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Tax Increment Financing

KRS tit. XII, ch. 154, subch. 30
in effect

KRS 154.30-010 Definitions for subchapter. (Effective until January 1, 2027)

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 desi gn 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 in dex; 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 th e 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 determinat ion 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.

KRS 154.30-020 Findings of General Assembly relative to development areas and projects

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.

KRS 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

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 3. of this paragraph; 6. 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.

KRS 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

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.

KRS 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

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 subsecti on (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 minimu m 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 rel eased 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 req uired 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 inc entive 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 permitt ed 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 pr ojects 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 wit h 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.

KRS 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

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 t wenty 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 th e 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 sha ll: (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 c ertification 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 overa ll 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).

KRS 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

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.

KRS 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

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.

KRS 154.30-090 Annual disbursement of tax incremental revenues

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.
Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=37790Fetched: 10/20/2026

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