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AN ACT relating to housing districts. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
SECTION 1. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 3
READ AS FOLLOWS: 4
As used in Sections 1 to 6 of this Act: 5
(1) "Developer" means one (1) or more persons or entities that petition a local 6
government for the establishment of a district under Section 2 of this Act, and 7
that are responsible for the development of residential property within a district; 8
(2) "Establishing ordinance" means an ordinance of a local government 9
establishing a district under Section 2 of this Act; 10
(3) "Infrastructure" means: 11
(a) The streets, roads, bridges, sidewalks, water, wastewater, natural gas, 12
electric, telecommunications, and storm water facilities required for the 13
development of residential property within a district, whether located within 14
or without the district, that benefit the properties within the district; and 15
(b) The land within the boundaries of the district required to be donated, 16
dedicated, or otherwise made available to a local government for public 17
purposes; 18
(4) "Infrastructure costs" means: 19
(a) All costs that may be capitalized under generally accepted accounting 20
principles for purchasing, constructing, installing, and equipping 21
infrastructure; 22
(b) The fees or costs imposed by a municipality or utility service provider: 23
1. Related to the construction or installation of infrastructure; or 24
2. As a condition to the delivery of utility services to properties within a 25
district; and 26
(c) The cost of any land required to be donated, dedicated, or otherwise made 27
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available to a governmental ent ity for public purposes, which land shall be 1
valued at either the developer's demonstrated cost or, if the value of the land 2
has subsequently been appraised, its appraised value, whichever is higher; 3
(5) "Initiating petition" means a petition submitted to a local government requesting 4
the establishment of a district under Section 2 of this Act; 5
(6) "Local government" means a city, county, consolidated local government, urban -6
county government, charter county government, or unified local government that 7
establishes and operates a district under Sections 1 to 6 of this Act; 8
(7) "Owner" means the owner of record of a parcel of property within a district or 9
the owner's authorized representative; 10
(8) "Residential infrastructure development district" or "district " means an area 11
that: 12
(a) Is composed of five (5) or more acres of land; 13
(b) Requires a capital cost to complete development that is equal to or greater 14
than five million dollars ($5,000,000); 15
(c) Upon its complete development will have more than one -half (1/2) of its 16
space dedicated to residential housing; and 17
(d) Is established under Sections 1 to 6 of this Act; and 18
(9) "Special assessment" means a special charge levied by a local government on 19
property to finance infrastructure costs under Sections 1 to 6 of this Act. 20
SECTION 2. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 21
READ AS FOLLOWS: 22
(1) A residential infrastructure development district shall be established as follows: 23
(a) The developer and each owner of property proposed to be included in a 24
district shall sign an initiating petition requesting the establishment of a 25
district, which shall be submitted to a local government. The initiating 26
petition shall set forth: 27
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1. The name and address of the developer; 1
2. The local government to be responsible for overseeing the district; 2
3. A map and description of the area to be included within the district; 3
4. A list of each parcel of property to be included within the district that 4
contains each parcel's mailing address; 5
5. A site development plan for the district showing the area in the district 6
that is anticipated to be used for residential housing; 7
6. A description of the infrastructure that the developer anticipates will 8
be necessary to complete the development and an estimated cost of that 9
infrastructure; 10
7. The cost that the developer anticipates is necessary to complete the 11
development; 12
8. The proposed rate of the special assessment to be imposed; 13
9. That the developer or owner of property to be included within the 14
district has received the approval set out in paragraph (b) of this 15
subsection, if applicable; and 16
10. A formal request that the local government establish the district; 17
(b) If a mortgage or lien encumbers a parcel of property to be included within 18
the district, the developer or owner of the property shall obtain a signed 19
approval from the mortgage holder or lien holder before the property may 20
be included in the district. If the mortgage holder or lien holder does not 21
grant the approval, the property shall not be included within the district; 22
(c) Upon receipt of the initiating petition a local government shall, within 23
ninety (90) days, appro ve or deny the petition. The decision to approve or 24
deny a petition is solely at the discretion of the local government. To 25
approve a petition a local government shall: 26
1. Determine whether the petition contains the information required in 27
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paragraph (a) of this subsection; 1
2. Conduct a public hearing concerning the proposed establishment of 2
the district, notice of which shall be provided in the usual method of 3
providing notice of a public meeting and shall also include mailed, 4
written notices to each proper ty owner whose property is proposed to 5
be included in the district; and 6
3. Adopt an establishing ordinance that contains: 7
a. The name and address of the developer; 8
b. The local government responsible for overseeing the district; 9
c. A map and description of the area to be included within the 10
district; 11
d. A list of each parcel of property to be included within the district 12
that contains each parcel's mailing addresses; 13
e. A statement that the properties in the district may be subject to a 14
special assessment; 15
f. A description of the infrastructure that the local government has 16
authorized to be financed via a special assessment; 17
g. A description of the method of assessing and collecting special 18
assessments under Section 4 of this Act; 19
h. The time and manner in w hich the special assessment shall be 20
paid; and 21
i. The portion of the special assessment to be retained by the local 22
government for the payment of administrative expenses under 23
Section 4 of this Act; and 24
(d) The establishing ordinance may differ from the in itiating petition, but the 25
local government shall endeavor to negotiate with the developer and the 26
owners of any property to be included within the district regarding 27
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differences between the initiating petition and the establishing ordinance 1
prior to its passage. 2
(2) A property owner that signs a petition pursuant to subsection (1)(a) of this section 3
shall not be permitted to remove the property owner's name from the petition. 4
(3) Each district established under Sections 1 to 6 of this Act shall be dissolve d by the 5
local government immediately upon the payment and discharge of all outstanding 6
debt obligations incurred as a result of infrastructure costs for the district. 7
SECTION 3. A NEW SECTION OF KRS CHAPTER 65 IS CREATE D TO 8
READ AS FOLLOWS: 9
(1) A local government shall have the power to issue bonds, notes, or other debt 10
obligations for the purpose of any of the following: 11
(a) Paying infrastructure costs identified in the establishing ordinance; 12
(b) Reimbursing the develo per for the payment of prior infrastructure costs 13
identified in the establishing ordinance; or 14
(c) Refinancing those bonds, notes, or obligations consistent with applicable 15
law. 16
(2) A local government shall use revenue collected from special assessments levied 17
under Section 4 of this Act for the payment of any bond, note, or other obligation 18
issued pursuant to this section. 19
(3) The maximum term of any bonds, notes, or other debt oblig ations issued under 20
this section shall not exceed thirty (30) years from the date of first issuance. 21
SECTION 4. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 22
READ AS FOLLOWS: 23
(1) Upon the adoption of an establishing ordinance, a local government is authorized 24
to levy special assessments against all properties located in a district. The revenue 25
collected from special assessments shall be applied to infrastructure costs 26
identified in the establishing ordinance and may be ap plied to administrative 27
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costs under subsection (4) of this section. 1
(2) The local government shall determine the total costs and expenses to be paid from 2
special assessments, and apportion those costs and expenses upon the various 3
properties located in the district in accordance with the benefits conferred upon 4
the properties. In determining the benefits to each property, the local government 5
may consider factors regarding the property, including: 6
(a) Frontage to infrastructure; 7
(b) Total area; and 8
(c) Proportion that the assessed value of each property has to the total property 9
in the district. 10
(3) A local government that levies a special assessment under this section shall 11
impose and collect the special assessment annually. 12
(4) A local government may provi de that up to five percent (5%) of the revenue 13
collected from a special assessment may be used for its administrative expenses, 14
including overhead costs associated with the collection of the special assessment. 15
(5) A local government shall prepare an asses sment roll that lists the address and 16
owner of each property in the district and the assessed value of the property, and 17
shall update the roll whenever property listed on the roll is subdivided or its value 18
is reassessed. 19
(6) If a property owner fails to p ay a special assessment on or before the date 20
determined by the local government, interest of one percent (1%) per month and a 21
penalty of one percent (1%) per month shall be added to the assessment. 22
SECTION 5. A NEW SECT ION OF KRS CHAPTER 65 IS CREATED TO 23
READ AS FOLLOWS: 24
(1) A special assessment, any interest accruing on the assessment, and the costs of 25
collection of the assessment under Section 4 of this Act constitute a lien on the 26
property upon which the assessment is levied. The lien shall be superior to a lien 27
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of any trust deed, mortgage, mechanic's lien, or other encumbrance, but shall not 1
be superior to any lien for the payment of taxes or a lien established pursuant to 2
KRS 65.8835. 3
(2) Amounts collected by a local government shall not be allocated to the payment of 4
a special assessment until all taxes, penalties, and interest relating to ad valorem 5
taxes imposed by any governmental entity have been paid in full. 6
(3) If any special assessment is or becomes delinquent and the property subject to the 7
assessment has been sold to the local government as a result of the delinquency, 8
redemption of that property is allowed upon payment, not later than one (1) year 9
after the date of sale, of the full amount of assessments du e, plus interest and 10
penalties. 11
SECTION 6. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 12
READ AS FOLLOWS: 13
(1) A residential infrastructure development district may be formed by two (2) or 14
more local governments acting jointly. 15
(2) Each local government acting jointly to establish a district shall enter into an 16
interlocal agreement in accordance with KRS 65.210 to 65.300 concerning the 17
district. 18
(3) Each local government acting jointly to establish a district shall follow the 19
procedures set out in Section 2 of this Act, but may satisfy the public hearing 20
requirement set out in subsection (1)(c)2. of Section 2 of this Act by conducting a 21
single joint public hearing. 22
(4) Prior to the completion of establishing ordinances, lo cal governments acting 23
jointly shall determine which local government will be responsible for the 24
specified infrastructure costs and the collection of any special assessments 25
authorized under Section 4 of this Act. This information shall be provided in the 26
establishing ordinance and the interlocal agreement. 27
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SECTION 7. A NEW SECTION OF KRS CHAPTER 65 IS CREATED TO 1
READ AS FOLLOWS: 2
(1) As used in this section: 3
(a) "Approved project" means a project for which the developer has: 4
1. Filed an application under subsection (6) of this section; 5
2. Negotiated the terms of housing incentive payments with a local 6
government; and 7
3. Commenced a housing development within a district; 8
(b) "Cabinet" means the Cabinet for Economic Development; 9
(c) "Department" means the Department for Local Government; 10
(d) "Housing development district" or "district" means a contiguous 11
geographic area of not more than one thousand (1,000) acres, no more than 12
twenty percent (20%) of which may be land zoned for agricultural use upon 13
the adoption of an establishing ordinance, which may be within one (1) or 14
more cities or counties, defined and created for development or 15
revitalization purposes by an ordinance of a local government in which one 16
(1) or more projects are proposed to be located; 17
(e) "Local government" means a city, county, charter county government, 18
consolidated local government, urban -county government, or unified local 19
government; 20
(f) "New constructi on" means the planning, design, building, or any 21
combination of these, to erect a completely new structure never before 22
occupied within a district; 23
(g) "Program" means the Housing Incentive Payment Program provided for in 24
this section; 25
(h) "Project" means a housing development within a district that: 26
1. Contains at least fifteen (15) housing units, including multifamily and 27
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mixed-use housing; and 1
2. Meets the requirements set out in this section and any additional 2
requirements adopted by an ordinance of a local government; 3
(i) "Revitalization" means the planning or replanning, design or redesign, 4
acquisition, clearance, development, disposal, rehabilitation, historic 5
preservation, or any combination of these, of a structure within a district 6
and the preparation and use of the structure for residential purposes; and 7
(j) "Taxing authority" means a school district or a special purpose 8
governmental entity having ad valorem taxing authority and operating 9
within the jurisdiction of a local government that has established a district. 10
(2) (a) A local government may establish a housing development district by: 11
1. Adopting an ordinance containing: 12
a. A map and description of the area to be included within the 13
district; 14
b. A description of the process by which a develope r may apply to 15
construct housing within the district; 16
c. A statement regarding whether development within the district 17
is: 18
i. Exempt from permitting or review by the planning unit; or 19
ii. Subject to an alternative process for permitting or review 20
except in no instance shall an alternative process be more 21
stringent than the procedure utilized outside of the district 22
for similar developments; and 23
d. Any additional requirements or qualifications that developers 24
must meet to be eligible for participation in the program; 25
2. Notifying the cabinet and the department that a district has been 26
created and transmitting information as required in subsection (10) of 27
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this section; and 1
3. Providing notice by certified mail to each owner of record of property 2
proposed to be included within the district that: 3
a. The property is proposed to be included within the district; and 4
b. The owner may exclude the property from the district as set out 5
in paragraph (c)1. of this subsection. 6
(b) A developer may petition a local government to establish a district. 7
(c) A local government shall: 8
1. Exclude a parcel of property from a proposed district if the local 9
government receives a written request from a property owner seeking 10
exclusion within th irty (30) days of the adoption of an ordinance 11
under paragraph (a) of this subsection; and 12
2. Amend the map and description of the district accordingly. 13
(3) (a) If a local government chooses to utilize the exemption to planning and 14
zoning or alternative pr ocess under subsection (2)(a)1.c. of this section, the 15
local government shall conduct a public hearing regarding the exemption 16
or alternative process, and a separate vote of the legislative body of the local 17
government shall be required to adopt the exemption or alternative process. 18
(b) The meeting shall be held solely for this purpose, and no other business 19
shall be conducted at the meeting. 20
(4) (a) Local governments may act jointly, via an interlocal agreement in 21
accordance with KRS 65.210 to 65.300, to establish a district. 22
(b) The interlocal agreement shall contain the information set out in subsection 23
(2) of this section, and each participating local government shall be 24
required to adopt an ordinance as set out in subsection (2) of this section. 25
(5) (a) In addition to a local government, any taxing authority may elect to 26
participate in the program by its board enacting a resolution declaring its 27
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election to participate. 1
(b) If a taxing authority elects to participate under paragraph (a) of this 2
subsection, the taxing authority shall proceed to negotiate with the 3
developer as described in subsection (6)(c) of this section. 4
(6) (a) Following the creation of a district, a local government may accept 5
applications from developers for a project. 6
(b) A local go vernment shall have the sole discretion to approve or deny an 7
application, but a local government shall not approve a project unless it 8
determines that the project will not commence unless the developer receives 9
the housing incentive payment set out in subsection (7) of this section. 10
(c) If a local government approves an application, it shall: 11
1. Negotiate with the developer to: 12
a. Determine a percentage of the property tax actually paid in any 13
year that will be used to calculate the housing incentive payme nt 14
described in subsection (7) of this section; 15
b. Set the duration of the housing incentive payments, not to exceed 16
the maximum terms set out in subsection (7) of this section; 17
c. Define when the project shall be considered to have commenced 18
for the purposes set out in subsection (7) of this section; and 19
d. Establish the timing for the housing incentive payments; and 20
2. After agreeing to the terms set out in subparagraph 1. of this 21
paragraph, transmit the application along with a document setting out 22
those terms to the cabinet and the department. 23
(d) An application under this subsection shall not be required for a developer 24
seeking to develop housing within a district if that developer is not seeking 25
to participate in the program. An application shall only be required if a 26
developer is seeking to participate in the program. This section shall not be 27
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construed to permit a local government to prohibit a developer from 1
developing housing within the district that would otherwise be permissible 2
outside of the district or in the absence of the existence of a district. 3
(7) A Housing Incentive Payment Program shall be administered as follows: 4
(a) Participating local governments and participating taxing authorities shall 5
each award a housing incentive payment to a dev eloper of an approved 6
project on an annual basis for a period of up to: 7
1. Seven (7) years for a project involving new construction; or 8
2. Fifteen (15) years for a project solely involving revitalization of 9
structures; 10
beginning six (6) months from the commencement of the project as 11
determined under subsection (6)(c)1.c. of this section; 12
(b) The annual housing incentive payment from each participating local 13
government and taxing authority shall be calculated by first determining the 14
total property tax th at was actually paid in the preceding year to each 15
participating local government and taxing authority for each parcel of 16
property included in an approved project which has been issued a certificate 17
of occupancy, and applying the percentage agreed to by th e participating 18
local governments, other taxing authorities if applicable, and the developer 19
as set out in subparagraph (6)(c)1. of this section; and 20
(c) Any private or nonprofit entity may contribute money to a local government 21
to award as additional housing incentive payment amounts for a project 22
within a district. 23
(8) A local area development district shall, upon the request of a local government, 24
assist with the establishment of a district under this section and with the 25
administration of a program under subsection (7) of this section. 26
(9) (a) The cabinet shall develop and implement strategies and programs to 27
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promote awareness of a program operating unde r this section among 1
businesses and employers it provides services to or conducts business with. 2
(b) When the cabinet engages with a company regarding participation in any 3
incentive or funding program administered by the cabinet, including when 4
it initial ly communicates with, receives an application from, and approves 5
funding to, any company, it shall provide to the company information 6
regarding: 7
1. The program set out in this section, including a list of local 8
governments that have established districts and implemented programs 9
under this section; and 10
2. The Certified Child Care Community Designation Program under 11
KRS 199.891, including a list of communities that have obtained that 12
designation. 13
(c) The cabinet shall prepare and post a report to the website required in KRS 14
154.12-2035, on November 1 of each year, that contains a list of the local 15
governments that have established districts and implemented programs 16
under this section and a list of communities that have obtained the certified 17
child care commun ity designation under KRS 199.891, and information 18
regarding the cabinet's engagement with companies including the total 19
number of contacts made under paragraph (b) of this subsection. 20
(10) (a) When a local government establishes a district, and no later t han each 21
September 1 thereafter, the local government shall transmit information to 22
the cabinet and the department including: 23
1. Whether the district has been established jointly with any other local 24
government, and if so which other local governments; 25
2. A map and description of the area included in the district; 26
3. The density of housing units per acre in the district; 27
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4. The total number of developers that have applied for participation in 1
the program including the number approved and denied; 2
5. The total number of projects in the program; 3
6. For each approved project: 4
a. The name of the developer of the approved project; 5
b. The total assessed value of property that is a part of the approved 6
project; 7
c. The total number of housing units that have been con structed in 8
connection with the approved project; 9
d. The total amount of housing incentive payments that have been 10
made in connection with the approved project; 11
e. The duration of the housing incentive payments that the local 12
government has agreed to make to the developer; 13
f. The identity of any other taxing authority that has participated in 14
the approved project and the total amount of housing incentive 15
payments issued from each taxing authority; and 16
g. The identity of any private or nonprofit entities th at have 17
participated in the approved project and the total amount of 18
housing incentive payments from each entity; 19
7. A running total of the amount of funds all participating local 20
governments have expended on all approved projects within the 21
district; 22
8. A running total of the number of housing units constructed in the 23
district by a developer that has received housing incentive payments; 24
and 25
9. Whether the local government has obtained a certified child care 26
community designation. 27
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(b) Beginning November 1, 2027, the department shall submit an annual report 1
to the Legislative Research Commission for referral to the Interim Joint 2
Committee on Appropriations and Revenue summarizing the information it 3
has received from local governments under paragraph (a) of th is 4
subsection. 5
(c) The department may promulgate administrative regulations in accordance 6
with KRS Chapter 13A to carry out this subsection, including the creation 7
of a standardized form to be used by local governments to submit 8
information. 9
(d) A local government shall not be required to submit any further information 10
on an approved project following the disbursement of the final housing 11
incentive payment associated with that project. 12
(11) This section shall not be construed to prohibit or preempt a local government 13
from ado pting any other ordinance or regulation or establishing any other 14
program, including an incentive program, concerning housing development. 15