Be It Enacted by the General Assembly of the Commonwealth of Kentucky s15
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1 AN ACT relating to economic development and declaring an emergency. 2Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3 Section 1. KRS 154.45-010 is amended to read as follows: 4As used in KRS 154.45-020 to 154.45-110, unless the context otherwise requires: 5(1) "Authority" means the Economic Growth District[Enterprise Zone] Authority of 6 Kentucky; 7(2) "Employee" means a person who works twenty (20) hours or more per week and is 8 employed by a business located in an economic growth district[enterprise zone] 9 and includes a qualified seasonal employee. For purposes of determining whether a 10 qualified business maintains the percentage of targeted workforce employees 11 required by subsection (8) of this section for the entire time it is certified as a 12 qualified business, a qualified seasonal employee shall be deemed to be employed 13 for the entire calendar year; 14(3) "Economic growth district" or "district[Enterprise zone]" means an area 15 designated by the authority to be eligible for the benefits of KRS 154.45-020 to 16 154.45-110; 17(4) "Establishment" means a single physical location where business is conducted or 18 where services or industrial operations are performed; 19(5) "Existing business" means a person, corporation, or other entity engaged in the
20 active conduct of a trade or business at a location within the economic growth 21 district[enterprise zone] prior to the date the authority designated the area as an 22 economic growth district[enterprise zone]; 23(6) "Local government" means a city, county, urban-county government, or charter 24 county government; 25(7) "New business" means a person, corporation, or other entity who was not engaged 26 in the active conduct of a trade or business in the economic growth 27 district[enterprise zone] prior to the date the authority designated the area as an
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1 economic growth district[enterprise zone], and who becomes engaged in the active 2 conduct of a trade or business within the economic growth district[enterprise zone] 3 after the date the authority designated the area as an economic growth 4 district[enterprise zone]; 5(8) "Qualified business" means an existing business or new business that has been 6 certified by the authority to have at least fifty percent (50%) of its employees 7 performing substantially all of their services within an economic growth 8 district[enterprise zone] and meeting one (1) of the following criteria: 9 (a) With a new business employing at least twenty-five percent (25%) of the 10 business's employees from the targeted workforce; or 11 (b) With an existing business creating new activity within the economic growth 12 district[enterprise zone] of not less than a twenty percent (20%) increase in 13 the number of employees or by a twenty percent (20%) increase in capital 14 investment within eighteen (18) months from the date of application for 15 certification as a qualified business. Businesses that are certified based upon 16 an increase in employees shall employ at least twenty-five percent (25%) of 17 the new employees from the targeted workforce; 18(9) "Qualified employee" means an employee of a qualified business; 19(10) "Qualified seasonal employee" means a seasonal employee employed by a seasonal
20 business for at least sixty (60) days during the calendar year; 21(11) "Seasonal business" means a business with respect to which seasonal employees 22 constitute at least eighty percent (80%) of the total number of employees of the 23 business during the calendar year. For purposes of this definition, a person shall be 24 treated as an employee only if the person is employed by the business for at least 25 sixty (60) days during the calendar year; 26(12) "Seasonal employee" means a person who is employed by a qualified business 27 during certain seasons or during part of the calendar year; and
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1(13) "Targeted workforce" means Kentucky residents: 2 (a) Who reside within an economic growth district[enterprise zone]; or 3 (b) Who have been unemployed for at least ninety (90) days or who have 4 received public assistance benefits, based on need and intended to alleviate 5 poverty, for at least ninety (90) days prior to employment with a qualified 6 business. 7 (c) For the purpose of this subsection, "Kentucky resident" means a person who 8 has resided in the Commonwealth for at least ninety (90) days. 9 Section 2. KRS 154.45-020 is amended to read as follows: 10(1) A local government may, by act of the local legislative body, designate an area 11 within its jurisdiction to be an economically depressed area. The local government 12 may then make written application to the authority to have the area declared to be 13 an economic growth district[enterprise zone]. The application shall include a 14 description of the location of the area and other information the authority may 15 require. 16(2) Two (2) or more local governments may, by an act of each respective legislative 17 body, designate an area within their collective jurisdictions to be an economically 18 depressed area. After each local government has enacted the proper ordinances 19 designating the area to be economically depressed for the purpose of applying to the
20 authority for designation as an economic growth district[enterprise zone], each 21 legislative body shall enter into an interlocal governmental agreement. The 22 agreement shall be governed by the provisions of the Interlocal Cooperation Act, 23 KRS 65.210 to 65.300, and shall include: 24 (a) The establishment of a joint board to administer the economic growth 25 district[enterprise zone] that shall be comprised of representatives from each 26 local government; 27 (b) A statement establishing the joint board for the life of the economic growth
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1 district[enterprise zone]; 2 (c) A statement establishing uniform local incentives that shall be offered by each 3 local government; 4 (d) A statement establishing financial support by each local government for the 5 administration of the joint board; and 6 (e) Other requirements that may be established by the authority. 7(3) A local government with an existing economic growth district[enterprise zone] may 8 apply to the authority to amend the boundaries of the existing district[zone] for the 9 purpose of joining with other local governments. A local government applying to 10 cross jurisdictional boundaries to amend the area of an economic growth 11 district[enterprise zone] shall comply with the provisions of subsection (2) of this 12 section and KRS 154.45-030. 13(4) Upon approval of the interlocal governmental agreement pursuant to KRS 65.210 to 14 65.300, two (2) or more local governments may make written application to the 15 authority to have the area declared an economic growth district[enterprise zone]. 16 The application shall include a description of the area and other information the 17 authority may require. 18(5) Upon receipt of an application, the authority shall review the application to 19 determine if the area described in the application qualifies to be designated an
20 economic growth district[enterprise zone]. 21(6) The authority shall complete its review within one hundred twenty (120) days of 22 receipt of the application, but may extend this time period an additional sixty (60) 23 days if necessary. If the authority denies the application, it shall inform the local 24 government of the fact in writing along with reasons for the denial. 25 Section 3. KRS 154.45-030 is amended to read as follows: 26(1) A local government may make written application to the authority for purposes of 27 amending the boundaries of an existing economic growth district or for the
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1 designation of an area as an economic growth district[enterprise zone]. Neither 2 the designation of an area as an economic growth district nor a boundary change 3 to an existing economic growth district[enterprise zone] shall[ not] become 4 effective until after written approval has been granted by the authority. 5(2) A local government applying to the authority for an amendment to the boundaries 6 of an existing economic growth district[enterprise zone] shall certify in writing the 7 following information: 8 (a) The proposed area for amendment is contiguous to the existing zone; 9 (b) The proposed area for amendment independently meets the requirements 10 established by KRS 154.45-040; and 11 (c) A statement documenting the reasons the local government is seeking to 12 amend the boundaries of its existing economic growth district[enterprise 13 zone]. A detailed map showing original boundary lines and proposed 14 boundary line changes shall be attached to the application. 15(3) Prior to granting approval for amending the boundaries of an existing economic 16 growth district[enterprise zone], the authority shall verify and document in writing 17 the following: 18 (a)[ How amending the boundaries of the existing zone will comply with the goals 19 established pursuant to KRS 154.45-001;
20 (b)] The local government's commitment and incentives to be offered to support 21 the expanded economic growth district[enterprise zone]; 22 (b)[(c)] If two (2) or more local governments are involved, that each local 23 government has met the requirements of KRS 154.45-020; 24 (c)[(d)] The local government's attempt to utilize available buildings and 25 properties within the existing district[zone]; and 26 (d)[(e)] Unforeseen circumstances or overriding economic factors that have 27 occurred since the designation of the original district[zone] that necessitate
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1 amending the boundaries of the existing district[zone]. 2 Section 4. KRS 154.45-040 is amended to read as follows: 3(1) Any area of a local government may be designated an economic growth 4 district[enterprise zone] that: 5 (a) Has a continuous boundary, and 6 (b) Is an area of pervasive poverty, unemployment, and economic distress. 7(2) An area meets the requirements of subsection (1)(b) of this section if: 8 (a) The average rate of unemployment in the area for the most recent eighteen 9 (18) month period for which data is available was at least one and one-half (1- 10 1/2) times the average national rate of unemployment for that eighteen (18) 11 month period; and 12 (b) At least seventy percent (70%) of the residents living in the area have incomes 13 below eighty percent (80%) of the median income of the residents of the local 14 government requesting designation of an economic growth district[enterprise 15 zone]; or 16 (c) The population of all census tracts in the area decreased by ten percent (10%) 17 or more between 1990[1980] and 2000[1990] and the local government 18 requesting designation establishes in writing, to the satisfaction of the 19 authority, that either:
20 1. Chronic abandonment or demolition of commercial or residential 21 structures exist in the area, or 22 2. Substantial tax arrearages of commercial or residential structures exist in 23 the area. 24 Section 5. KRS 154.45-050 is amended to read as follows: 25(1) Existing state enterprise zones on December 29, 2003, shall be designated as 26 economic growth districts on the effective date of this Act[In addition to the seven 27 (7) existing state enterprise zones, the authority may designate three (3) additional
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1 state enterprise zones by December 31, 1988. In deciding which areas should be 2 designated as enterprise zones the authority shall give preference to: 3 (a) Local governments that have documented the greatest commitment to the 4 goals established pursuant to KRS 154.45-001; 5 (b) Areas with the highest levels of poverty, unemployment, and general distress; 6 and 7 (c) Areas that have the greatest support from the local government seeking 8 designation, the community, residents, local business, and private 9 organizations, taking into account the resources available to the local 10 government]. 11(2)[ Designation of an area as an enterprise zone shall remain in effect during the period 12 beginning on the date of designation and ending on December 31 of the twentieth 13 year following designation. 14(3)] The authority shall remove the designation of an area as an economic growth 15 district[enterprise zone] if the area no longer meets the criteria for designation as 16 set out in KRS 154.45-020 to 154.45-110 or by administrative regulation adopted 17 by the authority pursuant to KRS 154.45-020 to 154.45-110. The authority shall 18 establish by administrative regulation a procedure for revocation of the designation 19 of an economic growth district[enterprise zone]. The authority shall ensure that
20 local governments shall be notified in writing of the authority's intent and reasons 21 for considering revocation of the designation. The authority shall establish a 22 reasonable time frame within which the local government may correct the problems 23 cited by the authority to avoid revocation of the economic growth 24 district[enterprise zone designation]. 25(3)[(4)] A local government that has had an economic growth district[enterprise zone] 26 designation revoked shall be prohibited from applying for future economic growth 27 district[enterprise zone] designations until such time as an area within its
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1 jurisdiction meets the criteria set forth in subsection (2) of Section 4 of this 2 Act[for at least five (5) years. The authority may, by administrative regulation, 3 extend the time frame that a local government is prohibited from participating in the 4 enterprise zone program]. 5(4)[(5)] If the authority revokes the designation of an economic growth 6 district[enterprise zone], it shall immediately begin reviewing the applications of 7 local governments seeking an economic growth district[enterprise zone] and 8 designate a new area as an economic growth district within one hundred twenty 9 (120) days, but may extend this time period an additional sixty (60)) days if 10 necessary[enterprise zone as soon as possible]. 11(5)[(6)] If the authority removes the designation of an area as an economic growth 12 district[enterprise zone] pursuant to this section, the qualified businesses within the 13 area shall lose[retain] certification and shall not remain eligible to receive tax 14 exemptions pursuant to KRS 154.45-090[ until December 31 of the twentieth year 15 from the date of the original designation of the area as an enterprise zone]. 16 Section 6. KRS 154.45-060 is amended to read as follows: 17(1) For the purposes of carrying out the provisions of KRS 154.45-020 to 154.45-110, 18 there is created the Economic Growth District[Enterprise Zone] Authority of 19 Kentucky consisting of eleven (11) members. The authority shall be appointed as
20 follows: one (1) member appointed by the Governor from a list of three (3) persons 21 nominated by the Labor Management Advisory Council; one (1) member appointed 22 by the Governor from a list of three (3) persons nominated by the Kentucky League 23 of Cities; one (1) member appointed by the Governor from a list of three (3) 24 persons nominated by the Kentucky Association of Counties; one (1) member 25 appointed by the Governor who is qualified to represent the interests of Kentucky's 26 small business community; one (1) member appointed by the Governor from a list 27 of three (3) persons nominated by the AFL-CIO of Kentucky; two (2) members
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1 appointed by the Governor to serve at large; one (1) member appointed by the 2 Governor from a list of five (5) persons nominated by the secretary of the Cabinet 3 for Economic Development; the secretary of the Cabinet for Economic 4 Development or his designee; the secretary of the Revenue Cabinet or his designee; 5 and the secretary of the Cabinet for Families and Children or his designee. 6(2) Authority members shall serve a term of four (4) years and, except for the secretary 7 of the Cabinet for Economic Development, the secretary of the Revenue Cabinet, 8 and the secretary of the Cabinet for Families and Children, shall not be eligible to 9 succeed themselves. 10(3) The authority shall meet at least four (4) times per year. A majority of the total 11 authority membership shall be required to designate an area as an economic growth 12 district[enterprise zone] and to certify businesses as qualified businesses. The 13 authority shall keep official minutes of all meetings. All members shall serve until 14 such time as their successors are qualified and appointed. Each member of the 15 authority shall receive one hundred dollars ($100), not to exceed twelve hundred 16 dollars ($1,200) per calendar year, as compensation for attending official meetings 17 of the authority. Each member of the authority shall be reimbursed for travel 18 expenses actually incurred in the discharge of his duties on the authority. 19(4) The Cabinet for Economic Development shall serve as staff for the authority and
20 carry out the administrative duties and functions as directed by the authority. 21 Section 7. KRS 154.45-070 is amended to read as follows: 22The authority shall administer the provisions of KRS 154.45-020 to 154.45-110, and shall 23promulgate administrative regulations in accordance with the provisions of KRS 24Chapter 13A to: 25(1) Develop procedures, in conjunction with the Department for Employment 26 Services, to verify whether the qualified employees of a qualified business reside 27 within an economic growth district or are otherwise considered to be within the
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1 targeted workforce[Establish by administrative regulation a process to monitor 2 compliance by local governments and qualified businesses with the provisions of 3 the Enterprise Zone Program]; 4(2) Develop procedures, in conjunction with the Department for Employment 5 Services, to verify the total number of qualified employees of economic growth 6 district qualified businesses[Initiate contact and fully cooperate with the Revenue 7 Cabinet in the collection of information to determine the fiscal impact of enterprise 8 zone tax exemptions on state revenues]; 9(3) Develop procedures, in conjunction with the Revenue Cabinet, in which the sales 10 taxes on new and used equipment and machinery and building materials and the 11 motor vehicle usage tax are paid at the point of sale and refunded to qualified 12 businesses after sufficient documentation has been provided to the Revenue 13 Cabinet; 14 (4) Develop procedures, in conjunction with the Revenue Cabinet, in which the 15 motor vehicle usage tax is paid at the point of sale and refunded to qualified 16 businesses after sufficient documentation has been provided to the Revenue 17 Cabinet. The authority and the Revenue Cabinet shall establish guidelines for the 18 submission of documentation and other evidence from the qualified businesses 19 necessary to establish that the vehicle or vehicles shall be used solely for
20 legitimate business purposes and shall not be used by the owner, officer, director, 21 partner, or manager of the qualified business, or the family members of the 22 owner, officer, director, partner, or manager of the qualified business, for either 23 business or personal use. 24 (5) Develop procedures and standards for certification of economic growth districts, 25 and determination and approval of qualified businesses; 26 (6) Cooperate with the Revenue Cabinet to assist in collecting information to be used 27 to determine the fiscal impact of the Economic Growth District Program on state
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1 tax revenues; 2(7) Report to the General Assembly no later than October 1 annually regarding: 3 (a) The authority's method of monitoring the Economic Growth 4 District[Enterprise Zone] Program; 5 (b) Information on the fiscal impact of economic growth district[enterprise zone] 6 tax exemptions on state revenues; 7 (c) The authority's method of reviewing local incentives; 8 (d) Information on the number of qualified businesses per district[zone]; 9 (e) Information on the number of requests for amendments to district[zone] 10 boundaries and the number of amendments granted and denied; and 11 (f) Recommendations requiring state legislative action; 12(8)[(4)] Revoke designation of an area as an economic growth district[enterprise 13 zone] pursuant to the provisions of KRS 154.45-050;[.] 14(9)[(5)] Prohibit the certification of businesses in an economic growth 15 district[enterprise zone] if the local government has been notified in writing by the 16 authority of the authority's intent to revoke the local government's designation as an 17 economic growth district[enterprise zone]. The prohibition of certification of 18 businesses shall continue until the authority officially revokes the local 19 government's economic growth district[enterprise zone] designation, or notifies the
20 local government in writing that the problems cited by the authority have been 21 corrected and the economic growth district[enterprise zone] designation shall not 22 be revoked; 23(10)[(6)] Offer technical assistance and job training assistance to local governments, 24 qualified businesses, and neighborhood economic growth district[enterprise] 25 association corporations; and 26(11)[(7)] Aggressively review local incentives and commitments on an annual basis. 27 Section 8. KRS 154.45-080 is amended to read as follows:
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1(1) The authority shall establish and design for public display a master business license 2 that shall certify that the qualifying business has obtained all necessary state agency 3 permits, licenses, certificates, approvals, registrations, charters, or any other form of 4 permission required by law to engage in business in an economic growth 5 district[enterprise zone]. 6(2) The authority shall provide information and assistance to persons desiring to locate 7 and engage in business in an economic growth district[enterprise zone] regarding 8 the state licenses, permits, certificates, approvals, registrations, charters, and any 9 other forms of permission required by law to engage in business in the 10 Commonwealth. 11(3) Responsibility for determining if requested licenses, permits, certificates, approvals, 12 registrations, charters, or other form of permission required by law shall be issued 13 to a qualified business, shall remain with the agency legally authorized to issue the 14 license. 15 Section 9. KRS 154.45-090 is amended to read as follows: 16(1) A new business, or an existing business certified on the basis of employee 17 expansion, shall be eligible to receive the tax advantages provided for in this section 18 if the qualified business maintains the percentage of targeted workforce employees 19 required by KRS 154.45-010(8) for the entire time it is certified as a qualified
20 business in an economic growth district[the Enterprise Zone Program]. 21(2) Building materials used in remodeling, rehabilitation, or new construction within an 22 economic growth district[enterprise zone] shall be exempt from sales and use taxes 23 provided for in KRS Chapter 139. 24(3) New and used equipment and machinery purchased and used by a qualified 25 business within an economic growth district[enterprise zone] shall be exempt from 26 sales and use taxes provided for in KRS Chapter 139. Equipment and machinery 27 may be moved in and out of an economic growth district[enterprise zone] for
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1 business purposes only. In addition, it may not become a permanent fixture at 2 another location and may be only temporarily located elsewhere for maintenance, 3 mechanical failure, or emergency short term replacement. 4(4) Commercial vehicles as defined in KRS 186.050, purchased and used by a qualified 5 business solely for business purposes, shall be exempt from the motor vehicle usage 6 tax imposed by KRS 138.460. 7(5) Motor vehicles not considered commercial vehicles pursuant to KRS 186.050, 8 purchased and used by a qualified business solely for business purposes and in 9 accordance with subsection (4) of Section 7 of this Act, shall be exempt from the 10 motor vehicle usage tax limited to the first twenty thousand dollars ($20,000) of the 11 "retail price" of the vehicle as defined in KRS 138.450. 12(6) Motor vehicles or motor trucks purchased by a qualified business for the purpose of 13 being leased to a customer for a period greater than ninety (90) days shall not be 14 exempt from the motor vehicle usage taxes provided for in KRS 138.460. 15(7) A qualified business shall be allowed a credit against the tax levied pursuant to 16 KRS 141.040 equal to ten percent (10%) of wages paid to each employee who has 17 been unemployed for at least ninety (90) days or who has received public assistance 18 benefits, based on need and intended to alleviate poverty, for at least ninety (90) 19 days prior to employment with the qualified business, up to fifteen hundred dollars
20 ($1,500) per employee. Any unused credit may be carried forward for up to five (5) 21 years. 22(8) A local government may, by an act of the local legislative body, levy an ad valorem 23 tax rate of one-tenth of one cent ($.001) upon each one hundred dollars ($100) of 24 value on qualified property within an economic growth district[enterprise zone] 25 regardless of the rates provided for in KRS Chapter 132. 26 Section 10. KRS 154.45-100 is amended to read as follows: 27(1) Individuals residing in an economic growth district[enterprise zone] may establish
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1 a neighborhood economic growth district[enterprise] association corporation. There 2 shall be one (1) corporation for each geographic neighborhood area which shall be 3 defined by the incorporating residents. 4(2) The incorporating residents shall draft a charter and bylaws for the association 5 suitable for doing business in corporate form. The charter and bylaws shall describe 6 the geographic neighborhood area to which the incorporating association applies, 7 the manner in which a stock interest in the corporation shall be offered to each 8 resident of the neighborhood, contain provisions for amendment by a majority of 9 stockholders, and authorize the corporation to engage in business only within the 10 particular district[zone] in which the neighborhood area of the corporation is 11 located. 12(3) The incorporating residents shall send to all residents of the corporation's 13 neighborhood area: 14 (a) An explanation of the proposed new corporation and their rights in it; 15 (b) A copy of the corporate charter and bylaws; and 16 (c) An offer of the stock interest to which each particular resident is entitled 17 without charge. 18(4) The board of directors of the corporation may, upon approval of a majority of the 19 members of the local legislative body of appropriate jurisdiction, apply to the
20 authority for certification as a neighborhood economic growth district[enterprise] 21 association corporation. The authority shall not grant the status unless the 22 corporation has complied with the requirements of this section and other 23 requirements as may be adopted by the authority by administrative regulation. Upon 24 granting certification, the authority shall place the corporation's charter and bylaws 25 in a public file. The authority shall have power to revoke or suspend certification, or 26 any of the leases issued under subsection (5) of this section, if the corporation fails 27 to continue to comply with the requirements of this section. The authority shall give
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1 technical assistance to district[zone] residents attempting to start corporations. 2(5) Property within the neighborhood area of a certified corporation that is owned by 3 the state or a local government and that is not in current use by the government 4 shall be leased to the corporation. The term of the lease shall not be less than 5 ninety-nine (99) years and the full amount of rental fees under the lease shall not 6 exceed one dollar ($1). The lease may be renewed upon expiration if the 7 corporation has continuously complied with the requirements of this section. 8(6) A certified corporation shall be exempt from state and local taxation during the life 9 of the district[zone] in which it is located. 10 Section 11. KRS 154.45-110 is amended to read as follows: 11(1) The Revenue Cabinet shall initiate contact and fully cooperate with the authority in 12 the collection of information to determine the fiscal impact of economic growth 13 district[enterprise zone] tax exemptions on state revenues. 14(2) Report to the Interim Joint Committee on Local Government and the Interim 15 Joint Committee on Economic Development and Tourism of the General 16 Assembly or their logical successors, no later than October 1 annually regarding: 17 (a) The cabinet's method of monitoring the Economic Growth District[Enterprise 18 Zone Program]; 19 (b) Information on the fiscal impact of economic growth district[enterprise zone]
20 tax exemptions on state revenues; and 21 (c) Recommendations requiring state legislative action. 22(3) The Revenue Cabinet shall by administrative regulation amend its sales and use tax 23 return to collect fiscal information on qualified businesses within an economic 24 growth district[enterprise zone] for purposes of reporting to the General Assembly. 25(4) The Revenue Cabinet shall promulgate administrative regulations to establish a 26 process for the collection of tax information relating to economic growth 27 district[enterprise zone] tax exemptions.
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1 Section 12. KRS 65.680 is amended to read as follows: 2As used in KRS 65.680 to 65.699: 3(1) "Activation date" means the date established in the grant contract at any time in a 4 two (2) year period after the date of approval of the grant contract by the economic 5 development authority or the tourism development authority, as appropriate. The 6 economic development authority or tourism development authority, as appropriate, 7 may extend this two (2) year period to no more than four (4) years upon written 8 application of the agency requesting the extension. To implement the activation 9 date, the agency who is a party to the grant contract shall notify the economic 10 development authority or the tourism development authority, as appropriate, the 11 Revenue Cabinet, and other taxing districts that are parties to the grant contract 12 when the implementation of the increment authorized in the grant contract shall 13 occur; 14(2) "Agency" means an urban renewal and community development agency established 15 under KRS Chapter 99; a development authority established under KRS Chapter 16 99; a nonprofit corporation established under KRS Chapter 58; an air board 17 established under KRS 183.132 to 183.160; a local industrial development authority 18 established under KRS 154.50-301 to 154.50-346; a riverport authority established 19 under KRS 65.510 to 65.650; or a designated department, division, or office of a
20 city or county; 21(3) "Assessment" means the job development assessment fee authorized by KRS 22 65.6851, which the governing body may elect to impose throughout the 23 development area; 24(4) "Brownfield site" means real property, the expansion, redevelopment, or reuse of 25 which may be complicated by the presence or potential presence of a hazardous 26 substance, pollutant, or contaminant; 27(5) “City” means any city, consolidated local government, or urban-county;
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1(6) "Commencement date" means the date a development area is established, as 2 provided in the ordinance creating the development area; 3(7) "Commonwealth" means the Commonwealth of Kentucky; 4(8) “County” means any county, consolidated local government, or charter county; 5(9) "CPI" means the nonseasonally adjusted Consumer Price Index for all urban 6 consumers, all items (base year computed for 1982 to 1984 equals one hundred 7 (100)), published by the United States Department of Labor, Bureau of Labor 8 Statistics; 9(10) "Debt charges" means the principal, including any mandatory sinking fund deposits, 10 interest, and any redemption premium, payable on increment bonds as the payments 11 come due and are payable and any charges related to the payment of the foregoing; 12(11) “Development area” means a contiguous geographic area, which may be within one 13 (1) or more cities or counties, defined and created for economic development 14 purposes by an ordinance of a city or county in which one (1) or more projects are 15 proposed to be located, except that for any development area for which increments 16 are to include revenues from the Commonwealth, the contiguous geographic area 17 shall satisfy the requirements of KRS 65.6971 or 65.6972; 18(12) "Economic development authority" means the Kentucky Economic Development 19 Finance Authority as created in KRS 154.20-010;
20(13) "Economic growth district[Enterprise Zone]" means an area designated by the 21 Economic Growth District[Enterprise Zone] Authority of Kentucky to be eligible 22 for the benefits of KRS 154.45-010 to 154.45-110; 23(14) “Governing body” means the body possessing legislative authority in a city or 24 county; 25(15) "Grant contract" means: 26 (a) That agreement with respect to a development area established under KRS 27 65.686, by and among an agency and one (1) or more taxing districts other
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1 than the Commonwealth, by which a taxing district permits the payment to an 2 agency of an amount equal to a portion of increments other than revenues 3 from the Commonwealth received by it in return for the benefits accruing to 4 the taxing district by reason of one (1) or more projects in a development area; 5 or 6 (b) That agreement, including with respect to a development area satisfying the 7 requirements of KRS 65.6971 or 65.6972, a master agreement and addenda to 8 the master agreement, by and among an agency, one (1) or more taxing 9 districts, and the economic development authority or the tourism development 10 authority, as appropriate, by which a taxing district permits the payment to an 11 agency of an amount equal to a portion of increments received by it in return 12 for the benefits accruing to the taxing district by reason of one (1) or more 13 projects in a development area; 14(16) "Increment bonds" means bonds and notes issued for the purpose of paying the 15 costs of one (1) or more projects in a development area, the payment of which is 16 secured solely by a pledge of increments or by a pledge of increments and other 17 sources of payment that are otherwise permitted by law to be pledged or used as a 18 source of payment of the bonds or notes; 19(17) "Increments" means the amount of revenues received by any taxing district,
20 determined by subtracting the amount of old revenues from the amount of new 21 revenues in the calendar year with respect to a development area and for which the 22 taxing district or districts and the agency have agreed upon under the terms of a 23 grant contract; 24(18) "Infrastructure development" means the acquisition of real estate within a 25 development area meeting the requirements of KRS 65.6971 and the construction or 26 improvement, within a development area meeting the requirements of KRS 27 65.6971, of roads and facilities necessary or desirable for improvements of the real
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1 estate, including surveys; site tests and inspections; environmental remediation; 2 subsurface site work; excavation; removal of structures, roadways, cemeteries, and 3 other underground and surface obstructions; filling, grading, and provision of 4 drainage, storm water retention, installation of utilities such as water, sewer, sewage 5 treatment, gas, and electricity, communications, and similar facilities; and utility 6 extensions to the boundaries of the development area meeting the requirements of 7 KRS 65.6971; 8(19) "Issuer" means a city, county, or an agency issuing increment bonds; 9(20) "New revenues" means the amount of revenues received with respect to a 10 development area in any calendar year after the activation date for a development 11 area: 12 (a) Established under KRS 65.686, the ad valorem taxes other than the school and 13 fire district portions of the ad valorem taxes received from real property 14 generated from the development area and properties sold within the 15 development area, and occupational license fees not otherwise used as a credit 16 against an assessment, and all or a portion of assessments as determined by 17 the governing body; or 18 (b) Satisfying the requirements of KRS 65.6971, the ad valorem taxes other than 19 the school and fire district portions of the ad valorem taxes received from real
20 property generated from the development area and properties sold within the 21 development area; or 22 (c) Satisfying the requirements of KRS 65.6972, the ad valorem taxes, other than 23 the school and fire district portions of the ad valorem taxes, received from real 24 property, Kentucky individual income tax, Kentucky sales and use taxes, local 25 insurance premium taxes, occupational license fees, or other such state taxes 26 as may be determined by the Revenue Cabinet to be applicable to the project 27 and specified in the grant contract, generated from the primary project entity
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1 within the development area minus relocation revenue; 2(21) "Old revenues" means the amount of revenues received with respect to a 3 development area: 4 (a) Established under KRS 65.686, in the last calendar year prior to the 5 commencement date for the development area, revenues which constitute ad 6 valorem taxes other than the school and fire district portions of ad valorem 7 taxes received from real property in the development area and occupational 8 license fees generated from the development area; or 9 (b) Satisfying the requirements of KRS 65.6971, in the last calendar year prior to 10 the commencement date for the development area, revenues which constitute 11 ad valorem taxes other than the school and fire district portions of ad valorem 12 taxes received from real property in the development area; or 13 (c) Satisfying the requirements of KRS 65.6972, in the period of no longer than 14 three (3) calendar years prior to the commencement date, the average as 15 determined by the Revenue Cabinet to be a fair representation of revenues 16 derived from ad valorem taxes, other than the school and fire district portions 17 of ad valorem taxes, from real property in the development area, and 18 Kentucky individual income tax, Kentucky sales and use taxes, local 19 insurance premium taxes, occupational license fees, and other such state taxes
20 as may be determined by the Revenue Cabinet as specified in the grant 21 contract generated from the development area. With respect to this paragraph, 22 if the development area was within an active economic growth 23 district[enterprise zone] for the period used by the Revenue Cabinet for 24 measuring old revenues, then the calculation of old revenues shall include the 25 amounts of ad valorem taxes, other than the school and fire district portions of 26 ad valorem taxes, that would have been generated from real property, 27 Kentucky individual income tax, Kentucky sales and use taxes, local
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1 insurance premium taxes, occupational license fees, and other such state taxes 2 as may be determined by the Revenue Cabinet as specified in the grant 3 contract, were the development area not within an active economic growth 4 district[enterprise zone]. With respect to this paragraph, if the primary project 5 entity generated old revenue prior to the commencement date in the 6 development area or revenues were derived from the development area prior 7 to the commencement date of the development area, then revenues shall 8 increase each calendar year by the percentage increase of the consumer price 9 index, if any; 10(22) "Outstanding" means increment bonds that have been issued, delivered, and paid 11 for, except any of the following: 12 (a) Increment bonds canceled upon surrender, exchange, or transfer, or upon 13 payment or redemption; 14 (b) Increment bonds in replacement of which or in exchange for which other 15 bonds have been issued; or 16 (c) Increment bonds for the payment, or redemption or purchase for cancellation 17 prior to maturity, of which sufficient moneys or investments, in accordance 18 with the ordinance or other proceedings or any applicable law, by mandatory 19 sinking fund redemption requirements, or otherwise, have been deposited, and
20 credited in a sinking fund or with a trustee or paying or escrow agent, whether 21 at or prior to their maturity or redemption, and, in the case of increment bonds 22 to be redeemed prior to their stated maturity, notice of redemption has been 23 given or satisfactory arrangements have been made for giving notice of that 24 redemption, or waiver of that notice by or on behalf of the affected bond 25 holders has been filed with the issuer or its agent; 26(23) "Primary project entity" means the entity responsible for control, ownership, and 27 operation of the project within a development area satisfying the requirements of
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1 KRS 65.6972 which generates the greatest amount of new revenues or, in the case 2 of a proposed development area satisfying the requirements of KRS 65.6972, is 3 expected to generate the greatest amount of new revenues; 4(24) "Project" means, for purposes of a development area: 5 (a) Established under KRS 65.686, any property, asset, or improvement certified 6 by the governing body, which certification is conclusive as: 7 1. Being for a public purpose; 8 2. Being for the development of facilities for residential, commercial, 9 industrial, public, recreational, or other uses, or for open space, or any 10 combination thereof, which is determined by the governing body 11 establishing the development areas as contributing to economic 12 development; 13 3. Being in or related to a development area; and 14 4. Having an estimated life or period of usefulness of one (1) year or more, 15 including but not limited to real estate, buildings, personal property, 16 equipment, furnishings, and site improvements and reconstruction, 17 rehabilitation, renovation, installation, improvement, enlargement, and 18 extension of property, assets, or improvements so certified as having an 19 estimated life or period of usefulness of one (1) year or more;
20 (b) Satisfying the requirements of KRS 65.6971; an economic development 21 project defined under KRS 154.22-010, 154.24-010, or 154.28-010; or a 22 tourism attraction project defined under KRS 148.851; or 23 (c) Satisfying the requirements of KRS 65.6972, the development of facilities for: 24 1. The transportation of goods or persons by air, ground, water, or rail; 25 2. The transmission or utilization of information through fiber-optic cable 26 or other advanced means; 27 3. Commercial, industrial, recreational, tourism attraction, or educational
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1 uses; or 2 4. Any combination thereof; 3(25) "Relocation revenue" means the ad valorem taxes, other than the school and fire 4 district portions of ad valorem taxes, from real property, Kentucky individual 5 income tax, Kentucky sales and use taxes, local insurance premium taxes, 6 occupational license fees, and other such state taxes as specified in the grant 7 contract, received by a taxing district attributable to that portion of the existing 8 operations of the primary project entity located in the Commonwealth and 9 relocating to the development area satisfying the requirements of KRS 65.6972; 10(26) "Special fund" means a special fund created in accordance with KRS 65.688 into 11 which increments are to be deposited; 12(27) "Taxing district" means a city, county, or other taxing district that encompasses all 13 or part of a development area, or the Commonwealth, but does not mean a school 14 district or fire district; 15(28) "Termination date" means the date on which a development area shall cease to 16 exist, which for purposes of a development area: 17 (a) Established under KRS 65.686, shall be for a period of no longer than twenty 18 (20) years from the commencement date and set forth in the grant contract. 19 Increment bonds shall not mature on a date beyond the termination date
20 established by this paragraph; or 21 (b) Satisfying the requirements of KRS 65.6971, shall be for a period of no longer 22 than twenty (20) years from the commencement date and set forth in the grant 23 contract constituting a master agreement, except that for an addendum added 24 to the master agreement for each project in the development area, the 25 termination date may be extended to no longer than twenty (20) years from 26 the date of each addendum; or 27 (c) Satisfying the requirements of KRS 65.6972, shall be for a period of no longer
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1 than twenty (20) years from the activation date of the grant contract. 2 Increment bonds shall not mature on a date beyond the termination date 3 established by this subsection; 4(29) "Tourism development authority" means the Tourism Development Finance 5 Authority as created in KRS 148.850; and 6(30) "Project costs" mean the total private and public capital costs of a project. 7 Section 13. KRS 141.0205 is amended to read as follows: 8If a taxpayer is entitled to more than one (1) of the tax credits allowed against the tax 9imposed by KRS 141.020 or 141.040, the priority of application and use of the credits 10shall be determined as follows: 11(1) The nonrefundable credits against the tax imposed by KRS 141.020 shall be taken 12 in the following order: 13 (a) The individual credits permitted by KRS 141.020(3); 14 (b) The economic development credits computed under KRS 141.347, 141.400, 15 141.403, 141.407, and 154.12-2088; 16 (c) The health insurance credit permitted by KRS 141.062; 17 (d) The tax paid to other states credit permitted by KRS 141.070; 18 (e) The credit for hiring the unemployed permitted by KRS 141.065; 19 (f) The recycling or composting equipment credit permitted by KRS 141.390;
20 (g) The tax credit for cash contributions in investment funds permitted by KRS 21 154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 22 154.20-258; 23 (h) The low income credit permitted by KRS 141.066; 24 (i) The household and dependent care credit permitted by KRS 141.067; 25 (j) The coal incentive credit permitted under KRS 141.0405; and 26 (k) The research facilities credit permitted under KRS 141.395. 27(2) After the application of the nonrefundable credits in subsection (1) of this section,
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1 the refundable credits against the tax imposed by KRS 141.020 shall be taken in the 2 following order: 3 (a) The individual withholding tax credit permitted by KRS 141.350; and 4 (b) The individual estimated tax payment credit permitted by KRS 141.305. 5(3) The nonrefundable credits against the tax imposed by KRS 141.040 shall be taken 6 in the following order: 7 (a) The economic development credits computed under KRS 141.347, 141.400, 8 141.403, 141.407, and 154.12-2088; 9 (b) The health insurance credit permitted by KRS 141.062; 10 (c) The unemployment credit permitted by KRS 141.065; 11 (d) The recycling or composting equipment credit permitted by KRS 141.390; 12 (e) The coal conversion credit permitted by KRS 141.041; 13 (f) The economic growth district[enterprise zone] credit permitted by KRS 14 154.45-090; 15 (g) The tax credit for cash contributions to investment funds permitted by KRS 16 154.20-263 in effect prior to July 15, 2002, and the credit permitted by KRS 17 154.20-258; 18 (h) The coal incentive credit permitted under KRS 141.0405; and 19 (i) The research facilities credit permitted under KRS 141.395.
20(4) After the application of the nonrefundable credits in subsection (3) of this section, 21 the refundable corporation estimated tax payment credit permitted by KRS 141.044 22 shall be allowed as a credit against the tax imposed by KRS 141.040. 23 Section 14. KRS 141.120 is amended to read as follows: 24(1) As used in this section, unless the context requires otherwise: 25 (a) "Business income" means income arising from transactions and activity in the 26 regular course of a trade or business of the corporation and includes income 27 from tangible and intangible property if the acquisition, management, or
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1 disposition of the property constitutes integral parts of the corporation's 2 regular trade or business operations; 3 (b) "Commercial domicile" means the principal place from which the trade or 4 business of the corporation is managed; 5 (c) "Compensation" means wages, salaries, commissions, and any other form of 6 remuneration paid or payable to employees for personal services; 7 (d) "Financial organization" means any bank, trust company, savings bank, 8 industrial bank, land bank, safe deposit company, private banker, savings and 9 loan association, credit union, cooperative bank, investment company, or any 10 type of insurance company; 11 (e) "Nonbusiness income" means all income other than business income; 12 (f) "Public service company" means any business entity subject to taxation under 13 KRS 136.120; 14 (g) "Sales" means all gross receipts of the corporation not allocated under 15 subsections (3) through (7) of this section; 16 (h) "State" means any state of the United States, the District of Columbia, the 17 Commonwealth of Puerto Rico, any territory or possession of the United 18 States, and any foreign country or political subdivision thereof. 19(2) Any corporation which is required by KRS 141.010(14)(b) to allocate and apportion
20 its net income shall allocate and apportion its net income as provided in this section. 21(3) Rents and royalties from real, intangible or tangible personal property, capital gains 22 and losses, interest, or patent or copyright royalties, to the extent that they constitute 23 nonbusiness income, shall be allocated as provided in subsections (4) through (7) of 24 this section. 25(4) (a) Net rents and royalties from real property located in this state are allocable to 26 this state. 27 (b) Net rents and royalties from tangible personal property are allocable to this
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1 state if and to the extent that the property is utilized in this state; or in their 2 entirety if the corporation's commercial domicile is in this state and the 3 corporation is not organized under the laws of or taxable in the state in which 4 the property is utilized. 5 (c) The extent of utilization of tangible personal property in a state is determined 6 by multiplying the rents and royalties by a fraction, the numerator of which is 7 the number of days of physical location of the property in the state during the 8 rental or royalty period in the taxable year and the denominator of which is 9 the number of days of physical location of the property everywhere during all 10 rental or royalty periods in the taxable year. If the physical location of the 11 property during the rental or royalty period is unknown or unascertainable by 12 the corporation, the tangible personalty is utilized in the state in which the 13 property was located at the time the rental or royalty payer obtained 14 possession. 15 (d) Net rents and royalties from intangible personal property located in this state 16 are allocable to this state. For purposes of this section, royalties from property 17 leased in Kentucky shall be considered as royalties from intangible personal 18 property. 19(5) (a) Capital gains and losses from sales or other dispositions of real property
20 located in this state are allocable to this state. 21 (b) Capital gains and losses from sales or other dispositions of tangible personal 22 property are allocable to this state if the property had a situs in this state at the 23 time of the sale, or the corporation's commercial domicile is in this state and 24 the corporation is not taxable in the state in which the property had a situs. 25 (c) Capital gains and losses from sales or other dispositions of intangible personal 26 property are allocable to this state if the corporation's commercial domicile is 27 in this state.
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1(6) Interest is allocable to this state if the corporation's commercial domicile is in this 2 state. 3(7) (a) Patent and copyright royalties are allocable to this state if and to the extent 4 that the patent or copyright is utilized by the payer in this state; or if and to the 5 extent that the patent or copyright is utilized by the payer in a state in which 6 the corporation is not taxable and the corporation's commercial domicile is in 7 this state. 8 (b) A patent is utilized in a state to the extent that it is employed in production, 9 fabrication, manufacturing, or other processing in the state or to the extent that 10 a patented product is produced in the state. If the basis of receipts from patent 11 royalties does not permit allocation to states or if the accounting procedures 12 do not reflect states of utilization, the patent is utilized in the state in which 13 the corporation's commercial domicile is located. 14 (c) A copyright is utilized in a state to the extent that printing or other publication 15 originates in the state. If the basis of receipts from copyright royalties does not 16 permit allocation to states or if the accounting procedures do not reflect states 17 of utilization, the copyright is utilized in the state in which the corporation's 18 commercial domicile is located. 19(8) Except as provided for in subsection (9) of this section, all business income shall be
20 apportioned to this state by multiplying the income by a fraction, the numerator of 21 which is the property factor plus the payroll factor plus the sales factor, and the 22 denominator of which is three (3); provided, however, that effective with taxable 23 years beginning after July 31, 1985, in lieu of the equally weighted three (3) factor 24 apportionment fraction based on property, payroll, and sales, an apportionment 25 fraction composed of a sales factor representing fifty percent (50%) of the fraction, 26 a property factor representing twenty-five percent (25%) of the fraction, and a 27 payroll factor representing twenty-five percent (25%) of the fraction shall be used.
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1 (a) The property factor is a fraction, the numerator of which is the average value 2 of the corporation's real and tangible personal property owned or rented and 3 used in this state during the tax period and the denominator of which is the 4 average value of all the corporation's real and tangible personal property 5 owned or rented and used during the tax period; provided, however, that 6 property which has been certified as a pollution control facility as defined in 7 KRS 224.01-300 shall be excluded from the property factor. 8 1. Property owned is valued at its original cost. If the original cost of any 9 property is not determinable or is nominal or zero (0) the property shall 10 be valued by the cabinet pursuant to administrative regulations 11 promulgated by the cabinet. Property rented is valued at eight (8) times 12 the net annual rental rate. Net annual rental rate is the annual rental rate 13 paid by the corporation less any annual rental rate received by the 14 corporation from subrentals, provided that the rental and subrentals are 15 reasonable. If the cabinet determines that the annual rental or subrental 16 rate is unreasonable, or if a nominal or zero (0) rate is charged, the 17 cabinet may determine and apply the rental rate as will reasonably 18 reflect the value of the property rented by the corporation. 19 2. The average value of property shall be determined by averaging the
20 values at the beginning and ending of the tax period but the cabinet may 21 require the averaging of monthly values during the tax period if 22 reasonably required to reflect properly the average value of the property. 23 (b) The payroll factor is a fraction, the numerator of which is the total amount 24 paid or payable in this state during the tax period by the corporation for 25 compensation, and the denominator of which is the total compensation paid or 26 payable by the corporation everywhere during the tax period. Compensation is 27 paid or payable in this state if:
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1 1. The individual's service is performed entirely within the state; 2 2. The individual's service is performed both within and without the state, 3 but the service performed without the state is incidental to the 4 individual's service within the state; or 5 3. Some of the service is performed in the state and the base of operations 6 or, if there is no base of operations, the place from which the service is 7 directed or controlled is in the state, or the base of operations or the 8 place from which the service is directed or controlled is not in any state 9 in which some part of the service is performed, but the individual's 10 residence is in this state. 11 (c) 1. The sales factor is a fraction, the numerator of which is the total sales of 12 the corporation in this state during the tax period, and the denominator 13 of which is the total sales of the corporation everywhere during the tax 14 period. 15 2. Sales of tangible personal property are in this state if: 16 a. The property is delivered or shipped to a purchaser, other than the 17 United States government, or to the designee of the purchaser 18 within this state regardless of the f.o.b. point or other conditions of 19 the sale; or
20 b. The property is shipped from an office, store, warehouse, factory, 21 or other place of storage in this state and the purchaser is the 22 United States government. 23 3. Sales, other than sales of tangible personal property, are in this state if 24 the income-producing activity is performed in this state; or the income- 25 producing activity is performed both in and outside this state and a 26 greater proportion of the income-producing activity is performed in this 27 state than in any other state, based on costs of performance.
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1(9) (a) If the allocation and apportionment provisions of this section do not fairly 2 represent the extent of the corporation's business activity in this state, the 3 corporation may petition for or the cabinet may require, in respect to all or 4 any part of the corporation's business activity, if reasonable: 5 1. Separate accounting; 6 2. The exclusion of any one (1) or more of the factors; 7 3. The inclusion of one (1) or more additional factors which will fairly 8 represent the corporation's business activity in this state; or 9 4. The employment of any other method to effectuate an equitable 10 allocation and apportionment of income. 11 (b) A corporation may elect the allocation and apportionment methods for the 12 corporation's business income provided for in subparagraphs 1. and 2. of this 13 paragraph. The election, if made, shall be irrevocable for a period of five 14 years. 15 1. All business income derived directly or indirectly from the sale of 16 management, distribution, or administration services to or on behalf of 17 regulated investment companies, as defined under the Internal Revenue 18 Code of 1986, as amended, including trustees, and sponsors or 19 participants of employee benefit plans which have accounts in a
20 regulated investment company, shall be apportioned to this state only to 21 the extent that shareholders of the investment company are domiciled in 22 this state as follows: 23 a. Total business income shall be multiplied by a fraction, the 24 numerator of which shall be Kentucky receipts from the services 25 for the tax period and the denominator of which shall be the total 26 receipts everywhere from the services for the tax period. 27 b. For purposes of subdivision a. of this subparagraph, Kentucky
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1 receipts shall be determined by multiplying total receipts for the 2 tax period from each separate investment company for which the 3 services are performed by a fraction. The numerator of the fraction 4 shall be the average of the number of shares owned by the 5 investment company's shareholders domiciled in this state at the 6 beginning of and at the end of the investment company's taxable 7 year, and the denominator of the fraction shall be the average of 8 the number of the shares owned by the investment company 9 shareholders everywhere at the beginning of and at the end of the 10 investment company's taxable year. 11 c. Nonbusiness income shall be allocated to this state as provided in 12 subsections (4) through (7) of this section. 13 2. All business income derived directly or indirectly from the sale of 14 securities brokerage services by a business which operates within the 15 boundaries of any area of the Commonwealth, which on June 30, 1992, 16 was designated as a Kentucky Enterprise Zone, or on the effective date 17 of this Act was designated as a Kentucky Economic Growth District as 18 defined in KRS 154.45-010(3)[154.655(2)], shall be apportioned to this 19 state only to the extent that customers of the securities brokerage firm
20 are domiciled in this state. The portion of business income apportioned 21 to Kentucky shall be determined by multiplying the total business 22 income from the sale of these services by a fraction determined in the 23 following manner: 24 a. The numerator of the fraction shall be the brokerage commissions 25 and total margin interest paid in respect of brokerage accounts 26 owned by customers domiciled in Kentucky for the brokerage 27 firm's taxable year; and
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1 b. The denominator of the fraction shall be the brokerage 2 commissions and total margin interest paid in respect of brokerage 3 accounts owned by all of the brokerage firm's customers for that 4 year. 5 c. Nonbusiness income shall be allocated to this state as provided in 6 subsections (4) through (7) of this section. 7(10) Public service companies and financial organizations required by KRS 141.010(14) 8 (b) to allocate and apportion net income shall allocate and apportion such income as 9 follows: 10 (a) Nonbusiness income shall be allocated to this state as provided in subsections 11 (4) through (7) of this section. 12 (b) Business income shall be apportioned to this state by multiplying the business 13 income by a fraction, the numerator of which is the property factor plus the 14 payroll factor plus the sales factor and the denominator of which is three (3); 15 provided, however, that effective with taxable years beginning after July 31, 16 1985, in lieu of the equally weighted three (3) factor apportionment fraction 17 based on property, payroll, and sales, an apportionment fraction composed of 18 a sales factor representing fifty percent (50%) of the fraction, a property factor 19 representing twenty-five percent (25%) of the fraction, and a payroll factor
20 representing twenty-five percent (25%) of the fraction shall be used. The 21 payroll factor shall be determined as provided in subsection (8)(b) of this 22 section. The property factor and sales factor shall be determined as provided 23 by administrative regulations promulgated by the cabinet. 24 (c) An affiliated group electing to file a consolidated return under KRS 25 141.200(3) that includes a public service company or financial organization 26 shall determine the amount of payroll to be included in the apportionment 27 factor as provided in subsection (8)(b) of this section. The amount of property
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1 and sales of the public service company or financial organization to be 2 included in the apportionment factors of the affiliated group shall be 3 determined in accordance with administrative regulations promulgated by the 4 cabinet under paragraph (b) of this subsection. 5 Section 15. KRS 154.12-224 is amended to read as follows: 6(1) There is created in the Cabinet for Economic Development the Department of 7 Financial Incentives. The department shall be headed by a commissioner appointed 8 by the Governor pursuant to KRS 12.040. The department shall coordinate all 9 financial assistance, tax credit, and related programs available for business and 10 industry. 11(2) The department shall include the following divisions, each of which shall be headed 12 by a director appointed by the secretary pursuant to KRS 12.050: 13 (a) The Grant Programs Division, which shall supervise and manage the 14 Economic Development Bond Program, as set forth in KRS 154.12-100, and 15 the Local Government Economic Development Program, as set forth in KRS 16 42.4588; 17 (b) The Direct Loan Programs Division, which shall supervise and manage the 18 Direct Loan Program of the Kentucky Economic Development Finance 19 Authority, as set forth in 307 KAR 1:020, and the Small Business Loans
20 Branch; 21 (c) The Tax Incentive Programs Division, which shall supervise and manage the 22 Kentucky Industrial Development Act Program, as set forth in KRS 154.28- 23 010 et seq., the Kentucky Jobs Development Act Program, as set forth in KRS 24 154.24-010 et seq., the Kentucky Industrial Revitalization Act Program, as set 25 forth in KRS 154.26-010 et seq., the Kentucky Rural Economic Development 26 Act Program, as set forth in KRS 154.22-010 et seq., and the Kentucky 27 Economic Growth District[Enterprise Zone] Program, as set forth in KRS
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1 154.45.010[154.45-001] et seq., which shall be attached to the division for 2 administrative purposes; and 3 (d) The Program Servicing Division, which shall perform auditing, monitoring, 4 and compliance functions for the Grant Programs Division, the Direct Loan 5 Programs Division, and the Tax Incentive Programs Division within the 6 Department of Financial Incentives. 7(3) The department shall also include the following entities: 8 (a) The Kentucky investment fund, established by KRS 154.20-250 to 154.20- 9 284, which shall be attached to the department for administrative purposes 10 and staff support; and 11 (b) The Bluegrass State Skills Corporation, established by KRS 154.12-204 to 12 154.12-208, which shall be attached to the department. 13 Section 16. The following KRS section is repealed: 14154.45-001 Purpose of Enterprise Zone Program. 15 Section 17. Qualified businesses may apply retroactively to the Revenue Cabinet 16for a refund on taxes paid from December 30, 2003, through the effective date of this 17Act, on goods exempted and employees hired under Section 9 of this Act. 18 Section 18. Whereas the incentives provided by this Act are essential to the 19economic vitality of designated areas, an emergency is declared to exist, and this Act
20takes effect upon its passage and approval by the Governor or upon its otherwise 21becoming law.
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