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AN ACT relating to tax increment financing and declaring an emergency. 1
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
Section 1. KRS 65.7047 is amended to read as follows: 3
(1) Any city or county may establish a local development area pursuant to this section, 4
subject to the following conditions: 5
(a) A local development area shall be on previously undeveloped land; 6
(b) No more than one thousand (1,000) acres shall be approved for a local 7
development area in any twelve (12) month period in any county; 8
(c) The establishment or expansion of the local development area shall not cause 9
the assessed value of taxable real property within all local development areas 10
and development areas of the city or county establishing the local 11
development area to exceed twenty percent (20%) of the assessed value of all 12
taxable real property within its jurisdiction. For the purpose of determining 13
whether the twenty percent (20%) threshold has been met, the assessed value 14
of taxable real property within all of the local development areas and 15
development areas shall be valued as of the establishment date; and 16
(d) Unless the ordinance establishing a local development area requires an earlier 17
termination date, a local development area shall cease to exist on the 18
termination date. 19
(2) A city or county shall take the following steps to establish or modify a local 20
development area: 21
(a) If the city or county pledges occupational license taxes or the occupational 22
license fee authorized by KRS 65.7056 as a part of the local tax revenues to 23
support the local development area, the city or county may[shall] engage the 24
services of a qualified independent outside consultant or financial adviser to 25
analyze the data related to the project and the development area and prepare a 26
report. If the city or county elects to have the report prepared pursuant to 27 UNOFFICIAL COPY 22 RS SB 111/GA
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this paragraph the report may[shall] include the following: 1
1. The estimated approved public infrastructure costs for the project[ and, 2
if relevant, project costs, financing costs, and costs associated with land 3
preparation, demolition, and clearance]; 4
2. The feasibility of the project, taking into account the scope and location 5
of the project; 6
3. The estimated amount of local tax revenues, as applicable, that would be 7
generated by the project over the period, which may be up to forty (40) 8
years, as applicable, from the development area's established date; 9
4. The estimated amount of local tax revenues, as applicable, that would be 10
displaced within the city or county, for the purpose of quantifying 11
economic activity which is being shifted over the same period as that set 12
forth in subparagraph 3. of this paragraph. The projections for displaced 13
activity shall include economic activity that is lost to the local 14
jurisdiction as a result of the project, as well as economic activity that is 15
diverted to the project that formerly took place at existing establishments 16
within the local jurisdiction prior to the commencement date of the 17
project; 18
5. The estimated amount of old revenues that would have been generated 19
in the development area of the project in the absence of the project, 20
computed over the same time period as set forth in subparagraph 3. of 21
this paragraph; 22
6. In the process of estimating the revenues and impacts prescribed in 23
subparagraphs 3. and 4. of this paragraph, the independent outside 24
consultant shall not consider any of the following: 25
a. Local tax revenues or economic impacts associated with any 26
projects within the development area where the new project will be 27 UNOFFICIAL COPY 22 RS SB 111/GA
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located; or 1
b. Local tax revenues or economic impacts associated with economic 2
development projects and approved Kentucky Tourism 3
Development Act projects under KRS Chapter 148; 4
7. The relationship of the estimated incremental revenues to the financing 5
needs, including any increment bonds, of the project; 6
8. When estimating the fiscal impact of the project, the consultant shall 7
evaluate the amount of revenue estimated in subparagraph 3. of this 8
paragraph and shall deduct the amounts estimated in subparagraphs 4. 9
and 5. of this paragraph. The resulting difference shall be compared to 10
the estimated incremental revenues to determine the presence or absence 11
of a positive fiscal impact; and 12
9. A determination that the project will not occur if not for the designation 13
of the development area, the granting of incremental revenues by the 14
taxing district or districts, and the granting of the local tax incremental 15
revenues;[.] 16
(b) The city or county shall hold a public hearing to solicit input from the public 17
regarding the local development area. The city or county shall advertise the 18
hearing by causing to be published, in accordance with KRS 424.130, notice 19
of the time, place, and purpose of the hearing and a general description of the 20
boundaries of the proposed local development area. The notice shall include a 21
summary of the projects proposed for the local development area; 22
(c) After the public hearing, the city or county shall adopt an ordinance which 23
shall include the following provisions: 24
1. A description of the boundaries of the local development area; 25
2. The establishment date and the termination date; 26
3. A name for the local development area for identification purposes; 27 UNOFFICIAL COPY 22 RS SB 111/GA
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4. Approval of any agreements relating to the local development area; 1
5. A provision establishing a special fund for the local development area or 2
any project within the local development area; 3
6. A requirement that any entity other than the governing body that 4
receives financial assistance under the local development area ordinance, 5
whether in the form of a grant, loan, or loan guarantee, shall make 6
periodic accounting to the governing body; 7
7. A provision for periodic analysis and review by the governing body of 8
the development activity in the local development area; 9
8. Designation of the agency or agencies responsible for oversight, 10
administration, and implementation of the local development ordinance; 11
9. The estimated net positive fiscal impact as calculated in paragraph (a)8. 12
of this subsection if the city or county elects to have an[in the required] 13
independent consultant report prepared; and 14
10. Any other provisions, findings, limitations, rules, or procedures 15
regarding the proposed local development area or a project within the 16
local development area and its establishment or maintenance deemed 17
necessary by the city or county;[ and] 18
(d) If incremental revenues or other resources are to be pledged from taxing 19
districts other than the city or county establishing the local development area, 20
a local development area agreement shall be executed in accordance with the 21
provisions of subsection (4) of this section; and 22
(e) If the city or county elects to use an independent consultant or financial 23
adviser as provided in paragraph (a) of this subsection, the independent 24
consultant or financial adviser shall: 25
1. Consult with the city's or county's budget office in the development of 26
the report; and 27 UNOFFICIAL COPY 22 RS SB 111/GA
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2. With the approval of the city's or county's budget office, create a 1
methodology to be used and assumptions to be made by the 2
independent consultant or financial adviser in preparing the report. 3
The developer requesting the city or county to establish the local 4
development area shall pay all costs associated with the independent 5
consultant or financial adviser preparation of the independent consultant or 6
financial adviser report, unless the city or county agrees to pay the costs of 7
preparation. 8
(3) Funding for projects in a local development area shall be provided in accordance 9
with KRS 65.7057. 10
(4) A local development area agreement shall be executed among the agencies and 11
taxing districts involved in administering, providing financing, or pledging 12
incremental revenues within the local development area. The local development 13
area agreement shall be adopted by a city or county by ordinance and by any other 14
taxing district or agency by resolution, and shall include but not be limited to the 15
following provisions: 16
(a) Identification of the parties to the local development area agreement and the 17
duties and responsibilities of each entity under the agreement; 18
(b) Specific identification of the tax increments released or pledged by type of tax 19
by each taxing district; 20
(c) The anticipated benefit to be received by each taxing district for the release or 21
pledge, including: 22
1. A detailed summary of old revenues collected and projected new 23
revenues for each taxing district on an annual basis for the term of the 24
local development area agreement; and 25
2. The maximum amount of incremental revenue to be paid by each taxing 26
district and the maximum number of years the payment will be effective; 27 UNOFFICIAL COPY 22 RS SB 111/GA
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(d) A detailed description of the local development area; 1
(e) A description of each proposed project, including an estimate of the costs of 2
construction, acquisition, and development; 3
(f) A requirement that pledged incremental revenues will be deposited in a 4
special fund pursuant to KRS 65.7061, including the timing and procedure for 5
depositing incremental revenues and other pledged amounts into the special 6
fund; 7
(g) Terms of default and remedies, provided that no remedy shall permit the 8
withholding by any party to the local development area agreement of any 9
incremental revenues pledged to the special fund if increment bonds are 10
outstanding that are secured by a pledge of those incremental revenues; 11
(h) The commencement date, activation date, and termination date; and 12
(i) Any other provisions not inconsistent with KRS 65.7041 to 65.7083 deemed 13
necessary or appropriate by the parties to the agreement. 14
(5) Any pledge of incremental revenues in a local development area agreement shall be 15
superior to any other pledge of revenues for any other purpose and shall, from the 16
activation date to the termination date set forth in the local area development 17
agreement, supersede any statute, ordinance, or resolution regarding the application 18
or use of incremental revenues. No ordinance in conflict with a local development 19
area agreement shall be adopted while any increment bonds secured by that pledge 20
remain outstanding. Ordinances or resolutions pledging incremental revenues on a 21
subordinate basis to any existing pledges may be adopted. 22
Section 2. Whereas it is of the utmost importance for local governments to have 23
the ability to establish or modify local development areas using the provisions of this Act 24
at the earliest timeframe possible, an emergency is declared to exist and this Act takes 25
effect upon its passage and approval by the Governor or upon its otherwise becoming a 26
law. 27