Interim Joint Committee on Appropriations and Revenue


Budget Review Subcommittee on Economic Development and Tourism, Natural Resources and Environmental Protection


Minutes of the<MeetNo1> 2nd Meeting

of the 2011 Interim


<MeetMDY1> October 27, 2011


Call to Order and Roll Call

The<MeetNo2> 2nd meeting of the Budget Review Subcommittee on Economic Development and Tourism, Natural Resources and Environmental Protection of the Interim Joint Committee on Appropriations and Revenue was held on<Day> Thursday,<MeetMDY2> October 27, 2011, at<MeetTime> 10:30 AM, in<Room> Room 129 of the Capitol Annex. Senator Brandon Smith, Chair, called the meeting to order. Note: Chair Smith proceeded with the presentations. The minutes of the July 28, 2011, meeting were not approved and a roll call was not taken. Members were noted as they arrived due to several meetings this day.


Present were:


Members:<Members> Senator Brandon Smith, Co-Chair; Representatives Leslie Combs, Jim Gooch Jr., Terry Mills, Ruth Ann Palumbo, Tanya Pullin, Marie Rader, Fitz Steele, and Susan Westrom.


Guests: Sam Burgess, Kentucky Main Street, Carrollton; Chris Robinson and Holly Little, Kentucky Main Street, London; Nancy Turner, Preservation Kentucky; and Ned Sheehy, Community Ventures Corporation.


LRC Staff: Kem Delaney-Ellis, Perry Papka, and Marlene Rutherford.


Preservation Kentucky – Historic Preservation Issues Facing Kentucky

Nancy Turner, Chairman, Preservation Kentucky and Executive Director of Tourism for Winchester-Clark County area, Holly Wiedemann, President and Founder of AU Associates, and Chris Robinson, London Main Street, discussed the economic impact of historic preservation in Kentucky.


Ms. Turner explained that Preservation Kentucky formed in 1998 is a statewide, nonprofit entity dedicated to advocating and educating about the importance of preservation. Preservation Kentucky is dedicated to preserving buildings, structures, and sites in all regions and cities in the Commonwealth. National partnerships include Preservation Action and the National Trust for Historic Preservation; the state partners include the Kentucky Heritage Council, Main Street Program, as well as having different heritage organizations throughout the state on local and regional levels. In 2005, Preservation Kentucky spearheaded the historic tax credit initiative which has been very successful. Since its implementation, it has created $161.5 million re-generated back into the economy and several thousand jobs. Preservation is not only an economic tool but is an element that helps describe the state’s unique heritage and history. Kentucky was one of two states to launch the rural heritage development initiative and has been able to help farm owners receive historic tax credits for barns and outbuildings, which have preserved the landscape.


Chair Smith indicated that this program is a wonderful tool for old buildings in a downtown area for funds to revitalize the area and receive a tax credit of 20-30 percent credit if the building is on the state historical society’s list in addition to federal money. He asked that Ms. Turner provide any additional information regarding this program not contained in the packets for review or consideration should members want their district communities to participate in the program.


Ms. Holly Weiedemann discussed the impact the state historic tax credit has on AU Associates. Since its founding 22 years ago, AU Associates has done $63 million worth of projects around the state, and the projects have created 5,400 jobs. Her company has done restoration on various old schools throughout the state and is currently working on an old federal post office in Jackson. These projects happen because AU Associates combines historic federal and state tax credits and housing tax credits. The state historic tax credit plays an important role in making these projects happen. The challenge on the state tax credit currently is the cap and the amount of funding is unknown because the state looks at how many projects are submitted and does a pro rata share.


In response to a question from Chair Smith, Ms. Weiedemann indicated that the state tax credit amount was originally $3 million when passed with the assistance of Preservation Kentucky, and it is currently $5 million. Because of the cap on the amount of tax credits, out of the $5 million for this year, only 53 percent of the projects requested were allocated. If the cap was $10 million, all the credits for projects could have been allocated that were requested. She said it is important to understand that for every unit developed there are three jobs created, which translates to being able to create more jobs. She said that the states of Rhode Island and Missouri have a 25 percent tax credit available, and they are able to provide a significant amount of tax credits, which attracts federal dollars.


In response to another question by Chair Smith, Ms. Wiedemann indicated that projects are eligible for 20 percent tax credit for the total project costs. The federal tax credit is also 20 percent, however in Kentucky because of the cap, a project may be eligible for 20 percent but based on today’s numbers would only receive 7 percent. She also said that the state tax credit allows Kentucky banks only to offset their franchise tax.


Chris Robinson works with the City of London and its Main Street Program. He also encouraged alleviating the cap on the tax credits. The Kentucky Heritage Council provides service to 72 participating communities. He stated that in 2010 the Kentucky Main Street Programs reported more than $465 million invested in downtowns, representing the creation of 367 new businesses within the districts. Since its inception, the districts have generated more than $3.5 billion of public and private investment over the past 30 years. The Main Street programs not only preserve historic buildings, but they also promote new business, innovation, and creativity, and foster community pride. There are only two dedicated staff persons at the Kentucky Heritage Council to guide the 72 communities participating in the Main Street Program to guide and assistant the communities.


In response to a question by Chair Smith concerning ISTEA funds or Intermodal Surface Transportation Efficiency Act funds, Ms. Wiedemann indicated that the ISTEA funds are being threatened and that these funds are also an important tool. The threat of these funds underscores the necessity of increasing the cap for the state tax credits. She said that ISTEA funds are used predominantly for projects in communities that are on existing federal highways. The funds can be used for the restoration of bridges, taverns, historic buildings that are contiguous or adjacent to a federal or state highway.


Kentucky State Nature Preserves Commission

Donald Dott, Executive Director of the Kentucky State Nature Preserves Commission updated the committee on the Commission’s activities. The Commission’s mission is to protect the biological diversity of the Commonwealth which he said is done primarily through determining what is out in the state and identifying what is rare and unusual, what is the best natural place for the species and try to acquire the species and place in a nature preserve system.


The Commission recently developed a book published by the University Press of Kentucky entitled “Kentucky’s Natural Heritage, An Illustrated Guide to Biodiversity.” The book has many photos and information and is written in a way that the general public can follow and at the same time contains scientific information and a goal is to get the book into schools to use as a teaching resource for science classrooms to teach about the different species a biological environment of Kentucky. Kentucky has a lot of diversity in species that would be very effective in a classroom. Biodiversity is important because everyone completely depends on it; everything needed comes from the natural world, such as food, medicines, clothing, wood, and coal, and the biodiversity is what keeps it working.


He said Kentucky is an important state on a global perspective. The southeast United States is concentrated in the aquatic species.


In response to a question by Chair Smith concerning the suppression of the Asian carp in western Kentucky, Mr. Dott indicated that his Commission does not work directly on this species because this species is in the larger rivers such as the Mississippi and Ohio Rivers but it is a non native species. He said the biggest threat to biodiversity is land conversion and secondly the non native species such as the Asian carp because this type fish feeds on the native species in the river. Another concern is the black carp, which gets into ponds and small rivers when the Mississippi floods and gets into other areas where there are rare species and will feed on those species.


He said the Commission is treating pockets of hemlock trees that are being invaded by beetles to preserve trees from being totally destroyed so they can spread back out in the future after losing many of them. The University of Kentucky has been involved in research in Blanton Forest, Western Kentucky University does research in the Green River area, and Eastern Kentucky University has a strong biotic program. He said that the nature preserves are open to research. Mr. Dott stated that Kentucky is third in the country behind Tennessee and Alabama for the number of fresh water fish species stating there are 245 native species. Kentucky is fourth behind Tennessee, Alabama, and Georgia with 103 native mussels’ species. Pink Mucket, a species of freshwater mussels, function as a filtering system pulling out bacteria and contaminants and algae out of streams and also serve as food for other wildlife.


He said that Kentucky has 54 percent native species of crayfishes and that 10 percent of the world’s crayfish species are in Kentucky. To conserve the crayfish species that are spread throughout the state, several years ago the Commission put together an effort to look at creating a map of the state and identified the most important watersheds for protecting the species. The Green River is fourth nationally for the number of species of fish and mussels.


To determine which species are rare, the Commission inventories the state. The white-haired Goldenrod is a threatened species; the only place this plant is known to grow is in the Daniel Boone and Red River Gorge area.


The Commission also does bat surveys, but over the last couple of years has lost this position between cap reductions and retirements and were not able to replace this employee position. There is an exotic disease called white nose syndrome that is killing bats in large numbers. Much research is being performed to find a remedy. The employee who did bat surveys also performed bird surveys.


In addition to species inventory, the Commission inventories for natural areas or trying to find examples of the state where the environment is still in a condition that would have been before settlers in the 1700s with only about half of the state inventoried thus far. When this information is collected it goes into a database and is used to develop a preserve design as to the most promising area financially to be protected. He said that there are several preserves where hunting and fishing is allowed and some preserves that are jointly managed with the Department of Fish and Wildlife Resources. The primary purpose of the nature preserves is biodiversity protection which is why they are limited to passive recreation. The collected information goes into a Natural Heritage Program of Biological database which is feed into a national database that all fifty states participate in called Nature Serve which brings in information also from Canada and Latin America. This database is used also for data requests by universities on particular plants, trees, or fish species. This can also involve development projects such as utility corridors and road construction. The Commission also has set up with the Department of Natural Resources and Environmental Public Protection a system that helps that department review permit applications for surface mining and quarries and other resource development.


At this time Kentucky is about 47 percent forested. Mr. Dott also stated that Kentucky is losing to development approximately 130 acres per day, a loss of about 80 percent of the wetlands, and an invasion of exotic species.


In response to a question by Chair Smith as to the best way to eradicate kudzu, a fast growing vine and exotic species, Mr. Dott indicated that herbicide is the best control for kudzu at this time and it takes a couple of years of application to kill it.


Mr. Dott stated that the Nature Preserves Program is geared to rare species and community management, research, education and outreach and passive outdoor recreation. There are 60 nature preserves at this time encompassing 25,000 acres.


Mr. Dott indicated that the Commission has done well with the nature preserves. There are 727 species of plants and animals listed as rare and of that 727 species there are over 200 that are protected on the nature preserves system or approximately one-third. Of the 62 natural communities in the state, 22 are protected within the state nature preserve system. Also, he said that the Blanton Forest State Nature Preserve is the largest old growth forest in the state with 2,300 acres and is 14th in the eastern United States.


Mr. Dott stated that the state has lost a lot of the prairie areas and a study was just completed this past year looking at remnants of the prairies. The Commission has been working with the Departments of Fish and Wildlife and Natural Resources to identify these areas to landowners who can use some of the habitat protection funds that come through the farm programs to protect these areas.


Mr. Dott indicated that next spring would be a good time for committee members to visit or take a hike in a nature preserve such as Floracliff in Fayette County or Lower Howard’s Creek in Clark County, both of which are close to Frankfort.


Mr. Dott noted that Kentucky is the third largest producer of hardwood in the United States with $6.3 billion generated in timber shipments since 2004 and employing over 22,000 people.


Some of the issues that affect the growth and success of the Commission are: restoring the position of zoologist to survey birds, mammals, reptiles and amphibians, which are keystone species that have major impacts on their natural communities and systems; expediting the natural area inventory and species surveys because of land conversion accelerating; and increasing the Nature Preserves stewardship staff to manage the 26,000 acres of nature preserves.


Representative Palumbo asked where the facts were obtained concerning the urban sprawl numbers. Mr. Dott said this information was provided by the Natural Resources and Conservation Services, which is part of the U. S. Department of Agriculture. He pointed out that this included such things as road development, home development, resource development, and quarries, and that he would provide this information.


The meeting adjourned at 11:35 a.m.