{"data":{"id":"us-ky/krs-65.6972","jurisdiction":"us-ky","citation":"KRS 65.6972","heading":"Development area and related project -- Application -- Approval --","body":"Requirements for project -- Independent consultant -- Approval by authority -\n- Ordinance -- Grant contracts -- Portion of increment due from each taxing\ndistrict -- Financing account -- Reports -- Operating procedures -- Obligation\nof Department of Revenue and agency.\n(1) A city, county, or agency shall submit an application to the Cabinet for Economic\nDevelopment for approval of a development area, which includes revenues from the\nCommonwealth, and the related project, the standards for which the Cabinet for\nEconomic Development and the Tourism, Arts and Heritage Cabinet shall establish\nthrough their operating procedures or by the promulgation of administrative\nregulations in accordance  with KRS Chapter 13A. The Cabinet for Economic\nDevelopment shall determine whether the development area and related project\ndescribed in the application constitutes a project of the type described in KRS\nChapter 154 for which the economic development auth ority shall have the right to\napprove the development area and related project or KRS Chapter 148 for which the\ntourism development authority shall have the right to approve the development area\nand related project. The Cabinet for Economic Development, up on its\ndetermination, shall assign the application to the economic development authority\nor the tourism development authority, as appropriate, for further consideration and\napproval.\n(2) A project otherwise satisfying the requirements of the project as def ined in KRS\n65.680, in order to qualify the project and related development area, in addition\nshall satisfy all of the following requirements for a project:\n(a) Represent new economic activity in the Commonwealth;\n(b) Result in a minimum capital investment of ten million dollars ($10,000,000);\n(c) Result in the creation of a minimum of twenty-five (25) new full-time jobs for\nKentucky residents to be held by persons subject to the personal income tax of\nthe Commonwealth within two (2) years of the date of th e final resolution\nauthorizing the development area and the project;\n(d) Result in a net positive economic impact to the economy of the\nCommonwealth, taking into consideration any substantial adverse impact on\nexisting Commonwealth businesses;\n(e) Generate a minimum of twenty -five percent (25%) of the total revenues\nderived from the project attributable to sources outside of the Commonwealth\nduring each year a grant contract is in effect;\n(f) Result in a unique contribution to or preservation of the economi c vitality and\nquality of life of a region of the Commonwealth; and\n(g) Not be primarily devoted to the retail sale of goods.\n(3) After assignment of the application for the project and related development area by\nthe Cabinet for Economic Development:\n(a) The economic development authority or the tourism development authority, as\nappropriate, shall engage the services of a qualified independent consultant to\nanalyze data related to the project and the development area, who shall\nprepare a report for the eco nomic development authority or the tourism\ndevelopment authority, as appropriate, with the following findings:\n1. The percentage of revenues derived from the development area which\nare generated from business not located in the Commonwealth;\n2. The estimated amount of increment the development area is expected to\ngenerate over a twenty (20) year period from the projected activation\ndate;\n3. The estimated amount of ad valorem taxes, other than the school or fire\ndistrict portion of ad valorem taxe s, from real property, Kentucky\nindividual income tax, Kentucky sales and use taxes, local insurance\npremium taxes, occupational license fees, or other such state taxes\nwhich would be displaced within the Commonwealth, to reflect\neconomic activity which is  being shifted over the twenty (20) year\nperiod;\n4. The estimated increment the development area is expected to generate\nover the twenty (20) year period, equal to the estimated amount set forth\nin paragraph (a)2. of this subsection minus the estimated amo unt set\nforth in paragraph (a)3. of this subsection; and\n5. The project or development area will not occur if not for the designation\nof the development area and granting of increments by the\nCommonwealth to the development area.\n(b) The independent consul tant shall consult with the economic development\nauthority or the tourism development authority, as appropriate, the Office of\nState Budget Director and the Finance and Administration Cabinet in the\ndevelopment of the report. The Office of State Budget Dir ector and the\nFinance and Administration Cabinet shall agree as to methodology to be used\nand assumptions to be made by the independent consultant in preparing its\nreport. On the basis of the independent consultant's report and prior to any\napproval of a p roject by the economic development authority or the tourism\ndevelopment authority, as appropriate, the Office of State Budget Director and\nthe Finance and Administration Cabinet shall certify whether there is a\nprojected net positive economic impact to the  Commonwealth and the\nexpected amount of incremental state revenues from the project to the\neconomic development authority or tourism development authority, as\nappropriate. Approval shall not be granted if it is determined that there is no\nprojected net positive economic impact to the Commonwealth.\n(c) The primary project entity shall pay all costs associated with the independent\nconsultant's report.\n(4) With respect to each city, county, or agency that applies for approval of a project\nand development area , the economic development authority or the tourism\ndevelopment authority, as appropriate, shall request materials and make all inquiries\nconcerning the application the economic development authority or the tourism\ndevelopment authority, as appropriate, de ems necessary. Upon review of the\napplication and requested materials, and completion of inquiries, the economic\ndevelopment authority or the tourism development authority, as appropriate, may by\nresolution grant approval for:\n(a) The development area and project for which an application has been\nsubmitted;\n(b) The percentage of the Commonwealth's portion of the increment that the\nCommonwealth agrees to have distributed to the agency each year during the\nterm of the grant contract;\n(c) The maximum amount of costs for the project for which the increment may be\ndistributed to the agency; and\n(d) The grant contract.\n(5) Prior to any approval by the economic development authority or the tourism\ndevelopment authority, as appropriate, the economic development auth ority or the\ntourism development authority shall have received an ordinance adopted by the city\nor county creating the development area and approving the project and establishing\nthe percentage of increment that the city and county are distributing each year to the\nagency to pay for the development area for which economic development authority\nor tourism development authority approval is sought. The economic development\nauthority or the tourism development authority, as appropriate, shall not approve a\npercentage of the Commonwealth's portion of the increment to be distributed to the\nagency each year with respect to a development area and project greater than the\npercentage approved by the city or county creating the development area.\n(6) The amount of incre ment available for a development area shall be no more than\neighty percent (80%) per year, but shall in no case exceed twenty -five percent\n(25%) of the project costs during the term of the grant agreement.\n(7) The terms and conditions of each grant contrac t are subject to negotiations between\nthe economic development authority or the tourism development authority, as\nappropriate, and the other parties to the grant contract. The grant contract shall\ninclude but not be limited to the following provisions: the  activation date, the\nagreed taxes to be included in the calculation of the increment, the percentage\nincrement to be contributed by the Commonwealth and other taxing districts, the\nmaximum amount of project costs, a description of the development area and  the\nproject, the termination date, and the requirement that the agency annually certify to\nthe economic development authority or tourism development authority, as\nappropriate, as to the use of the increment for payment of project costs in the\ndevelopment area.\n(8) The agency responsible for the development area that enters into the grant contract\nshall, after each year the grant contract is in effect, certify to the economic\ndevelopment authority or the tourism development authority, as appropriate:\n(a) The amount of the increment used during the previous calendar year for the\nproject costs; and\n(b) That more than twenty -five percent (25%) of the total revenues derived from\nthe project during the previous calendar year were attributable to sources\noutside the Commonwealth.\n(9) (a) Any agency that enters into a grant contract for the release of any increments\nthat may arise during the period of a grant contract shall, after each calendar\nyear a grant contract is in effect, notify each taxing district obligated under the\ngrant contract that an increment is due. In consultation with each taxing\ndistrict, the agency shall determine the respective portion of the total\nincrement due from each taxing district, and the determination of the agency\nshall be reviewed by  an independent certified public accountant. The agency\nshall submit to the Department of Revenue for certification its determination\nwith respect to the total increment due together with the review of the certified\npublic accountant and detailed informati on concerning ad valorem taxes,\nKentucky individual income tax, Kentucky sales and use taxes, local\ninsurance premium taxes, occupational license fees, and other such state taxes\nas may be determined by the Department of Revenue, including withholding\ntaxes of employees of each taxpayer located in the development area.\n1. Upon notification to the agency of the total increment by the Department\nof Revenue and notice from the agency, each taxing district obligated\nunder the grant contract, other than the Comm onwealth, shall release to\nthe agency the respective portion of the total increment due under the\ngrant contract. The agency shall certify to the Department of Revenue on\na calendar year basis the amount of the increments collected.\n2. Upon certification o f the total increment due from the Commonwealth\nby the Department of Revenue, the department is authorized and\ndirected to transfer the increment to a tax increment financing account\nestablished and administered by the Finance and Administration Cabinet\nfor payment of the Commonwealth's portion of the increment. Prior to\ndisbursement by the Finance and Administration Cabinet of the funds\nfrom the tax increment financing account, the economic development\nauthority or the tourism development authority, as app ropriate, shall\nnotify the Finance and Administration Cabinet that the agency is in\ncompliance with the terms of the grant contract. Upon notification, the\nFinance and Administration Cabinet is authorized and directed to release\nto the agency the Commonwea lth's portion of the total increment due\nunder the grant contract.\n(b) The Department of Revenue shall report to the economic development\nauthority or the tourism development authority, as appropriate, on a calendar\nyear basis the amount of the total increment released to an agency.\n(10) The Department of Revenue shall have the authority to establish operating\nprocedures for the administration and determination of the Commonwealth's\nincrement.\n(11) The Department of Revenue or agency shall have no obligatio n to refund or\notherwise return any of the increment to the taxpayer from whom the increment\narose or is attributable. Further, no additional increment resulting from audit,\namended returns or other activity for any period shall be transferred to the trust\naccount established under subsection (9)(a)2. of this section and administered by the\nFinance and Administration Cabinet after the initial release to the agency of the\nCommonwealth's increment for that period.","path":["KRS Chapter 65"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=23463","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:49:22Z","sha256":"7912c9fa377f543989ad632114f3160b2f60e3ede107643bbeb51084892019b6","source_id":"us-ky","stale":false,"prev":"us-ky/krs-65.6971","next":"us-ky/krs-65.698"},"notice":"GroundRules: Original legal text. Not legal advice."}