KRS 154.20-195: Certified mixed -use rehabilitation tax credit -- Definitions for section --

Application -- Approval -- Notification of department. (Effective July 1, 2027)

(1) As used in this section:

(a) "Authority" means the Kentucky Economic Development F inance Authority

established by KRS 154.20-010;

(b) "Certified mixed -use rehabilitation" means the development, rehabilitation,

renovation, and improvement of a qualified abandoned building that will

serve at least two (2) of the following purposes, in its finished, rehabilitated

state:

1. Commercial;

2. Residential; or

3. Retail;

(c) "Department" means the Department of Revenue;

(d) "Eligible rehabilitation expenses" means all costs incurred in association with

the certified mixed -use rehabilitation of a q ualified abandoned building and

includes:

1. Building and construction materials;

2. The costs of fixture installation; and

3. Labor and mechanics costs;

(e) "Qualified abandoned building" means a vacant structure that:

1. Contains a minimum of two hundred twenty -five thousand (225,000)

square feet of gross leasable area;

2. Is located within an urban core area;

3. Has a minimum vacancy rate by square footage of at least fifty percent

(50%) for a continuous period of at least six (6) months immediately

prior to the certified mixed-use rehabilitation; and

4. Is not a project that has been awarded the certified rehabilitation credit

under KRS 171.397;

(f) "Taxpayer" means any person or entity who:

1. a. Incurs eligible rehabilitation expenses for a certified mixed -use

rehabilitation; or

b. Is the recipient of a certified mixed -use rehabilitation credit which

is transferred as provided in subsection (7)(b) of this section; and

2. Is subject to the taxes imposed by KRS 136.320, 136.330, 136.340,

136.350, 136.370, 136.390, 141.020, 304.3 -270, or 141.040 and

141.0401; and

(g) "Urban core area" means a central, downtown part of this state that is located

within a metrop olitan statistical area with a population of greater than three

hundred thousand (300,000) based on the most recent federal decennial

census.

(2) There is hereby created the certified mixed-use rehabilitation credit.

(3) For taxable years beginning on or after January 1, 2028, but before January 1, 2032,

a taxpayer shall be allowed a refundable, transferable certified mixed -use

rehabilitation credit against the taxes imposed by:

(a) KRS 141.020 or 141.040 and 141.0401, with the ordering of the credits as

provided in KRS 141.0205; or

(b) KRS 136.320, 136.330, 136.340, 136.350, 136.370, 136.390, and 304.3 -270,

with the ordering of the credits as provided in KRS 136.376.

(4) The credit shall be:

(a) Equal to twenty percent (20%) of the eligible rehabilitation e xpenses incurred

during the taxable year; and

(b) Limited to:

1. Twenty-five million dollars ($25,000,000) per eligible taxpayer; and

2. A total of fifty million dollars ($50,000,000) for all tax credits

preliminarily approved for each calendar year in whi ch the credit is

available.

(5) (a) An eligible taxpayer seeking the credit provided under this section shall file

an application with the authority for preliminary approval by December 31,

2027, and by each December 31 thereafter of the calendar year imme diately

preceding in the calendar year in which the certified mixed -use rehabilitation

will take place, and include the following:

1. Project location;

2. Proposed start and completion date of the project;

3. Anticipated costs to be incurred;

4. Verification that the building meets the requirements established in

subsection (1) of this section as a qualified abandoned building;

5. Detailed rehabilitation plans that outline the projected use of the

qualified abandoned building in its final, rehabilitated state; and

6. Any other information the authority may require to provide preliminary

project approval.

(b) The authority shall provide preliminary approval with the anticipated credit

amount to be awarded by Janu ary 15, 2028, and each January 15 thereafter as

long as the credit is available and shall:

1. Create the application by which a taxpayer may apply for preliminary

and final credit approval;

2. Provide notification to the taxpayer of preliminary and final c redit

approval; and

3. Promulgate administrative regulations in accordance with KRS Chapter

13A necessary to implement this section.

(6) (a) If the total amount of credits granted preliminary approval for a calendar year

under subsection (5) of this section:

1. Exceeds fifty million dollars ($50,000,000), each taxpayer shall receive

no more than its applicable pro rata share as determined by the

authority; or

2. Is less than fifty million dollars ($50,000,000), the difference between

the amount of credits preliminarily approved and the maximum amount

available in accordance with subsection (4) of this section, shall be

added to the maximum amount of credit available for preliminary

approval in the next calendar year.

(b) In the event that credits are divide d pro rata among all applicants, the

authority shall provide notification to the taxpayer with preliminary credit

approval.

(7) Within thirty (30) days of completion of the certified mixed -use rehabilitation

project, the taxpayer shall:

(a) Submit an application to the authority for final credit approval;

(b) Include an irrevocable election to:

1. Use the credit; or

2. Transfer the credit, in which case the following shall be included:

a. Transferee's taxpayer identification number; and

b. Amount of credit to be transferred; and

(c) Provide documentation of final project dates and actual costs incurred as

projected in subsection (5) of this section.

(8) Within sixty (60) days of the taxpayer's final application submission, the authority

shall:

(a) Review and verify all actual eligible rehabilitation expenses incurred; and

(b) Provide notification of final credit determination to the taxpayer and the

department, which may be claimed on the taxpayer's return for the taxable

year.

(9) The authority shall notify the department following approval of a certified mixed -

use rehabilitation project and include:

(a) The name and taxpayer identification number of each approved taxpayer;

(b) The location of each certified mixed-use rehabilitation project approved;

(c) The total amount of credit available for each taxpayer; and

(d) Any other information required by the department.