65.7047 Establishment of local development areas -- Conditions for
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/ky/65-7047A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
establishment -- Steps for establishment or modification -- Funding --
Execution of agreement -- Pledge of revenues -- Reporting requirements
-- Administrative regulations.
(1)Any city or county may establish a local development area pursuant to this
section, subject to the following conditions:
(a)A local development area shall be on previously undeveloped land;
(b)No more than one thousand (1,000) acres shall be approved for a local
development area in any twelve
(12)month period in any county;
(c)The establishment or expansion of the local development area shall not
cause the assessed value of taxable real property within all local
development areas and development areas of the city or county
establishing the local development area to exceed twenty percent (20%)
of the assessed value of all taxable real property within its jurisdiction. For
the purpose of determining whether the twenty percent (20%) threshold
has been met, the assessed value of taxable real property within all of the
local development areas and development areas shall be valued as of the
establishment date; and
(d)Unless the ordinance establishing a local development area requires an
earlier termination date, a local development area shall cease to exist on
the termination date.
(2)A city or county shall take the following steps to establish or modify a local
development area:
(a)If the city or county pledges occupational license taxes or the
occupational license fee authorized by KRS 65.7056 as a part of the local
tax revenues to support the local development area, the city or county
may engage the services of a qualified independent outside consultant or
financial adviser to analyze the data related to the project and the
development area and prepare a report. If the city or county elects to
have the report prepared pursuant to this paragraph, the report may
include the following:
1. The estimated approved public infrastructure costs for the project;
2. The feasibility of the project, taking into account the scope and
location of the project;
3. The estimated amount of local tax revenues, as applicable, that
would be generated by the project over the period, which may be up
to forty
(40)years, as applicable, from the development area's
established date;
4. The estimated amount of local tax revenues, as applicable, that
would be displaced within the city or county, for the purpose of
quantifying economic activity which is being shifted over the same
period as that set forth in subparagraph 3. of this paragraph. The
projections for displaced activity shall include economic activity that
is lost to the local jurisdiction as a result of the project, as well as
economic activity that is diverted to the project that formerly took
place at existing establishments within the local jurisdiction prior to
the commencement date of the project;
5. The estimated amount of old revenues that would have been
generated in the development area of the project in the absence of
the project, computed over the same time period as set forth in
subparagraph 3. of this paragraph;
6. In the process of estimating the revenues and impacts prescribed in
subparagraphs 3. and 4. of this paragraph, the independent outside
consultant shall not consider any of the following:
a. Local tax revenues or economic impacts associated with any
projects within the development area where the new project
will be located; or
b. Local tax revenues or economic impacts associated with
economic development projects and approved Kentucky
Tourism Development Act projects under KRS Chapter 148;
7. The relationship of the estimated incremental revenues to the
financing needs, including any increment bonds, of the project;
8. When estimating the fiscal impact of the project, the consultant shall
evaluate the amount of revenue estimated in subparagraph 3. of this
paragraph and shall deduct the amounts estimated in
subparagraphs 4. and 5. of this paragraph. The resulting difference
shall be compared to the estimated incremental revenues to
determine the presence or absence of a positive fiscal impact; and
9. A determination that the project will not occur if not for the
designation of the development area, the granting of incremental
revenues by the taxing district or districts, and the granting of the
local tax incremental revenues;
(b)The city or county shall hold a public hearing to solicit input from the
public regarding the local development area. The city or county shall
advertise the hearing by causing to be published, in accordance with KRS
424.130, notice of the time, place, and purpose of the hearing and a
general description of the boundaries of the proposed local development
area. The notice shall include a summary of the projects proposed for the
local development area;
(c)After the public hearing, the city or county shall adopt an ordinance which
shall include the following provisions:
1. A description of the boundaries of the local development area;
2. The establishment date and the termination date;
3. A name for the local development area for identification purposes;
4. Approval of any agreements relating to the local development area;
5. A provision establishing a special fund for the local development
area or any project within the local development area;
6. A requirement that any entity other than the governing body that
receives financial assistance under the local development area
ordinance, whether in the form of a grant, loan, or loan guarantee,
shall make periodic accounting to the governing body;
7. A provision for periodic analysis and review by the governing body
of the development activity in the local development area;
8. Designation of the agency or agencies responsible for oversight,
administration, and implementation of the local development
ordinance;
9. The estimated net positive fiscal impact as calculated in paragraph
(a)8. of this subsection if the city or county elects to have an
independent consultant report prepared; and
10. Any other provisions, findings, limitations, rules, or procedures
regarding the proposed local development area or a project within
the local development area and its establishment or maintenance
deemed necessary by the city or county;
(d)If incremental revenues or other resources are to be pledged from taxing
districts other than the city or county establishing the local development
area, a local development area agreement shall be executed in
accordance with the provisions of subsection
(4)of this section; and
(e)If the city or county elects to use an independent consultant or financial
adviser as provided in paragraph
(a)of this subsection, the independent
consultant or financial adviser shall:
1. Consult with the city's or county's budget office in the development
of the report; and
2. With the approval of the city's or county's budget office, create a
methodology to be used and assumptions to be made by the
independent consultant or financial adviser in preparing the report.
The developer requesting the city or county to establish the local
development area shall pay all costs associated with the independent
consultant or financial adviser preparation of the independent consultant
or financial adviser report, unless the city or county agrees to pay the
costs of preparation.
(3)Funding for projects in a local development area shall be provided in
accordance with KRS 65.7057.
(4)A local development area agreement shall be executed among the agencies
and taxing districts involved in administering, providing financing, or pledging
incremental revenues within the local development area. The local
development area agreement shall be adopted by a city or county by ordinance
and by any other taxing district or agency by resolution, and shall include but
not be limited to the following provisions:
(a)Identification of the parties to the local development area agreement and
the duties and responsibilities of each entity under the agreement;
(b)Specific identification of the tax increments released or pledged by type of
tax by each taxing district;
(c)The anticipated benefit to be received by each taxing district for the
release or pledge, including:
1. A detailed summary of old revenues collected and projected new
revenues for each taxing district on an annual basis for the term of
the local development area agreement; and
2. The maximum amount of incremental revenue to be paid by each
taxing district and the maximum number of years the payment will
be effective;
(d)A detailed description of the local development area;
(e)A description of each proposed project, including an estimate of the costs
of construction, acquisition, and development;
(f)A requirement that pledged incremental revenues will be deposited in a
special fund pursuant to KRS 65.7061, including the timing and procedure
for depositing incremental revenues and other pledged amounts into the
special fund;
(g)Terms of default and remedies, provided that no remedy shall permit the
withholding by any party to the local development area agreement of any
incremental revenues pledged to the special fund if increment bonds are
outstanding that are secured by a pledge of those incremental revenues;
(h)The commencement date, activation date, and termination date; and
(i)Any other provisions not inconsistent with KRS 65.7041 to 65.7083
deemed necessary or appropriate by the parties to the agreement.
(5)Any pledge of incremental revenues in a local development area agreement
shall be superior to any other pledge of revenues for any other purpose and
shall, from the activation date to the termination date set forth in the local area
development agreement, supersede any statute, ordinance, or resolution
regarding the application or use of incremental revenues. No ordinance in
conflict with a local development area agreement shall be adopted while any
increment bonds secured by that pledge remain outstanding. Ordinances or
resolutions pledging incremental revenues on a subordinate basis to any
existing pledges may be adopted.
(6)A city or county government acting pursuant to this section on or after March
25, 2022, shall file information regarding its local development area agreement
with the Cabinet for Economic Development on a form prescribed by the
cabinet. The Cabinet for Economic Development is authorized to promulgate
administrative regulations pursuant to KRS Chapter 13A to create any
necessary forms to meet the requirements of this subsection.