††††† 307 KAR 1:040. Application process for incentives for energy independence.
††††† RELATES TO: KRS 61.878, 154.27-010 -154.27-090
††††† STATUTORY AUTHORITY: KRS 154.27-030, 154.20-020, 154.20-033
††††† NECESSITY, FUNCTION AND CONFORMITY: KRS 154.27-030(10) requires the Kentucky Economic Development Finance Authority to establish standards and requirements for the application process for incentives for energy independence, and KRS 154.27-030(2)(f) authorizes fees in conjunction with the application process. This administrative regulation clarifies the application process, identifies the information required for purposes of application, and clarifies the steps that shall be taken by the authority and the applicant between preliminary approval and final approval.
††††† Section 1. Definitions. (1) "Affiliate" is defined by KRS 154.27-010(2).
††††† (2) "Agreement" means a "tax incentive agreement" as defined by KRS 154.27-010(28).
††††† (3) "Application" means the form "Application for Incentives for Energy Independence Act (IEIA) Tax Incentive Program."
††††† (4) "Authority" is defined by KRS 154.27-010(6).
††††† (5) "Capital investment" is defined by KRS 154.27-010(9).
††††† (6) "Carbon capture ready" is defined by KRS 154.27-010(10).
††††† (7)"Project" means an "eligible project" as defined by KRS 154.27-010(15).
††††† (8) "Retrofit" is defined by KRS 154.27-010(26).
††††† (9) "Upgrade" is defined by KRS 154.27-010(30).
††††† Section 2. Application. (1) An applicant for incentives pursuant to KRS Subchapter 154.27 shall submit an application to the authority at the applicable address stated in the application instructions.
††††† (a) If the applicant is retrofitting or upgrading an existing facility, the applicant shall notify the appropriate regional office within the Department for Existing Business Development within the Cabinet for Economic Development. That office shall assign a project manager to assist the applicant in any matters concerning the Kentucky Cabinet for Economic Development.
††††† (b) If the applicant is a new business locating in Kentucky, the applicant shall notify the Department for New Business Development in the Cabinet for Economic Development. That office shall assign a project manager to assist the applicant in any matters concerning the Kentucky Cabinet for Economic Development.
††††† (c) An application shall not receive consideration without the signature of an agent of the cabinet from the appropriate office as identified in the application instructions.
††††† (d) An application shall be received by the office identified in the application instructions as appropriate, prior to the last Friday of the month to be considered at the following monthís meeting of the authority.
††††† (2) In addition to the information required by KRS 154.27-030, the applicant shall provide as part of the application the following information:
††††† (a) Identification of the applicantís affiliates as required by KRS 154.27-030 shall include:
††††† 1. Entity name;
††††† 2. State of incorporation or organization;
††††† 3. Federal tax identification number or Social Security numbers for individual partners;
††††† 4. Agent for service of process;
††††† 5. Street address;
††††† 6. Telephone number; and
††††† 7. If there are more than two (2) affiliates, a diagram of the ownership structure of the affiliated companies.
††††† (b)1. Identification of each anticipated source of eligible project funding as required by KRS 154.27-030 shall include the:
††††† a. Name of any agencies or institutions to which loan or grant applications have been submitted or are anticipated;
††††† b. Date of the loan or grant application submission or the anticipated date of submission;
††††† c. Amount and type of funds requested or to be requested; and
††††† d. Current status of each loan or grant application, date of closing, and award or transfer of funds.
††††† 2. Copies of grant or loan applications, agreements or contracts related to funding shall be provided upon request of the authority;
††††† (c) An itemized list of the capital investment, including specific estimated cost by line item, identification of items expected to qualify for sales tax exemption, and projected date of completion of the project;
††††† (d) Identification of the proposed feedstock and, for each type of feedstock, either anticipated or confirmed sources;
††††† (e) A business plan for the facility, including a full analysis of the product to be produced, market potential for the product identified and any long term contracts that are already in place for sale of the product, legal structure of the applicant and identification of the management team for the applicant and, if different, at the project site;
††††† (f) A financial statement from the applicant for the most recent fiscal year end, and if the applicant is a newly formed entity, a financial statement from the entity or individuals forming the entity;
††††† (g) A letter from the applicant containing:
††††† 1. If the project is a new location, a statement that the economic development project may reasonably and efficiently locate outside of the Commonwealth and, without the inducements offered by the authority, the eligible company would likely locate outside the state; or
††††† 2. If the project is a retrofit or upgrade, a statement that the tax incentives are necessary for the retrofit or upgrade to occur.
††††† (h) A plan for employment of Kentucky residents during construction required by KRS 154.27-030, which shall include an explanation of methods to be employed and shall describe specific actions that shall be taken by the applicant to ensure that Kentucky residents shall have opportunities for employment;
††††† (i) If requested by the authority, a letter of support from the local government describing local economic development funding or incentive and giving general support for the proposed project; and
††††† (j) An application fee in the amount of $1,000.
††††† Section 3. Use and Costs of Consultant. (1) If the authority determines pursuant to KRS 154.27-030(5)(c) that there is a need to consult with an outside expert, after preliminary approval, the authority shall contract with an outside consultant with the expertise required to analyze the project.
††††† (2) The consultant shall review the work to be completed and provide an estimate of the cost;
††††† (3) The applicant shall pay to the authority the total estimated cost upon execution of the consultant payment agreement.
††††† (4) The authority shall pay the consultant from the consultant funds paid by the applicant in accordance with the terms and conditions of the consultant payment agreement.
††††† (5) Any balance of funds remaining after completion and delivery of the consultantís analysis to the authority shall be returned to the applicant.
††††† Section 4. Memorandum of Agreement. If the authority grants preliminary approval of the application, it shall enter into a Memorandum of Agreement with the applicant which shall include:
††††† (1) The maximum incentive amount preliminarily approved by the authority;
††††† (2) The amount and the percentage of incentives to be provided under each available recovery method, if applicable;
††††† (3) Conditions for final approval, including:
††††† (a) Verification of representations made in the application and other documents submitted in association with the application;
††††† (b) Payment for all professional services that may result from the application including legal fees and expenses of counsel through the authority pursuant to KRS 154.20-033;
††††† (c) A date by which the applicant shall request the final approval from the authority;
††††† (d) Verification of information necessary for calculation of advance payment incentive if requested by applicant; and
††††† (e) Terms and standards for amendment of the Memorandum of Agreement.
††††† Section 5. Information Sharing. (1) The authority may seek comments and recommendations from the Governorís Office of Energy Policy and the Center for Applied Energy Research with regard to the following:
††††† (a) Whether the facility, as proposed, is eligible for incentives pursuant to KRS Subchapter 154.27;
††††† (b) Whether the facility is carbon capture ready, if applicable, including comments regarding appropriate equipment and floor plan required for compression and storage of carbon;
††††† (c) Feasibility of the project, including the product, the market for the product, and the process employed;
††††† (d) Applicable permits that shall be required and projection of eligibility of the facility; and
††††† (e) Issues or questions relating to the application and applicant eligibility for incentives.
††††† (2) Information provided to the authority in conjunction with the application may be shared with the Office of Energy Policy, the Department of Revenue, the Center for Applied Energy Research, and other appropriate experts or consultants, and those agencies, experts, or consultants shall maintain the confidentiality of the information provided to the extent that the information is exempt from disclosure under the Kentucky Open Records Act, KRS 61.878.
††††† Section 6. Payment of Administrative Fees. (1) Upon final approval and execution of the agreement, the applicant shall remit to the authority an administrative fee equal to..25 percent of the incentives authorized in the tax incentive agreement, not to exceed $50,000. This administrative fee shall be exclusive of any expert consultant or legal fees which may be due.
††††† (2) The applicant shall not be eligible for incentives until the administrative fee, any consultant payments or legal fees, and expenses are paid in full.
††††† Section 7. Incorporation by Reference. (1) "Application for Incentives for Energy Independence Act (IEIA) Tax Incentive Program, November, 2007", is incorporated by reference.
††††† (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the following locations of the Cabinet for Economic Development, Monday through Friday, 8:00 a.m. to 4:30 p.m.:
††††† (a) Central Kentucky Office, 2300 Capital Plaza Tower, 500 Mero Street, Frankfort, Kentucky 40601;
††††† (b) East Kentucky Office, 530 South Lake Drive Prestonsburg, Kentucky 41653;
††††† (c) West Kentucky Office, 145 East Center Street, Suite 28, Madisonville, Kentucky 42431 if the applicant is an existing business considering a retrofit or upgrade; and
††††† (d) Department for New Business Development, Old Capitol Annex, 300 West Broadway, Frankfort, Kentucky 40601 if the applicant is a new business. (34 Ky.R. 1311; Am. 1719; eff. 2-1-2008.)