AN ACT relating to tax increment financing.

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AN ACT relating to tax increment financing. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 154.30-010 is amended to read as follows: 3
As used in this subchapter: 4
(1) "Activation date" means: 5
(a) For all projects except those described in paragraph (b) of this subsection, the 6
date established any time within a two (2) year period after the 7
commencement date. The Commonwealth may extend the two (2) year period 8
to no more than four (4) years upon written application by the agency 9
requesting the extension; and 10
(b) For signature projects approved under KRS 154.30 -050(3)(a), the date 11
established any time within a ten (10) year period after the commencement 12
date. 13
For all projects established after July 14, 2018, the activation date is the date on 14
which the time period for the pledge of incremental revenues shall commence. To 15
implement the activation date, the minimum capital investment must be met and the 16
agency that is a party to the tax incentive agreement shall notify the office; 17
(2) "Agency" means: 18
(a) An urban ren ewal and community development agency established under 19
KRS Chapter 99; 20
(b) A development authority established under KRS Chapter 99; 21
(c) A nonprofit corporation; 22
(d) A housing authority established under KRS Chapter 80; 23
(e) An air board established under KRS 183.132 to 183.160; 24
(f) A local industrial development authority established under KRS 154.50 -301 25
to 154.50-346; 26
(g) A riverport authority established under KRS 65.510 to 65.650; or 27
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(h) A designated department, division, or office of a city or county; 1
(3) (a) "Approved public infrastructure costs" means costs associated with the 2
acquisition, installation, construction, or reconstruction of public works, 3
public improvements, and public buildings, including planning and design 4
costs associated with the development of the public amenities. 5
(b) "Approved public infrastructure costs" includes but is not limited to costs 6
incurred for the following: 7
1. Land preparation, including demolition and clearance work; 8
2. Buildings; 9
3. Sewers and storm drainage; 10
4. Curbs, sidewalks, promenades, and pedways; 11
5. Roads; 12
6. Street lighting; 13
7. The provision of utilities; 14
8. Environmental remediation; 15
9. Floodwalls and floodgates; 16
10. Public spaces or parks; 17
11. Parking; 18
12. Easements and rights-of-way; 19
13. Transportation facilities; 20
14. Public landings; 21
15. Amenities, including fountains, benches, and sculptures; and 22
16. Riverbank modifications and improvements; 23
(4) "Approved signature project costs" means: 24
(a) The acquisition of land for portions of the project that are for infrastructure; 25
and 26
(b) Costs associated with the acquisition, installation, development, construction, 27
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improvement, or reconstruction of infrastructure, including planning and 1
design costs a ssociated with the development of infrastructure, including but 2
not limited to parking structures, including portions of parking structures that 3
serve as platforms to support development above; 4
that have been determined by the commission to represent a un ique challenge in the 5
financing of a project such that the project could not be developed without 6
incentives intended by this chapter to foster economic development; 7
(5) "Authority" means the Kentucky Economic Development Finance Authority 8
established by KRS 154.20-010; 9
(6) "Capital investment" means: 10
(a) Obligations incurred for labor and to contractors, subcontractors, builders, and 11
materialmen in connection with the acquisition, construction, installation, 12
equipping, and rehabilitation of a project; 13
(b) The cost of acquiring land or rights in land within the development area on the 14
footprint of the project, and any cost incident thereto, including recording 15
fees; 16
(c) The cost of contract bonds and of insurance of all kinds that may be required 17
or necessar y during the course of acquisition, construction, installation, 18
equipping, and rehabilitation of a project which is not paid by the contractor 19
or contractors or otherwise provided; 20
(d) All costs of architectural and engineering services, including test bor ings, 21
surveys, estimates, plans, specifications, preliminary investigations, 22
supervision of construction, and the performance of all the duties required by 23
or consequent upon the acquisition, construction, installation, equipping, and 24
rehabilitation of a project; 25
(e) All costs that are required to be paid under the terms of any contract for the 26
acquisition, construction, installation, equipping, and rehabilitation of a 27
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project; and 1
(f) All other costs of a nature comparable to those described in this subsec tion 2
that occur after preliminary approval; 3
(7) "City" means any city, consolidated local government, or urban -county 4
government; 5
(8) "Commencement date" means the final approval date or the date on which a tax 6
incentive agreement is executed; 7
(9) "Commonwealth" means the Commonwealth of Kentucky; 8
(10) "County" means any county, consolidated local government, charter county, unified 9
local government, or urban-county government; 10
(11) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban 11
consumers, all items, base year computed for 1982 to 1984 equals one hundred 12
(100), published by the United States Department of Labor, Bureau of Labor 13
Statistics; 14
(12) "Department" means the Department of Revenue; 15
(13) "Development area" means an area esta blished under KRS 65.7049, 65.7051, and 16
65.7053; 17
(14) "Economic development projects" means projects which are approved for tax 18
credits under Subchapter 20, 22, 23, 24, 25, 26, 27, 28, 34, or 48 of KRS Chapter 19
154; 20
(15) "Financing costs" means principal, i nterest, costs of issuance, debt service reserve 21
requirements, underwriting discount, costs of credit enhancement or liquidity 22
instruments, and other costs directly related to the issuance of bonds or debt for 23
approved public infrastructure costs or approv ed signature project costs for projects 24
approved pursuant to KRS 154.30-050; 25
(16) "Footprint" means the actual perimeter of a discrete, identified project within a 26
development area. The footprint shall not include any portion of a development area 27
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outside the area for which actual capital investments are made and must be 1
contiguous; 2
(17) "Governing body" means the body possessing legislative authority in a city or 3
county; 4
(18) "Increment bonds" means bonds and notes issued for the purpose of paying the 5
costs of one (1) or more projects; 6
(19) "Incremental revenues" means: 7
(a) The amount of revenues received by a taxing district, as determined by 8
subtracting old revenues from new revenues in a calendar year with respect to 9
a development area, or a project within a development area; or 10
(b) The amount of revenues received by the C ommonwealth as determined by 11
subtracting old revenues from new revenues in a calendar year with respect to 12
the footprint; 13
(20) "Local participation agreement" means the agreement entered into under KRS 14
65.7063; 15
(21) "Local tax revenues" has the same meaning as in KRS 65.7045; 16
(22) "Modified new revenues for income tax" means the amount of individual income 17
tax included in state tax revenues that is: 18
(a) The result of multiplying the portion of state tax revenues from individual 19
income taxes by the modifier; 20
(b) Used for calculating state tax revenues in a calendar year beginning on or 21
after January 1, 2023[calendar years 2023 to 2026]; and 22
(c) For projects approved prior to January 1, 2023; 23
(23) "Modifier" means the result of dividing the individual income t ax rate of five 24
percent (5%), in effect as of December 31, 2022, by the individual income tax rate 25
under KRS 141.020 for the calendar year in which the new revenues for income tax 26
are being computed; 27
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(24) "New revenues" means: 1
(a) The amount of local tax r evenues received by a taxing district with respect to 2
a development area in any calendar year beginning with the year in which the 3
activation date occurred; and 4
(b) The amount of state tax revenues received by the Commonwealth with respect 5
to the footprint in any calendar year beginning with the year in which the 6
activation date occurred. 7
For projects approved prior to January 1, 2023, any state tax revenues received by 8
the Commonwealth from individual income tax shall be computed using modified 9
new revenues for income tax; 10
(25) "Old revenues" means: 11
(a) The amount of local tax revenues received by a taxing district with respect to 12
a development area as of December 31 of the year of preliminary approval; or 13
(b) 1. The amount of state tax revenues received by the Commonwealth within 14
the footprint as of December 31 of the year of preliminary approval. If 15
the authority determines that the amount of state tax revenues received 16
as of December 31 of the last calendar year prior to the commencement 17
of preliminary approval does not represent a true and accurate depiction 18
of revenues, the authority may consider revenues for a period of no 19
longer than three (3) calendar years prior to the year of preliminary 20
approval, so as to determine a fair representation of state t ax revenues. 21
The amount determined by the authority shall be specified in the tax 22
incentive agreement. If state tax revenues were derived from the 23
footprint prior to the year of preliminary approval, old revenues shall 24
increase each calendar year by: 25
a. The percentage increase, if any, of the CPI or a comparable index; 26
or 27
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b. An alternative percentage increase that is determined to be 1
appropriate by the authority. 2
The method for increasing old revenues shall be set forth in the tax 3
incentive agreement. 4
2. If state revenues were derived from the footprint prior to the year of 5
preliminary approval, the calculation of incremental revenues shall be 6
based on the value of old revenues as increased using the method 7
prescribed in subparagraph 1. of this paragraph to reflect the same 8
calendar year as is used in the determination of new revenues; 9
(26) "Outstanding" means increment bonds that have been issued, delivered, and paid 10
for by the purchaser, except any of the following: 11
(a) Increment bonds canceled upon surren der, exchange, or transfer, or upon 12
payment or redemption; 13
(b) Increment bonds in replacement of which or in exchange for which other 14
increment bonds have been issued; or 15
(c) Increment bonds for the payment, redemption, or purchase for cancellation 16
prior t o maturity, of which sufficient moneys or investments, in accordance 17
with the ordinance or other proceedings or any applicable law, by mandatory 18
sinking fund redemption requirements, or otherwise, have been deposited, and 19
credited in a sinking fund or with a trustee or paying or escrow agent, whether 20
at or prior to their maturity or redemption, and, in the case of increment bonds 21
to be redeemed prior to their stated maturity, notice of redemption has been 22
given or satisfactory arrangements have been made fo r giving notice of that 23
redemption, or waiver of that notice by or on behalf of the affected bond 24
holders has been filed with the issuer or its agent; 25
(27) "Preliminary approval" means the action taken by the authority preliminarily 26
approving an eligible project for incentives under this subchapter; 27
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(28) "Project" means any property, asset, or improvement located in a development area 1
and certified by the governing body as: 2
(a) Being for a public purpose; and 3
(b) Being for the development of facilities for residential, commercial, industrial, 4
public, recreational, or other uses, or for open space, including the 5
development, rehabilitation, renovation, installa tion, improvement, 6
enlargement, or extension of real estate and buildings; and 7
(c) Contributing to economic development or tourism; and 8
(d) Meeting the additional requirements established by KRS 154.30 -040, 154.30-9
050, or 154.30-060; 10
(29) "Signature project" means a project approved under KRS 154.30-050; 11
(30) "State real property ad valorem tax" means real property ad valorem taxes levied 12
under KRS 132.020(1)(a); 13
(31) "State tax revenues" means revenues received by the Commonwealth from one (1) 14
or more of the following sources: 15
(a) State real property ad valorem taxes; 16
(b) Individual income taxes levied under KRS 141.020, other than individual 17
income taxes that have already been pledged to support an economic 18
development project within the development area; 19
(c) Corporation income taxes levied under KRS 141.040, other than corporation 20
income taxes that have already been pledged to support an economic 21
development project within the development area; 22
(d) Limited liability entity taxes levied under KRS 141.0401, other than limited 23
liability entity taxes that have already been pledged to support an economic 24
development project within the development area; and 25
(e) Sales taxes levied under KRS 139.200, excluding sales taxes already pledged 26
for: 27
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1. Approved tourism attraction projects, as defined in KRS 148.851, within 1
the development area; and 2
2. Projects which are approved for sales tax refunds under Subchapter 20 3
of KRS Chapter 154 within the development area; 4
(32) "Tax incentive agreement" means an agreement entere d into in accordance with 5
KRS 154.30-070; and 6
(33) "Termination date" means: 7
(a) For a tax incentive agreement satisfying the requirements of KRS 154.30 -040 8
or 154.30 -060, a date established by the tax incentive agreement that is no 9
more than twenty (20) y ears from the activation date. However, the 10
termination date for a tax incentive agreement shall in no event be more than 11
forty (40) years from the establishment date of the development area to which 12
the tax incentive agreement relates; and 13
(b) For a project grant agreement satisfying the requirements of KRS 154.30 -050, 14
a date established by the tax incentive agreement that is no more than thirty 15
(30) years from the activation date. However, the termination date for a tax 16
incentive agreement shall in no eve nt be more than forty (40) years from the 17
establishment date of the development area to which the tax incentive 18
agreement relates. 19