KRS 154.25-030: Jobs retention project agreement -- Requirements, limitations, and

permitted inducements.

(1) The authority, upon adoption of its final approval, may enter into, with any

approved company, an agreement with respect to the jobs retention proj ect. The

terms and provisions of each agreement, including the amount of approved costs,

the amount of the inducement, the job maintenance requirement, and any

limitations the authority may deem necessary, shall be determined by negotiations

between the authority and the approved company, except that each agreement shall

include the following provisions:

(a) The amount the approved company may recover through inducements under

this subchapter for the initial project, which shall be a negotiated percentage

not to exceed fifty percent (50%) of eligible costs. However, the authority

may negotiate an increase in the percentage such that both the initial project

and any supplemental projects are eligible for seventy -five percent (75%) of

eligible costs upon appro val of a supplemental project. The adjustment to the

initial project shall be made on the total approved costs and any credits taken

prior to the addition of a supplemental project shall then be subtracted from

that increased amount of approved costs. Neit her the initial project nor any

supplemental project shall ever be eligible for inducements greater than

seventy-five percent (75%) of the eligible costs. The authority shall negotiate

a maximum allowable inducement for each year of the agreement, and the

approved company may not recover inducements above that maximum in any

year during the term of the agreement, except that the annual maximum

allowable inducement may be exceeded if a carry -forward of unused

inducements from previous years exists. Any carry -forward of unused

inducements will lapse upon maturity or termination of the agreement;

(b) A provision that sets the activation date for the initial project within three (3)

years of the final approval. Prior to the activation date, the authority may

extend the time for the completion of the jobs retention project and

compliance with the required investment upon request of the approved

company for good cause; however, the ten (10) year period for the term of the

agreement shall begin from the activation d ate. No inducements from the jobs

retention project shall be available, other than the transferred credits provided

for under subsection (2) of this section, until activation. Upon activation, the

balance of transferred credits shall expire;

(c) A provision that states that within three (3) months of the completion of the

jobs retention project, the approved company shall document the actual cost

of the project in a manner acceptable to the authority. The authority may

employ an independent consultant or ut ilize technical resources to verify the

cost of the project. The approved company shall reimburse the authority for

the cost of the consultant;

(d) A provision that establishes a minimum required number of full-time jobs that

must be maintained at the site of the jobs retention project and filled with

residents of the Commonwealth subject to Kentucky income tax and states

that the authorized inducements may be suspended at the discretion of the

authority from the date of noncompliance until the date complia nce is

reestablished if the approved company's employment falls below the

established minimum employment requirement. If the company does not

increase the number of full-time employees at the site who are residents of the

Commonwealth and subject to Kentuc ky income tax sufficiently to meet the

minimum employment requirement within one (1) year from the date of the

initial suspension, the remaining unused inducements may be terminated at

the discretion of the authority;

(e) A provision that gives the authori ty discretion to suspend or terminate the

authorized inducements for any failure to comply with the terms of the

agreement; and

(f) 1. A provision that provides the term shall not be longer than the earlier of:

a. The date on which the approved company has received

inducements or withheld assessments equal to the amount that the

company may recover under paragraph (a) of this subsection; or

b. Ten (10) years from the activation date.

2. The term in subparagraph 1. of this paragraph may be extended to a

period longer than ten (10) years upon:

a. The approved company demonstrating that less than seventy -five

percent (75%) of the incentives awarded under the agreement will

be claimed during the term of the agreement; or

b. The addition of a supplemental project as negotiated and approved

by the authority.

3. An extension of the term shall not amend any provision of the

agreement impacting the scope of the project or the maximum amount

of incentives awarded under the agreement.

(2) In consideration of the execution of the agreement, during the time the agreement is

in effect, which time shall commence on the date of the agreement, the approved

company may be permitted the following inducements:

(a) Beginning on the effective date of the jobs retention agreement, which shall

also be the date of final approval, if the approved company has a balance of

unused approved costs on a previously existing and active incentive

agreement approved by the aut hority pursuant to KRS Chapter 154, the

approved company may impose wage assessments on employees whose jobs

are at the facility where the project defined in the previously existing

incentive agreement was located. The wage assessments may be imposed as

provided in KRS 154.25 -040, and shall be available in an amount up to the

balance of transferred credits from the previously existing project.

1. The transferred credits shall only be available to the approved company

until the activation date, the term from the original incentive agreement

expires, or the balance of transferred credits is exhausted, whichever

occurs first; and

2. Should the approved company exercise this option, the incentive

agreement from which the credits were transferred shall be termina ted

upon transfer and all parties shall be released from their obligations

thereunder.

(b) After the activation date:

1. A one hundred percent (100%) credit against the taxes imposed by KRS

141.020, 141.040, and 141.0401 that would otherwise be owed by the

approved company, in the approved company's taxable year, as

determined under KRS 141.402, on the taxable income, Kentucky gross

receipts, or Kentucky gross profits of the approved company generated

by or arising from the jobs retention project. The order ing of credits

shall be as provided in KRS 141.0205; and

2. The aggregate assessment withheld by the approved company as

provided in KRS 154.25-040 in each year after the activation date;

(c) The tax credits allowed to the approved company shall be equal t o the lesser

of the total amount of the tax liability or the amount that the company may

recover under subsection (1)(a) of this section that has not yet been recovered,

reduced by any recovery through the collection of assessments subject to the

annual maximum inducements authorized pursuant to subsection (1)(a) of this

section. The credit shall be allowed for each taxable year of the approved

company during the term of the agreement and for which a tax return of the

approved company is filed until the amo unt that the company may recover

under subsection(1)(a) of this section has been received through a

combination of credits and assessments, if the company elects to impose

assessments. The approved company shall not be required to pay estimated

tax payment s as prescribed under KRS 141.044 or 141.305 on income,

Kentucky gross profits, or Kentucky gross receipts from the jobs retention

project. One hundred eighty (180) days after the filing of the tax return of the

approved company, the Department of Revenue shall certify to the authority

the state tax liability for the preceding taxable year of the approved company

and the amount of any tax credits taken pursuant to this section;

(d) Prior to execution of the agreement, the eligible company shall secure from all

local governmental authorities responsible for collecting local occupational

license fees a resolution or order of the local governmental entities

acknowledging and consenting to the termination or partial termination of the

receipt of local occupation al license fees on wages subject to the agreement

paid by the approved company on behalf of its employees to the local

government entities;

(e) If more than one (1) local occupational license fee is imposed upon the

employees of the approved company, the a ssessment imposed upon the

employees shall be credited against the local occupational license fee and

shall be apportioned to each local occupational license fee according to each

local occupational license fee's proportion to the total of all local occupa tional

license fees for such employees. No credit or portion thereof shall be allowed

against any local occupational license fee imposed by or dedicated solely to a

local board of education; and

(f) If, in any taxable year of the approved company during wh ich the agreement

is in effect, the assessment collected from the wages of the employees exceeds

the expended portion of the amount that the approved company may recover

under paragraph (a) of this subsection, or exceeds the annual maximum

negotiated by th e authority, the assessment collected from the wages of the

employees shall cease for the remainder of that taxable year of the approved

company. The approved company shall resume normal personal income tax

and occupational license fee withholdings from th e employees' wages for the

remainder of that taxable year, and the approved company shall remit to the

Commonwealth and applicable local jurisdictions their respective shares of

the excess assessment collected on the withholding filing date for employees'

wages next succeeding the first date when the approved company collected

excess assessments.

(3) The jobs retention agreement and inducements available pursuant thereto shall not

be transferable or assignable by the approved company without the expressed

written consent of the authority.