††††† 307 KAR 1:050. Application process for Tax Increment Financing.


††††† RELATES TO: KRS 154.30-010, 154.30-030, 154.30-040, 154.30-050, 154.30-060, 154.30-070, and 154.20-033.

††††† STATUTORY AUTHORITY: KRS 154.30-030(2)(b) and KRS 154.20-033.

††††† NECESSITY, FUNCTION AND CONFORMITY: KRS 154.30-030(2)(b) requires the Kentucky Economic Development Finance Authority to establish additional standards and requirements for the application process for Tax Increment Financing. KRS 154.20-033 authorizes the Kentucky Economic Development Finance Authority to impose fees in conjunction with the application process. This administrative regulation establishes the application process for tax increment financing and the procedures that occur between preliminary approval and final approval.


††††† Section 1. Definitions. (1) "Agency" is defined by KRS 154.30-010(2).

††††† (2) "Application" means the form "Application for State Tax Increment Financing (TIF)".

††††† (3) "Authority" is defined by KRS 154.30-010(5).

††††† (4) "Capital Investment" is defined by KRS 154.30-010(6).

††††† (5) "City" is defined by KRS 154.30-010.

††††† (6) "County" is defined by KRS 154.30-010(10).

††††† (7) "Development area" is defined by KRS 154.30-010(13).

††††† (8) "Incentives" means the portion of state tax revenues as defined in KRS 154.30-010(28) that may be pledged by the authority under the specific tax increment financing participation program for which an applicant has applied.

††††† (9) "Project" is defined by KRS 154.30-010(25).

††††† (10) "Tax incentive agreement" is defined by KRS 154.30-010(29).


††††† Section 2. Application. (1) A city, county or agency applying for incentives pursuant to KRS Chapter 154.30 shall submit an application to the Department of Financial Incentives within the Cabinet for Economic Development at the Old Capitol Annex, 300 West Broadway, Frankfort, Kentucky 40601.

††††† (2) Applications shall be submitted by electronic mail, by mail or by hand delivery.

††††† (3) If an application is submitted by electronic mail, the signature pages relevant to that application shall be submitted by mail in the original hard copy. The authority shall not accept electronic signatures.


††††† Section 3. Local Certification. The governing body of the city, county, or agency submitting the application shall include with its submission to the authority the determinations, findings, and data required by KRS 65.7049(3) and (4).


††††† Section 4. Application Supplements. In addition to the information required by KRS 154.30-030, the applicant shall provide:

††††† (1) All information and attachments required by the "Application for State Tax Increment Financing (TIF)"; which is incorporated herein by reference.

††††† (2) An application fee in the amount of $1,000; and

††††† (3) Copies of any grant or loan applications, agreements, contracts or other documentation related to financing of the project, upon request of the authority.


††††† Section 5. Preliminary Approval. (1) If the application and supplemental information submitted in accordance with Section 4 of this administrative regulation indicate that the minimum requirements for any of the Tax Increment Financing Programs involving state participation are likely to be met, the staff shall make a recommendation to the authority and submit the project for preliminary approval.

††††† (2) If the authority staff cannot confirm the minimum requirements, a letter shall be sent to the applicant identifying the specific requirements which have not been met.


††††† Section 6. Use and Costs of Contract Consultant. (1)(a) If the project receives preliminary approval, and state participation is requested under KRS 154.30-050 or 154.30-060, the authority shall contract with an outside consultant with the expertise required to analyze the project pursuant to KRS 154.30-030.

††††† (b) If the applicant requests state participation under KRS 154.30-040, the authority may contract with an outside consultant to analyze the project if the authority determines that additional information is necessary.

††††† (2) If the applicant requests state participation under KRS 154.30-050 or 154.30-060, the he authority shall consult with the Office of State Budget Director, the contract consultant, and the Department of Revenue and develop an appropriate analysis that will meet the requirements of KRS 154.30-030.

††††† (3) If the authority seeks analysis of a contract consultant:

††††† (a) The contract consultant shall provide an estimate of the cost of the analysis;

††††† (b) The applicant shall pay to the authority the total estimated cost of the analysis in advance and shall execute a consultant payment agreement; and

††††† (c) The authority shall pay the contract consultant from the consultant funds paid by the applicant to the authority in accordance with the terms and conditions of the consultant payment agreement.

††††† (4) Any balance of funds remaining after completion and delivery of the contract consultantís analysis to the authority shall be returned to the applicant.


††††† Section 7. Memorandum of Agreement. If the authority grants preliminary approval of the application, the authority shall enter into a Memorandum of Agreement with the applicant which shall include the following:

††††† (1) Identification of the footprint of the project;

††††† (2) The total maximum incentive amount preliminarily approved by the authority;

††††† (3) Conditions for final approval, including:

††††† (a) Verification of representations made in the application and other documents submitted in association with the application; and

††††† (b) Payment for all professional services that may result from the application including legal fees and expenses of counsel to the authority pursuant to KRS 154.20-033;

††††† (4) A date by which all statutory and regulatory requirements for final approval shall have been met and a schedule for periodic reporting at the discretion of the authority; and

††††† (5) Terms and standards for amendment of the Memorandum of Agreement.


††††† Section 8. Information Sharing. (1) The authority may seek comments and recommendations from the Office of the State Budget Director and the Department of Revenue.

††††† (2) Information provided to the authority in conjunction with the application may be shared with the Office of State Budget Director, Department of Revenue and any affected local jurisdictions as well as appropriate experts or contract consultants. Those agencies, experts or contract 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 9. Final Approval. Upon final approval of a project by the authority, the authority and the agency shall enter into a tax incentive agreement pursuant to KRS 154.30-070.


††††† Section 10. Payment of Administrative Fees. (1) Upon final approval and execution of the tax incentive agreement required by KRS 154.30-070, the applicant shall remit to the authority an administrative fee equal to 0.25 percent of the incentives authorized in the tax incentive agreement, not to exceed $50,000. This administrative fee shall be exclusive of any contract consultant fees or legal fees which may be due.

††††† (2) The applicant shall not be eligible for incentives until the administrative fee, any consultant payments and all legal fees and expenses are paid in full.


††††† Section 11. Incorporation by Reference. (1) "Application for State Tax Increment Financing (TIF)", July 2008, is incorporated by reference.

††††† (2) This material may be inspected, copied, or obtained, subject to applicable copyright law, at the Cabinet for Economic Development, Department of Financial Incentives, Old Capitol Annex, 300 West Broadway, Frankfort, Kentucky Monday through Friday, 8 a.m. to 4:30 p.m. (35 Ky.R. 680; 1167; eff. 12-5-2008.)