Financing of Rural Economic Development

KRS tit. XII, ch. 154, subch. 22

in effect

KRS 154.22-010 Definitions for KRS 154.22-010 to 154.22-080

154.22-010. Definitions for KRS 154.22-010 to 154.22-080 The following words and terms as used in KRS 154.22-010 to 154.22-080, unless the context clearly indicates a different meaning, shall have the following meanings: (1) "Activation date" means a date selected by an approved company in the tax incentive agreement at any time within a two (2) year period after the date of final approval of the tax incentive agreement by the authority; (2) "Affiliate" means the following: (a) Members of a family, including only brothers and sisters of the whole or half blood, spouse, ancestors, and lineal descendants of an individual; (b) An individual, and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for that individual; (c) An individual, and a limited liability company of which more than fifty percent (50%) of the capital interest or profits are owned or controlled, directly or indirectly, by or for that individual; (d) Two (2) corporations which are members of the same controlled group, which includes and is limited to: 1. One (1) or more chains of corporations connected through stock ownership with a common parent corporation, if: a. Stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned by one (1) or more of the other corporations; and b. The common parent corporation owns stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of at least one (1) of the other corporations, excluding, in computing the voting power or value, stock owned directly by the other corporations; or 2. Two (2) or more corporations, if five (5) or fewer persons who are individuals, estates, or trusts own stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each person only to the extent the stock ownership is identical with respect to each corporation; (e) A grantor and a fiduciary of any trust; (f) A fiduciary of a trust and a fiduciary of another trust, if the same person is a grantor of both trusts; (g) A fiduciary of a trust and a beneficiary of that trust; (h) A fiduciary of a trust and a beneficiary of another trust, if the same person is a grantor of both trusts; (i) A fiduciary of a trust and a corporation more than fifty percent (50%) in value of the outstanding stock of which is owned, directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust; (j) A fiduciary of a trust and a limited liability company more than fifty percent (50%) of the capital interest, or the interest in profits, of which is owned directly or indirectly, by or for the trust or by or for a person who is a grantor of the trust; (k) A corporation, a partnership, and a limited partnership, if the same persons own: 1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and 2. More than fifty percent (50%) of the capital interest, or the profits interest, in the partnership or limited partnership; (l) A corporation and a limited liability company, if the same persons own: 1. More than fifty percent (50%) in value of the outstanding stock of the corporation; and 2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company; (m) A partnership, limited partnership, and a limited liability company, if the same persons own: 1. More than fifty percent (50%) of the capital interest or profits in the partnership or limited partnership; and 2. More than fifty percent (50%) of the capital interest or the profits in the limited liability company; (n) An S corporation and another S corporation, if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation, S corporation designation being the same as that designation under the Internal Revenue Code of 1986, as amended; or (o) An S corporation and a C corporation, if the same persons own more than fifty percent (50%) in value of the outstanding stock of each corporation; S and C corporation designations being the same as those designations under the Internal Revenue Code of 1986, as amended; (3) "Agribusiness" means any activity involving the processing of raw agricultural products, including timber, or the providing of value-added functions with regard to raw agricultural products; (4) "Approved company" means any eligible company seeking to locate an economic development project in a qualified county, which eligible company is approved by the authority pursuant to KRS 154.22-010 to 154.22-080; (5) "Approved costs" means: (a) Obligations incurred for labor and to contractors, subcontractors, builders, and materialmen in connection with the acquisition, construction, installation, equipping, and rehabilitation of an economic development project; (b) The cost of acquiring land or rights in land and any cost incidental thereto, including recording fees; (c) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, installation, equipping, and rehabilitation of an economic development project which is not paid by the contractor or contractors or otherwise provided for; (d) All costs of architectural and engineering services, including test borings, surveys, estimates, plans and specifications, preliminary investigations, and supervision of construction, as well as for the performance of all the duties required by or consequent upon the acquisition, construction, installation, equipping, and rehabilitation of an economic development project; (e) All costs which shall be required to be paid under the terms of any contract or contracts for the acquisition, construction, installation, equipping, and rehabilitation of an economic development project; and (f) All other costs of a nature comparable to those described above; (6) "Assessment" means the job development assessment fee authorized by KRS 154.22-010 to 154.22-080; (7) "Authority" means the Kentucky Economic Development Finance Authority as created in KRS 154.20-010; (8) "Average hourly wage" means the wage and employment data published by the Department of Workforce Development in the Education and Labor Cabinet collectively translated into wages per hour based on a two thousand eighty (2,080) hour work year for the following sectors: (a) Manufacturing; (b) Transportation, communications, and public utilities; (c) Wholesale and retail trade; (d) Finance, insurance, and real estate; and (e) Services; (9) "Commonwealth" means the Commonwealth of Kentucky; (10) (a) "Economic development project" means and includes: 1. The acquisition of ownership in any real estate in a qualified county by the authority, the approved manufacturing or agribusiness company, or its affiliate; 2. The present ownership of real estate in a qualified county by the approved manufacturing or agribusiness company or its affiliate; 3. The acquisition or present ownership of improvements or facilities, as described in paragraph (b) of this subsection, on land which is possessed or is to be possessed by the approved manufacturing or agribusiness company pursuant to a ground lease having a term of sixty (60) years or more; 4. The new construction of an electric generation facility; and 5. The legal possession of facilities by an approved company or its affiliate pursuant to a lease having a term equal to or greater than fifteen (15) years with a third-party entity, negotiated at arm's length, if the facility will be used by the approved company to conduct the approved activity for which the inducement has been granted. An economic development project qualifying under this subparagraph shall only be eligible for credits against equipment and costs related to installation of equipment and for purposes of the tax credits provided under the provisions of KRS 154.22-010 to 154.22-080 only to the extent of twenty thousand dollars ($20,000) per job created by and maintained at the economic development project. Notwithstanding KRS 154.22-050(8) and 154.22-060, an economic development project qualifying under this subparagraph shall be eligible only for the aggregate assessments pursuant to KRS 154.22-070 withheld by the approved company each year and shall not be eligible for credit against Kentucky income tax and limited liability entity tax. (b) For purposes of paragraph (a)1. and 2. of this subsection, ownership of real estate shall only include fee ownership of real estate and possession of real estate pursuant to a capital lease as determined in accordance with Statement of Financial Accounting Standards No. 13, Accounting for Leases, issued by the Financial Accounting Standards Board, November 1976. With respect to paragraph (a)1., 2., and 3. of this subsection or this paragraph, the construction, installation, equipping, and rehabilitation of improvements, including fixtures and equipment, and facilities necessary or desirable for improvement of the real estate, including surveys; site tests and inspections; subsurface site work; excavation; removal of structures, roadways, cemeteries, and other surface obstructions; filling, grading, and provision of drainage, storm water retention, installation of utilities such as water, sewer, sewage treatment, gas, electricity, communications, and similar facilities; off-site construction of utility extensions to the boundaries of the real estate; and the acquisition, installation, equipping, and rehabilitation of manufacturing facilities on the real estate, for use and occupancy by the approved company or its affiliates for manufacturing purposes, electric generation, or for agribusiness purposes. Pursuant to paragraph (a)3. and 5. of this subsection, an economic development project shall not include lease payments made pursuant to a ground lease for purposes of the tax credits provided under the provisions of KRS 154.22-010 to 154.22-080; (11) "Electric generation" means the generation of electricity for resale by means of combusting at least fifty percent (50%) of the total fuel used to generate electricity from coal or from gas derived from coal; (12) "Eligible company" means any corporation, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or any other entity engaged in manufacturing, electric generation, or in agribusiness; (13) "Employee benefits" means nonmandated costs paid by an eligible company for its full-time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k), or similar plans; (14) "Final approval" means the action taken by the authority authorizing the eligible company to receive inducements under this subchapter; (15) "Full-time employee" means a person employed by an approved company for a minimum of thirty-five (35) hours per week and subject to the state income tax imposed by KRS 141.020; (16) "Inducements" means the assessment and the tax credits allowed by KRS 154.22-060; (17) "Manufacturing" means any activity involving the manufacturing, processing, assembling, or production of any property, including the processing resulting in a change in the conditions of the property and any activity related to it, together with the storage, warehousing, distribution, and related office facilities; however, "manufacturing" shall not include mining, coal or mineral processing, or extraction of minerals; (18) "Preliminary approval" means the action taken by the authority conditioning final approval by the authority upon satisfaction by the eligible company of the requirements under this subchapter; (19) "Qualified county" means any county certified as such by the authority pursuant to KRS 154.22-010 to 154.22-080; (20) "Revenues" shall not be considered state funds; (21) "State agency" shall have the meaning assigned to the term in KRS 56.440(8); (22) "Tax incentive agreement" means the agreement entered into, pursuant to KRS 154.22-050, between the authority and an approved company with respect to an economic development project; (23) "Kentucky gross receipts" means "Kentucky gross receipts" as defined in KRS 141.0401; and (24) "Kentucky gross profits" means "Kentucky gross profits" as defined in KRS 141.0401. Effective:July 1, 2022 History: Amended 2022 Ky. Acts ch. 236, sec. 50, effective July 1, 2022. -- Amended 2019 Ky. Acts ch. 146, sec. 19, effective June 27, 2019. -- Repealed and reenacted 2010 Ky. Acts ch. 51, sec. 43, effective July 15, 2010. -- Amended 2009 Ky. Acts ch. 11, sec. 37, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 75, sec. 1, effective June 26, 2007; and ch. 137, sec. 43, effective June 26, 2007. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 43, effective June 28, 2006. -- Amended 2006 Ky. Acts ch. 149, sec. 216, effective July 12, 2006; and ch. 211, sec. 69, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 105, sec. 2, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 19, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 321, sec. 1, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 29, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 390, sec. 4, effective July 15, 1994; and ch. 450, sec. 3, effective July 15, 1994. Repealed, reenacted, and amended as KRS 154.22-010, 1992 Ky. Acts ch. 105, sec. 22, effective July 14, 1992; ch. 360, sec. 1, effective July 14, 1992; and ch. 363, sec. 12, effective July 14, 1992. -- Amended 1990 Ky. Acts ch. 326, sec. 2, effective July 13, 1990. -- Created 1988 Ky. Acts ch. 392, sec. 1, effective April 8, 1988. Formerly codified as KRS 152.260 Legislative Research Commission Note (7/15/2010). 2010 Ky. Acts ch. 51, sec. 183, provides, "The specific textual provisions of Sections 1 to 178 of this Act which reflect amendments made to those sections by 2007 Ky. Acts ch. 137 shall be deemed effective as of June 26, 2007, and those provisions are hereby made expressly retroactive to that date, with the remainder of the text of those sections being unaffected by the provisions of this section." Legislative Research Commission Note (7/12/2006). In 2006 Ky. Acts ch. 149, almost all references in the Kentucky Revised Statutes to "registered limited liability partnerships" were removed by amendments to various sections of the KRS. However, in this section and in sec. 217 of the bill, KRS 154.23-010, this phrase was not changed or deleted. It appears that leaving this phrase in these two sections was an oversight. Legislative Research Commission Note (6/28/2006). 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

KRS 154.22-020 Legislative findings

154.22-020. Legislative findings (1) The General Assembly hereby finds and declares that the general welfare and material well-being of citizens of the Commonwealth, and particularly those residing in qualified counties, depends in large measure upon the development and growth of industry in the Commonwealth. (2) The General Assembly hereby finds and declares further that it is in the best interest of the Commonwealth to induce the location of manufacturing facilities, electric generation, and agribusiness operations within the qualified counties of the Commonwealth in order to advance the public purposes of relieving unemployment by creating new jobs within the qualified counties that but for the inducements to be offered by the authority to approved companies as herein provided would not exist and of creating new sources of tax revenues for the support of the public services provided by the Commonwealth and qualified counties. (3) The General Assembly hereby finds and declares further that the authority granted by KRS 154.22-010 to 154.22-070 and the purposes to be accomplished hereby are proper governmental and public purposes for which public moneys may be expended, and that the inducement of the location of manufacturing facilities, electric generation, and agribusiness operations within qualified counties is of paramount importance, mandating that the provisions of KRS 154.22-010 to 154.22-070 be liberally construed and applied in order to advance the public purposes. Effective: July 14, 2000 History: Amended 2000 Ky. Acts ch. 321, sec. 2, effective July 14, 2000. -- Amended 1994 Ky. Acts ch. 390, sec. 5, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-020, 1992 Ky. Acts ch. 105, sec. 23, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 392, sec. 2, effective April 8, 1988. Formerly codified as KRS 152.262

KRS 154.22-040 Certification of qualified counties -- Loss of certification -- Coal-producing counties qualified for electric generation -- Selection of eligible companies under Rural Economic Development Assistance Program -- Limitation of applicability to nonprofit corporations with handicapped and sheltered workers

154.22-040. Certification of qualified counties -- Loss of certification -- Coal-producing counties qualified for electric generation -- Selection of eligible companies under Rural Economic Development Assistance Program -- Limitation of applicability to nonprofit corporations with handicapped and sheltered workers (1) Each year, the authority shall, under its Rural Economic Development Assistance Program, on the basis of the final unemployment figures calculated by the Department of Workforce Development in the Education and Labor Cabinet, determine which counties have had a countywide rate of unemployment exceeding the statewide unemployment rate of the Commonwealth in the most recent five (5) consecutive calendar years, or which have had an average countywide rate of unemployment exceeding the statewide unemployment rate of the Commonwealth by two hundred percent (200%) in the most recent calendar year, and shall certify those counties as qualified counties. A county not certified on the basis of final unemployment figures may also be certified as a qualified county if the authority determines the county is one (1) of the sixty (60) most distressed counties in the Commonwealth based on the following criteria with equal weight given to each criterion: (a) The average countywide rate of unemployment in the most recent three (3) consecutive calendar years, on the basis of final unemployment figures calculated by the Department of Workforce Development in the Education and Labor Cabinet; (b) In each county the percentage of adults twenty-five (25) years of age and older who have attained at least a high school education or equivalent, on the basis of the most recent data available from the United States Department of Commerce, Bureau of the Census; and (c) Road quality, as quantified by the access within a county to roads ranked in descending order from best quality to worst quality as follows: two (2) or more interstate highways, one (1) interstate highway, a state four (4) lane parkway, four (4) lane principal arterial access to an interstate highway, state two (2) lane parkway and none of the preceding road types, as certified by the Kentucky Transportation Cabinet to the authority. If the authority determines that a county which has previously been certified as a qualified county no longer meets the criteria of this subsection, the authority shall decertify that county. The authority shall not provide inducements for any facilities in that county and an approved company shall not be eligible for the inducements offered by KRS 154.22-010 to 154.22-070 unless the tax incentive agreements required herein are entered into by all parties prior to July 1 of the year following the calendar year in which the authority decertified that county. In addition, the authority shall certify coal-producing counties, not otherwise certified as qualified counties in this subsection, for economic development projects involving the new construction of electric generation facilities. A coal-producing county shall mean a county in the Commonwealth of Kentucky that has produced coal upon which the tax imposed under KRS 143.020 was paid at any time. For economic development projects undertaken in a regional industrial park, as defined in KRS 42.4588, or in an industrial park created pursuant to an interlocal agreement in which revenues are shared as provided in KRS 65.210 to 65.300, where the physical boundaries of the industrial park lie within two (2) or more counties of which at least one (1) of the counties is a qualified county under this section, an eligible company undertaking an economic development project within the physical boundaries of the industrial park may be approved for the inducements under KRS 154.22-010 to 154.22-080. (2) The authority shall establish the procedures and standards for the determination and approval of eligible companies and their economic development projects by the promulgation of administrative regulations in accordance with KRS Chapter 13A. The criteria for approval of eligible companies and economic development projects shall include but not be limited to the creditworthiness of eligible companies; the number of new jobs to be provided by an economic development project to residents of the Commonwealth; and the likelihood of the economic success of the economic development project. (3) The economic development project shall involve a minimum investment of one hundred thousand dollars ($100,000) by the eligible company and shall result in the creation by the eligible company, within two (2) years from the date of the final approval authorizing the economic development project, of a minimum of fifteen (15) new full-time jobs at the site of the economic development project for Kentucky residents to be employed by the eligible company and to be held by persons subject to the personal income tax of the Commonwealth. The authority may extend this two (2) year period upon the written application of an eligible company requesting an extension. (4) (a) Within six (6) months after the activation date, the approved company shall compensate a minimum of ninety percent (90%) of its full-time employees whose jobs were created with base hourly wages equal to either: 1. Seventy-five percent (75%) of the average hourly wage for the Commonwealth; or 2. Seventy-five percent (75%) of the average hourly wage for the county in which the project is to be undertaken. (b) If the base hourly wage calculated in paragraph (a)1. or 2. of this subsection is less than one hundred fifty percent (150%) of the federal minimum wage, then the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage. However, for projects receiving preliminary approval of the authority prior to July 1, 2008, the base hourly wage shall be one hundred fifty percent (150%) of the federal minimum wage existing on January 1, 2007. In addition to the applicable base hourly wage calculated above, the eligible company shall provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage; however, if the eligible company does not provide employee benefits equal to at least fifteen percent (15%) of the applicable base hourly wage, the eligible company may qualify under this section if it provides the employees hired by the eligible company as a result of the economic development project total hourly compensation equal to or greater than one hundred fifteen percent (115%) of the applicable base hourly wage through increased hourly wages combined with employee benefits. (c) The requirements of this subsection shall not apply to eligible companies which are nonprofit corporations established under KRS 273.163 to 273.387 and whose employees are handicapped and sheltered workshop workers employed at less than the established minimum wage as authorized by KRS 337.295. For an eligible company, within a regional industrial park which lies within two (2) or more counties, the calculation of the wage and benefit requirement shall be determined by averaging the average county hourly wage for all counties within the regional industrial park. (5) No economic development project which will result in the replacement of agribusiness, manufacturing, or electric generation facilities existing in the state shall be approved by the authority; however, the authority may approve an economic development project that: (a) Rehabilitates an agribusiness, manufacturing, or electric generation facility: 1. Which has not been in operation for a period of ninety (90) or more consecutive days; 2. For which the current occupant of the facility has published a notice of closure so long as the eligible company intending to acquire the facility is not an affiliate of the current occupant; or 3. The title to which is vested in other than the eligible company or an affiliate of the eligible company and that is sold or transferred pursuant to a foreclosure ordered by a court of competent jurisdiction or an order of a bankruptcy court of competent jurisdiction; (b) Replaces an agribusiness, manufacturing, or electric generation facility existing in the Commonwealth: 1. The title to which shall have been taken under the exercise of the power of eminent domain, or the title to which shall be the subject of a nonappealable judgment granting the authority to exercise the power of eminent domain, in either event to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or 2. Which has been damaged or destroyed by fire or other casualty to the extent that normal operations cannot be resumed at the facility within twelve (12) months; or (c) Replaces an existing agribusiness, manufacturing, or electric generation facility located in the same qualified county, and the existing agribusiness, manufacturing, or electric generation facility to be replaced cannot be expanded due to the unavailability of real estate at or adjacent to the agribusiness, manufacturing, or electric generation facility to be replaced. Any economic development project satisfying the requirements of this subsection shall only be eligible for inducements to the extent of the expansion, and no inducements shall be available for the equivalent of the agribusiness, manufacturing, or electric generation facility to be replaced. No economic development project otherwise satisfying the requirements of this subsection shall be approved by the authority which results in a lease abandonment or lease termination by the approved company without the consent of the lessor. (6) With respect to each eligible company making an application to the authority for inducements, and with respect to the economic development project described in the application, the authority shall request materials and make inquiries of the applicant as necessary or appropriate. Upon review of the application and completion of initial inquiries, the authority may, by resolution, give its preliminary approval by designating an eligible company as a preliminarily approved company and authorizing the undertaking of the economic development project. After preliminary approval, the authority may by final approval designate an eligible company to be an approved company. Effective:July 1, 2022 History: Amended 2022 Ky. Acts ch. 236, sec. 51, effective July 1, 2022. -- Amended 2020 Ky. Acts ch. 98, sec. 14, effective July 15, 2020. -- Amended 2019 Ky. Acts ch. 146, sec. 20, effective June 27, 2019. -- Amended 2009 Ky. Acts ch. 11, sec. 38, effective June 25, 2009. -- Amended 2007 Ky. Acts ch. 69, sec. 2, effective June 26, 2007. -- Amended 2006 Ky. Acts ch. 211, sec. 70, effective July 12, 2006. -- Amended 2004 Ky. Acts ch. 84, sec. 1, effective April 6, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 20, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 321, sec. 3, effective July 14, 2000. -- Amended 1998 Ky. Acts ch. 349, sec. 1, effective July 15, 1998; and ch. 584, sec. 1, effective July 15, 1998. -- Amended 1996 Ky. Acts ch. 194, sec. 30, effective July 15, 1996; and ch. 271, sec. 8, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 5, effective July 15, 1994. Repealed, reenacted, and amended as KRS 154.22-040, 1992 Ky. Acts ch. 105, sec. 25, effective July 14, 1992; ch. 360, sec. 5, effective July 14, 1992; and ch. 363, sec. 13, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 392, sec. 9, effective April 8, 1988. Formerly codified as KRS 152.276

KRS 154.22-050 Tax incentive agreements between authority and approved companies - - Time limits -- Extensions -- Tax credits and assessments as inducements for approved companies -- Assignment of tax incentive agreement -- Documentation of expenditures -- Suspension of inducements -- Authority's remedies in case of failure to comply -- Activation date

154.22-050. Tax incentive agreements between authority and approved companies - - Time limits -- Extensions -- Tax credits and assessments as inducements for approved companies -- Assignment of tax incentive agreement -- Documentation of expenditures -- Suspension of inducements -- Authority's remedies in case of failure to comply -- Activation date The authority may enter into, with any approved company, a tax incentive agreement with respect to its economic development project, upon adoption of a resolution authorizing the tax incentive agreement. Subject to the inclusion of the mandatory provisions set forth below, the terms and provisions of each tax incentive agreement shall be determined by negotiations between the authority and the approved company. (1) The tax incentive agreement shall set forth the maximum amount of inducements available to the approved company for recovery of the approved costs authorized by the authority and expended by the approved company. (2) The approved company shall expend the authorized approved costs for the economic development project within three (3) years of the date of the final approval by the authority. (3) The approved company shall provide the authority with documentation as to the expenditures for approved costs in a manner acceptable to the authority. (4) (a) The term of the tax incentive agreement shall commence upon the activation date and shall terminate upon the earlier of the full receipt of the maximum amount of inducements by the approved company or fifteen (15) years after the activation date unless paragraph (b) of this subsection applies. (b) 1. An approved company may request an extension of the fifteen (15) year term as provided in this paragraph. The extension may be granted by the authority for up to ten (10) years under the following conditions: a. The approved company commits to an additional investment or the creation of additional jobs at the approved economic development project; b. The approved company consolidates operations, facilities, or services currently located in another state to the Kentucky facility; c. At the time the extension is granted, the approved company has used less than sixty percent (60%) of the inducements awarded under the tax incentive agreement; and d. The authority shall not increase the maximum amount of incentives established by the existing tax incentive agreement. 2. If the authority approves the extension, the tax incentive agreement shall be amended as necessary to extend the term, and to incorporate any additional requirements established by the authority as required by this paragraph. (5) The tax incentive agreement shall include the activation date. To implement the activation date, the approved company shall notify the authority, the Department of Revenue, and the approved company's employees of the activation date when the implementation of the inducements authorized in the tax incentive agreement shall occur. If the approved company does not satisfy the minimum investment and minimum employment requirements of KRS 154.22-040(3) by the activation date, the approved company shall not be entitled to receive inducements pursuant to this subchapter until the approved company satisfies the requirements; however, the fifteen (15) year period for the term of the tax incentive agreement shall begin from the activation date. Notwithstanding the previous sentence, if the approved company does not satisfy the minimum investment and minimum employment requirements of KRS 154.22-040(3) within two (2) years from the date of final approval of the tax incentive agreement, then the approved company shall be ineligible to receive inducements under this subchapter unless an extension is approved by the authority. (6) The tax agreement shall also state that if the total number of new full-time employees at the site of the economic development project who are residents of the Commonwealth and subject to the Kentucky income tax is less than fifteen (15) at any time after activation, the authorized inducements shall be suspended for a period of up to one (1) year. If the company does not have at least fifteen (15) new full-time employees at the site who are residents of the Commonwealth and subject to Kentucky income tax within one (1) year from the date of the initial suspension, the inducements may be terminated at the discretion of the authority. (7) The approved company shall comply with the hourly wage criteria set forth in KRS 154.22-040(4) and provide documentation in connection with hourly wages paid to its full-time employees hired as a result of the economic development project in a manner acceptable to the authority. (8) The approved company may be permitted the following inducements during the term of the tax incentive agreement: (a) A one hundred percent (100%) credit against the Kentucky income tax and the limited liability entity tax imposed under KRS 141.0401 that would otherwise be owed in the approved company's fiscal year, as determined under KRS 141.347, to the Commonwealth by the approved company on the income, Kentucky gross receipts, or Kentucky gross profits of the approved company generated by or arising from the economic development project. The ordering of the credits shall be as provided in KRS 141.0205; and (b) The aggregate assessments withheld by the approved company in each year. (9) The credit allowed the approved company shall be applied against both the income tax imposed by KRS 141.020 or 141.040, and the limited liability entity tax imposed by KRS 141.0401, with credit ordering as provided in KRS 141.0205, for the fiscal year for which the tax return of the approved company is filed. The total inducements may not exceed authorized cumulative approved costs paid by the approved company in the period commencing with the date of final approval. (10) The approved company shall not be required to pay estimated tax payments under KRS 141.044 on the Kentucky taxable income, Kentucky gross receipts or Kentucky gross profits generated by or arising from the economic development project. (11) The tax incentive agreement may be assigned by the approved company only upon the prior written consent of the authority following the adoption of a resolution by the authority to that effect. (12) The tax incentive agreement shall provide that if an approved company fails to comply with its obligations under the tax incentive agreement then the authority shall have the right, at its option, to: (a) Suspend the tax credits and assessments available to the approved company; (b) Pursue any remedy provided under the tax incentive agreement, including termination thereof; and (c) Pursue any other remedy at law to which it may be entitled. (13) All remedies provided in subsection (12) of this section shall be deemed to be cumulative. Effective: June 27, 2019 History: Amended 2019 Ky. Acts ch. 151, sec. 64, effective June 27, 2019. -- Amended 2010 Ky. Acts ch. 152, sec. 1, effective July 15, 2010. -- Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 44, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 576, effective June 20, 2005. -- Amended 2004 Ky. Acts ch. 105, sec. 3, effective July 13, 2004. -- Amended 2002 Ky. Acts ch. 338, sec. 21, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 18, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 31, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 6, effective July 15, 1994. â€“ Repealed, reenacted, and amended as KRS 154.22-050, 1992 Ky. Acts ch. 105, sec. 26, effective July 14, 1992; and ch. 360, sec. 6, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 329, sec. 10, effective April 8, 1988. Formerly codified as KRS 152.278 Legislative Research Commission Note (6/27/2019). Section 85 of 2019 Ky. Acts ch. 151 states that the amendments to this statute made in Section 64 of that Act apply retroactively to April 14, 2018. Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

KRS 154.22-060 Determination of income tax credit by Department of Revenue

154.22-060. Determination of income tax credit by Department of Revenue (1) The approved company shall be entitled to a credit against the Kentucky tax liability mandated by KRS Chapter 141, as determined under KRS 141.347. The credit shall be equal to the total amount of the tax liability, and together with the aggregate assessments not to exceed the maximum amount of inducements as set forth in the tax incentive agreement. (2) By October 1 of each year, the Department of Revenue of the Commonwealth shall certify to the authority in the form of an annual report, aggregate income tax credits claimed on tax returns filed during the fiscal year ending June 30 of that year, and assessments taken by approved companies with respect to their economic development projects during the prior calendar year under this subchapter, and shall certify to the authority, within ninety (90) days from the date an approved company has filed its state income tax return, when an approved company has taken income tax credits equal to its total inducements. Effective: June 28, 2006 History: Amended 2006 (1st Extra. Sess.) Ky. Acts ch. 2, sec. 45, effective June 28, 2006. -- Amended 2005 Ky. Acts ch. 85, sec. 577, effective June 20, 2005. -- Amended 2002 Ky. Acts ch. 338, sec. 22, effective July 15, 2002. -- Amended 2000 Ky. Acts ch. 300, sec. 19, effective July 14, 2000. -- Amended 1996 Ky. Acts ch. 194, sec. 32, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 8, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-060, 1992 Ky. Acts ch. 105, sec. 27, effective July 14, 1992; and ch. 360, sec. 7, effective July 15, 1996. -- Created 1988 Ky. Acts ch. 392, sec. 11, effective April 8, 1988. Formerly codified as KRS 152.280 Legislative Research Commission Note (6/28/2006). 2006 (1st Extra Sess.) Ky. Acts ch. 2, sec. 73, provides that "unless a provision of this Act specifically applies to an earlier tax year, the provisions of this Act shall apply to taxable years beginning on or after January 1, 2007."

KRS 154.22-070 Assessment based on employee's gross wages -- Credits against Kentucky income tax

154.22-070. Assessment based on employee's gross wages -- Credits against Kentucky income tax (1) The approved company or, with the authority's consent, an affiliate of the approved company may require that each employee subject to state tax imposed by KRS 141.020, as a condition of employment, agree to pay an assessment, equal to four percent (4%) of the gross wages of each employee whose job was created as a result of the economic development project, for the purpose of recovering authorized approved costs as set forth in the tax incentive agreement. (2) Each employee so assessed shall be entitled to credits against Kentucky income tax equal to the assessment withheld from wages during the calendar year as provided by KRS 141.310 and 141.350. (3) If an approved company shall elect to impose the assessment as a condition of employment, it shall be authorized to deduct the assessment from each paycheck of each employee. (4) Any approved company collecting an assessment as provided in subsection (1) of this section shall make its payroll books and records available to the authority at such reasonable times as the authority shall request and shall file with the authority documentation respecting the assessment as the authority may require. Effective: July 15, 2002 History: Amended 2002 Ky. Acts ch. 338, sec. 23, effective July 15, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 33, effective July 15, 1996; and ch. 337, sec. 2, effective July 15, 1996. -- Amended 1994 Ky. Acts ch. 450, sec. 9, effective July 15, 1994. – Repealed, reenacted, and amended as KRS 154.22-070, 1992 Ky. Acts ch. 105, sec. 28, effective July 14, 1992; and ch. 360, sec. 8, effective July 14, 1992. -- Created 1988 Ky. Acts ch. 392, sec. 12, effective April 8, 1988. Formerly codified as KRS 152.282

KRS 154.22-080 Application of law prior to July 15, 1994, in certain circumstances

154.22-080. Application of law prior to July 15, 1994, in certain circumstances If the authority adopts a preliminary resolution designating an eligible company as an approved company and preliminarily approving the project of the eligible company as an economic development project prior to July 15, 1994, and the authority adopts a final resolution approving the eligible company as an approved company and the project of the eligible company as an economic development project, and the authority and the eligible company enter into a financing agreement no later than June 30, 1995, then the approved company thereafter shall be subject to KRS 154.22-010 to 154.22-070 as in effect prior to July 15, 1994. Effective: April 11, 2002 History: Amended 2002 Ky. Acts ch. 338, sec. 44, effective April 11, 2002. -- Amended 1996 Ky. Acts ch. 194, sec. 66, effective July 15, 1996. -- Created 1994 Ky. Acts ch. 450, sec. 10, effective July 15, 1994.

KRS 154.22-081 Short title for KRS 154.22-010 to 154.22-080

154.22-081. Short title for KRS 154.22-010 to 154.22-080 KRS 154.22-010 to 154.22-080 shall be known as the Kentucky Rural Economic Development Act. Effective: July 15, 1996 History: Created 1996 Ky. Acts ch. 194, sec. 28, effective July 15, 1996.

KRS 154.22-083 Deadline for new applications -- Governing law for outstanding approved projects

154.22-083. Deadline for new applications -- Governing law for outstanding approved projects New applications shall not be accepted or considered under this subchapter on or after June 26, 2009. All outstanding projects with preliminary or final approval under this subchapter as of June 26, 2009, shall continue to be governed by the provisions of this subchapter. Effective: June 26, 2009 History: Created 2009 (1st Extra. Sess.) Ky. Acts ch. 1, sec. 25, effective June 26, 2009.

KRS 154.22-100 Approved company's ability to elect to reduce job assessment fee rate imposed prior to July 15, 1996

154.22-100. Approved company's ability to elect to reduce job assessment fee rate imposed prior to July 15, 1996 (1) If an approved company's financing agreement in effect prior to July 15, 1996, stipulates that the approved company elects to impose a six percent (6%) job development assessment fee pursuant to KRS 154.22-070 as in effect prior to July 15, 1996, the approved company, subject to provisions of subsection (2) of this section, may elect to change the job development fee rate from six percent (6%) as prescribed in KRS 154.22-070 as in effect prior to July 15, 1996, to four percent (4%) as set forth in KRS 154.22-070. (2) An approved company may elect to reduce the job assessment fee rate as prescribed in subsection (1) of this section if the financing agreement respecting the approved company's approved project is amended upon written approval of all parties thereto, and the approved company attests in writing to the satisfaction of the authority that the approved company has not entered into any other agreement by which the company has pledged the proceeds of a six percent (6%) job development assessment fee as partial or full payment of any debt or other obligation to any other party. Effective: July 14, 2000 History: Amended 2000 Ky. Acts ch. 539, sec. 1, effective July 14, 2000. -- Created 1996 Ky. Acts ch. 337, sec. 3, effective July 15, 1996.

KRS 154.22-102 Application of statutes to companies that are approved and that enter into agreements by certain dates

154.22-102. Application of statutes to companies that are approved and that enter into agreements by certain dates If the authority adopts a preliminary resolution designating an eligible company as an approved company and preliminarily approving the project of the eligible company as an economic development project prior to July 15, 2002, and the authority adopts a final resolution approving the eligible company as an approved company and the project of the eligible company as an economic development project, and the authority and the eligible company enter into a financing agreement no later than June 30, 2003, then the approved company thereafter shall be subject to KRS 154.22-010 to 154.22-100 as in effect prior to July 15, 2002. Effective: July 15, 2002 History: Created 2002 Ky. Acts ch. 338, sec. 24, effective July 15, 2002.

Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/chapter.aspx?id=37780Fetched: 10/20/2026