KRS 154.30-030: State tax increment financing participation programs -- Sunset --

Application requirements for a local government to request state participation

-- Authority review requirements -- Pledge limitations -- Tax incentive

agreements required -- Independent consultant's report.

(1) (a) The Commonwealth shall offer three (3) tax increment financing participation

programs. The first program, the criteria and details of which are set forth in

KRS 154.30-040, relates to a pledge of state real pro perty ad valorem taxes

only. The second program, the criteria and details of which are set forth in

KRS 154.30 -050, is the Signature Projects Program. The third program, the

criteria and details of which are set forth in KRS 154.30 -060, relates to the

pledge of state tax revenues to support mixed -use development in blighted

urban areas.

(b) 1. The first and third programs identified in paragraph (a) of this

subsection shall sunset on July 15, 2026, and new applications shall not

be submitted or considered for approval after July 15, 2026.

2. The Signature Projects Program shall sunset on December 31, 2028, and

new applications shall not be submitted or considered for approval after

December 31, 2028.

3. Projects approved for a program prior to the date the p rogram shall

sunset under subparagraph 1. or 2. of this paragraph shall continue to be

governed in accordance with the tax incentive agreement's terms and

conditions as set forth in KRS 154.30-070.

4. Tax incentive agreements related to the programs under paragraph (a) of

this subsection and in effect on July 15, 2026, shall not be amended or

have activation date extensions approved by the Commonwealth after

July 15, 2026.

(2) (a) Except as provided in subsection (1)(b)3. of this section, a city or county t hat

has established a development area pursuant to KRS 65.7049, 65.7051, and

65.7053, or an agency designated as the entity managing a development area

established pursuant to KRS 65.7049, 65.7051, and 65.7053, may submit an

application to the authority requesting that the Commonwealth participate in a

project, before July 15, 2026.

1. The application shall identify the specific program under which state

participation is being requested and shall include the following

attachments, in addition to any require ments developed by the authority

pursuant to paragraph (b) of this subsection:

a. A copy of the ordinance adopted by the city or county establishing

the development area;

b. A copy of the local participation agreement; and

c. Data and information supporting the determinations and findings

required by KRS 65.7049.

2. The staff of the authority shall review the application to determine if the

applicant has met all of the statutory and regulatory requirements

established by this subchapter and shall notify the applicant in writing of

its determination. This review shall be preliminary in na ture and shall

not constitute approval of the request. All applications for participation

by the Commonwealth shall be reviewed by the authority for approval.

3. a. Applications meeting all statutory and regulatory requirements

requesting participation by the Commonwealth pursuant to KRS

154.30-040, along with any supporting materials, shall be referred

by the staff of the authority to the authority for consideration.

b. i. Applicants meeting all statutory and regulatory requirements

requesting participatio n by the Commonwealth pursuant to

KRS 154.30 -050(3)(b) or 154.30 -060 shall be required to

submit a report prepared by an independent consultant or

financial adviser as described in subsection (6) of this section

for the application to be complete. The staf f of the authority

shall notify the applicants of the report requirements and

shall provide information regarding the contents and

requirements for the report at the same time it notifies the

applicant of the results of its preliminary review.

ii. Upon rec eipt and review of the report, the staff of the

authority shall refer the application and supporting

information to the authority for consideration.

(b) Additional standards and requirements for the application process shall be

established by the authorit y through the promulgation of administrative

regulations in accordance with KRS Chapter 13A.

(3) (a) The authority may request any materials and make any inquiries concerning

an application that the authority deems necessary.

(b) The authority shall, throu gh the promulgation of administrative regulations in

accordance with KRS Chapter 13A, establish commercially reasonable

limitations on the financing costs that may be recovered under the provisions

of KRS 154.30-050.

(4) Upon review of an application and o ther information available, the authority may

pledge all or a portion of the state real property ad valorem tax incremental revenue

of the Commonwealth or state tax revenues attributable to the footprint of the

project, as limited by KRS 154.30 -040, 154.30 -050, or 154.30 -060, whichever is

applicable.

(a) If incremental revenues are pledged from less than one hundred percent

(100%) of the footprint of the project, a description of the included portion of

the development area shall be provided.

(b) State tax revenues from the development area that have not been pledged to

projects within the development area may be used to support other economic

development projects or tourism projects approved under KRS 139.536 and

148.851 to 148.860, provided that state tax revenues shall not be pledged

more than once during the existence of the development area. Thus, state tax

revenues pledged to support increment bonds issued for the development area,

or a project in the development area shall not be pledged to support any other

development area, project, program, development, or undertaking during the

life of the development area. If less than one hundred percent (100%) of

incremental revenues are pledged pursuant to the provisions of this

subchapter, the remaining increme ntal revenues shall not be used to support

other economic development projects or tourism projects approved under

KRS 139.536 and 148.851 to 148.860.

(5) The pledge of incremental state real property ad valorem tax revenues or state tax

revenues of the Com monwealth by the authority shall be implemented through the

execution of a tax incentive agreement between the Commonwealth and the agency,

city, or county, as the case may be, in accordance with KRS 154.30-070.

(6) (a) The authority shall engage the servi ces of a qualified independent outside

consultant or financial adviser to analyze the data related to the project and

the development area and prepare the report required by subsection (2) of this

section. The report shall include the following:

1. The estimated approved public infrastructure costs for the project and, if

relevant, approved signature project costs, financing costs, and costs

associated with land preparation, demolition, and clearance;

2. The feasibility of the project, taking into account t he scope and location

of the project;

3. The estimated amount of local tax revenues and state tax revenues, as

applicable, that would be generated by the project over the period,

which may be up to twenty (20) years or thirty (30) years, as applicable,

from the activation date;

4. The estimated amount of local tax revenues and state tax revenues, as

applicable, that would be displaced within the Commonwealth, for the

purpose of quantifying economic activity which is being shifted over the

same period as tha t set forth in subparagraph 3. of this paragraph. The

projections for displaced activity shall include economic activity that is

lost to the Commonwealth as a result of the project, as well as economic

activity that is diverted to the project that formerly took place at existing

establishments within the Commonwealth prior to the commencement

date of the project;

5. The estimated amount of local and state old revenues that would have

been generated in the footprint of the project in the absence of the

project, computed over the same time period as set forth in subparagraph

3. of this paragraph;

6. In the process of estimating the revenues and impacts prescribed in

subparagraphs 3. and 4. of this paragraph, the independent outside

consultant shall not consider any of the following:

a. Revenues or economic impacts associated with any projects within

the development area where the new project will be located; and

b. Revenues or economic impacts associated with economic

development projects and approved Kentucky Tourism

Development Act projects under KRS Chapter 148;

7. The relationship of the estimated incremental revenues to the financing

needs, including any increment bonds, of the project;

8. When estimating the fiscal impact of the project, the consultant shall

evaluate the amount of revenue estimated in subparagraph 3. of this

paragraph and shall deduct the amounts estimated in subparagraphs 4.

and 5. of this para graph. The resulting difference shall be compared to

the estimated incremental revenues to determine the presence or absence

of a positive fiscal impact; and

9. A determination that the project will not occur if not for the designation

of the development a rea, the granting of incremental revenues by the

taxing district or districts, other than the Commonwealth, and the

granting of the state tax incremental revenues.

(b) 1. The independent consultant or financial advisor shall consult with the

Office of Stat e Budget Director, and the Finance and Administration

Cabinet in the development of the report.

2. The Office of State Budget Director and the staff of the authority, in

collaboration with the independent consultant or financial advisor, shall

agree on a m ethodology to be used and assumptions to be made by the

independent consultant or financial consultant in preparing its report.

3. On the basis of the independent consultant's report and the other

materials provided, prior to any approval of a project by t he authority,

the Office of State Budget Director and the Finance and Administration

Cabinet shall certify to the authority whether there is a projected net

positive economic impact to the Commonwealth and the expected

amount of state tax incremental revenues from the project.

4. The city, county, or agency making the application shall pay all costs

associated with the independent consultant's or financial advisor's report.