Kentucky Product Development Initiative

KRS tit. XII, ch. 154, subch. 21

in effect

KRS 154.21-010 Legislative findings

154.21-010. Legislative findings The General Assembly finds and declares that the purpose of KRS 154.21-010 to 154.21- 040 is to support economic development and job growth across this Commonwealth. In enacting this legislation, it is the intention of the General Assembly to enable the Cabinet for Economic Development to enter into a partnership with the Kentucky Association for Economic Development for the purposes of this program, herein known as the Kentucky Product Development Initiative, and to administer program funds to achieve this purpose. Effective: July 14, 2022 History: Created 2022 Ky. Acts ch. 176, sec. 1, effective July 14, 2022.

KRS 154.21-015 Definitions for KRS 154.21-010 to 154.21-040

154.21-015. Definitions for KRS 154.21-010 to 154.21-040 As used in KRS 154.21-010 to 154.21-040: (1) "Cabinet" means the Cabinet for Economic Development; (2) "County population ranking" means the score of each county determined by the cabinet under KRS 154.21-017; (3) "Eligible grant recipient" means a grant applicant that is a local government or an economic development authority in an economic development district in this Commonwealth that is engaged in an eligible project; (4) "Eligible project": (a) Means an economic development project initiated on a property that meets the availability requirements in KRS 154.21-035(3); and (b) Requires local matching funds based on the county population ranking; (5) "Eligible use": (a) Means the authorized purpose for which an awarded grant may be used depending on the source of funds from the Commonwealth; and (b) May include expenditures in any of the following categories or some combination thereof: 1. Due diligence study; 2. Property acquisition; 3. Infrastructure extension or improvement; 4. Site preparation work; 5. Building construction or renovation; or 6. Road improvement; (6) "Heritage county" means a county where the county population ranking determined by the cabinet under KRS 154.21-017 scores greater than or equal to ninety-seven (97); (7) "Population density": (a) Means the number of persons per square mile of a county; (b) Is calculated by dividing the total county population by the square miles in the county; (c) Is determined by using the population estimate from the most recent available five (5) year American Community Survey as published by the United States Census Bureau; and (d) Is used to rank each county in descending order, with the county having the largest population density receiving a rank of one (1) and the county with the smallest population density receiving a rank of one hundred twenty (120); (8) "Regional project" means an eligible project that is proposed by eligible grant recipients residing in different counties in this Commonwealth who submit a single grant application as co-applicants; and (9) "Ten (10) year percentage change in population": (a) Means the percentage change in population within a county; (b) Is determined by comparing the population estimate from the most recent available five (5) year American Community Survey as published by the United States Census Bureau to the same survey ten (10) years prior to the most recent available survey; and (c) Is used to rank each county in descending order, with the county having the largest positive percentage change in population receiving a rank of one (1) and the county with the largest negative percentage change receiving a rank of one hundred twenty (120). Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 6, effective April 27, 2026. -- Amended 2024 Ky. Acts ch. 191, sec. 1, effective July 1, 2024. -- Amended 2023 Ky. Acts ch. 12, sec. 3, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 176, sec. 2, effective July 14, 2022.

KRS 154.21-017 Kentucky Product Development Initiative of 2024 -- Establishment -- Grant criteria -- County population ranking and local match for eligible projects -- Limitations -- Maximum amount -- Pooling of funds -- Report

154.21-017. Kentucky Product Development Initiative of 2024 -- Establishment -- Grant criteria -- County population ranking and local match for eligible projects -- Limitations -- Maximum amount -- Pooling of funds -- Report (1) The Kentucky Product Development Initiative of 2024 is hereby established under the cabinet. The cabinet shall partner with the Kentucky Association for Economic Development to administer the program. The cabinet's administration of the program includes: (a) Creating and making available a standardized grant application and regional grant application; (b) Adopting a standardized scoring system pursuant to KRS 154.21 -040; (c) Reviewing the applications and proposals submitted by the proposed grant recipients; (d) Verifying the eligibility of the proposed grant recipients; (e) Verifying that the proposed grant recipient seeks grant money for an eligible project prior to prioritizing all eligible projects; (f) Determining the county's population ranking under subsection (3) of this section; (g) Awarding grants to selected eligible grant recipients in multiple rounds of funding; and (h) Compiling and submitting the reports required by subsections (3) and (5) of this section. (2) Upon receipt of eligible grant recipients and eligible proj ect recommendations and prioritization from the Kentucky Association for Economic Development and the third-party independent site selection consultant, the cabinet shall verify and process the eligible grant recipients and eligible project recommendations with the intent to approve and award grants under the economic development fund program pursuant to KRS 154.12-100 and based on the following criteria: (a) Consideration of whether the eligible grant recipient had received a grant award from the Kentucky Product Development Initiative of 2022 under KRS 154.21-020; and (b) The matching funds for the selected grant recipient's contribution to its eligible project based on the county population ranking determined under subsection (3) of this section. (3) (a) On or before June 1, 2024, and no later than June 1 every two (2) years thereafter, the cabinet shall determine a county population ranking for each county by adding the following two (2) factors: 1. The population density ranking; and 2. The ten (10) year percentage change in population ranking. (b) The required local match for each county shall be as follows: 1. Eligible projects in counties where the county population ranking is greater than or equal to one hundred ninety-three (193) shall provide a minimum amount of local matching funds equal to ten percent (10%) of the project cost; 2. Eligible projects in counties where the county population ranking is less than one hundred ninety-three (193) but greater than or equal to one hundred forty-five (145) shall provide a minimum amount of local matching funds equal to twelve and one-half percent (12.5%) of the project cost; 3. Eligible projects in counties where the county population ranking is less than one hundred forty-five (145) but greater than or equal to ninety- seven (97) shall provide a minimum amount of local matching funds equal to fifteen percent (15%) of the project cost; 4. Eligible projects in counties where the county population ranking is less than ninety-seven (97) but greater than or equal to forty-nine (49) shall provide a minimum amount of local matching funds equal to seventeen and one-half percent (17.5%) of the project cost; 5. Eligible projects in counties where the county population ranking is less than forty-nine (49) shall provide a minimum amount of local matching funds equal to twenty percent (20%) of the project cost; and 6. For eligible projects requesting due diligence as an eligible use, the due diligence must be completed prior to acquisition of the site. If the due diligence result leads to the decision to not purchase the site, then the cabinet may expend up to two hundred thousand dollars ($200,000) with no local matching funds required. If the amount to be reimbursed by the cabinet exceeds two hundred thousand dollars ($200,000), the cabinet shall report to the Interim Joint Committee on Appropriations and Revenue, or the Senate Standing Committee on Appropriations and Revenue and the House Standing Committee on Appropriations and Revenue, within five (5) days of the disbursement. The report shall include the name and county location of the eligible project approved, the amount of the grant awarded, the amount of the funding disbursed for due diligence and the extenuating circumstances related to the due diligence study. (c) On or before July 1, 2024, and no later than July 1 every two (2) years thereafter, the cabinet shall report to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue the following information for each county: 1. The county name; 2. The population density ranking for that county; 3. The ten (10) year percentage change in population ranking for that county; and 4. The county population ranking for that county. (d) When awarding grants in this initiative, the cabinet shall not award grants to: 1. An eligible grant recipient or a group of eligible grant recipients in excess of the amount allocated to the county in which the county is located, except when pooled pursuant to subsection (4) of this section; or 2. An eligible grant recipient that received a grant award from the Kentucky Product Development Initiative of 2022 prior to all other eligible grant recipients receiving a grant award from the Kentucky Product Development Initiative of 2024 if the eligible project scores are equal to or above the score of an eligible project from an eligible grant recipient who received a grant award from the Kentucky Product Development Initiative of 2022 under KRS 154.21-040, and in the case where the scores are equal, discretion by the Kentucky Association for Economic Development and the cabinet shall be used. (e) The maximum funding available for an approved development project is two million five hundred thousand dollars ($2,500,000) in a heritage county and two million dollars ($2,000,000) in any other county, except as permitted by subsection (4) of this section. (f) If there are funds available after the first round of grant awards of the Kentucky Product Development Initiative of 2024, the cabinet shall initiate additional rounds of grant awards. (4) (a) For selected eligible grant recipients that are involved in a regional project, the cabinet may pool the potential allocation of funds available for each county represented by the eligible grant recipients for the grant amount awarded. (b) A county that is an eligible grant recipient involved in a regional project shall provide that county's local matching funds based on the county population ranking determined under subsection (3) of this section and each county's local matching funds may be pooled as described in paragraph (a) of this subsection. (5) Beginning no later than November 1, 2024, and annually thereafter until the authorized appropriation is spent or returned, the cabinet shall compile and submit a report for each application approved by the Kentucky Economic Development Finance Authority for the Kentucky Product Development Initiative of 2024. The report shall be electronically delivered to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue and contain the following information: (a) The name of the applicant, a description of the eligible project, and the location of each proposed project for which an application was approved; (b) The date the application was approved by the Kentucky Economic Development Finance Authority; (c) The amount of funding authorized for each project approved; (d) The total amount of funding disbursed for each project approved; and (e) The round of funding for which each project received approval. (6) The Kentucky Product Development Initiative of 2024 shall b egin July 1, 2024. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 7, effective April 27, 2026. -- Created 2024 Ky. Acts ch. 191, sec. 3, effective July 1, 2024.

KRS 154.21-020 Kentucky Product Development Initiative of 2022 -- Establishment -- Funds -- Maximum amount

154.21-020. Kentucky Product Development Initiative of 2022 -- Establishment -- Funds -- Maximum amount (1) The Kentucky Product Development Initiative of 2022 is hereby established under the cabinet. The cabinet shall partner with the Kentucky Assoc iation for Economic Development to administer the program. The cabinet's administration of the program includes but is not limited to the following: (a) Creating and making available a standardized grant application and regional grant application; (b) Adopting a standardized scoring system pursuant to KRS 154.21 -040; (c) Reviewing the applications and proposals submitted by the proposed grant recipients; (d) Verifying the eligibility of the proposed grant recipients; (e) Verifying that the proposed grant re cipient seeks grant money for an eligible project prior to prioritizing and recommending the eligible grant recipient and eligible project to the cabinet; (f) Awarding grants to selected eligible grant recipients in two (2) rounds of funding; and (g) Compiling and submitting the following information, no later than November 1, 2024, and annually thereafter until the authorized appropriation is spent or returned, for each application approved by the Kentucky Economic Development Finance Authority related to the Kentucky Product Development Initiative of 2022 to the Legislative Research Commission and the Interim Joint Committee on Appropriations and Revenue: 1. The name of the applicant, a description of the eligible project, and the location of each proposed project for which an application was received; 2. The date the application was approved by the Kentucky Economic Development Finance Authority; 3. The amount of funding authorized for each project approved; 4. The total amount of funding disbursed for each project approved; and 5. The round of funding for which each project received approval. (2) Upon receipt of eligible grant recipients and eligible project recommendations and prioritization from the Kentucky Association for Economic Development and the third-party independent site selection consultant, the cabinet shall verify and process the eligible grant recipients and eligible project recommenda tions with the intent to approve and award grants matching the selected grant recipient's contribution to its eligible project on a dollar -for-dollar basis, under the economic development fund program pursuant to KRS 154.12 -100. (3) (a) Prior to the first round of grant awards, the cabinet shall allocate a percentage of the total funds appropriated to this program by the General Assembly to each county in the Commonwealth. When awarding grants in the first round of funding, the cabinet shall not award grant s to an eligible grant recipient or a group of eligible grant recipients in excess of the amount allocated to the county in which it or they are located, except when pooled pursuant to subsection (4) of this section. The allocation shall be made according to the following calculations: 1. For all counties except Jefferson County, the percentage of the fund each county is eligible to receive shall be determined by each county's proportion of the state's population based on the most recent federal decennial census; 2. For Jefferson County, the percentage of the fund it shall be eligible to receive shall be determined by the county's proportion of the state's population based on the most recent federal decennial census, which shall be discounted by fifty percent (50%); and 3. The maximum funding available for an approved development project is two million dollars ($2,000,000) per county except as permitted by subsection (4) of this section. (b) If there are funds available after the first round of grant awards, the cabinet shall initiate a second round of grant awards through the Kentucky Product Development Initiative. Any remaining funds available for program use shall be pooled and available to eligible grant recipients from all counties on a first- come, first-served basis, but each county's eligible allocation shall not exceed two million dollars ($2,000,000) except as permitted by subsection (4) of this section. (4) For selected eligible grant recipients that are involved in a regional project, the cabinet may pool the potential allocation of funds available for each county represented by the eligible grant recipients for the grant amount awarded. For example, if a county that is eligible for up to ten percent (10%) of the program funds based on the calculations in subsection (3) of this section partners with a county that is eligible for five percent (5%) of the program funds based on the calculations in subsection (3) of this section, then the total allocation for the regional project that the cabinet may award is fifteen percent (15%). (5) Grant applicants that have received discretionary mega-development project funding shall be disqualified from participation in the Kentucky Product Development Initiative. Effective: July 1, 2024 History: Amended 2024 Ky. Acts ch. 191, sec. 2, effective July 1, 2024. -- Amended 2023 Ky. Acts ch. 12, sec. 4, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 176, sec. 3, effective July 14, 2022. Legislative Research Commission Note (7/1/2024). In subsection (1)(g)2. of this statute, a reference to "Kentucky Economic Development Authority" has been changed in codification to read "Kentucky Economic Development Finance Authority." The reviser of statutes has made this correction of a manifest clerical or typographical error under the authority of KRS 7.136. Legislative Research Commission Note (7/14/2022). See State/Executive Branch Budget, 2022 Ky. Acts ch. 199, Pt. I, B, 1, (12)(b) at 1655, which appropriated funds in fiscal years 2021-2022 and 2022-2023 to support the creation and implementation of the Kentucky Product Development Initiative and established an alternate allocation method for the 2022-2024 fiscal biennium.

KRS 154.21-025 Grant application -- Compliance

154.21-025. Grant application -- Compliance (1) (a) To participate in the Kentucky Product Development Initiative, grant applicants shall submit an application to the Kentucky Association for Economic Development that will be received by or shared with the third-party independent site selection consultant for review. (b) Grant applicants wishing to engage in a regional project shall submit a single application to the Kentucky Association for Economic Development that will be received by or shared with the third-party independent site selection consultant for review. (2) If a grant applicant is selected as an eligible grant recipient approved under the economic development fund program, it shall comply with any incentive agreements and reporting requirements deemed necessary by the cabinet to verify that the awarded grant goes toward an eligible use. (3) If the selected grant recipient fails to comply with subsection (2) of this section or uses the awarded grant money for any purpose other than an eligible use, the selected eligible grant recipient shall forfeit and be liable to the cabinet for the full award amount. Effective: July 14, 2022 History: Created 2022 Ky. Acts ch. 176, sec. 4, effective July 14, 2022.

KRS 154.21-030 Application processes -- Annual report

154.21-030. Application processes -- Annual report (1) In the implementation of the Kentucky Product Development Initiative, the Kentucky Association for Economic Development shall: (a) Process the grant applications; (b) Determine whether a grant applicant is an eligible grant recipient and seeking a grant for an eligible project; (c) Evaluate the project site cited or proposed by each grant applicant in accordance with the program's evaluation model described in KRS 154.21-035 and based on the criteria recommended by the third-party independent site selection consultant; (d) Score each grant applicant's project pursuant to the scoring system described in KRS 154.21-040; (e) Rank the grant applicants: 1. In a manner that prioritizes the greatest return on investment, workforce creation, and relative positive impact on the community; and 2. Based on the project site evaluation and subsequent project score described in KRS 154.21-035 and 154.21-040; (f) Compile a list of proposed grant recipients whose eligible project demonstrates a high level of investment potential if a grant is made, as revealed by the evaluation, scoring, and ranking process described in this section and KRS 154.21-035 and 154.21-040; (g) Submit the proposed grant recipients and their prioritization to the cabinet for final selection of the grant recipients; (h) Provide detailed feedback to all grant applicants after the project site evaluation and project score are completed; and (i) Compile an annual report for the cabinet conveying the following information about the program: 1. A list of all program applicants; 2. The identity of applicants who were not selected for recommendation; 3. Trends found in feedback given to applicants who were not selected for recommendation; 4. Eligible uses of the properties cited in the grant applications; and 5. Any other information requested by the cabinet. (2) The Kentucky Association for Economic Development shall contract with a third- party independent site selection consultant to assist with the grant applicant site evaluations, scoring, prioritization, and recommendations described in this section and KRS 154.21-035 and 154.21-040. Effective: July 14, 2022 History: Created 2022 Ky. Acts ch. 176, sec. 5, effective July 14, 2022. Legislative Research Commission Note (7/14/2022). In codification, a correction has been made to subsection (1)(c) of this statute. 2022 House Bill 745, Section 5, which created this statute, contained a reference in subsection (1)(c) to "Section 7 of this Act," which has been codified as KRS 154.21-040. However, it is clear from the text and context that the reference was intended to read "Section 6 of this Act," which has been codified as KRS 154.21-035. Under the authority of KRS 7.136, the Reviser of Statutes has corrected this reference.

KRS 154.21-035 Evaluation criteria -- Availability -- Developable property -- Zoning -- Transportation -- Utilities

154.21-035. Evaluation criteria -- Availability -- Developable property -- Zoning -- Transportation -- Utilities (1) The Kentucky Association for Economic Development shall evaluate each applicant's eligible project according to the criteria describe d in this section and KRS 154.21-040 for the purposes of compiling a recommendation and score for the eligible project and project site pursuant to KRS 154.21 -040. (2) The Kentucky Association for Economic Development and the third -party independent site selection consultant shall consider the requirements in the following five (5) categories in the evaluation of proposed projects: (a) Property availability as described in subsection (3) of this section; (b) Property development ability as described in subs ection (4) of this section; (c) Zoning availability as described in subsection (5) of this section; (d) Transportation accessibility as described in subsection (6) of this section; and (e) Utility adequacy as described in subsection (7) of this section. (3) The property that the eligible project occupies or is proposed to occupy shall be available. Property shall be deemed available for the purposes of this program: (a) If the property is publicly owned; or (b) If the project's eligible use includes property acquisition or a due diligence study. In this situation the application shall include one (1) of the following: 1. A legally binding letter of intent or option for the sale to an eligible grant recipient; or 2. An agreement for the sale to an eligible recipient. (4) The property that the eligible project occupies or is proposed to occupy shall be developable. Property shall be deemed developable if: (a) The acreage intended for development is clearly defined by either: 1. The grant applicant; or 2. An engineering partner during or after a site visit, if the applicant is unable to define the developable acreage; and (b) The property is free of impediments to development, or a known impediment can be mitigated by a grant applicant. A property is free of impediments if it: 1. Is located outside of the one hundred (100) year and five hundred (500) year flood zone; 2. Is free of recognized environmental conditions; 3. Is free of wetlands; 4. Is free of state and federally threatened and endangered species; 5. Is free of areas of archaeological or historical significance; and 6. Possesses soils compatible with the grant applica nt's intended development. (5) The property that the eligible project occupies or is proposed to occupy shall be appropriately zoned for the intended use or shall be able to be rezoned within ninety (90) calendar days. The properties surrounding the grant applicant's project site shall be zoned so they are compatible with the grant applicant's intended development and use of the project site. (6) The property that the eligible project occupies or is proposed to occupy shall be directly served by a road or roads that are compatible with the intended use of the property. Additionally, if the property is marketed as rail-served, the property shall be deemed rail-served if: (a) The grant applicant provides documentation from the rail provider that evinces that rail infrastructure exists and the rail provider actually provides rail service; or (b) If the rail service does not exist at the time of the grant application, the grant applicant provides documentation from the rail provider that evinces that the project site will be able to be rail-served within twelve (12) months. (7) The property that the eligible project occupies or is proposed to occupy shall have access to adequate utilities and shall be served or able to be served by the following: (a) Electric infrastructure; (b) Natural gas or propane; (c) Water infrastructure and a public water system; (d) Wastewater infrastructure and a public wastewater treatment plant, excluding a septic wastewater treatment system; and (e) Fiber telecommunications infrastructure. Effective: April 27, 2026 History: Amended 2026 Ky. Acts ch. 198, sec. 8, effective April 27, 2026. -- Amended 2024 Ky. Acts ch. 191, sec. 4, effective July 1, 2024. -- Amended 2023 Ky. Acts ch. 12, sec. 5, effective June 29, 2023. -- Created 2022 Ky. Acts ch. 176, sec. 6, effective July 14, 2022.

KRS 154.21-040 Scoring system

154.21-040. Scoring system (1) In the administration of the Kentucky Product Development Initiative, the Kentucky Association for Economic Development, via a third-party independent site selection consultant, shall develop a scoring system for the project and the project site proposed by each grant applicant based on the total projected return on investment, key workforce characteristics, and the relative positive impact in the community. (2) The scoring system shall include: (a) A score in each category as specified in subsection (3) of this section; and (b) A total weighted score, which is the average of the scores in each category. (3) The scoring categories shall include but are not limited to: (a) Projected return on investment the project will yield, which includes an assessment of the: 1. Likelihood of project completion at the applicant's proposed site, both with the cabinet's funding and without; 2. Projected gross economic impact of the proposed project on the community; 3. Projected number of jobs created by the proposed project and subsequent impact on the community; and 4. A determination of the cost of the job based on the cost expended by the cabinet if it awards the requested grant amount to the applicant; (b) Key workforce characteristics, including an assessment of objective workforce data for the community in which the project is located; and (c) Relative positive impact the project will have on the surrounding community. Effective: July 14, 2022 History: Created 2022 Ky. Acts ch. 176, sec. 7, effective July 14, 2022.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=51875Fetched: 10/20/2026