KRS 154.27-090: Advance disbursement of incentives -- Computation of maximum

disbursement amount -- Schedule for disbursement -- Repayment.

(1) An approved company may be eligible for the advance disbursement of a

portion of the post-construction period incentives for which it has been

approved. The amount of the advance disbursement shall be based on the

employment of Kentucky residents during the construction of the facility, shall

be negotiated with the authority as part of the tax incentive agreement, and

shall not exceed the limitations established by this section.

(2) The authority shall compute the maximum amount of the advance

disbursement employment incentive as follows:

(a) The base amount shall equal the total capital investment specified in the

tax incentive agreement multiplied by the labor intensity factor as

determined in paragraph (c) of this subsection;

(b) The base amount shall then be multiplied by the Kentucky resident factor

as determined in paragraph (d) of this subsection. The resulting amount

shall be the maximum advance disbursement employment incentive that

the authority may approve;

(c) The labor intensity factor shall be:

1. Twenty-five percent (25%), if the estimated labor component for the

eligible project is greater than thirty percent (30%) of the total capital

investment;

2. Twenty percent (20%), if the estimated labor component for the

eligible project is greater than twenty-five percent (25%) but less

than or equal to thirty percent (30%) of the total capital investment;

or

3. Fifteen percent (15%), if the estimated labor component for the

eligible project is equal to or less than twenty-five percent (25%) of

the total capital investment; and

(d) The Kentucky resident factor shall be four percent (4%) multiplied by a

fraction, the numerator of which shall be the estimated total gross wages

that will be paid to Kentucky residents who are working on the

construction, retrofit, or upgrade of the eligible project, and the

denominator of which shall be the estimated total gross wages that will be

paid to all workers working on the construction, retrofit, or upgrade of the

eligible project.

(3) The tax incentive agreement shall include a schedule for the disbursement of

the advance disbursement employment incentive during the construction

period. In negotiating the disbursement schedule, the authority shall consider

the possible increased risk to the Commonwealth associated with the

disbursement of funds prior to construction completion.

(4) (a) The approved company shall repay the advance disbursement through a

reduction in the post-construction period incentive amounts it would

otherwise receive. The amount by which the post-construction period

incentive amounts are reduced shall be applied as a credit against the

amount owed by the approved company.

(b) The amount of the annual reduction, the incentives the reduction shall

apply to, interest due, the time period over which the advance

disbursement amount shall be recouped, and alternate payment methods

if incentives are not sufficient to repay the advance disbursement shall be

negotiated between the authority and the approved company as part of

the tax incentive agreement.

(c) The repayment schedule included in the tax incentive agreement shall

require uniform incremental payments, to the extent possible, and shall

continue until the entire advance disbursement amount has been repaid

by the approved company.

(d) The tax incentive agreement shall include a provision addressing an

alternate method for payment if incentives are not sufficient to repay the

advance disbursement.

(e) The total post-construction incentive payments for which an approved

company is eligible shall be tracked by the department. That portion of the

incentive amounts identified in the tax incentive agreement as being

devoted to the repayment of the advance disbursement amount shall be

credited against the balance due from the approved company and shall

not be paid to or retained by the approved company.

(f) The department shall forward the amounts credited to the repayment of

the advance disbursement amount to the Cabinet for Economic

Development, Department of Financial Incentives for deposit in the

Energy Projects Economic Development Bond Pool.

(g) During the period for which any portion of the post-construction incentive

payments are being credited toward the advance disbursement amount,

the approved company shall, at the direction of the authority or the

department, file all required requests for incentives, submit all required

remittances, make all required tax payments, and provide to the

department and the authority any information that would normally be

required for the approved company to receive the incentives.

(5) The authority may, for purposes of administering the provisions of this section,

solicit information or consultation from one (1) or more of the following sources:

(a) The Office of Energy Policy;

(b) The Center for Applied Energy Research;

(c) The Department of Workforce Development; or

(d) Any public postsecondary education institution within the Commonwealth.