KRS 154.32-010: Definitions for subchapter.

As used in this subchapter:

(1) "Activation date" means the date established in the tax incentive agreement that is

within two (2) years of final approval;

(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 limite d 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 fi ve (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 an d 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 lim ited 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, or 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 or 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 corporati on designation being the same as that designation under the

Internal Revenue Code of 1986, as amended;

(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; or

(p) Two (2) or more limited liability companies, if the same persons own more

than fifty percent (50%) of the capital interest or are entitled to more than fifty

percent (50%) of the capital profits in the limited liability companies;

(3) "Agribusiness" means the processing of raw agricultural products, including but not

limited to timber and industrial hemp, or the performance of valu e-added functions

with regard to raw agricultural products;

(4) "Alternative fuel production" means a Kentucky operation that primarily produces

alternative transportation fuels for sale. The alternative fuel production may

produce electricity as a by-product if the primary function of the operations remains

the production and sale of alternative transportation fuels;

(5) "Alternative transportation fuels" has the same meaning as in KRS 152.715;

(6) "Approved company" means an eligible company that has rece ived final approval

to receive incentives under this subchapter;

(7) "Approved costs" means the amount of eligible costs approved by the authority at

final approval;

(8) "Authority" means the Kentucky Economic Development Finance Authority

established by KRS 154.20-010;

(9) "Biomass resources" has the same meaning as in KRS 152.715;

(10) "Capital lease" means a lease classified as a capital lease by the Statement of

Financial Accounting Standards No. 13, Accounting for Leases, issued by the

Financial Accounting Standards Board, November 1976, as amended;

(11) "Carbon dioxide or hydrogen transmission pipeline" means the in -state portion of a

pipeline, including appurtenant f acilities, property rights, and easements, that is

used exclusively for the purpose of transporting carbon dioxide or hydrogen to the

point of sale, storage, or other carbon or hydrogen management applications;

(12) "Coal severing and processing" means act ivities resulting in the eligible company

being subject to the tax imposed by KRS Chapter 143;

(13) "Commonwealth" means the Commonwealth of Kentucky;

(14) "Confirmed approved costs" means:

(a) For owned economic development projects, the documented eligib le costs

incurred on or before the activation date; or

(b) For leased economic development projects:

1. The documented eligible costs incurred on or before the activation date;

and

2. Estimated rent to be incurred by the approved company throughout the

term of the tax incentive agreement.

For both owned and leased economic development projects, "confirmed approved

costs" may be less than approved costs, but shall not be more than approved costs;

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

(16) "Economic development project" means:

(a) The acquisition, leasing, or construction of a new facility;

(b) The acquisition, leasing, rehabilitation, or expansion of an existing facility; or

(c) The installation and equipping of a facility;

by an eligible compa ny. "Economic development project" does not include any

economic development project that will result in the replacement of facilities

existing in the Commonwealth, except as provided in KRS 154.32-060;

(17) (a) "Eligible company" means any corporation, li mited liability company,

partnership, limited partnership, sole proprietorship, business trust, or any

other entity with a proposed economic development project that is engaged in

or is planning to be engaged in one (1) or more of the following activities

within the Commonwealth:

1. Manufacturing;

2. Agribusiness;

3. Nonretail service or technology;

4. Headquarters operations, regardless of the underlying business activity

of the company;

5. Alternative fuel, gasification, energy -efficient alternative fuel, or

renewable energy production;

6. Carbon dioxide or hydrogen transmission pipeline;

7. Coal severing and processing;

8. Hospital operations;

9. Development of the nuclear energy ecosystem, including but not limited

to nuclear energy generating facility siting and development; or

10. Research and development.

(b) "Eligible company" does not include companies where the primary activity to

be conducted within the Commonwealth is forestry, fish ing, the provision of

utilities, except as provided in paragraph (a)9. of this subsection, construction,

wholesale trade, retail trade, real estate, rental and leasing, educational

services, accommodation and food services, or public administration services;

(18) "Eligible costs" means:

(a) For owned economic development projects:

1. Start-up costs to furnish and equip a facility, including:

a. Office and manufacturing equipment;

b. Software;

c. Computers;

d. Fixtures; and

e. Fixed telecommunications equipment;

2. Nonrecurring obligations incurred for labor and nonrecurring payments

to contractors, subcontractors, builders, and materialmen in connection

with the economic development project;

3. The cost of acquiring land or rights in land and any cost incide ntal

thereto, including recording fees;

4. The cost of contract bonds and of insurance of all kinds that may be

required or necessary for completion of an economic development

project which is not paid by a contractor or otherwise provided for;

5. All cost s of architectural and engineering services, including test

borings, surveys, estimated plans and specifications, preliminary

investigations, and supervision of construction, as well as for the

performance of all the duties required for construction of the economic

development project;

6. All costs which are required to be paid under the terms of any contract

for the economic development project;

7. All costs incurred for construction activities, including site tests and

inspections; subsurface site work; e xcavation; removal of structures,

roadways, cemeteries, and other surface obstructions; filling, grading,

and providing drainage and storm water retention; installation of utilities

such as water, sewer, sewage treatment, gas, electric, communications,

and similar facilities; off -site construction of utility extensions to the

boundaries of the real estate; construction and installation of railroad

spurs as needed to connect the economic development project to existing

railways; or similar activities as the authority may determine necessary

for construction of the economic development project; and

8. All other costs of a nature comparable to those described in this

paragraph, including but not limited to investments in:

a. Laboratory equipment;

b. Computer servers;

c. Software;

d. Capitalized leases; and

e. Leasehold improvements;

when the costs are integral to the operation of research and

development, headquarters, high -technology operations, or service

sector facilities; and

(b) For leased economic development projects:

1. Start-up costs to furnish and equip a facility, including:

a. Office and manufacturing equipment;

b. Software;

c. Computers;

d. Fixtures; and

e. Fixed telecommunications equipment;

2. Building/leasehold improvements;

3. Fifty percent (50%) of the estimated annual rent for each year of the tax

incentive agreement; and

4. Investments in:

a. Laboratory equipment;

b. Computer servers;

c. Software; and

d. Capitalized leases;

when the costs are directly related to the establishment or expansion of

research and development, headquarters, high -technology operations, or

service sector facilities;

(19) "Employee benefits" means payments by an approved company for its full -time

employees for health insurance, life insurance, dental insurance, vision insurance,

defined benefits, 401(k), or similar plans;

(20) "Energy-efficient alternative fuel production" means a Kentucky operation that

produces for sale energy-efficient alternative fuels;

(21) "Energy-efficient alternative fuels" means homogeneous fuels that:

(a) Are produced from processes designed to densify feedstock coal , waste coal,

or biomass resources; and

(b) Have an energy content that is greater than the feedstock coal, waste coal, or

biomass resource;

(22) "Final approval" means the action taken by the authority authorizing the eligible

company to receive incentives under this subchapter;

(23) (a) "Full-time job" means a job held by a person who:

1. Is required to work a minimum of thirty-five (35) hours per week; and

2. a. Is subject to the Kentucky individual income tax imposed by KRS

141.020; or

b. Works remotely away from the economic development project if

the job meets all of the following conditions:

i. Is held by a Kentucky resident;

ii. Was created as a result of the economic development project;

and

iii. The payroll of this job is expensed to the economic

development project.

(b) "Full-time job" does not include a job held by a resident of any state with a

reciprocal agreement between the Commonwealth and the other s tate as

described in KRS 141.070;

(24) "Gasification process" means a process that converts any carbon -containing

material into a synthesis gas composed primarily of carbon monoxide and

hydrogen;

(25) "Gasification production" means a Kentucky operation th at primarily produces for

sale:

(a) Alternative transportation fuels;

(b) Synthetic natural gas;

(c) Chemicals;

(d) Chemical feedstocks; or

(e) Liquid fuels;

from coal, waste coal, coal -processing waste, or biomass resources, through a

gasification process. The gasification production may produce electricity as a by -

product if the primary function of the operations remains the production and sale of

alternative transportation fuels, synthetic natural gas, chemicals, chemical

feedstocks, or liquid fuels;

(26) "Headquarters" means the principal office where the principal executives of the

entity are located and from which other personnel, branches, affiliates, offices, or

entities are controlled;

(27) "Heritage county" means a county where the county populati on ranking determined

by the cabinet under KRS 154.21 -017 scores greater than or equal to ninety -seven

(97);

(28) "Hospital" means a facility licensed by the Cabinet for Health and Family Services

under KRS Chapter 216B for the operation of a hospital and the basic services

provided by a hospital;

(29) "Incentives" means the incentives available under this subchapter, as listed in KRS

154.32-020(3);

(30) "Job target" means the annual average number of new full -time jobs that the

approved company commits to create and maintain at the economic development

project, which shall not be less than ten (10) new full-time jobs;

(31) "Kentucky gross profits" has the same meaning as in KRS 141.0401;

(32) "Kentucky gross receipts" has the same meaning as in KRS 141.0401;

(33) "Lease agreement":

(a) Means an agreement between:

1. An approved company and an unrelated entity conveying the right to use

a facility, the terms of which reflect an arms' length transaction; or

2. An approved company and a related entity where the facility to be

occupied by the approved company was conveyed by unrelated entity

after the approved company received preliminary approval; and

(b) Does not include a capital lease;

(34) "Leased project" means an economic development project site occupied by an

approved company pursuant to a lease agreement;

(35) "Manufacturing" means any activity involving:

(a) 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 the processing, assembling, or production of property,

together with the storage, warehousing, distribution, and related office

facilities; or

(b) Production of vital medications, personal protective equipment, or equipment

necessary to produce personal protective equipment;

(36) (a) "Nonretail serv ice or technology" means any activity where service or

technology is provided predominantly outside the Commonwealth and

designed to serve a multistate, national, or international market.

(b) "Nonretail service or technology" includes but is not limited to call centers,

centralized administrative or processing centers, telephone or internet sales

order or processing centers, distribution or fulfillment centers, data processing

centers, research and development facilities, and other similar activities;

(37) "Owned project" means an economic development project owned in fee simple by

the approved company or an affiliate, or possessed by the approved company or an

affiliate pursuant to a capital lease;

(38) "Personal protective equipment" means protective cloth ing, helmets, gloves, face

shields, goggles, face masks, respirators, and other equipment designed to protect

the user from injury or the spread of infection or illness;

(39) "Preliminary approval" means the action taken by the authority preliminarily

approving an eligible company for incentives under this subchapter;

(40) "Renewable energy production" means a Kentucky operation that utilizes wind

power, biomass resources, landfill methane gas, hydropower, solar power, or other

similar renewable resources to generate electricity for sale to unrelated entities;

(41) "Rent" means the actual annual rent or fee paid by an approved company under a

lease agreement;

(42) "Start-up costs" means nonrecurring costs, with the exception of paragraphs (d) and

(e) of this subsection, incurred to furnish and equip a facility for an economic

development project, including costs incurred for:

(a) Computers, furnishings, office equipment, manufacturing equipment, and

fixtures;

(b) The relocation of out-of-state equipment;

(c) Recurring software subscription or licensing fees covering a period not to

exceed one (1) year form activation of the project;

(d) The initial software and licensing costs association with each new full -time

job created;

(e) Cost of fixed telecommunications equipment; and

(f) Investments in:

1. Laboratory equipment;

2. Computer servers;

3. Software;

4. Capitalized leases; and

5. Leasehold improvements;

when the costs are necessary to accommodate research and development,

headquarters, high-technology operations, or service sector facilities;

as certified to the authority in accordance with KRS 154.32-030;

(43) "Synthetic natural gas" means the same thing as in KRS 152.715;

(44) "Tax incentive agreement" means the agreement entered into pursuant to KRS

154.32-040 between the authority and an approved company;

(45) "Term," subject to KRS 154.32 -040, means the period of time for which a tax

incentive agreement may be in effect, which shall not exceed fifteen (15) years for

an economic development project located in a heritage county, or ten (10) years for

an economic development project not located in any other county;

(46) "Vital medications" means any drug or biologic used to prevent or treat a serious

life-threatening disease or medical condition for which there is no other available

source with sufficient supply of that drug or biologic or alternative drug or biologic;

(47) "Wage" means the per hour earnings of a full-time employee, including wages, tips,

overtime, bonuses, and commissions, as reflected on the employee's federal form

W-2 wage and tax statement, but excludes employee benefits; and

(48) "Wage target" means the average total hourly compensati on amount, including the

minimum wage and employee benefits, that the approved company commits to

meet for all new full -time jobs created and maintained as a result of the economic

development project, which shall not be less than:

(a) Two hundred percent (200%) of the federal minimum wage in heritage

counties; or

(b) Three hundred percent (300%) of the federal minimum wage in any other

counties.