalty payments on patents and licenses for innovations or inventions arising in the course of research conducted by the infrastructure's centers.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 508, sec. 49, effective July 15, 1994.

154.35-040 Kentucky Research and Development Infrastructure fund.

There is established a fund entitled the "Kentucky Research and Development Infrastructure Fund" for the purposes and benefit of the Kentucky Research and Development Infrastructure. The fund may receive state appropriations, gifts, grants, and any other funds both public and private. Moneys deposited in the fund shall be disbursed by the State Treasurer upon the warrant of the secretary of Finance and Administration Cabinet. Any unallotted or unencumbered balances in the fund shall be invested as provided in KRS 42.500(6), and any income earned from the investments along with the unallotted or unencumbered balances in the fund shall not lapse, and shall be deemed a trust and agency account and made available solely for the purposes and benefits of the Kentucky Research and Development Infrastructure.

Effective: July 15, 1996

History: Amended 1996 Ky. Acts ch. 194, sec. 65, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 508, sec. 50, effective July 15, 1994.

154.35-042 Repealed, 1996.

[Repealed]

154.35-044 Allocation of fund moneys by council -- Limitations.

The council shall allocate moneys from the fund for the operation of the infrastructure and the centers subject to the following limitations:

(1) The council may retain not more than eight percent (8%) of the deposits into the fund in any budget year for the central administration of the infrastructure;

(2) After payment of expenses for central administration, not more than twenty-five percent (25%) of the remainder of the fund in any budget year shall be allocated to basic research centers and the balance shall be allocated to applied research centers;

(3) Not more than twenty percent (20%) of the total moneys allocated to applied research centers in any budget year shall be allocated to any one (1) applied research center; and

(4) All moneys allocated to the contracting universities for the operation of the centers shall be paid out in accordance with contracts entered into between the council and the universities;

(5) Notwithstanding the provisions of subsections (1) to (3) of this section:

(a) The council may defer the establishment of all centers for up to four (4) years after July 15, 1994 to allow the fund to grow to sufficient size to support operation of the centers; and

(b) The allocation percentage set forth in subsection (3) of this section may be modified by the council with approval of the cabinet for a period of up to four

(4) years after the first center is established.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 508, sec. 52, effective July 15, 1994.

154.35-046 Establishment of accounts for individual research centers -- Report to Legislative Research Commission -- Audits.

(1) The council is authorized to establish accounts for each research center approved by the council. Each account shall be kept separately from any other accounts established by the council and shall be kept separately from any other moneys and accounts at participating research institutions.

(2) Each approved center may draw money from its account as approved by the council.

(3) On or before January 5, 1996, and annually on or before January 5 thereafter, the council shall submit to the Legislative Research Commission a written status report on the projects and activities of each center of the infrastructure.

(4) The Auditor of Public Accounts shall be responsible for a biennial financial post audit of the books and records of the infrastructure and each center approved by the infrastructure. The audit shall be conducted in accordance with generally accepted accounting principles and shall be paid for by the infrastructure.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 508, sec. 53, effective July 15, 1994.

154.35-050 Functions of basic research centers and applied research centers -- Advisory committees -- Goal of infrastructure -- Centers to retain or contract with experts.

(1) The function of the basic research centers shall be to perform basic research of significant benefit to one (1) or more key industries that have been identified in and targeted by the state's economic development strategic plan as having major importance to the sustained economic growth of the Commonwealth. The areas of research to be performed by each basic research center shall be set forth in the contract between the council and the contracting university and shall be approved only for those projects for which the center has a commitment from a private sector partner to make use of the results of the research.

(2) The functions of the applied research centers shall be:

(a) To perform applied research, development, and technology transfer on a fee for service basis, to businesses and groups of businesses. For performing this function the center shall give preference to businesses in key industries and networks of businesses;

(b) To provide advice to businesses regarding other areas of business operations necessary for improved performance, including workforce training, total quality assurance, inventory control, and reorganization of the business and workplace; and

(c) To perform applied research and technology development of significant benefit to one (1) or more key industries in areas set forth in the contract between the council and the contracting university.

(3) The council shall appoint advisory committees of persons knowledgeable in each key industry to advise the council and the centers with regard to research needs of the industry and to evaluate research plans and research results.

(4) It shall be the goal of the infrastructure that eighty percent (80%) of the total revenues of each center shall be generated by payments under contracts from private businesses.

(5) To perform the functions set out in this section each center shall retain or contract with scientists, engineers, and other persons having high levels of expertise in appropriate fields of research, including but not limited to, faculty, staff and students of the contracting universities; provided, however, that all contracts with persons employed by the contracting university shall be subject to approval by the council.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 508, sec. 54, effective July 15, 1994.

154.35-055 Qualification as contracting university.

Universities individually or jointly eligible to serve as contracting universities for the centers set forth in KRS 154.35-020 may qualify by:

(1) Agreeing to match the moneys allocated to the center by the council from the fund dollar-for-dollar from nonstate, nonagency funds raised by the university for research purposes; provided that for university budget years ending on or before July 1, 1996 a contracting university may provide its matching funds by redirecting previously-budgeted state or agency funds. In the discretion of the council, a university may provide all or part of its match by in-kind contributions of facilities and equipment of equal value.

(2) Providing an operations plan, acceptable to the council, for the center which sets forth staffing, facilities, equipment, anticipated business demand for services, a proposed budget that reflects revenues from all sources including the fund, matching contributions from the contracting university, and anticipated receipts from research contracts with private businesses, and such other matters as directed by the council; and

(3) Entering into a contract with the council which sets forth the terms and conditions upon which the center will be operated, including the operations plan agreed upon by the parties, performance standards, and funding commitments. The contract may extend beyond the end of the budget cycle of the university, may be renewed or extended by the parties, and shall be terminable by the council for nonperformance or unacceptable performance by the university as specified in the contract.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 508, sec. 55, effective July 15, 1994.

Subchapter 40 Eastern Kentucky Exposition Center Corporation Subchapter 40 Eastern Kentucky Exposition Center Corporation

154.40-010 Definitions for KRS 154.40-010 to 154.40-060.

As used in KRS 154.40-010 to 154.40-060, unless the context indicates otherwise:

(1) "Board" means the board of directors of the Eastern Kentucky Exposition Center Corporation;

(2) "Center" means the Eastern Kentucky Exposition Center; and

(3) "Corporation" means the Eastern Kentucky Exposition Center Corporation.

Effective: June 21, 2001

History: Created 2001 Ky. Acts ch. 27, sec. 1, effective June 21, 2001.

154.40-020 Eastern Kentucky Exposition Center Corporation.

(1) The Eastern Kentucky Exposition Center Corporation is created and established as an independent, de jure municipal corporation and political subdivision of the Commonwealth that shall be a public body corporate and politic. The corporation shall develop, operate, and manage the Eastern Kentucky Exposition Center funded by 2000 Ky. Acts ch. 549, Part II, Section F, Item 1(e) and Part II, Section S, Item 2(a)236. The corporation shall be attached to the Tourism, Arts and Heritage Cabinet for administrative purposes.

(2) The corporation shall be a participating agency in the Kentucky Employees Retirement System. Its employees shall be considered state employees for the purpose of participating in the Kentucky Employees Retirement System and shall be entitled to the requirements and benefits provided to other system participants.

Effective: June 25, 2009

History: Amended 2009 Ky. Acts ch. 16, sec. 40, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 152, sec. 12, effective July 12, 2006. -- Created 2001 Ky. Acts ch. 27, sec. 2, effective June 21, 2001.

154.40-030 Board of directors.

(1) The corporation shall be governed by a board of directors consisting of seven (7) members appointed as follows:

(a) Three (3) members appointed by the Governor;

(b) Two (2) members appointed by the county judge/executive of Pike County; and

(c) Two (2) members appointed by the mayor of Pikeville. Initial appointments shall be for a term expiring November 1, 2003. Thereafter, members shall serve terms of four (4) years beginning November 1, 2003. After a membership term expires, members shall serve until new members are appointed to replace them.

(2) A member may be removed by his or her appointing authority as set forth in subsection (1) of this section, for misfeasance or malfeasance and after being afforded notice, an opportunity for a hearing under KRS Chapter 13B, and a finding of facts. A copy of charges, transcripts of the records of hearings, and findings of fact shall be filed with the Secretary of State.

(3) Members of the board shall serve without compensation, but shall be reimbursed for actual and necessary travel expenses incurred in the performance of their duties. The reimbursement shall be in accordance with administrative regulations promulgated under KRS Chapter 13A by the Finance and Administration Cabinet.

Effective: June 8, 2011

History: Amended 2011 Ky. Acts ch. 85, sec. 1, effective June 8, 2011. -- Created 2001 Ky. Acts ch. 27, sec. 3, effective June 21, 2001.

154.40-040 Powers of board -- Executive director.

(1) The board may develop articles of incorporation and appropriate documentation to establish its existence as a corporation under KRS 58.180.

(2) A quorum of the board shall consist of four (4) members, with a majority of members present authorized to act upon any matter legally before the corporation.

(3) The board may enact bylaws concerning the election of officers and other administrative procedures it deems necessary.

(4) The board may adopt administrative regulations under KRS Chapter 13A to govern the operation, maintenance, or use of property under its custody and control.

(5) Minutes and records of all meetings of the board shall be kept, and all official actions shall be recorded.

(6) The board may establish an executive committee from among its membership with full authority to act between meetings of the board to the extent delegated by vote of a majority of the members of the board.

(7) The board may employ a full-time executive director who shall hold office at its pleasure.

(a) The executive director shall act under the direction of the board in employing necessary staff to perform the corporation's duties and exercise its powers.

(b) The executive director shall keep all minutes, records, and orders of the corporation and shall be responsible for the preservation of all the documents, which shall be public records under KRS 61.870 to 61.884.

Effective: June 21, 2001

History: Created 2001 Ky. Acts ch. 27, sec. 4, effective June 21, 2001.

154.40-050 Powers and duties of corporation.

The Eastern Kentucky Exposition Center Corporation shall have the following powers and duties:

(1) The corporation shall supervise the design, construction, and operation of the Eastern Kentucky Exposition Center and shall provide all management functions for the facility and for any other property acquired or leased in accordance with its powers established in this section.

(2) The corporation shall promote the growth and development of the convention, trade, tourism, hotel, restaurant, and entertainment industry in eastern Kentucky, Pike County, and the Commonwealth through utilization of the center.

(3) The corporation shall have the exclusive control of all exhibitions, performances, and concessions in the Eastern Kentucky Exposition Center. The corporation shall have a prior lien upon the property of any private exhibitor, concessionaire, or other person holding an exhibition or performance or operating a concession in the center and may sell the property upon ten (10) days' notice to satisfy any indebtedness.

(4) The corporation shall participate with local hotels and the travel industry to develop tourist packages and additional services to attract conferences and conventions to the region.

(5) The corporation may take, acquire, and hold property, and all interests therein, by deed, purchase, gift, devise, bequest, or lease or by transfer from the State Properties and Buildings Commission and may dispose of any property so acquired in any manner provided by law.

(6) The corporation may levy a surcharge on tickets for functions held within the center to contribute to operating revenue.

(7) The corporation may sue and be sued and maintain and defend legal actions in its corporate name.

Effective: June 21, 2001

History: Created 2001 Ky. Acts ch. 27, sec. 5, effective June 21, 2001.

154.40-060 Use of revenues and funds -- Annual audit.

(1) All revenues derived by the corporation from the use of Eastern Kentucky Exposition Center, all contributions to the center from other sources, and any revenues derived by the corporation from any other source shall be used solely for the expenses of the center, including payment on debt; the cost of management and operation of its facilities; the creation of an adequate reserve for repair, replacement, debt service, and capital improvements; the procurement of insurance; and promotional activities.

(2) Unless an election is made pursuant to the provisions of subsection (3) of this section, the Auditor of Public Accounts shall conduct an annual audit of all funds of the corporation and its affiliated entities, if any, and report annually to the Governor and the Legislative Research Commission.

(3) (a) In lieu of having the Auditor of Public Accounts perform the annual audit under subsection (2) of this section:

1. A city government that appoints members to the board of the corporation may make an irrevocable election upon written notice to the Auditor of Public Accounts that it shall include the corporation within the city's annual audit conducted under the provisions of KRS 91A.040. A city making an election pursuant to this subparagraph shall be reimbursed by the corporation for the direct costs it incurs as a result of the inclusion of the corporation within its annual audit; or

2. Upon written notification to the Auditor of Public Accounts, a city government meeting the requirements of subparagraph 1. of this paragraph and the board may jointly elect to have its annual audit performed by an independent auditor. Any audit performed by an independent auditor for the corporation shall be generally conducted and conform to the requirements of KRS 91A.040(6).

(b) If an audit is performed under this subsection, the audit shall be forwarded to the Auditor of Public Accounts.

Effective: June 27, 2025

History: Amended 2025 Ky. Acts ch. 153, sec. 4, effective June 27, 2025. -- Created 2001 Ky. Acts ch. 27, sec. 6, effective June 21, 2001.

Subchapter 45 Enterprise Zone Development Subchapter 45 Enterprise Zone Development

154.45-001 Repealed, 2005.

[Repealed]

154.45-010 Repealed, 2008.

[Repealed]

154.45-020 Repealed, 2005.

[Repealed]

154.45-030 Repealed, 2005.

[Repealed]

154.45-040 Repealed, 2005.

[Repealed]

154.45-050 Repealed, 2008.

[Repealed]

154.45-060 Repealed, 2008.

[Repealed]

154.45-070 Repealed, 2008.

[Repealed]

154.45-080 Repealed, 2005.

[Repealed]

154.45-090 Repealed, 2008.

[Repealed]

154.45-100 Repealed, 2005.

[Repealed]

154.45-110 Repealed, 2008.

[Repealed]

154.45-120 Repealed, 2008.

[Repealed]

Subchapter 47 Forest Resources Development Subchapter 47 Forest Resources Development

General Provisions General Provisions

154.47-005 Definitions for subchapter.

As used in this subchapter, unless the context clearly indicates otherwise:

(1) "Center" means the Quicksand Wood Utilization Center located in Breathitt County, Kentucky;

(2) "Certified tree farmer" means a person whose tree farm is certified by the Kentucky Tree Farm Committee and approved by the American Forest Foundation;

(3) "Forest steward" means a person whose forest property is certified as a stewardship forest and approved by the Division of Forestry of the Department for Natural Resources;

(4) "Procurement area" means an area specified by the applicant in a radius of miles from the applicant's site of operations from which the applicant acquires raw wood products;

(5) "Secondary wood products industry" means businesses that compose that segment of the forest products industry that manufacture, assemble, process, or produce wood into a finished or semifinished product; however, the "secondary wood products industry" does not include primary wood products operations such as logging, sawmilling, chip milling, veneer milling, or pulp milling. Businesses that include both primary and secondary wood products operations are deemed to be within the secondary wood products industry only in regard to their secondary wood products operations; and

(6) "Wood industry hub" or "hub" means a system in which the technical and workforce training needs of the secondary wood products industry are integrated.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 27, effective June 29, 2023. -- Amended 2017 Ky. Acts ch. 117, sec. 16, effective June 29, 2017. -- Amended 2013 Ky. Acts ch. 49, sec. 3, effective June 25, 2013. -- Created 1994 Ky. Acts ch. 224, sec. 1, effective July 15, 1994.

154.47-010 Legislative findings.

(1) The General Assembly of the Commonwealth of Kentucky finds that the forests of the Commonwealth provide abundant, renewal timber resources that historically have been underdeveloped, underutilized, and poorly managed, but which have proven to be resilient; and that, with proper planning, management, harvesting, value-added processing and manufacturing, and marketing, these resources will continue to grow in importance to the Commonwealth's economy.

(2) The General Assembly further finds that through proper attention and direction by the agencies of the Commonwealth and its public educational institutions working in partnership with secondary wood products businesses, the secondary wood products industry as a key industrial sector of the Commonwealth's future economic growth and health, should prosper through the generation of new and expanding secondary wood products manufacturers by supporting improved management and harvesting practices, by developing and implementing workers' training programs to upgrade the skills of Kentuckians employed in the wood products processing and manufacturing industry, by assisting the private sector to adapt existing manufacturing systems to new or improved technologies and world class management practices for the purposes of increasing product quality and productivity of Kentucky's wood products manufacturers and processors and enhancing the global competitiveness of Kentucky secondary wood products industries.

Effective: July 15, 1994

History: Created 1994 Ky. Acts ch. 224, sec. 2, effective July 15, 1994.

Kentucky Wood Products Competitiveness Corporation Kentucky Wood Products Competitiveness Corporation

154.47-015 Repealed, 2013.

[Repealed]

154.47-020 Repealed, 2013.

[Repealed]

154.47-025 Repealed, 2013.

[Repealed]

154.47-030 Repealed, 2013.

[Repealed]

154.47-035 Repealed, 2013.

[Repealed]

Secondary Wood Products Secondary Wood Products

154.47-040 Repealed, 2023.

[Repealed]

154.47-045 Repealed, 2013.

[Repealed]

154.47-050 Design, development, use, and sale of Kentucky-made furniture and other wood products by Kentucky Department of Parks.

The Kentucky Department of Parks of the Tourism, Arts and Heritage Cabinet shall, whenever practicable:

(1) Develop and design Kentucky-made furniture for use in state parks;

(2) Make state parks facilities living showrooms for Kentucky furniture and other wood products; and

(3) Establish retail showrooms where Kentucky-made furniture and other wood products can be displayed for sale to, or order by, park visitors.

Effective: June 25, 2013

History: Amended 2013 Ky. Acts ch. 49, sec. 5, effective June 25, 2013. -- Amended 2009 Ky. Acts ch. 16, sec. 41, effective June 25, 2009. -- Amended 2005 Ky. Acts ch. 95, sec. 35, effective June 20, 2005. -- Amended 1998 Ky. Acts ch. 48, sec. 14, effective July 15, 1998. -- Created 1994 Ky. Acts ch. 224, sec. 10, effective July 15, 1994.

Legislative Research Commission Note (6/20/2005). 2005 Ky. Acts chs. 11, 85, 95, 97, 98, 99, 123, and 181 instruct the Reviser of Statutes to correct statutory references to agencies and officers whose names have been changed in 2005 legislation confirming the reorganization of the executive branch. Such a correction has been made in this section.

154.47-055 Integrated workforce training program.

(1) Notwithstanding the provisions of KRS Chapter 151B, the University of Kentucky, Eastern Kentucky University, Morehead State University, and the Kentucky Community and Technical College System in conjunction with the Department of Workforce Development in the Education and Labor Cabinet may develop an integrated program and curricula for workforce training in the area of secondary wood products manufacturing, including nondegree and degree courses of study.

(2) The integrated workforce training program and the curricula shall be designed in a manner that shall provide postsecondary, nondegree and degree level students with the contemporary skills needed for employment in the secondary wood industry.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 59, effective July 1, 2022. -- Amended 2013 Ky. Acts ch. 49, sec. 6, effective June 25, 2013. -- Amended 1997 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 56, effective May 30, 1997. -- Created 1994 Ky. Acts ch. 224, sec. 11, effective July 15, 1994.

154.47-060 Quicksand Wood Utilization Center as hub for industry expansion -- Demonstration projects.

(1) The University of Kentucky College of Agriculture may operate the Quicksand Wood Utilization Center, which is located in Breathitt County at the Quicksand Substation of the College of Agriculture of the University of Kentucky, as a hub for the expansion of the secondary wood products industry. The center shall, if utilized as a secondary wood products training center, develop and further workforce training, management skills, technology transfer, and collaborative design and product development mechanisms and processes associated with the secondary wood products industry.

(2) The Quicksand Wood Utilization Center shall serve as a model for the development of additional hubs in other parts of the state.

(3) The cabinet, utilizing facilities of the Quicksand Wood Utilization Center, may conduct demonstration projects at the center, and may provide assistance to rural development organizations by producing building materials, furniture, and other wood products for display and sale at area showrooms and for use by rural development organizations in carrying out approved demonstration projects.

Effective: June 25, 2013

History: Amended 2013 Ky. Acts ch. 49, sec. 7, effective June 25, 2013. -- Amended 1996 Ky. Acts ch. 145, sec. 3, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 224, sec. 12, effective July 15, 1994.

154.47-065 Repealed, 2023.

[Repealed]

154.47-070 Repealed, 2013.

[Repealed]

154.47-075 Training and assistance programs for forest management and worker safety.

(1) The Kentucky Division of Forestry shall develop and implement a program to provide training and assistance to private woodland owners in best management practices of forest development and sustainability. The training and assistance program shall provide advice and assistance in matters relating to productivity, management priorities, stewardship, planning, timber quality, forest improvement, and proper ecological management.

(2) The Education and Labor Cabinet, the Division of Forestry, and representatives from the University of Kentucky, Eastern Kentucky University, and Morehead State University, shall develop and implement a program to provide training and assistance in the area of worker safety for both the primary and secondary wood industry.

Effective:July 1, 2022

History: Amended 2022 Ky. Acts ch. 236, sec. 60, effective July 1, 2022. -- Amended 2013 Ky. Acts ch. 49, sec. 9, effective June 25, 2013. -- Amended 2010 Ky. Acts ch. 24, sec. 205, effective July 15, 2010. -- Created 1994 Ky. Acts ch. 224, sec. 18, effective July 15, 1994.

Kentucky Forest Products Council Kentucky Forest Products Council

154.47-100 Repealed, 2017.

[Repealed]

154.47-105 Repealed, 2017.

[Repealed]

154.47-110 Repealed, 2017.

[Repealed]

154.47-120 Repealed, 2017.

[Repealed]

Subchapter 48 Environmental Stewardship Subchapter 48 Environmental Stewardship

Kentucky Environmental Stewardship Act Kentucky Environmental Stewardship Act

154.48-010 Repealed, 2018.

[Repealed]

154.48-015 Repealed, 2018.

[Repealed]

154.48-020 Repealed, 2018.

[Repealed]

154.48-025 Repealed, 2018.

[Repealed]

154.48-030 Repealed, 2018.

[Repealed]

154.48-035 Repealed, 2018.

[Repealed]

Subchapter 50 Industrial Development Subchapter 50 Industrial Development

154.50-020 Legislative findings of fact -- Purpose of KRS 154.50-020 to 154.50-030.

(1) It is hereby found, determined, and declared as a legislative finding of fact that the general welfare of the citizens of the Commonwealth is directly related to the economic and employment opportunities available to them, and it is the legitimate business of the Kentucky state government to provide to the maximum extent practicable, the impetus for and assistance to economic development in the Commonwealth through the provision of monetary assistance to industrial entities for industrial improvement projects which will directly and proximately cause the improvement and retention of industry and employment in the Commonwealth.

(2) It is hereby further found, determined, and declared as a legislative finding of fact that the improvement and retention of manufacturing, processing, and assembling facilities will proximately result in:

(a) The creation or retention of employment opportunities; or

(b) The creation or retention of tax revenues to the Commonwealth, as a taxing entity, which would not be available to the citizens of the Commonwealth or received by the Commonwealth but for the improvement and retention of the facilities and which creation or retention of employment opportunities or tax revenues are hereby found, determined, and declared to constitute receipt of value by the Commonwealth for the monetary assistance which it may provide pursuant to KRS 154.50-020 to 154.50-030 to industrial entities undertaking industrial improvement projects located in this state.

(3) It is the purpose of KRS 154.50-020 to 154.50-030 to promote and foster the gainful employment, business, and economic development opportunities and general welfare of the citizens and residents of the Commonwealth which will result in the alleviation or prevention of unemployment and the general stability of the economy of Kentucky. This purpose will be accomplished by the creation of the authority to enable the Commonwealth to provide monetary assistance to industrial entities, for the improvement and retention of industrial manufacturing, processing, or assembling facilities in the Commonwealth which, in return, will create or retain employment opportunities for citizens of the Commonwealth or will create or retain tax revenues. The authority granted by KRS 154.50-020 to 154.50-030 and the purposes to be accomplished by KRS 154.50-020 to 154.50-030 are hereby declared to be public purposes for which public money may be expended.

Effective: July 13, 1990

History: Created 1990 Ky. Acts ch. 306, sec. 2, effective July 13, 1990 Formerly codified as KRS 154.770

154.50-030 Expenditure of funds to industrial entities.

(1) In carrying out the purposes of KRS 154.50-020 to 154.50-030, and in providing for the expenditure of funds to industrial entities to assist in the implementation of an industrial improvement project, the cabinet may find that the cost may be paid in whole or in part out of funds directly appropriated to the responsible state agency for that purpose or by any other method approved by the Governor and the General Assembly.

(2) In carrying out the purposes of KRS 154.50-020 to 154.50-030, and in providing for the expenditure of funds to industrial entities which are appropriated by the General Assembly to assist in the implementation of an industrial improvement project, the cabinet may determine the amount of monetary assistance to be provided by reference to any formula or other objective standard which is based on target levels of employment, projected interest rates or other financing costs, projected levels of investment by the industrial entity or any other objective criteria deemed appropriate by the cabinet under the circumstances.

(3) (a) In carrying out the purposes of KRS 154.50-020 to 154.50-030, the expenditure of funds to industrial entities to assist in the implementation of an industrial improvement project may only be made if:

1. There is a finding by the cabinet, that, based upon reasonable investigation, the industrial improvement project cannot be funded out of existing appropriations and is in the best interest of the Commonwealth because it is reasonably expected to result in the creation or retention in whole or in part of employment opportunities or of tax revenues;

2. The industrial improvement project is separately approved in writing by the Governor;

3. The industrial improvement project is separately approved by the General Assembly; and

4. There is an agreement in writing by the subject industrial entity to engage in the industrial improvement project setting forth the basis upon which the amount of monetary assistance provided pursuant to KRS 154.50-020 to 154.50-030 is determined.

(b) It is hereby determined and declared as a legislative finding of fact that the provisions and requirements of paragraph (a) of this subsection provide for the receipt by the Commonwealth of fair market value for any monetary assistance provided pursuant to KRS 154.50-020 to 154.50-030.

Effective: July 13, 1990

History: Created 1990 Ky. Acts ch. 306, sec. 3, effective July 13, 1990 Formerly codified as KRS 154.780

Acquisition of Land for Industrial Development Acquisition of Land for Industrial Development

154.50-301 Citation.

KRS 154.50-301 to 154.50-346 shall be known as the Local Industrial Development Authority Act.

History: Created 1970 Ky. Acts ch. 114, sec. 1. Formerly codified as KRS 152.930

154.50-310 Definitions for KRS 154.50-301 to 154.50-346.

As used in KRS 154.50-301 to 154.50-346, unless the context otherwise requires:

(1) "Authority" means a local industrial development authority as established by KRS 154.50-301 to 154.50-346.

(2) "Industrial sites, parks and subdivisions" means land and improvements thereon, including buildings, fixtures, and equipment, suitable for one (1) or more manufacturers, industries, or commercial establishments.

(3) "Development of land" means the improvement and provision of facilities essential to the use of land for manufacturing, industrial, and commercial purposes such as, but not limited to, core drilling, grading, sewerage systems, water systems, access roads, rail lines, electrical lines, layout planning, and the construction and equipping of buildings.

(4) "Governmental units" means any city or the combination of any two (2) or more cities, any county or combination of two (2) or more counties, or any city or cities acting jointly with any county or counties.

(5) "Person" means any individual, firm, partnership, corporation, company, association, joint stock association, or body politic, and includes any trustee, receiver, assignee, or other similar representative thereof.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 199, sec. 1, effective July 15, 1994. -- Created 1970 Ky. Acts ch. 114, sec. 3. Formerly codified as KRS 152.810

154.50-313 Purpose.

The purpose of KRS 154.50-301 to 154.50-346 is to create local industrial development authorities to aid in the acquisition, retention and development of land for industrial and commercial purposes in Kentucky; to aid in the development and promotion of industrial sites, parks and subdivisions for accommodating industrial and commercial needs; to promote and stimulate the acquisition, retention and development of land for industrial and commercial purposes in Kentucky by other local development organizations both public and private.

History: Created 1970 Ky. Acts ch. 114, sec. 2. Formerly codified as KRS 152.820

154.50-316 Establishment of local industrial development authority.

(1) Any governmental unit by act of its legislative body may establish a nonprofit industrial development authority to be composed of not less than six (6) and not more than eight (8) members.

(2) The authority shall be a body politic and corporate with the usual corporate attributes and in its corporate name may sue and be sued, contract and be contracted with, and do all things reasonable or necessary to effectively carry out the duties prescribed by KRS 154.50-301 to 154.50-346.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 104, sec. 1, effective July 15, 2002. -- Created 1970 Ky. Acts ch. 114, sec. 4. Formerly codified as KRS 152.830

154.50-320 Functions of authority.

(1) The purpose, duties, and powers of the authority shall be to:

(a) Acquire, retain, and develop land for industrial and commercial purposes in Kentucky; aid in the development and promotion of industrial sites, parks, and subdivisions to meet industrial and commercial needs in Kentucky.

(b) Encourage the acquisition, retention, and development of land for industrial and commercial needs in Kentucky by other local development organizations, both public and private.

(c) Cooperate with the United States Army Corps of Engineers and other federal agencies in formulating development plans and in acquiring and developing land for industrial and commercial purposes in accordance with these plans.

(d) Acquire by contract, lease, purchase, gift, condemnation, or otherwise any real or personal property, or rights therein, necessary or suitable for establishing industrial sites, parks, or subdivisions. The authority may dispose of any real or personal property, or rights therein, which in the opinion of the authority are no longer needed to carry out the purposes of KRS 154.50-301 to 154.50-

346. The authority may lease, sell, or convey any or all industrial sites, parks, and subdivisions owned or optioned by it to any public or private organization, governmental unit, or industry for the purpose of constructing and/or operating any manufacturing, industrial, or commercial facility. Provided, however, that no sale or conveyance of any land shall be made to a private organization or industry without such organization or industry first having executed a written contract with the authority providing that if no actual construction of a manufacturing, industrial, or commercial facility, as set forth in the executed contract, is commenced within ten (10) years, the organization or industry shall offer to reconvey the land, free and clear of liens and encumbrances, to the authority, and should the authority accept the offer of reconveyance, it shall return to the organization or industry ninety-five percent (95%) of the purchase price paid therefor.

(2) Upon the adoption by the authority of a resolution reciting that property is needed for industrial sites, parks, and subdivisions and cannot be acquired by negotiation and purchase at its fair market value, the governmental units in which such land is located may direct and institute condemnation proceedings in the name of such governmental units, for the use and benefit of the authority. The procedure for condemnation shall conform to the procedure set out in the Eminent Domain Act of Kentucky. Upon acquisition of the property, the governmental unit shall convey the property to the authority upon payment by the authority to the governmental unit of an amount of money equal to the judgment and costs paid by the governmental unit.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 47, sec. 1, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 72, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 199, sec. 2, effective July 15, 1994. -- Amended 1978 Ky. Acts ch. 384, sec. 41, effective July 17, 1978. -- Amended 1976 Ky. Acts ch. 140, sec. 66. -- Created 1970 Ky. Acts ch. 114, sec. 5. Formerly codified as KRS 152.840

154.50-323 Limitations on condemnation powers.

Notwithstanding any other provision or section of KRS 154.50-301 to 154.50-346, no governmental unit shall have the power to condemn property under KRS 154.50-301 to 154.50-346 unless the governmental unit has first given proper public notice as required by law stating the specific purpose for which the property to be condemned shall be used and said purposes shall be pleaded and proved in such condemnation action. The property shall be developed within a period of five (5) years pursuant to the purpose stated, and the failure of the authority to so develop shall entitle the person or persons whose property was condemned to repurchase the property at the price the authority paid to the governmental unit for the same. The person from whom the land is taken by condemnation shall have the right to reacquire the land as aforementioned by application to the court of competent jurisdiction, if such procedure be necessary, and shall be entitled to recovery of his costs and reasonable attorney's fees necessary to reacquire said land.

History: Created 1970 Ky. Acts ch. 114, sec. 13. Formerly codified as KRS 152.850

154.50-326 Membership of authority.

(1) The members of the authority shall be appointed as follows:

(a) If the authority is established by a city, the members shall be appointed by the mayor of the city;

(b) If the authority is established by a county, the members shall be appointed by the county judge/executive;

(c) If the authority is established as a joint city-county industrial development authority, one-half (1/2) of the members shall be appointed by the mayor and one-half (1/2) of the members by the county judge/executive. If the authority is composed of seven (7) members, the mayor and the county judge/executive shall jointly appoint the seventh member;

(d) If a combination of cities and/or counties establishes a joint industrial development authority, or if an established joint industrial development authority is altered by adding a new city or county as a participating member, the mayors and/or county judges/executive involved shall:

1. Jointly choose the members, and shall jointly choose successors; or

2. Choose the members and successors in a manner established by an agreement entered into between the legislative bodies of the affected cities and counties.

(2) Members of the authority shall serve for a term of four (4) years each, and until their successors are appointed and qualified. If the authority is composed of six (6) members, initial appointments shall be made so that two (2) members are appointed for two (2) years, two (2) members for three (3) years, and two (2) members for four

(4) years. If the authority is composed of seven (7) members, initial appointments shall be made so that two (2) members are appointed for two (2) years, two (2) members for three (3) years, and three (3) members for four (4) years. If the authority is composed of eight (8) members, initial appointments shall be made so that two (2) members are appointed for two (2) years, three (3) members for three

(3) years, and three (3) members for four (4) years. Upon expiration of these staggered terms, successors shall be appointed for a term of four (4) years.

(3) An industrial development authority member may be replaced by the appointing authority upon a showing to the appointing authority of misconduct as an authority member or upon conviction of a felony.

Effective: July 13, 2004

History: Amended 2004 Ky. Acts ch. 43, sec. 1, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 104, sec. 2, effective July 15, 2002. -- Amended 1992 Ky. Acts ch. 86, sec. 1, effective July 14, 1992. -- Created 1970 Ky. Acts ch. 114, sec. 6. Formerly codified as KRS 152.860

154.50-330 Withdrawal by governmental unit -- Dissolution of authority.

(1) In the event that a joint industrial development authority is created by cities and/or counties, and thereafter a city or cities or county or counties desire to withdraw from participation, then the remaining participants may jointly choose a successor member or members of the authority. No such withdrawing city or cities or county or counties shall be entitled to the return of any money or property advanced such authority.

(2) Notwithstanding the provisions of subsection (1) of this section, any cities and/or counties which have established a joint industrial development authority as provided for herein, may provide by a mutual written agreement between such cities and/or counties, and the joint industrial development authority, that such joint industrial development authority may be dissolved and may further provide that upon such complete termination, all funds, property and other assets held by the joint industrial development authority shall be returned to such cities and/or counties in the same proportion as contributions of funds, property and other assets were made by such cities and/or counties. This section shall not apply and no dissolution shall be made until such time as all legal obligations of the joint industrial development authority shall be satisfied and all existing commitments fulfilled.

Effective: June 17, 1978

History: Amended 1978 Ky. Acts ch. 384, sec. 42, effective June 17, 1978. -- Created 1970 Ky. Acts ch. 114, sec. 7. Formerly codified as KRS 152.870

154.50-333 Quorum -- Effect of tie vote.

A quorum for the transacting of the business of the authority shall consist of a majority of the members. Meetings of the authority may be called by the chairman or by a majority of the members. In case of tie voting by the authority, the issue shall be deemed to have failed passage.

Effective: July 15, 2002

History: Amended 2002 Ky. Acts ch. 104, sec. 3, effective July 15, 2002. -- Created 1970 Ky. Acts ch. 114, sec. 8. Formerly codified as KRS 152.880

154.50-336 Authority officers, employees -- Expenses of members.

(1) Members of the authority shall serve without compensation but shall be reimbursed for any actual and necessary expenses incurred by them in the conduct of the affairs of the authority. The authority shall, upon the appointment of its members, organize and elect officers. The authority shall choose a chairman and vice chairman who shall serve for terms of one (1) year. The authority may fix a salary for the secretary-treasurer, and the secretary-treasurer shall execute an official bond to be set and approved by the authority, and the cost thereof shall be paid by the authority.

(2) The authority may employ necessary counsel, agents and employees to carry out its work and functions and prescribe such rules and regulations as it deems necessary.

(3) The secretary-treasurer shall keep the minutes of all meetings of the authority and shall also keep a set of books showing the receipts and expenditures of the authority. He shall preserve on file duplicate vouchers for all expenditures and shall present to the authority, upon request, complete reports of all financial transactions and the financial condition of the authority. Such books and vouchers shall at all times be subject to examination by the legislative body or bodies by whom the authority was created. He shall transmit at least once annually a detailed report of all acts and doings of the authority to the legislative body or bodies by whom the authority was created.

History: Created 1970 Ky. Acts ch. 114, sec. 9. Formerly codified as KRS 152.890

154.50-340 Authority's power to receive appropriations and to finance by borrowing or by issuance of revenue bonds.

(1) In order to provide money for the purchase of property necessary to develop industrial sites, parks, and subdivisions, the legislative body of any governmental unit creating the industrial development authority under KRS 154.50-301 to 154.50- 346 may make an annual appropriation from its general fund for such industrial development. Any appropriation shall be made by the legislative body in such amounts, in such proportion, and upon such terms as the legislative body may determine. All funds derived from such appropriation shall be turned over to the industrial development authority for the purpose of carrying out the duties and powers of the authority.

(2) The authority may borrow money and issue notes and other financial instruments on its own credit. The authority may pledge the appropriations or income anticipated, or the industrial sites, parks, and subdivisions, or both, as security for its debts.

(3) The authority is authorized to defray the cost of acquiring and developing any industrial sites, parks, and subdivisions through the issuance of revenue bonds issued under the terms, conditions, and procedures set forth in KRS 103.200 to 103.285.

(4) The authority may, as an alternative method and in addition to all other methods provided by law, acquire and develop land for industrial and commercial use, and issue revenue bonds in connection therewith under the terms and provisions of KRS Chapter 58; and under said law the term "governmental agency" means the authority and the term "public project" means industrial sites, parks, and subdivisions.

Effective: July 15, 1994

History: Amended 1994 Ky. Acts ch. 199, sec. 3, effective July 15, 1994. -- Created 1970 Ky. Acts ch. 114, sec. 10. Formerly codified as KRS 152.900

154.50-343 Title to property -- Authority's property, revenues are tax-exempt.

The title to all property acquired by the authority shall vest in the authority. All property acquired for the development of industrial sites, parks and subdivisions shall be exempt from taxation to the same extent as other property used for public purposes. All revenues collected by the authority shall also be exempt from taxation.

History: Created 1970 Ky. Acts ch. 114, sec. 11. Formerly codified as KRS 152.910

154.50-346 Declaration of public purpose.

The acquisition of any lands for the purpose of developing industrial sites, parks and subdivisions is hereby declared to be a public and governmental function, exercised for a public purpose, and a matter of public necessity, and such lands and other property, easements and privileges acquired in the manner and for the purposes enumerated in KRS 154.50-301 to 154.50-346 shall and are hereby declared to be acquired and used for public and governmental purposes and as a matter of public necessity.

History: Created 1970 Ky. Acts ch. 114, sec. 12. Formerly codified as KRS 152.920

154.50-350 Compliance with KRS 65A.010 to 65A.090.

Any authority shall comply with the provisions of KRS 65A.010 to 65A.090.

Effective: March 21, 2013

History: Created 2013 Ky. Acts ch. 40, sec. 57, effective March 21, 2013.

Subchapter 54 International Trade Development (Superseded) Subchapter 54 International Trade Development (Superseded)

154.54-020 Repealed, 1994.

[Repealed]

154.54-030 Repealed, 1994.

[Repealed]

Subchapter 60 Small Business Tax Credit and Selling Farmer Tax Credit Programs Subchapter 60 Small Business Tax Credit and Selling Farmer Tax Credit Programs

154.60-005 Subchapter title.

This subchapter shall be known as the Small Business Tax Credit and Selling Farmer Tax Credit Programs.

Effective: April 15, 2020

History: Amended 2020 Ky. Acts ch. 91, sec. 22, effective April 15, 2020. -- Created 2014 Ky. Acts ch. 128, sec. 3, effective July 15, 2014.

154.60-010 Definitions for subchapter.

As used in this subchapter:

(1) "Authority" means the Kentucky Economic Development Finance Authority;

(2) (a) "Average hourly wage" means the per-hour wage earned by a full-time employee, including wages, tips, overtime, bonuses, and commissions, as reflected on the employee's federal form W-2 wage and tax statement.

(b) "Average hourly wage" does not include employee benefits as defined in KRS 154.32-010, including health insurance and reimbursements;

(3) "Base employment" means:

(a) For the first application for which credits are approved, the number of full- time employees employed on the day prior to the work start date of the new employee filling the earliest eligible position identified on the application;

(b) For subsequent applications, the number of full-time employees employed on the day prior to the work start date of the new employee filling the earliest eligible position identified on the initial approved application plus each eligible position for which a credit has been approved; and

(c) For applications from businesses involved in mergers, acquisitions, or federal tax identification number changes, base employment may be adjusted by the Cabinet for Economic Development;

(4) "Eligible position" means each position that:

(a) Is filled by a full-time employee and that increases the total employment of the small business above its base employment; and

(b) Carries an average hourly wage of no less than one hundred fifty percent (150%) of the federal minimum wage;

(5) "Full-time employee" means a person employed by a small business for at least an average of thirty-five (35) hours per week and subject to the state tax imposed by KRS 141.020;

(6) "Qualifying equipment or technology" means equipment or technology that has been approved by the Office of Entrepreneurship and Innovation; and

(7) "Small business" means any business entity organized for profit that has been approved by the Office of Entrepreneurship and Innovation, including a sole proprietorship, partnership, limited partnership, corporation, limited liability company, joint venture, association, or cooperative, that has fifty (50) or fewer employees working more than thirty-five (35) hours per week, whether within or outside the Commonwealth, at the time it applies.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 28, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 128, effective June 29, 2021. -- Amended 2020 Ky. Acts ch. 76, sec. 4, effective July 15, 2020. -- Amended 2018 Ky. Acts ch. 199, sec. 35, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 128, sec. 1, effective July 15, 2014. -- Amended 2010 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 11, effective June 4, 2010. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 65, effective June 26, 2009.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 73, provided that this statute and KRS 154.60-020 and 154.60-030 "shall be known as the Emergency Small Business Stimulus Act."

154.60-020 Small Business Development Credit Program -- Application requirements -- Maximum credits permitted.

(1) The authority shall develop a Small Business Development Credit Program in consultation with the Office of Entrepreneurship and Innovation to assist new or existing small businesses operating in the Commonwealth. The nonrefundable credit shall be allowed against the taxes imposed by KRS 141.020 or 141.040, and 141.0401. The ordering of credits shall be as provided in KRS 141.0205.

(2) The authority shall determine the terms, conditions, and requirements for application for the credit, in consultation with the Office of Entrepreneurship and Innovation, subject to the provisions of subsection (3) of this section. The application shall contain identification information about the number of eligible positions created and filled, a calculation of the base employment of the small business, verification of investment of five thousand dollars ($5,000) or more in qualifying equipment or technology, and other information the authority may specify to determine eligibility for the credit.

(3) (a) The maximum amount of credits that may be committed in each fiscal year by the authority and shared between the small business tax credit program and the Selling Farmer Tax Credit Program shall be capped at three million dollars ($3,000,000).

(b) In order to be eligible to receive final approval for a credit, a small business shall, within the twenty-four (24) month period immediately preceding the application submission date:

1. Create and fill one (1) or more eligible positions over the base employment; and

2. Invest five thousand dollars ($5,000) or more in qualifying equipment or technology.

(c) Each eligible position that is created and filled shall be maintained for twelve

(12) months. If a full-time employee filling a newly created eligible position ceases to be employed by the small business for any reason, that employee shall be replaced within forty-five (45) days in order for the eligible position to maintain its eligible status, in addition to meeting all other applicable requirements.

(d) The small business shall submit all information necessary for the authority to determine credit eligibility for each year, and the amount of credit for which the small business is eligible.

(e) The maximum amount of credit for each small business for each year shall not exceed twenty-five thousand dollars ($25,000).

(f) The credit shall be claimed on the tax return for the year during which the credit was approved. Unused credits may be carried forward for up to five (5) years.

Effective: June 29, 2023

History: Amended 2023 Ky. Acts ch. 75, sec. 29, effective June 29, 2023. -- Amended 2021 Ky. Acts ch. 185, sec. 129, effective June 29, 2021. -- Amended 2020 Ky. Acts ch. 91, sec. 23, effective April 15, 2020. -- Amended 2019 Ky. Acts ch. 172, sec. 6, effective March 26, 2019. -- Amended 2018 Ky. Acts ch. 199, sec. 36, effective July 14, 2018. -- Amended 2014 Ky. Acts ch. 128, sec. 2, effective July 15, 2014. -- Amended 2010 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 12, effective June 4, 2010. -- Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 66, effective June 26, 2009.

Legislative Research Commission Note (7/15/2014). In codification, the Reviser of Statutes has relocated the phrase "within a six (6) month period" from the position it had in 2014 Ky. Acts ch. 128, sec. 2, in subsection (3)(b) of this statute. The relocation did not change the meaning of subsection (3)(b).

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 73, provided that this statute and KRS 154.60-010 and 154.60-030 "shall be known as the Emergency Small Business Stimulus Act."

154.60-030 Administrative regulations.

The authority shall establish the procedures and standards for a small business development credit program by the promulgation of administrative regulations in accordance with KRS Chapter 13A.

Effective: June 26, 2009

History: Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 67, effective June 26, 2009.

Legislative Research Commission Note (6/26/2009). 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 73, provided that this statute and KRS 154.60-010 and 154.60-020 "shall be known as the Emergency Small Business Stimulus Act."

154.60-040 Selling Farmer Tax Credit Program -- Definitions -- Purposes -- Eligibility -- Application requirements -- Incentives to be negotiated by Cabinet for Economic Development -- Approval by the authority -- Authority to transmit required information to the Department of Revenue -- Penalty -- Sunset.

(1) As used in this section:

(a) "Actively engaged farmer" means a person who makes a significant contribution of:

1. Land, capital, and equipment to a farming operation; and

2. Active personal labor or management to a farming operation;

(b) 1. "Agricultural assets" means:

a. Agricultural land which has been appraised by an individual certified by the Real Property Appraisers Board created under KRS 324A.015; and

b. Buildings, facilities, machinery, equipment, agricultural products, or horticultural products, if:

i. Owned by the same seller owning the agricultural land sold to an actively engaged farmer or beginning farmer;

ii. Purchased at the same time and in the same transaction with the agricultural land; and

iii. Purchased with the intent to be used on the purchased agricultural land.

2. "Agricultural assets" does not mean:

a. A personal residence or any other residential structures;

b. Any agricultural assets that have been previously included in an approved application for the Kentucky selling farmer tax credit; and

c. Any land which has, is, or will be used in the production of solar power for personal or commercial purposes;

(c) "Agricultural land" means:

1. Any land located entirely in Kentucky that is zoned or permitted for farming, if the jurisdiction where the land is located has enacted an ordinance for zoning or permitting; and

2. a. Is a tract of land of at least ten (10) contiguous acres in area for a farming operation for agricultural products; or

b. Is a tract of land of at least five (5) contiguous acres in area for a farming operation for aquaculture or horticultural products; owned by the seller prior to the sale;

(d) "Agricultural products" means:

1. Livestock or livestock products;

2. Poultry or poultry products;

3. Milk or milk products; or

4. Field crops and other crops, including timber if approved by the authority;

(e) "Aquaculture" means the farming of fish, crustaceans, mollusks, aquatic plants, algae, or other similar organisms;

(f) "Beginning farmer" means an actively engaged farmer who has not previously held an ownership interest in agricultural land used for a farming operation for a period exceeding twenty (20) years prior to entering into an agreement to purchase agricultural assets from a seller;

(g) "Buyer" means an actively engaged farmer or beginning farmer who purchases agricultural assets from a seller;

(h) "Department" means the Department of Revenue;

(i) "Farm product" means aquaculture, agricultural products, or horticultural products;

(j) 1. "Farming operation" means the management and operation of agricultural assets for the purpose of pursuing a profitable commercial business venture to produce agricultural products, horticultural products, or both for sale.

2. "Farming operation" does not mean any:

a. Nonprofit venture;

b. Farm used primarily for storing agricultural products or horticultural products; or

c. Farm used to grow or raise agricultural products or horticultural products primarily for use by the immediate family members or owners of the agricultural assets;

(k) "Horticultural products" means orchards, fruits, vegetables, nuts, flowers, or ornamental plants;

(l) "Immediate family member" means any of the following in relation to any owner or spouse of the owner of the agricultural assets:

1. Parent or grandparent;

2. Children or their spouses; or

3. Siblings or their spouses;

(m) "Seller" means any individual or entity subject to the tax imposed by KRS 141.020 or 141.040 and 141.0401; and

(n) "Significant contribution" has the same meaning as in 7 C.F.R. sec. 1400.3.

(2) Any incentive offered to an eligible company under the Selling Farmer Tax Credit Program shall be negotiated by Cabinet for Economic Development officials and shall be subject to approval by the authority.

(3) The purpose of the Selling Farmer Tax Credit Program is to promote the continued use of agricultural land in Kentucky for farming purposes by granting a tax credit to a seller who agrees to sell agricultural assets to an actively engaged farmer or a beginning farmer.

(4) A seller wanting to sell agricultural assets may be eligible for a tax credit up to five percent (5%) of the selling price of qualifying agricultural assets, subject to:

(a) A twenty-five thousand dollar ($25,000) cap for each taxable year of the seller when agricultural assets are sold to an actively engaged farmer who does not meet the definition of a beginning farmer;

(b) A fifty thousand dollar ($50,000) cap for each taxable year of the seller when agricultural assets are sold to a beginning farmer;

(c) A one hundred thousand dollar ($100,000) lifetime cap for each seller selling to an actively engaged farmer;

(d) A two hundred thousand dollar ($200,000) lifetime cap for each seller selling to a beginning farmer; and

(e) A proration by the authority based on the overall cap shared between the Small Business Tax Credit Program and the Selling Farmer Tax Credit Program cap of three million dollars ($3,000,000) under KRS 154.60-020.

(5) The tax credit allowed in subsection (4) of this section may be claimed under KRS 141.3841.

(6) In order to be eligible to receive approval for a tax credit, the seller shall, at a minimum:

(a) 1. a. Be registered with the Kentucky Secretary of State; and

b. Be in good standing with the Kentucky Secretary of State; or

2. If not required to be registered with the Kentucky Secretary of State, be a taxpayer of Kentucky;

(b) Prior to a sale of agricultural assets, be a small business with fifty (50) or fewer full-time employees and be the sole legal owner of agricultural assets sold to an actively engaged farmer or a beginning farmer;

(c) Not be a farm equipment dealer, livestock dealer, or similar entity primarily engaged in the business of selling agricultural assets for profit and not engaged in farming as a primary business activity;

(d) Not be a bank or any other similar lending or financial institution;

(e) Not be:

1. An owner, partner, member, shareholder, or trustee;

2. A spouse of an owner, partner, member, shareholder, or trustee; or

3. An immediate family member of any of the owners, partners, members, shareholders, or trustees; of the actively engaged farmer or beginning farmer to whom the seller is seeking to sell agricultural assets;

(f) 1. Demonstrate management and operation of real and personal property for the production of a farm product; and

2. Execute and effectuate a purchase contract to sell agricultural land with an actively engaged farmer or a beginning farmer for an amount evidenced by an appraisal; and

(g) Sell, convey, and transfer ownership of related agricultural assets to an actively engaged farmer or a beginning farmer.

(7) In order for the seller to qualify for the tax credit, an actively engaged farmer or a beginning farmer shall, at a minimum:

(a) 1. a. Be registered with the Kentucky Secretary of State; and

b. Be in good standing with the Kentucky Secretary of State; or

2. If not required to be registered with the Kentucky Secretary of State, be a resident of Kentucky;

(b) Possess all licenses, registrations, and experience needed to legally operate a farming operation within the jurisdiction for the agricultural land purchased from a the seller;

(c) Not have an ownership interest in any of the agricultural assets included in the transaction with the seller; and

(d) Provide a majority of the management, and materially participate in the operation of a for-profit farming operation located in Kentucky and purchased from a seller, with the intent to continue a for-profit farming operation on the purchased agricultural land for a minimum of ten (10) years after the sale date.

(8) The seller shall submit an application with all information necessary for the authority to determine eligibility for the tax credit.

(9) The authority may consider applications prior to the consummation of the sale, transfer of title, and conveyance of agricultural assets.

(10) An application for the selling farmer tax credit shall contain, at a minimum, information about the:

(a) Seller and buyer;

(b) Purchase contract and closing statement;

(c) Documentation, such as a deed, title conveyance for the transfer of assets, including verification of Kentucky residency of the buyer; and

(d) Any other information the authority may require to determine eligibility for the credit.

(11) For each approved application, the authority shall transmit to the department sufficient information about the seller to ensure compliance with this section and KRS 141.3841, including the amount of approved tax credit allowed to the seller.

(12) If the buyer fails to meet the requirements of this section, the department shall assess a penalty against the buyer in an amount equal to the tax credit awarded to the seller. The department may assess an additional penalty in excess of the tax credit awarded.

(13) (a) The selling farmer tax credit shall sunset on December 31, 2031, and new applications shall not be accepted or considered on or after December 31, 2031.

(b) All outstanding applications with preliminary or final approval under this subchapter as of December 31, 2031, shall continue to be governed by the provisions of this subchapter.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 172, sec. 14, effective July 15, 2026. -- Amended 2025 Ky. Acts ch. 98, sec. 28, effective June 27, 2025. -- Amended 2020 Ky. Acts ch. 91, sec. 18, effective April 15, 2020. -- Created 2019 Ky. Acts ch. 172, sec. 7, effective March 26, 2019.

Subchapter 61 Motion Pictures and Entertainment Productions Subchapter 61 Motion Pictures and Entertainment Productions

154.61-010 Definitions for subchapter.

As used in this subchapter:

(1) "Above-the-line production crew" means employees involved with the production of a motion picture or entertainment production whose salaries are negotiated prior to commencement of production, such as actors, directors, producers, and writers;

(2) "Animated production" means a nationally distributed feature-length film created with the rapid display of a sequence of images using 2-D or 3-D graphics of artwork or model positions in order to create an illusion of movement;

(3) "Approved company" means an eligible company approved for incentives provided under KRS 141.383 and 154.61-020;

(4) "Below-the-line production crew" means employees involved with the production of a motion picture or entertainment production except above-the-line production

crew. "Below-the-line production crew" includes but is not limited to:

(a) Casting assistants;

(b) Costume design;

(c) Extras;

(d) Gaffers;

(e) Grips;

(f) Location managers;

(g) Production assistants;

(h) Set construction staff; and

(i) Set design staff;

(5) "Cabinet" means the Cabinet for Economic Development;

(6) "Certified audit" means an audit that:

(a) Contains production-related expenditures;

(b) Is completed within one hundred eighty (180) days of the completion of production in Kentucky; and

(c) Is conducted in accordance with the office's standards established by administrative regulations promulgated in accordance with KRS Chapter 13A, including the adoption of expenditure sampling procedures;

(7) "Commonwealth" means the Commonwealth of Kentucky;

(8) "Compensation" means:

(a) Compensation included in adjusted gross income as calculated in KRS 141.019; and

(b) The following:

1. Employer-paid payroll taxes;

2. Union and guild benefits;

3. Workers' compensation insurance premiums;

4. Payroll service fees; and

5. Qualifying per diem;

(9) "Continuous film production" means a motion picture or entertainment production that:

(a) 1. Has a projected minimum spend of ten million dollars ($10,000,000) for qualifying expenditures and qualifying payroll expenditures, which may be a prorated amount based on the total budget of the production; and

2. Has a minimum of fifty percent (50%) of the funds available and the ability to raise the remaining funds necessary to complete the filming and production, which may be verified by:

a. Bank statements or other financial documents; or

b. A fundraising plan at the request of the office;

(b) Demonstrates a distribution contract for each motion or entertainment production; and

(c) Maintains:

1. An apprenticeship program or on-the-job training program as defined in KRS 343.010; or

2. Partners with a film studies program with an accredited institution of postsecondary education located in the Commonwealth;

(10) "Council" means the Kentucky Film Leadership Council created in KRS 154.12- 282;

(11) "Documentary" means a production based upon factual information and not subjective interjections;

(12) "Eligible company" means any person that intends to film or produce a motion picture or entertainment production in the Commonwealth;

(13) "Employee" has the same meaning as in KRS 141.010, and, for purposes of this subchapter, also may include the employees or independent contractors of an approved company or the employees of a loan-out entity engaged by an approved company if they meet the requirements of KRS 141.310;

(14) "Employer-paid payroll taxes" means the tax paid by an approved company as an employer under the Federal Insurance Contributions Act, 26 U.S.C. sec. 3101 et seq., and the approved company's share of contributions required under KRS Chapter 341;

(15) "Feature-length film" means a live-action or animated production that is:

(a) More than thirty (30) minutes in length; and

(b) Produced for distribution in theaters or via digital format, including broadcast, cable, and streaming;

(16) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97);

(17) "Industrial film" means a business-to-business film that may be viewed by the public, including but not limited to videos used for training or for viewing at a trade show;

(18) "Kentucky-based company" has the same meaning as in KRS 164.6011;

(19) "Loan-out entity" means a corporation, partnership, limited liability company, or other entity through which an artist or other person is loaned out to perform services for the approved company. A loan-out entity shall be registered and in good standing with the Kentucky Secretary of State. Notwithstanding the business organization, the loan-out entity and all employees of and other persons performing services for the loan-out entity shall be subject to all applicable provisions of the Kentucky personal income tax and any applicable payroll or other tax provisions;

(20) (a) "Motion picture or entertainment production" means:

1. The following if filmed in whole or in part, or produced in whole or in part, in the Commonwealth:

a. A feature-length film;

b. A television program;

c. An industrial film;

d. A documentary;

e. A video game;

f. A music video; or

g. A commercial; or

2. A national touring production of a Broadway show produced in Kentucky.

(b) "Motion picture or entertainment production" does not include the filming or production of obscene material or television coverage of news or athletic events;

(21) "Obscene" has the same meaning as in KRS 531.010;

(22) "Office" means the Kentucky Film Office created in KRS 154.12-280;

(23) "Payroll service fees" means administrative fees paid by an approved company to a third-party payroll service company providing Kentucky-based payroll processing for above-the-line and below-the-line production crew members;

(24) "Person" has the same meaning as in KRS 141.010;

(25) (a) "Qualifying expenditure" means expenditures made in the Commonwealth for the following if directly used in or for a motion picture or entertainment production:

1. The production script and synopsis;

2. Set construction and operations, wardrobe, accessories, and related services;

3. Lease or rental of real property in Kentucky as a set location;

4. Photography, sound synchronization, lighting, and related services;

5. Editing and related services;

6. Rental of facilities and equipment;

7. Vehicle leases;

8. Food; and

9. Accommodations.

(b) "Qualifying expenditure" does not include:

1. Kentucky sales and use tax paid by the approved company on the qualifying expenditure; or

2. Distribution expenses;

(26) "Qualifying payroll expenditure" means compensation paid to above-the-line crew and below-the line crew while working on a motion picture or entertainment production in the Commonwealth if the compensation is for services performed in the Commonwealth;

(27) "Qualifying per diem":

(a) Means:

1. Meal and incidental allowance per diems, including those not taken on set, in the amounts established by the United States General Services Administration, if incurred in the Commonwealth; and

2. Hotel and other overnight living accommodations per diems, in the amounts established by the United States General Services Administration, if incurred in the Commonwealth; and

(b) Includes any amounts that:

1. Exceed the limits in paragraph (a)1. and 2. of this subsection; and

2. Are included in taxable compensation and subject to the withholding required under KRS Chapter 341;

(28) "Resident" has the same meaning as in KRS 141.010;

(29) "Secretary" means the secretary of the Cabinet for Economic Development;

(30) "Tax incentive agreement" means the agreement entered into pursuant to KRS 154.61-030 between the council and the approved company;

(31) "Television program" means any live-action or animated production or documentary, including but not limited to:

(a) An episodic series;

(b) A miniseries;

(c) A television movie; or

(d) A television pilot; that is produced for distribution on television via broadcast, cable, or any digital format, including but not limited to cable, satellite, internet, or mobile electronic devices;

(32) "Union and guild benefits" means any mandatory contributions to pension, health, and welfare plans paid by an approved company or a third-party payroll service company pursuant to a union or guild agreement entered into for the provision of services by above-the-line or below-the-line production crew members; and

(33) "Workers' compensation insurance premiums" means premiums paid by an approved company or a third-party payroll service company for the provision of workers' compensation covering above-the-line or below-the-line production crew members.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 194, sec. 4, effective July 15, 2026; and ch. 198, sec. 22, effective April 27, 2026. -- Amended 2025 Ky. Acts ch. 91, sec. 5, effective July 1, 2025. -- Amended 2023 Ky. Acts ch. 75, sec. 30, effective June 29, 2023. -- Created 2021 Ky. Acts ch. 156, sec. 17, effective June 29, 2021.

Legislative Research Commission Note (7/15/2026). This statute was amended by 2026 Ky. Acts chs. 194 and 198, which do not appear to be in conflict and have been codified together.

154.61-020 Purposes -- Tax incentives for motion pictures and entertainment productions and continuous film productions.

(1) The purposes of KRS 141.383 and this subchapter are to encourage:

(a) The film and entertainment industry to choose locations in the Commonwealth for the filming and production of motion picture or entertainment productions;

(b) The development of a film and entertainment industry in Kentucky;

(c) Increased employment opportunities for the citizens of the Commonwealth within the film and entertainment industry; and

(d) The development of a production and postproduction infrastructure in the Commonwealth for film production and touring Broadway show production facilities containing state-of-the-art technologies.

(2) The council, together with the Department of Revenue, shall administer the tax credit established by KRS 141.383, this section, and KRS 154.61-030.

(3) To qualify for the tax incentive provided in subsection (5) of this section, the following requirements shall be met:

(a) For an approved company that films or produces a commercial in whole or in part in the Commonwealth, the minimum combined total of qualifying expenditures and qualifying payroll expenditures shall be two hundred thousand dollars ($200,000); and

(b) For an approved company that is also a Kentucky-based company that:

1. Films or produces a feature-length film, television program, industrial film, video game, or music video in whole or in part in the Commonwealth, the minimum combined total of qualifying expenditures and qualifying payroll expenditures shall be two hundred thousand dollars ($200,000);

2. Produces a national touring production of a Broadway show in whole or in part in the Commonwealth, the minimum combined total of qualifying expenditures and qualifying payroll expenditures shall be twenty thousand dollars ($20,000); or

3. Films or produces a documentary in whole or in part in the Commonwealth, the minimum combined total of qualifying expenditures and qualifying payroll expenditures shall be ten thousand dollars ($10,000); and

(c) For an approved company that is not a Kentucky-based company that:

1. Films or produces a feature-length film, television program, industrial film, video game, or music video in whole or in part in the Commonwealth, the minimum combined total of qualifying expenditures and qualifying payroll expenditures shall be four hundred thousand dollars ($400,000); or

2. Films or produces a documentary in whole or in part in the Commonwealth or that produces a national touring production of a Broadway show, the minimum combined total of qualifying expenditures and qualifying payroll expenditures shall be twenty thousand dollars ($20,000).

(4) (a) Beginning on January 1, 2022, the total tax incentive approved under KRS 141.383 and this subchapter shall be limited to seventy-five million dollars ($75,000,000) for calendar year 2022 and each calendar year thereafter.

(b) Beginning with calendar year 2024:

1. Twenty-five million dollars ($25,000,000) shall be allocated for all approved companies with a continuous film production; and

2. On the first day of July of each calendar year, any unused balance of the amount allocated under subparagraph 1. of this paragraph for continuous film productions shall be made available for all approved companies with motion picture or entertainment productions.

(c) Beginning with calendar year 2026, any unallocated balance of the amount allocated in paragraph (a) of this subsection for the previous calendar year shall carry forward into the subsequent calendar year to be made available for approved companies with high-impact motion pictures, continuous film productions, or entertainment productions. The council shall promulgate administrative regulations in accordance with KRS Chapter 13A to establish the criteria for a high-impact motion picture or entertainment production.

(5) (a) To qualify for the tax incentive available under KRS 141.383 and this subchapter, all applicants shall:

1. Begin filming or production in Kentucky within one hundred eighty

(180) days of approval by the council;

2. Complete filming or production in Kentucky within two (2) years of the filming or production start date; and

3. Submit a certified audit to the office.

(b) The tax credit shall be against the Kentucky income tax imposed under KRS 141.020 or 141.040, and the limited liability entity tax imposed under KRS 141.0401, and shall be refundable as provided in KRS 141.383.

(c) 1. For a continuous film production filmed or produced in any Kentucky county, or a feature-length film, television program, industrial film, documentary, video game, music video, or national touring production of a Broadway show filmed or produced in its entirety in a heritage county, the amount of the incentive shall be equal to thirty-five percent (35%) of the approved company's:

a. Qualifying expenditures;

b. Qualifying payroll expenditures paid to resident and nonresident below-the-line production crew; and

c. Qualifying payroll expenditures paid to resident and nonresident above-the-line production crew not to exceed one million dollars ($1,000,000) in payroll expenditures per employee.

2. a. To the extent the approved company films or produces a motion picture or continuous film production in part in a heritage county and in part in a Kentucky county that is not a heritage county, the approved company shall be eligible to receive the incentives provided in this paragraph for those expenditures incurred in the heritage county and all other expenditures shall be subject to the incentives provided in paragraph (d) of this subsection.

b. The approved company shall track the requisite expenditures by county. If the approved company can demonstrate to the satisfaction of the cabinet that it is not practical to use a separate accounting method to determine the expenditures by county, the approved company shall determine the correct expenditures by county using an alternative method approved by the cabinet.

(d) For a commercial filmed or produced in any Kentucky county, or a feature- length film, television program, industrial film, documentary, video game, music video or national touring production of a Broadway show filmed or produced in whole or in part in any Kentucky county other than in a heritage county, the amount of the incentive shall be equal to:

1. Thirty percent (30%) of the approved company's:

a. Qualifying expenditures;

b. Qualifying payroll expenditures paid to below-the-line production crew that are not residents; and

c. Qualifying payroll expenditures paid to above-the-line production crew that are not residents, not to exceed one million dollars ($1,000,000) in payroll expenditures per employee; and

2. Thirty-five percent (35%) of the approved company's:

a. Qualifying payroll expenditures paid to resident below-the-line production crew; and

b. Qualifying payroll expenditures paid to resident above-the-line production crew not to exceed one million dollars ($1,000,000) in payroll expenditures per employee.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 194, sec. 5, effective July 15, 2026; and ch. 198, sec. 23, effective April 27, 2026. -- Amended 2025 Ky. Acts ch. 91, sec. 6, effective July 1, 2025. -- Amended 2023 Ky. Acts ch. 75, sec. 31, effective June 29, 2023. -- Created 2021 Ky. Acts ch. 156, sec. 18, effective June 29, 2021.

Legislative Research Commission Note (7/15/2026). This statute was amended by 2026 Ky. Acts chs. 194 and 198, which do not appear to be in conflict and have been codified together.

154.61-030 Applications -- Tax incentive agreements -- Fee -- Approval -- Cost report -- Review.

(1) An eligible company shall, prior to incurring any expenditure for which recovery will be sought, file an application for tax incentives with the office. The application shall include:

(a) The name and address of the applicant;

(b) Verification that the applicant is a Kentucky-based company;

(c) The preliminary production script or a detailed synopsis of the script;

(d) The locations where the filming or production will occur;

(e) The anticipated date on which filming or production shall begin in Kentucky;

(f) The anticipated date on which the applicant will complete incurring expenditures in Kentucky;

(g) The total anticipated qualifying expenditures;

(h) The total anticipated qualifying payroll expenditures for resident and nonresident above-the-line crew by county;

(i) The total anticipated qualifying payroll expenditures for resident and nonresident below-the-line crew by county;

(j) The address of a Kentucky location at which records of the production will be kept;

(k) An affirmation that if not for the incentive offered under this subchapter, the eligible company would not film or produce the production in the Commonwealth; and

(l) Any other information the office may require.

(2) The office shall notify the eligible company within thirty (30) days after receiving the application that:

(a) The application is complete; or

(b) Additional information is required.

(3) Upon receipt of the application and any additional information submitted by the office and cabinet, the council shall consider all submitted information and, if appropriate, authorize the execution of a tax incentive agreement between the council and the approved company, if the amount of anticipated tax credit from the application would not make the total tax credit approved for the calendar year exceed the annual tax credit cap under KRS 154.61-020(4).

(4) The tax incentive agreement shall include the following provisions:

(a) The duties and responsibilities of the parties;

(b) A detailed description of the motion picture or entertainment production for which incentives are requested;

(c) The anticipated qualifying expenditures and qualifying payroll expenditures for resident and nonresident above-the-line and below-the-line crews by county;

(d) The minimum combined total of qualifying expenditures and qualifying payroll expenditures necessary for the approved company to qualify for incentives;

(e) That the approved company shall:

1. Begin filming or production in Kentucky within one hundred eighty

(180) days of approval by the council; and

2. Complete production in Kentucky within two (2) years of their production start date;

(f) That the motion picture or entertainment production shall not include obscene materials and shall not negatively impact the economy or the tourism industry of the Commonwealth;

(g) That the execution of the agreement is not a guarantee of tax incentives and that actual receipt of the incentives shall be contingent upon the approved company meeting the requirements established by the tax incentive agreement;

(h) That the approved company shall submit to the office and cabinet within one hundred eighty (180) days of the completion of production in Kentucky for the motion picture or entertainment production:

1. A detailed cost report of the qualifying expenditures and qualifying payroll expenditures;

2. Certified audit; and

3. The latest version of the production script at the time of cost report submission;

(i) That the approved company shall provide the office and cabinet with documentation that the approved company or the associated loan-out entity has withheld income tax as required by KRS 141.310 or the individual income tax rate imposed by KRS 141.020 on all qualified payroll expenditures for which an incentive under this subchapter is sought;

(j) That, if the cabinet determines that the approved company has failed to comply with any of its obligations under the tax incentive agreement:

1. The council may deny the incentives available to the approved company;

2. Both the council and the Department of Revenue may pursue any remedy provided under the tax incentive agreement;

3. The council may terminate the tax incentive agreement; and

4. Both the council and the Department of Revenue may pursue any other remedy at law to which it may be entitled;

(k) That the cabinet and the Department of Revenue shall monitor the tax incentive agreement;

(l) That the approved company shall provide to the cabinet and the Department of Revenue all information necessary to monitor the tax incentive agreement;

(m) That the council may share information with the Department of Revenue and the Interim Joint Committee on Appropriations and Revenue or any other entity the cabinet determines is necessary for the purposes of monitoring and enforcing the terms of the tax incentive agreement;

(n) That the motion picture or entertainment production shall contain an acknowledgment that the motion picture or entertainment production was produced or filmed in the Commonwealth of Kentucky;

(o) That the approved company shall include screen credits in its final production, indicating the approved company received tax incentives from the Commonwealth of Kentucky;

(p) Terms of default;

(q) The method and procedures by which the approved company shall request and receive the incentive provided under KRS 141.383 and 154.61-020;

(r) That the approved company may be required to pay an administrative fee as authorized under subsection (5) of this section;

(s) The approved company may be required to pay a fee of two thousand dollars ($2,000) for expenses incurred as a result of preparation of the tax incentive agreement; and

(t) Any other provisions deemed necessary or appropriate by the parties to the tax incentive agreement.

(5) The council may require the approved company to pay an administrative fee, the amount of which shall be established by administrative regulation promulgated in accordance with KRS Chapter 13A. The administrative fee shall not exceed one- half of one percent (0.5%) of the estimated amount of tax incentive sought or five hundred dollars ($500), whichever is greater.

(6) Prior to commencement of activity as provided in a tax incentive agreement, the tax incentive agreement shall be approved by the council. Following approval by the council, the tax incentive agreement shall be submitted to the Government Contract Review Committee established by KRS 45A.705 for review, as provided in KRS 45A.695, 45A.705, and 45A.725.

(7) The council shall notify the Department of Revenue following approval of an approved company. The notification shall include the name of the approved company, the name of the motion picture or entertainment production, the estimated amount of qualifying expenditures, the estimated date on which the approved company will complete filming or production in Kentucky, and any other information required by the department.

(8) Within one hundred eighty days (180) days of completion of production in Kentucky for the motion picture or entertainment production, the approved company shall submit to the council:

(a) A detailed cost report of:

1. Qualifying expenditures;

2. Qualifying payroll expenditures for resident and nonresident above-the- line crew by county; and

3. Qualifying payroll expenditures for resident and nonresident below-the- line crew by county;

(b) The latest version of the production script available at the time of cost report submission; and

(c) The certified audit.

(9) (a) Cabinet staff shall review all information submitted for accuracy and shall confirm that all relevant provisions of the tax incentive agreement have been met.

(b) Upon confirmation that all requirements of the tax incentive agreement have been met, cabinet staff shall review the latest version of the production script available at the time of cost report submission, and if they determine that the motion picture or entertainment production does not:

1. Contain visual or implied scenes that are obscene; or

2. Negatively impact the economy or the tourism industry of the Commonwealth; the council shall forward the detailed cost report to the Department of Revenue for calculation of the refundable credit.

(10) The Department of Revenue shall:

(a) Verify that the approved company withheld the proper amount of income tax on qualifying payroll expenditures; and

(b) Notify the council of the total amount of refundable credit available on qualifying expenditures and qualifying payroll expenditures.

Effective: July 15, 2026

History: Amended 2026 Ky. Acts ch. 194, sec. 6, effective July 15, 2026. -- Amended 2025 Ky. Acts ch. 91, sec. 7, effective July 1, 2025. -- Amended 2023 Ky. Acts ch. 75, sec. 32, effective June 29, 2023. -- Created 2021 Ky. Acts ch. 156, sec. 19, effective June 29, 2021.

Subchapter 80 Water Resources Development Subchapter 80 Water Resources Development

Port and River Development Port and River Development

154.80-100 Statement of purpose.

The purpose of KRS 65.510 to 65.530, KRS 139.483, this section, and KRS 154.80-110 to 154.80-130 is to create within the Cabinet for Economic Development to aid in the promotion and development of river-related industry, agriculture, and commerce in Kentucky; to aid in the promotion and development of local port authorities as authorized by KRS 65.510 to 65.650; to aid in the promotion and development of industrial districts, parks, and sites for accommodating industrial complexes that utilize the rivers and river- related resources; to analyze, plan, and aid in systematically developing river-related resources by the development of services and facilities; to promote the development of industrial parks and terminal facilities for manufacturing and distribution industries for attracting and serving private and public enterprises that are directly or indirectly river- oriented; to promote the exportation of Kentucky made products in foreign commerce, especially as related to the utilization of the navigable waterways; and to establish the powers necessary or appropriate to carry out and effectuate the purposes of KRS 65.510 to 65.530, KRS 139.483, this section, and KRS 154.80-110 to 154.80-130.

Effective: July 14, 1992

History: Amended 1992 Ky. Acts ch. 105, sec. 36, effective July 14, 1992. -- Created 1966 Ky. Acts ch. 64, sec. 2. Formerly codified as KRS 154.315

154.80-110 Establishment of foreign trade zone -- Application for authorized -- Organization under KRS Chapters 271B and 273 not prohibited.

(1) The cabinet may make application to the proper federal authorities for the establishment of a foreign trade zone wherever and whenever such a zone is desirable. KRS 65.510 to 65.530, KRS 139.483, KRS 154.80-100, and KRS 154.80-110 to 154.80-130 will constitute legislative authority and approval of such applications, as required by federal law.

(2) Nothing contained in this section shall be construed to prohibit any corporation organized under KRS Chapters 271B and 273 from being organized and chartered for the purposes of establishing, operating, and maintaining a foreign trade zone within this state pursuant to KRS 271B.18-060.

(3) As used in this section, "foreign trade zone" means such a zone authorized by 19 U.S.C. sec. 81.

Effective: July 14, 1992

History: Amended 1992 Ky. Acts ch. 105, sec. 37, effective July 14, 1992. -- Amended 1984 Ky. Acts ch. 305, sec. 1, effective July 13, 1984. -- Created 1966 Ky. Acts ch. 64, sec. 9. Formerly codified as KRS 154.330

154.80-120 Power to contract.

The cabinet may enter into any and all contracts in its own name for planning, engineering, promotion, and development, consistent with the purposes of KRS 65.510 to 65.530, 139.483, 154.80-100, and 154.80-110 to 154.80-130, and may enter into contracts for these purposes with any local port authority authorized by KRS 65.510 to 65.650 or any other public or private organization.

Effective: July 14, 1992

History: Amended 1992 Ky. Acts ch. 105, sec. 38, effective July 14, 1992. -- Created 1966 Ky. Acts ch. 64, sec. 10. Formerly codified as KRS 154.335

154.80-130 Disbursement of funds.

The cabinet may disburse any and all funds appropriated by the Legislature for purposes consistent with KRS 65.510 to 65.530, 139.483, 154.80-100, and 154.80-110 to 154.80- 130, any funds received from any state agency, and may apply for, receive, and disburse funds from the federal government, or any other public or private organization or agency for carrying out the purposes of KRS 65.510 to 65.530, 139.483, 154.80-100, and 154.80- 110 to 154.80-130.

Effective: July 14, 1992

History: Amended 1992 Ky. Acts ch. 105, sec. 39, effective July 14, 1992. -- Created 1966 Ky. Acts ch. 64, sec. 11. Formerly codified as KRS 154.340

154.80-140 Repealed, 2023.

[Repealed]

Waterway Marina Development Waterway Marina Development

154.80-310 Repealed, 2023.

[Repealed]

Subchapter 85 West Kentucky Development Subchapter 85 West Kentucky Development

154.85-001 Repealed, 2007.

[Repealed]

154.85-010 Repealed, 2007.

[Repealed]

154.85-015 Repealed, 2007.

[Repealed]

154.85-020 Repealed, 2007.

[Repealed]

154.85-025 Repealed, 2007.

[Repealed]

154.85-027 Repealed, 2007.

[Repealed]

154.85-030 Repealed, 2007.

[Repealed]

154.85-033 Repealed, 2007.

[Repealed]

154.85-035 Repealed, 2007.

[Repealed]

154.85-040 Repealed, 2007.

[Repealed]

154.85-045 Repealed, 2007.

[Repealed]

154.85-050 Repealed, 2007.

[Repealed]

154.85-055 Repealed, 2007.

[Repealed]

154.85-060 Repealed, 2007.

[Repealed]

154.85-065 Repealed, 2007.

[Repealed]

154.85-070 Repealed, 2007.

[Repealed]

154.85-075 Repealed, 2007.

[Repealed]

154.85-080 Repealed, 2007.

[Repealed]

154.85-085 Repealed, 2007.

[Repealed]

Subchapter 90 Additional Types of Development Subchapter 90 Additional Types of Development

Northern Kentucky Convention Center Northern Kentucky Convention Center

154.90-005 Legislative findings.

The General Assembly finds that a major convention center in Northern Kentucky will serve as a catalyst in the regional development of commerce, and that it will enhance the position of Northern Kentucky as a year round convention and tourist attraction. The General Assembly finds further that the development and governance of a Northern Kentucky convention center is a public purpose of the Commonwealth.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 99, sec. 1, effective July 14, 1992.

154.90-010 Northern Kentucky Convention Center Corporation -- Board.

(1) The Northern Kentucky Convention Center Corporation is hereby established to develop and manage the Northern Kentucky Convention Center. The corporation shall be attached to the Tourism, Arts and Heritage Cabinet for administrative purposes. The corporation shall be directed by a board consisting of eleven (11) members appointed as follows:

(a) The county judges/executive of Kenton, Campbell, and Boone Counties, with the approval of their respective fiscal courts, shall each appoint two (2) members to the board;

(b) The mayor of the city within which the convention center is located shall appoint one (1) member, with the approval of the city commission;

(c) The Governor shall appoint four (4) members;

(d) One (1) of the initial appointees of the Governor shall have a one (1) year term, one (1) shall have a two (2) year term, and one (1) shall have a three (3) year term. All other appointments, and all subsequent appointments by the Governor, shall be for four (4) year terms; and

(e) Members may be removed by the appointing authority only for cause and after being afforded notice, a hearing, and a finding of fact by the appointing authority. A copy of charges, transcript of the record of the hearings, and findings of fact shall be filed with the Secretary of State.

(2) The Northern Kentucky Convention Center Corporation shall be a body corporate with full corporate powers. A quorum of the corporation shall consist of four (4) members, with a majority of members present authorized to act upon any matter legally before the corporation. Minutes and records shall be kept of all meetings of the corporation and all official actions shall be recorded.

(3) The corporation may enact bylaws concerning the election of officers and other administrative procedures it deems necessary.

Effective: June 27, 2025

History: Amended 2025 Ky. Acts ch. 109, sec. 5, effective June 27, 2025. -- Amended 2009 Ky. Acts ch. 16, sec. 42, effective June 25, 2009. -- Amended 2006 Ky. Acts ch. 152, sec. 7, effective July 12, 2006. -- Created 1992 Ky. Acts ch. 99, sec. 2, effective July 14, 1992.

154.90-015 Powers and duties of corporation.

The Northern Kentucky Convention Center Corporation:

(1) Shall supervise the design and construction of the Northern Kentucky Convention Center, and shall provide all management functions for the facility and for any other property acquired or leased pursuant to its powers under this section;

(2) May take, acquire, and hold property, and all interests therein, by deed, purchase, gift, devise, bequest, or lease, or by transfer from the State Property and Buildings Commission, and may dispose of any property so acquired in any manner provided by law.

(3) May issue revenue bonds, subject to procedures which shall be established by the Finance and Administration Cabinet, solely payable from the revenues and other funds pledged for their payment for the purpose of paying all or any part of the cost of any project or for the acquisition of property;

(4) Shall promote the growth and development of the convention trade, tourism, and the hotel, restaurant, and entertainment industry in Northern Kentucky and the Commonwealth, through utilization of the Northern Kentucky Convention Center to enhance these and the public interest;

(5) May adopt administrative regulations, as provided in KRS Chapter 13A, governing the operation, maintenance, or use of property under its custody and control;

(6) May levy a surcharge on tickets for functions held within the center to contribute to operating revenue;

(7) Shall have the exclusive control of all exhibitions, performances, and concessions in the Northern Kentucky Convention Center. The corporation shall have a prior lien upon the property of any private exhibitor, concessionaire, or other person holding an exhibition or performance or operating a concession in the center, and may sell the property upon ten (10) days notice to satisfy any indebtedness:

(8) Shall participate with local hotels and the travel industry to develop tourist packages and additional services to attract conferences and conventions to the region;

(9) May establish an executive committee from among its membership with full authority to act between its meetings to the extent delegated by the corporation; and

(10) May sue and be sued and maintain and defend legal actions in its corporate name.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 99, sec. 3, effective July 14, 1992.

154.90-020 Executive director -- Use of revenues -- Annual audit.

(1) The Northern Kentucky Convention Center Corporation may appoint an executive director, who shall hold office at its pleasure. The executive director shall act under the direction of the board of the corporation in employing necessary staff to perform its duties and exercise its powers as assigned by KRS 154.90-015.

(2) The executive director shall keep all minutes, records, and orders of the corporation, and shall be responsible for the preservation of all the documents, which are public records subject to KRS 61.870 to 61.884.

(3) All revenues derived by the corporation from the use of the Northern Kentucky Convention Center, or contributions to the Northern Kentucky Convention Center from other sources as authorized in KRS 154.90-015 shall be used solely to defray the expenses of the Northern Kentucky Convention Center, including payment on debt; the cost of management and operation of its facilities; the creation of an adequate reserve for repair, replacement, debt service, and capital improvements; the procurance of insurance; and promotional activities. Any additional revenues derived by the corporation from any other source shall similarly be used solely for the purposes enumerated in this section. An annual audit of all funds of the corporation and its affiliated entities, if any, shall be made by the State Auditor of Public Accounts, and reported to the Governor.

Effective: July 14, 1992

History: Created 1992 Ky. Acts ch. 99, sec. 4, effective July 14, 1992.

Subchapter 99 Penalties Subchapter 99 Penalties

154.99-012 Repealed, 2004.

[Repealed]