TABLE OF CONTENTS NORTHERN KENTUCKY OVERVIEW NORTHERN KENTUCKY OVERVIEW
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SOUTHBANK CITIES OVERVIEW SOUTHBANK CITIES OVERVIEW
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SOUTHBANK CITIES – ASSETS, OPPORTUNITIES, INCENTIVES LUDLOW COVINGTON NEWPORT BELLEVUE DAYTON
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REGIONAL ECONOMIC DEVELOPMENT/FINANCING/PLANNING ENTITIES SERVING NORTHERN KENTUCKY’S SOUTHBANK CITIES THE CATALYTIC FUND SOUTHBANK PARTNERS, INC. COVINGTON BUSINESS COUNCIL/URBAN PARTNERSHIP NORTHERN KENTUCKY TRI-ED NORTHERN KENTUCKY AREA DEVELOPMENT DISTRICT NORTHERN KENTUCKY AREA PLANNING COMMISSION NORTHERN KENTUCKY EZONE NORTHERN KENTUCKY CHAMBER OF COMMERCE
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STATE & REGIONAL DEVELOPMENT PROGRAMS/INCENTIVES KENTUCKY BUSINESS INVESTMENT PROGRAM KENTUCKY TOURISM DEVELOPMENT ACT KENTUCKY TOURISM LOAN PROGRAM KENTUCKY HISTORIC PRESERVATION TAX CREDIT KENTUCKY WINS KENTUCKY ENTERPRISE ACT LOAN PROGRAMS KENTUCKY ECONOMIC DEVELOPMENT FINANCE AUTHORITY COMMONWEALTH SMALL BUSINESS DEVELOPMENT CORPORATION COMMUNITY DEVELOPMENT BLOCK GRANT LOANS LINKED DEPOSIT PROGRAM INDUSTRIAL REVENUE BONDS KENTUCKY SMALL BUSINESS CREDIT INITIATIVE
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UTILITY INCENTIVES PROGRAMS AVAILABLE THROUGH THE NORTHERN KENTUCKY AREA DEVELOPMENT DISTRICT REVOLVING LOAN FUND
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BROWNFIELD REVOLVING LOAN FUND
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PROGRAMS FOR EARLY-STAGE COMPANIES AND START-UPS KENTUCKY INNOVATION NETWORK KENTUCKY ENTERPRISE FUND RURAL INNOVATION FUND KENTUCKY NEW ENERGY VENTURES KENTUCKY SCIENCE AND ENGINEERING FOUNDATION OFFICE OF INNOVATION AND COMMERCIALIZATION FORGIVABLE LOAN PROGRAM COMMONWEALTH SEED CAPITAL, LLC OTHER EARLY STAGE GROWTH FUNDS AND INVESTOR GROUPS ACCESS TO PROGRAMS, ACCELERATORS AND INCUBATORTS
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FINANCIAL INCENTIVES FOR ENERGY EFFICIENT CONTRUCTION/RETROFIT GREATER CINCINNATI ENERGY ALLIANCE
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MORTGAGE FINANCING FOR URBAN REVITALIZATION PROJECTS CINCINNATI DEVELOPMENT FUND THE CATALYTIC FUND
APPENDIX APPENDIX
SUPPLEMENTAL INFORMATION TAX INCREMENT FINANCING (TIF)
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NORTHERN KENTUCKY OVERVIEW Five Southbank cities (Ludlow, Covington, Newport, Bellevue, and Dayton) comprise the urban core of Northern Kentucky, which is a vibrant community within the Greater Cincinnati metropolitan statistical area. Northern Kentucky offers a variety of quality urban and suburban living options typical of any large metropolitan area yet maintains small-town convenience, easy access, and character. Rich in culture, recreation amenities, and economic opportunity, Northern Kentucky is a diverse metro area that is truly “Opportunity Central.” There are many ways to describe Northern Kentucky. Geographically, Northern Kentucky is the three northernmost counties of Kentucky (Boone, Campbell, and Kenton), or you could say Northern Kentucky is the southern side of Cincinnati. Economically, Northern Kentucky is described as the northern tip of the Golden Triangle of Kentucky, the area comprised of Northern Kentucky, Lexington and Louisville. The Golden Triangle is the heart of Kentucky’s business and economic activity and has a population of 2.3 million; which is 54% of Kentucky’s population, and 22% of the state’s land area.
TRANSPORTATION AIR – Home to Cincinnati/Northern Kentucky International Airport (CVG), with five other major metro airports located within a two-hour drive. INTERSTATE - Served by four major interstate highways (I-75, I-71, I-74, and I-275) in reach of 20 major metro areas within one day’s drive, and 30 additional markets within two days. RAIL - Home to the mainline services for CSX and Norfolk Southern railroads and the Cincinnati Intermodal Yard- more than 175 miles of mainline track serving local industry, moving more than two million rail cars per year WATERWAY- Port of Cincinnati, the fifth largest inland port for domestic barge loads. COST OF LIVING Ranked third most affordable city in the U.S. (Source: Forbes 2014 America’s Most Affordable Cities). 2009 three-county housing average is $212,944, 21.45% less than the U.S. average (Source: U.S. Census Bureau and Northern Kentucky MLS).
Northern Kentucky also benefits from being part of the Greater Cincinnati MSA, which has a wealth of assets that are very attractive to businesses and residents. POPULATION Overall the Greater Cincinnati MSA population is 2.2 million, with nearly 17% residing in Northern Kentucky’s Boone, Campbell, and Kenton counties. The population of the five Southbank cities was approximately 71,600 in 2010, with about 47,000 people living in the urban core.
COST OF BUSINESS One of the lowest for cost of doing business in the eastern U.S. and fourteenth lowest overall (Source: CNBC North American Top States for Business, 2014). Ranked 27th best in the nation in 2014 for state business tax climate index, up 15 spots in two years (Source: Tax Foundation).
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EDUCATION Nearly 100,000 students are enrolled in 11 universities and community colleges within a 15-mile radius of Northern Kentucky. 30% of the greater Cincinnati area’s 25+year-olds have bachelor’s degrees, compared to a 27% national average. Home to the College of Informatics at Northern Kentucky University, and Gateway Community and Technical College Center for Advanced Manufacturing, preparing and training the region’s manufacturing workforce.
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ENTREPRENEURSHIP The region has the resources to foster home grown and global talent from the idea phase all the way to premier Class A riverfront office space. Northern Kentucky’s leading businesses are building brakes for airliners, designing web platforms for major retailers, helping us all keep better track of our data in the cloud, and one is well on its way to curing cancer. Many of these firms are found in a unique urban entrepreneurship cluster where support and big ideas, as well as plenty of coffee, provide just the right atmosphere for business owners and dreamers at all phases of development. ENTERTAINMENT One of only 13 U.S. cities containing all five arts disciplines; ballet, opera, museums, symphony, and theater. Home to four professional sports organizations; Cincinnati Reds, Cincinnati Bengals, Cincinnati Cyclones, and NASCAR Sprint Cup Racing. The region also home to a large number of nightlife destinations including The Banks, Over-the-Rhine, Fountain Square, Newport on the Levee, Mount Adams, and MainStrasse Village.
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SOUTHBANK CITIES OVERVIEW At the heart of Northern Kentucky there are five urban cities (Ludlow, Covington, Newport, Bellevue, and Dayton) that border the Ohio River and are known as Greater Cincinnati’s Southbank. Each of the five cities has their own unique character and assets supporting a variety of real estate development opportunities in all product sectors. The real estate fundamentals of the Southbank are extraordinary: LOCATION The Southbank cities are located across the Ohio River from downtown Cincinnati. Many developable sites in the Southbank are within walking distance or a very short Southbank Shuttle ride to major league sports facilities, world-class arts and performance venues, Smale Riverfront Park, and other recreation areas found in the Cincinnati central business district.
HIGH QUALITY HISTORIC BUILDING STOCK The Southbank cities have a rich history, which is reflected in their abundance of historic buildings. Most of these buildings are in good condition making restoration or adaptive re-use projects relatively feasible. The combination of historic buildings and vibrant business districts provide many opportunities for New Economy companies, unique retail, restaurant, and entertainment venues in Northern Kentucky’s urban core.
NATURAL AMENITIES AND SPECTACULAR
ANCHORS OF SIGNIFICANT RESIDENTIAL INVESTMENT Southbank’s location, views, and historic character have attracted several high profile anchor residential projects as well as investment in individual single-family residences. Major condominium towers such as The Ascent in Covington (designed by world class architect Daniel Libeskind) and SouthShore in Newport contain the highest priced condominium residences in the region. Historic residential districts such as the Historic Licking Riverside Neighborhood in Covington and Mansion Hill in Newport have single-family residences with some of the highest home values in the region.
VIEWS Southbank’s location and natural amenities provide ideal developable sites that can’t be duplicated anywhere else in the U.S. Views of the Ohio River and Cincinnati’s skyline are extraordinary and are available from almost anywhere within the Southbank cities. The Southbank cities border not one, but two rivers: the Ohio River and its peaceful and natural tributary, the Licking River. Hillside parks and open areas are immediately accessible and visible to urban residents and workers, a very unique feature in an urban environment.
ANCHORS OF SIGNIFICANT PRIVATE AND PUBLIC COMMERCIAL INVESTMENT Southbank contains many commercial developments providing significant anchors and support for additional development projects: NORTHERN KENTUCKY CONVENTION CENTER The Northern Kentucky Convention Center is located in Covington at the heart of its business and entertainment district. This 204,000 total square foot multi-purpose facility has 110,000 square feet of meeting, exhibition and social function space and is directly connected to the Marriott at RiverCenter. PAGE 5
NEWPORT ON THE LEVEE Newport on the Levee is a multi-level urban retail and entertainment center in Newport, Kentucky. Drawing approximately 3.5 million people per year, Newport on the Levee is the most popular attraction in the Greater Cincinnati/Northern Kentucky area. Voted by Zagat as the #1 Mall/Shopping Attraction for Families in the United States, the Levee features a variety of entertainment options such as a 20-screen AMC Theater; an award-winning Newport Aquarium; Axis Alley, a boutique bowling lounge; GameWorks; and the Funny Bone Comedy Club. Several national and regional restaurant brands such as Brio Tuscan Grille, Mitchell’s Fish Market, Bar Louie, and Brothers Bar & Grill can be found on the Levee. This entertainment facility is also home to numerous creative class office tenants including i-wireless, Intrinzic, Constellation Brands and Comstock Valuation. RIVERCENTER OFFICE COMPLEX This Class A office complex transformed Northern Kentucky’s riverfront and has attracted some of the region’s largest employers. The complex consists of three towers containing 848,000 square feet of office space. IRS SERVICE CENTER One of the IRS’s five national service centers (which also includes one of only two Business Tax Return Processing Centers) is located in Covington and employs 5,500 in a federally owned building as well as leased space in nearby downtown Covington office buildings. COUNTY AND FEDERAL COURTHOUSES The Kenton County and Campbell County courthouses are located in Covington and Newport with a major federal courthouse in located in downtown Covington. HOTEL COMPLEXES Many of the region’s top hotels are located in Covington and Newport including an upscale fullservice Marriott, an Embassy Suites, Marriott Courtyard, Holiday Inn, Radisson, Extended Stay, Hampton Inn, and Comfort Suites.
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ANCHORS OF MAJOR CORPORATE AND PUBLIC EMPLOYERS Many of the region’s largest employers are located in Northern Kentucky’s river cities including St. Elizabeth Medical Center, the Internal Revenue Service, Fidelity Investments, Ashland, Inc., and Atkins & Pearce. In addition to all of these existing anchors, several initiatives and projects currently underway will support and generate additional demand for new development projects: GATEWAY URBAN METRO CAMPUS Gateway Community and Technical College, a public Kentucky Community and Technical College System (KCTCS) institution, is in the process of developing an $81.5 million Urban Metro Campus in downtown Covington. The campus will serve more than 5,000 students and will incorporate new classroom space construction with adaptive re-use of historic structures. RIVERFRONT COMMONS The $50 million Riverfront Commons project will connect the Southbank cities with the development of an extensive four-mile park and trail system along the Ohio River bank.
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LICKING RIVER GREENWAY The Licking River Greenway and Trails project is an ambitious Northern Kentucky effort to create an urban greenway from the mouth of the Licking River to the I-275 loop. The Greenway plan calls for the stabilization of the riverbanks, the removal of invasive species and the restoration of native plants, trees, and wildlife in the riparian corridor. In addition to the Greenway, the 5-mile corridor, between the confluence with the Ohio River and the I-275 overpass, includes plans for establishing a multilevel trail system that connects neighborhoods with historical, educational, and cultural institutions and recreational facilities. The proposed trail system provides for nature trails, paved trails and water trails. So far, several sections of the trail have been completed along the Covington portion of the Licking River bank.
SUPPORT FOR ENTREPRENEURS AND START-UP BUSINESSES Northern Kentucky’s Southbank cities are attracting many high impact start-up businesses especially in the areas of the life sciences and information technology. This is due to the fact that the area understands the importance of this type of business activity and intentionally creates a welcoming environment and support system for these types of companies. In Covington, bioLOGIC provides lab space units for biotech research firms in a historic building once used as a German dance hall. Also in Covington, a business-supported initiative called UpTech has established an informatics business accelerator providing seed capital for new businesses as well as business accelerator support, research support from NKU’s College of Informatics, legal, financial, and marketing mentorship, and free Class A office space. It was also just recently announced that Bad Girl Ventures, a educational and micro-finance organization for female entrepreneurs, will relocated to Covington’s Pike Street Corridor. Due to the Southbank cities’ excellent real estate fundamentals, a culture of aspiration and innovation, anchors of private, public, and institutional investment, Northern Kentucky’s urban core is perfectly positioned to take advantage of the demographic and economic trends creating demand for urban living, working, and entertainment spaces. PAGE 7
SOUTHBANK CITIES ASSETS, OPPORTUNITIES, INCENTIVES Each of the cities comprising the Southbank offers a unique sense of place that makes them special places individually. When they are considered together, the area offers a huge collection of assets making it a highly desirable urban living, working, and entertainment destination. Information about each Southbank city along with the development incentives offered by that particular municipality is included below.
LUDLOW Ludlow, Kentucky (population 4,407), covering approximately two square miles, is the western anchor of the Southbank cities. Incorporated in 1864, the City has the atmosphere of a quaint small town yet is directly accessible by interstate to all of the attractions and employment centers in the Greater Cincinnati. Land use in Ludlow is primarily residential with a street grid that makes it a perfect place for residents wanting a single-family home with walkable urban conveniences. The Ludlow school system has an excellent reputation (its High School ranked in the top 20 in the State) which makes the City is very attractive to families. Ludlow has a large stock of fine historic structures and an active Historic Society that encourages preservation and renovation. At the same time, Ludlow has expanses of undeveloped hillsides and riverfront property creating opportunities for new housing and other types of development. Housing development in Ludlow is attractive because of the City’s proximity to Greater Cincinnati’s CBD, accessibility to interstates, the recent construction of a new full service grocery store, walking access to a historic Main Street district, and adjacency to Devou Park. Devou Park is a 704-acre recreation area with stunning views of the Cincinnati skyline, hiking trails, playground and picnic areas, as well as an 18-hole golf course. Also located in Ludlow is the Ludlow Bromley Yacht Club, a waterfront restaurant and live music venue with boat docking facilities. One of Ludlow’s most unique assets is Paul Miller’s Circus Mojo facility, which is quickly becoming a major regional destination. Paul Miller is a former Ringling Bros. and Barnum & Bailey circus performer who purchased the vacant and blighted Ludlow Theater and converted it to a training and performance facility for circus performers. Today, Ludlow is attracting international “students” who live in Ludlow and train in this facility for positions in theatre and circus all over the world. Circus Mojo also provides corporate team building courses, youth circus camps, and outreach programs in hospitals and juvenile centers. Its activities have grown so quickly, that now Circus Mojo is in the process of expanding into another former warehouse building in downtown Ludlow. Miller’s shows, performances, events, and courses are attracting scores of visitors to Ludlow from all over the region.
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LUDLOW DEVELOPMENT PROGRAMS/BUSINESS INCENTIVES NEW MARKET TAX CREDITS Most of Ludlow is located within Census Tract #21117066900 which is eligible for the federal New Market Tax Credit program (see Appendix for Census Tract Map). RENAISSANCE KENTUCKY FAÇADE GRANT PROGRAM Buildings along Ludlow’s Main Street area may qualify for façade improvement grants depending on availability of State funding. HISTORIC INVESTMENT TAX CREDIT A 20% investment tax credit is available for substantial rehabilitation of certified historic buildings that are income producing. Project must comply with the Secretary of the Interior’s Standards for Rehabilitation. A 10% credit is available for buildings that are not certified as historic.
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COVINGTON Covington (population 40,640), incorporated in 1815, encompasses 13.7 square miles. It is the fifth largest city in the Commonwealth of Kentucky. Covington is directly across the Ohio River from Cincinnati’s Central Business District and has excellent vehicular and pedestrian connections to it via three bridges. Covington is well known for its dramatic economic recovery beginning in the late 1980’s after having been labeled by HUD as “the most distressed city in the United States” in the late 1970s. This recovery was triggered by a major Class A office and hotel complex known as RiverCenter which attracted major corporate headquarters to locate in Covington. RiverCenter also catalyzed major public investment in facilities such as a new Kenton County Courthouse Building and Garage, a U.S. Federal Courthouse, and the Northern Kentucky Convention Center. Covington’s downtown has also attracted major hotel chains such as a full service Marriott Hotel, a Marriott Courtyard, Embassy Suites, Holiday Inn, Hampton Inn and others. Today, Covington’s skyline not only includes these office and hotel towers but a stunning contemporary condominium tower called The Ascent at Roebling’s Bridge designed by world-class architect, Daniel Libeskind. This investment in Covington’s riverfront area has attracted major corporate employers to locate in Covington. Fortune 500 company Ashland, Inc.’s corporate headquarters is located in RiverCenter, Fidelity Investments built a 188acre, 780,000 square foot campus in Covington for 2,000+ employees, and recently the St. Elizabeth Medical Center constructed a major medical office complex in Covington. The significant investment in the riverfront has not only attracted major corporate employers but has also led to the reinvention of the RiverCenter as a hub for high tech companies and businesses such as TiER1 Performance Solutions and Clear Measures, formerly dba Direct. At the same time, Covington has preserved its extensive stock of historic buildings and has the second largest number of historic structures in the Commonwealth of Kentucky. Covington’s historic districts are a major regional attraction and the City’s Historic Licking Riverside District contains homes with the highest residential real estate values in Greater Cincinnati. The City is comprised of 18 distinct neighborhoods and residents take pride in and celebrate the City’s diversity. Covington is one of only a few cities in the United States with a human rights ordinance. Covington’s architectural and cultural diversity appeals to almost any residential or business taste or P A G E 12
requirement. Residential opportunities in Covington include homes and units of all sizes with spectacular views of the Cincinnati skyline and Ohio River, historic homes with original old world craftsmanship intact, as well as homes with cutting edge contemporary architectural styles. One can live in the urban core and walk to major sports and arts attractions in downtown Cincinnati or in the City’s quiet suburban neighborhoods. Businesses also have many choices in Covington ranging from traditional office space in Class A towers or historic buildings which have been creatively adapted for new economy small businesses. Covington has many major entertainment and restaurant attractions. The City’s historic downtown has several fine ethnic restaurants as well as attractions such as the Carnegie Arts Center, the Madison Event Center, and the Madison Theatre, a major draw for live music performances. MainStrasse Village has a collection of individually owned fine dining, casual restaurants and unique bars and pubs. The village also hosts several themed festivals each year attracting thousands from throughout the region. Arts and culture are also an important feature of Covington and the City was recently designated as a Kentucky Cultural District by the Kentucky Arts Council due to established venues such as the Carnegie Visual and Performing Arts Center, the Beringer-Crawford Museum, and the Baker Hunt Art Education Center. Covington is home to several nationally recognized historic churches such as Trinity, the Cathedral Basilica, and Mother of God, all located in Covington’s urban core. Covington is becoming a center for education and innovation. One of the region’s finest private high schools, Covington Latin recently invested in a major expansion in Covington’s downtown. Gateway Community College has located an urban metro campus in downtown Covington and is underway with an $81.5 million expansion that will accommodate 5,000+ new students. Entrepreneurs are attracted to Covington’s support for start up businesses such as the bioLOGIC life science accelerator, UpTech business informatics accelerator, Bad Girl Ventures micro-enterprise lender, and the Northern Kentucky ezone. Additionally, the City of Covington is experiencing a significant amount of investment within its urban core. Pike Street is emerging as a technology corridor with the investments made by bioLOGIC and UpTech. The corridor is also an up-and-coming residential area with the creation of the Pulse Lofts, Market Lofts and Pike Star apartment projects. The Madison Avenue Corridor is undergoing redevelopment with numerous projects aimed at creating a critical mass including: the adaptive reuse of former City hall into Hotel Covington, and the redevelopment of the Mutual Building and Doctors Building. The Madison South Corridor is also showing signs of rebirth with the new construction of HealthPoint and redevelopment of the former Robke Chevrolet and Stewart Iron Works Facility into the new homes of the Kentucky Career Center and Life Learning Center. P A G E 13
COVINGTON DEVELOPMENT PROGRAMS NEW MARKET TAX CREDITS Covington Census Tracts eligible for the federal New Market Tax Credit program includes the following (see Appendix for Census Tract Map): #21117063800 #21117061600 #21117060300 #21117060700 #21117065100 #21117067000 #21117067100 #21117060900 #21117061000 COVINGTON ECONOMIC DEVELOPMENT PROGRAM Covington Economic Development Program provides flexible financing for economic development projects that align with the City’s goals and the HUD 5-Year Consolidated plan. Eligibility extends to property owners, developers, existing new and targeted startup businesses whose project: has an identified development gap, creates quality jobs, is catalytic in nature, improves the site, and includes an experienced team with a proven track record. Types of projects include: upper floor residential rehab, gap financing, technical assistance, and façade improvements. Grants or loans will be considered for the development proposals that improve the overall economic environment in the City. The Covington Economic Development Authority (CEDA) will review and recommend approval of project funding levels and types to the City of Covington Board of Commissioners. VACANT PROPERTY PAYROLL TAX REIMBURSEMENT Property owners who rehabilitate vacant and blighted property for commercial reuse are eligible to apply for a reimbursement of a portion of the City’s payroll taxes generated by businesses locating in the completed project. The property must have been vacant for the previous 36 months and be at least 50 years old. Approved property owner applicants receive 50% of the city’s payroll tax from new and existing Covington employees who will be located in the property, paid annually for 5 years. CDBG UPPER FLOOR REHAB FORGIVABLE LOAN Provides eligible property owners up to $20,000 per unit for the redevelopment of vacant upper floor space into quality affordable rental housing. This incentive is available to assist owners of mixed-use buildings in the Short Pike/Madison Avenue/Scott Street target areas. PROPERTY TAX ASSESSMENT MORATORIUM Covington will freeze City’s property taxes at the pre-rehab level for a period of five years on properties that will be undergoing rehabilitation. The purpose of this program is to encourage the repair, rehabilitation, and restoration of buildings 25 years old or older that are located outside of the designated TIF district. This property tax freeze is achieved through a moratorium on property valuation assessments. To qualify for the property tax freeze, an application form must be submitted to the City’s Economic Development Department at least 30 days before any construction work begins. The Kenton County Property Valuation Administrator (PVA) assesses property value. The application is then reviewed by City officials and approved by the Covington City Commission. The moratorium becomes effective on the next assessment date after approval and remains in effect for five years. Improvements must be completed within two years unless a written extension is granted. Upon completion of the work, the owner should notify the City’s Finance Department and request an on-site P A G E 14
property inspection to insure that the improvements proposed in the application have been completed. The City of Covington Finance Department shall then enter the PVA assessment for the property for City tax purposes only. The tax moratorium may be transferred or assigned by the holder of the certificate to a new owner or lessee of the property. Any property granted an assessment moratorium might be eligible for another moratorium if three years have passed since the previous moratorium ended. On the next assessment date following the expiration, cancellation, or revocation of an assessment or reassessment moratorium, the property will be assessed on the basis of its full fair cost value. TAX INCREMENT FINANCING A designated fund financed by the dedication of incremental increases in property and payroll tax revenue that over time can be used as financing for property assets and improvements located in the locally designated development district. Eligible uses of the funds are projects that serve a public purpose and are residential, commercial, industrial, or public in nature, where the work includes the rehabilitation, installation, improvement, enlargement, or extension of real estate and buildings that will contribute to economic development. COVINGTON BUSINESS INCENTIVES COVINGTON JOBS DEVELOPMENT INCENTIVE Covington Jobs Development Incentive provides eligible existing and new businesses up to a 1.25% reimbursement of the City’s occupational license fee for creating and retaining jobs. Eligible types of businesses include professional, technical and innovation, administrative, manufacturing, communication, and general medical and/or surgical hospitals. CDBG SMALL BUSINESS PROGRAM The Small Business Program is designed to help facilitate the establishment of new businesses within the Targeted Downtown Initiative Area. The program is designed to provide financial assistance to retail and commercial businesses. A business can apply for the assistance in one of three ways: rent subsidy, machinery, equipment, fixtures and furniture, or professional services intended to help businesses during the critical first year of operation. Applicants must show that their business will create new jobs. Start-up and expanding businesses who need to relocate may qualify for the program, provided they demonstrate strong managerial skills, have a viable business plan, and demonstrate an ability to meet guidelines. GROW COVINGTON FUND The Grow Covington Fund is a unique economic development partnership between the City of Covington and the Grow America Fund, Inc. (GAF). The City and the Grow America Fund have established and capitalized the Grow Covington Fund as an economic development tool designed to assist eligible small businesses within Covington obtain the financing required to grow their businesses. To qualify for these loans, a business must be for-profit and meet the size and eligibility criteria of the US Small Business Administration (SBA). Loans made under this program are underwritten by the Grow America Fund and guaranteed by the SBA under GAF’s Small Business Lending Company License. Therefore, each loan must comply with SBA guidelines and procedures.
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NEWPORT One of Kentucky's oldest cities, Newport (population 15,273) was founded in 1795. An extraordinary mix of historic amenities and contemporary development characterizes the City. Newport occupies a land area of 3.5 square miles and is directly across the Ohio River from Cincinnati’s Central Business District, giving it a striking view of the Cincinnati skyline. Due to its location, Newport has the advantage of being easily accessible from every direction. Three bridges, two vehicular and one pedestrian, connect Newport to downtown Cincinnati. The City also has two bridges connecting to Covington on its western boundary. With excellent access to I-471, the City has three exits within its jurisdiction. Interstate 471 (I-471) provides connectivity to I-275, which facilitates easy transportation to all of Greater Cincinnati. Over the last fifteen years, due to the aspirations of a hard-working group of elected officials and City staff, Newport has experienced a rebirth that has positioned the area as a major family entertainment, nightlife, retail, tourist and neighborhood business center that attracts visitors from across the entire region and even the nation. Millions of people visit Newport’s destination venues including the Newport Aquarium, Newport on the Levee (Greater Cincinnati area’s largest tourist attraction with four million annual visitors), BB Riverboats, Hofbräuhaus, the Purple People Bridge, and the World Peace Bell, which is the world’s largest swinging bell. The riverfront area also attracts warm weather festivals and events almost every weekend such as Italianfest, a four-day festival featuring music, a wide variety of Italian food choices, rides, and games for children; all in a tribute to Newport's Italian heritage. Newport also has a historic downtown along Monmouth Street filled with eclectic businesses, which has been revitalized with a massive streetscape program and recently experienced $10M in reinvestment. There has also been major investment in residential development particularly in widespread renovation of historic homes particularly in the East Row neighborhood, one of Kentucky’s largest and finest historic districts. The upscale SouthShore condominium development is located directly on the Newport’s riverfront along with its companion upscale apartment complex, called Vue 180 on the Water. Monmouth Row, a 101-unit newly constructed apartment complex opened in spring of 2014. Complete with numerous amenities and modern design and finishes, this development is located on Monmouth Street in Newport’s Business and Entertainment Districts. The Wiedemann Hill development offers luxury single-family home sites with remarkable views of downtown Cincinnati and the Ohio River. Newport has also recently completed the Newport Pavilion project which provides major retail amenities that will complement and support investment in additional residential development throughout Northern Kentucky’s urban core. The project contains a Target, Dicks Sporting Goods, PetSmart, Michaels, T.J. Maxx, Famous Footwear, Ulta Beauty, and a Kroger Marketplace with an adjacent Kroger Fuel Station. The pavilion also offers several smaller retail shops and restaurants. P A G E 17
For businesses wishing to expanding or relocate, Newport offers Class A office space at the 180,000square-foot One Riverfront Place, which sits near the Ohio River and is suitable for corporate headquarters. The City also has smaller, affordable spaces in historic buildings along Monmouth Street that are suited for professionals such as lawyers, architects and others. Newport is also the home of Ethos Laboratories, a premier provider of laboratory services worldwide. Another exciting project that recently opened is the New Riff Distillery. The New Riff Distillery is a bourbon micro-distillery that is a member of the Kentucky Bourbon Trail – Craft Tour®. The site hopes to attract more than 40,000 visitors per year. One of Newport’s most promising future development opportunities is Ovation, an $800 million redevelopment of Newport’s riverfront at the confluence of the Ohio and Licking Rivers. Ovation will offer a first-class mixed-use development in the urban core. The site is planned to include approximately a thousand new housing units, one million square feet of office space, and provide additional lodging and entertainment amenities. The growth and positive changes in Newport are unprecedented regionally. The City is committed to improve every aspect of the community in order to enhance the business climate and also the quality of life for its residents. Newport is an excellent place to do business because of its prime location on the river and its access to the interstate system and downtown Cincinnati, and also because of its lean, serviceoriented staff that is motivated to help make positive projects happen.
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NEWPORT DEVELOPMENT PROGRAMS/BUSINESS INCENTIVES NEW MARKET TAX CREDITS Newport Census Tracts eligible for the federal New Market Tax Credit program include the following (see Appendix for Census Tract Map): #21037050100 #21037050600
#21037050500 #21037053200
HISTORIC INVESTMENT TAX CREDIT A 20% investment tax credit is available for substantial rehabilitation of certified historic buildings that are income producing. Project must comply with the Secretary of the Interior’s Standards for Rehabilitation. A 10% credit is available for buildings that are not certified as historic. There are six National Register historic districts in Newport, as well as one local historic district and numerous individually listed landmarks. The National Historic Register Districts include: • • • •
Cote Brilliante - 290 acres, 125 buildings East Newport - 1150 acres, 984 buildings Mansion Hill - 500 acres, 384 buildings Monmouth Street - 80 acres, 94 buildings
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York Street - 70 acres, 56 buildings Newport Courthouse Square - 110 acres, 17 buildings
JOB DEVELOPMENT INCENTIVE PROGRAM The City offers up to a forty percent (40 %) reduction in occupational license fees for certain projects locating in the community. The JDIP is available in three variations: Industry, Service, and Technology (requires $250,000 in new Newport payroll), Licensed Professionals (no minimum payroll requirement), and Signature (requires $15M in new Newport payroll). PROPERTY ASSESSMENT MORATORIUM Business and property owners can defer the added value of improvements from the taxable assessment of their property for a period of five years. A structure must be 25 years old or older and must undergo substantial rehabilitation to qualify. The exemption applies to city taxes only. PAINT PARTNERSHIP PROGRAM Sherwin-Williams, Co., 2292 Monmouth Street, offers a discount on recommended exterior paint colors, all interior paints, and associated products for both rehabilitation and new construction. Discount does not apply to Everclean, spray equipment, ladders, and ladder-related products. All properties located within boundaries of the Monmouth Street Redevelopment Area and East Row Historic District are eligible. MONMOUTH STREET RENAISSANCE KENTUCKY FACADE GRANT PROGRAM City provides matching grants for commercial facade improvements in the Renaissance Kentucky area. Improvements must comply with the Secretary of the Interior’s Standards for Rehabilitation.
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BELLEVUE Bordered on the west by Newport and on the east by Dayton, Kentucky, Bellevue is in northernmost Campbell County, just over the Ohio River from Cincinnati. Bellevue (population 5,955) covers .96 square miles and was incorporated in 1870. The City has a rich heritage, as reflected in its architecture and quaint historically authentic business district, which is a regional attraction. Bellevue was famous for its white sandy beaches in the early 20th century. Baseball fans know it as the home of former Cincinnati third baseman Harry Steinfeldt, the unnamed fourth infielder of the famous "Tinker-Evers-Chance" double play. Today Bellevue is experiencing an American renaissance and is home to talented artisans, unique restaurants, and specialty shops. Many of which can be found in the Fairfield Avenue historic district. New development along with valued historic architecture gives Bellevue its distinctive sense of place. Residential property values in Bellevue have experienced the highest rates of increase among the urban core cities. Outstanding public services, a low crime rate, beautiful parks, and popular community events such as Shop Bellevue and Art in the Park have contributed to Bellevue’s strong real estate values. Much of the new residential demand can be attributed to the City’s significant investment in Bellevue’s historic Fairfield Avenue Business District, which has attracted rehabilitation, adaptive reuse, and new infill construction. Bellevue has an excellent reputation for supporting its array of unique businesses by organizing regular events, joint advertising and other services. Because of these efforts and the quality of the merchants and restaurants in the district, Fairfield Avenue draws hundreds of visitors on a weekly basis. Along with rehabbed single-family historic homes, new luxury condominiums are also an option for Bellevue in the Harbor Greene and WatersEdge developments. New homes are available in Bellevue’s City View and the Robson Lane townhomes developments, which offer spectacular river and city vistas. One of Bellevue’s most exciting anchors is the Party Source, an upscale beer, wine and liquor store with specialty food and party supply departments. The Party Source has recently been expanded to create a whole campus of activities such as a brewery, distillery, space for parties and events, tastings, food and entertainment education and one-on-one opportunities, all in one location. P A G E 21
The City was one of the region’s pioneers in establishing a form-based zoning code. City staff and elected officials have a consistent reputation of professionalism and of responding to changing economic times proactively and creatively. BELLEVUE DEVELOPMENT PROGRAMS/BUSINESS INCENTIVES NEW MARKET TAX CREDITS Most of Bellevue is located within census tract #21037052100, which is eligible for the federal New Market Tax Credit program (see Appendix for Census Tract Map). BELLEVUE RENAISSANCE DISTRICT SIGNAGE GRANT PROGRAM The Bellevue Renaissance District Signage Grant Program provides financial assistance to eligible ground floor businesses and commercial property owners interested in installing new signage or upgrade existing signage for commercial first floor tenants. The intent of the program is to create a positive retail environment along historic Fairfield Avenue. The Signage Grant is a 50-50 matching grant with the grant match portion not exceeding $500 and may be used for the cost of design, fabrication, and installation of the signage. Any expenditures that exceed grant amounts shall be the sole responsibility of the applicant(s). URCDA ECONOMIC DEVELOPMENT INCENTIVE PROGRAM The URCDA Economic Development Incentive Program is a matching grant program established to revitalize, develop and encourage new growth and commerce within the City. The program is intended to enhance the quality of life in Bellevue by attracting new businesses, stimulating development, and enhancing existing businesses that advance revitalization and investment. Projects eligible for URCDA grant funds must fall into one of the following categories: • • • •
Public infrastructure Facade improvements Parking creation Public/Private partnerships
Since the primary focus of the grant is to spur economic development, applicants must demonstrate their ability to complete the project as well as the short- and long-term economic impact of their proposed project. Commercial, residential, and a combination of commercial and residential projects are eligible as long as the meet the program categories and criteria. OFF-STREET PARKING ASSISTANCE PROGRAM The purpose of this program is to reduce the demand for on-street parking and to improve the quality of life in Bellevue by providing an incentive to (1) assist those with qualified disabilities to improve existing off-street parking where, because of their disability, utilization of such existing off-street parking is not feasible and (2) create new off-street parking for residential properties. The incentive shall be in the form of a grant to qualified applicants. RENTAL CONVERSION GRANT PROGRAM This program provides an incentive to restore residential units to their original configuration, to reduce the demand for on-street parking, to eliminate blighted conditions, and to improve the quality of life in Bellevue by reducing the number of multi-family rental units. The incentive shall be in the form of a grant to qualified applicants to reduce the number of living units in individual structures. Grant P A G E 22
amounts for approved projects are: • • • •
Converting a two-family into a single-family - $ 5,000 Converting a three-family into a single-family - $10,000 Converting a four-family into a single-family - $15,000 Converting a four-family into a two-family $20,000 (Up to a maximum of $5,000 may be reimbursed or each unit eliminated in a multi-family structure.)
VACANT PROPERTY PAYROLL TAX INCENTIVE PROGRAM This grant focuses on the rehabilitation of one of the few vacant and underutilized buildings in Bellevue. Eligible businesses must renovate one of these buildings with a minimum investment in the rehabilitation of 50% of the listed PVA appraised value price. The average annual salaries of fulltime employees need to be a minimum of 20% the Kentucky median income and meet the total annual taxable payroll income. Qualifying businesses’ payroll tax will be reduced by 50% for ten years with a minimum total payroll of $500,000 and for five years with payroll between $3000, and $499,000.
PROPERTY ASSESSMENT MORATORIUM A building owner who seeks to repair, rehabilitate, restore, or stabilize an existing commercial facility at least 25 years old within the Bellevue city limits may apply to have their property assessment frozen at the pre-improvement level for a period of five years. The cost of improvements must total at least five percent of the property's current taxable assessment and constitute more than routine maintenance of the property. HISTORIC PRESERVATION GRANT Bellevue’s historic fabric has been a driving force in the economic development of its community. Therefore, a historic preservation grant is available within the Fairfield Avenue and Taylor’s Daughters Historic District. This is a matching grant for the cost of the restoration of historic materials, fabrication and installation of recreated historic features to historic property in compliance with the Secretary of Interior’s Standards for Rehabilitation.
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DAYTON Dayton (population 5,338) was created in 1867 by the merger of two communities: Jamestown and Brooklyn. Back then, before the Army Corps of Engineers raised the level of the Ohio River, Dayton's swimmers and sunbathers took advantage of its natural sand bar and it was well known for its "Manhattan Beach." Dayton is the eastern most of the urban Southbank cities and is characterized by its rich heritage and its architecturally distinctive historic homes and churches. Visitors from all over the region enjoy exploring this river city community that features shops, restaurants, beautifully landscaped parks and a two-mile walking path overlooking the Ohio River. One of Dayton’s major attractions is Manhattan Harbour Yacht Club, a full service marina and yacht brokerage center. The Marina is located in a protected inlet off the Ohio River on the Kentucky shore. It has 460 "in water" slips, dry storage with Valet Service, restaurant with bar, boater's lounge and code access rest rooms. Manhattan Harbor also offers transient slips for boats up to 50 feet. Its outdoor bar area is a popular regional entertainment venue because of its offerings of live music performances. Residential offerings in Dayton range from historic cottages and larger single-family homes in Grant Park to new hillside condominiums in Town Property’s Riverpointe complex. A major development area along Dayton’s riverfront called Manhattan Harbour was awarded a Kentucky State Signature Tax Increment Financing in the amount of $128 million. Manhattan Harbor can accommodate up to $1 billion of mixed-use development. This and other developments will help the City flourish and extend the Northern Kentucky riverfront to the east. Dayton’s gentle, curving coastline is a beautiful mirror to Cincinnati's Columbia Parkway. The City’s lean, efficient staff provides excellent service to developers and businesses. DAYTON DEVELOPMENT PROGRAMS/BUSINESS INCENTIVES NEW MARKET TAX CREDITS Most of Dayton is located within census tracts #21037051101 and #21037051200, which are eligible for the federal New Market Tax Credit program. (See Appendix for census tract map.) PROPERTY ASSESSMENT MORATORIUM For approved projects, business and property owners can defer the added value of improvements from the taxable assessment of their property for a period of five years. A structure must be 25 years or older and must undergo substantial rehabilitation to qualify. The exemption applied to City property taxes only. P A G E 25
JOB DEVELOPMENT INCENTIVE PROGRAM The City offers up to a 50% reduction in occupational license fees for new projects locating in Dayton creating a new annual payroll of $1,500,000 and over. HISTORIC INVESTMENT TAX CREDIT A 20% investment tax credit is available for substantial rehabilitation of certified historic buildings that are income-producing. Project must comply with the Secretary of the Interior’s Standards for Rehabilitation. A 10% credit is available for buildings built before 1936 that are not certified as historic. PAINT PARTNERSHIP PROGRAM Porter Paints offers a discount on recommended exterior paint colors, all interior paints, and associated products for both rehabilitation and new construction. All properties located within the boundaries of the former Enterprise zone are eligible.
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REGIONAL ECONOMIC DEVELOPMENT/FINANCING/PLANNING ENTITIES SERVING NORTHERN KENTUCKY’S SOUTHBANK CITIES In addition to the five Southbank City governments which offer development incentives and assistance unique to their own jurisdictions, there are several Northern Kentucky based entities providing a wide range of assistance to developers and businesses as well as access to local, state, and national grant and financing programs. A directory of these entities and their services is as follows:
THE CATALYTIC FUND Catalytic Development Funding Corp. Of Northern Kentucky (The Catalytic Fund) is a private sector, not-for-profit organization providing financing assistance and related services for developers of quality residential and commercial real estate projects in Northern Kentucky’s urban cities. Its mission is to accelerate Northern Kentucky’s urban renaissance though targeted investments in catalytic real estate development and redevelopment projects in urban neighborhoods. Essential to the revitalization and repopulation of our urban communities, the Catalytic Fund addresses the need for patient capital to support construction and/or rehabilitation of market rate housing and mixed-use real estate projects. The Catalytic Fund provides capital via a $10,000,000 investment fund to fill gaps between traditionally underwritten loans, developer’s equity, and project costs. Although the Catalytic Fund expects its capital to be returned, it can be patient and flexible allowing time for the project to succeed. PRODUCTS, SERVICES, AND ACTIVITIES The Catalytic Fund provides the following products and services to implement revitalization plans initiated by private for-profit developers, non-profit developers, or Cities: GAP LOANS AND EQUITY INVESTMENTS A $10,000,000 revolving investment fund for financing real estate projects. LAND BANKING Selective and opportunistic land banking and programs involving acquisition of REO properties from financial institutions and partnering with quality rehabbers/developers to improve these properties and sell them to end users. FINANCIAL PACKAGING Technical assistance as needed to developers and Target Area Cities, including financial feasibility analyses of proposed development projects, preparation of financial packages needed to solicit loan quotes, sourcing for primary financing, and obtaining public resources and incentives. RECRUITING QUALIFIED DEVELOPERS For projects initiated by the Catalytic Fund or one of the Target Area Cities, the Fund markets and solicits development proposals from qualified local, regional, and national developers. DEVELOPERS RESOURCE GUIDE A central database of information on available properties, development incentives (local, state, and federal), and grant opportunities. P A G E 29
RESEARCH Research on Target Area City demographics and housing statistics, as well as research relating to demographic trends and forecasts impacting real estate demand, real estate capital markets, and real estate product markets SERVICE AREA Cities of Ludlow, Covington, Newport, Bellevue and Dayton, Kentucky CONTACT INFORMATION Jeanne Schroer President/CEO Catalytic Development Funding Corp. of Northern Kentucky 50 East RiverCenter Blvd., Suite 429 Covington, KY 41011 (859) 757-0519 office (859) 760-9398 mobile jschroer@cdfcnky.org www.facebook.com/thecatalyticfund www.thecatalyticfund.org
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SOUTHBANK PARTNERS, INC. Southbank Partners, Inc. is a community and economic development organization that coordinates activity with the cities that lie along Northern Kentucky's bank of the Ohio River. Its purpose is to assist the cities especially through promoting and coordinating development activities, fostering teamwork and collaboration, and providing a unified voice for the partner cities in advocating common positions to state and federal governments, as well as to other communities. Recognizable accomplishments of Southbank Partners through the years include the creation of the Southbank Shuttle, the Purple People Bridge, and Developers’ Day. The organization is currently coordinating the exciting new $50 million Riverfront Commons trail project, a four-mile walking and bike path connecting the Southbank cities from Ludlow to Dayton. The impact also extends to arts, culture, tourism and health in addition to the obvious economic impact. PRODUCTS, SERVICES, AND ACTIVITIES • Coordinates activity with the cities that lie along Northern Kentucky’s bank of the Ohio River • Promotes and coordinates development activities • Provides a unified voice for the partner cities in advocating common positions to state and federal governments, as well as to other communities SERVICE AREA Cities of Ludlow, Covington, Newport, Bellevue, Dayton, and Ft. Thomas, Kentucky CONTACT INFORMATION Mr. Dennis Keene Economic Development Advisor dkeene@southbankpartners.com Mr. Jack Moreland President jmoreland@southbankpartners.com 425 York St. Newport, KY 41071 Phone: (859) 655-7700 Fax: (859) 655-9577 www.southbankpartners.com
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COVINGTON BUSINESS COUNCIL/URBAN PARTNERSHIP The mission of the Covington Business Council is to Advocate AND TAKE ACTION for a healthy Covington business environment. The Covington Business Council was founded in 1979, but was originally known as the Covington Urban Redevelopment Effort (CURE). CURE was started in 1972 by Ralph Haile Jr., President of Peoples-Liberty Bank & Trust Co. In April 1972, 16 volunteers hosted a public forum where they announced their ideas for the future of Covington. The organization had begun to accept memberships and changed their name from CURE to ACT for Covington. ACT became a successful partnership between the Covington Business Men's Association, the neighborhood residential groups, the City of Covington and interested citizens. From 1979-1989, ACT changed from focusing efforts on marketing downtown, to redevelopment. In 1990, the organization officially became the Covington Business Council. PRODUCTS, SERVICES, AND ACTIVITIES The CBC remains invaluable to its members by responding to their needs and requests by: advocating for them with city, county, and state officials, keeping them informed of issues and legislation that affect doing business in Covington, offering educational workshops, and creating opportunities to network with other local business professionals. The newly created Urban Partnership (formerly the CBC Foundation) is currently leading the organizational efforts to establish a Business Improvement District for Downtown Covington. SERVICE AREA Designated district in downtown Covington, KY CONTACT INFORMATION Pat Frew Executive Director 50 E. RiverCenter Blvd., Suite 160 Covington, KY 41011 Phone: (859) 431-1500, ext 1 Fax: (859) 431-5134 Cell: (513) 703-3027 UP Hotline: (859) 291-4333 pfrew@covingtonup.com www.cbcky.com www.covingtonup.com
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NORTHERN KENTUCKY TRI-ED The Northern Kentucky Tri-County Economic Development Corporation (Tri-ED) is a non-profit economic development organization. Its mission is to expand the local economy by providing expert assistance to the following sectors and overall primary industries: Manufacturing, Professional, Technology Entrepreneurs & Hi-Tech Firms, Aviation Industry, Distribution & Logistics. Tri-ED is the first point of contact for site selection consultants, corporate real estate developers/brokers, and Northern Kentucky businesses looking to expand. Working with local allies, Tri-ED creates a thriving business climate in Northern Kentucky. PRODUCTS, SERVICES, AND ACTIVITIES • Provides expertise in accessing state and local economic development incentives for businesses and developers • Maintains inventory of available sites and buildings via organization’s website • Provides detailed database of tax and other business cost information for each of the governmental units within its service area • Pro-actively markets the Northern Kentucky region to potential users and site selection consultants working on behalf of corporate clients SERVICE AREA Counties of Boone, Campbell, and Kenton, Kentucky as well as all cities and unincorporated areas within those counties. CONTACT INFORMATION Mr. Daniel Tobergte President/CEO 300 Buttermilk Pike, Ste. 332 P.O. Box 17246 Lakeside Park, KY 41017 Phone: (859) 344-0040 Toll Free: (888) 874-3365 Fax: (859) 344-8130 det@northernkentuckyusa.com www.northernkentuckyusa.com Mr. Wade Williams Vice President Phone: (859) 344-004 wtw@nothernkentuckyusa.com
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NORTHERN KENTUCKY AREA DEVELOPMENT DISTRICT The Northern Kentucky Area Development District (NKADD) is one of fifteen ADDs in Kentucky that comprise a statewide network of multi-county planning and development organizations. The NKADD serves as a forum, clearinghouse, technical center, and convener for the region and provides continuity to projects during the transition of local elected officials. The NKADD strives to foster regional strategies, solutions, and partnerships that achieve sustainable economic growth and improve the overall quality of life for the citizens of the region. Unlike many other organizations structured along multi-jurisdictional lines, the ADDs have both federal and state statutory authority (KRS 147A). PRODUCTS, SERVICES, AND ACTIVITIES INFRASTRUCTURE UPGRADES Partner with Kentucky Infrastructure Authority in implementing and overseeing water and wastewater projects. Create a priority list and maintain a database for all water and wastewater utilities. GRANT SERVICES Provide grant writing and administration services, certified financial professional services. PUBLIC ADMINISTRATION SERVICES The ADDs are committed to providing high quality, state-of-the-art management consulting by making available a vast array of sound, innovative services and products in the areas of public administration, human resource management, regional studies, finance, taxation, solid waste management, governance, and other areas, in order to improve the efficiency and effectiveness of local government and non-profit organizations. SUPPORTIVE SERVICES FOR INDIVIDUALS The Area Agencies on Aging help thousands of individuals remain in their own homes and communities and saves Kentucky millions of dollars in avoided costs for more expensive service interventions through programs such as Family Caregiver and Consumer Directed Option. The ADDs also provide individuals access to vital resources, adult day, in-home respite, care management assistance, transportation and financial consultation. MAPPING SERVICES Maintain GIS (Geographic Information Systems-GPS) inventory on water, wastewater, road centerline and other data for economic development, emergency management, health care, law enforcement, and transportation sectors. The NKAAD also provides metropolitan and rural transportation planning functions, identifies and advances transportation needs of the region, facilitates the ranking of projects in the state’s highway plan, and maintains an inventory of multi-modal assets. WORKFORCE TRAINING Provide management and staff support for regional and local Workforce Investment Boards and job recruitment training and retention for low-income families. COMPREHENSIVE ECONOMIC DEVELOPMENT STRATEGIES (CEDS) The ADDs work with local partners to develop and implement CEDS that address specific opportunities and challenges in the region with job creation and business development.
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FINANCING BUSINESSES TO SPUR INNOVATION AND ENTREPRENEURSHIP Provide gap financing, seed capital, and business planning assistance. HAZARD MITIGATION Partner with KY Division of Emergency Management to produce regional plans as a requirement for local governments to receive FEMA mitigation grant assistance. SERVICE AREA Counties of Boone, Kenton, Campbell, Carroll, Gallatin, Owen, Grant, and Pendleton, Kentucky as well as all cities and unincorporated areas within those counties. CONTACT INFORMATION Ms. Meghan Sandfoss Associate Director of Public Administration & Development Services 22 Spiral Dr. Florence, KY 41042 Phone: (859) 283-1885 Fax: (859) 283-8178 meghan.sandfoss@nkadd.org www.nkadd.org
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PLANNING AND DEVELOPMENT SERVICES OF KENTON COUNTY Planning and Development Services of Kenton County (PDS) was created in 1961 following action by the 1960 session of the Kentucky General Assembly. The General Assembly’s goals—and those of the local officials who saw the task through—were to decrease bureaucracy and conflicting development standards, to foster coordinated growth and economic prosperity, and to support local governments with those functions that impact growth and prosperity most directly. The Planning and Zoning staff is responsible for plans and studies that help provide a framework for the future of Kenton County communities. Staff pursues this framework through development of comprehensive plans, conducts specialized planning studies, and interacts with local citizens. Staff also performs the day-to-day functions, which promote the desirable community envisioned by those plans and studies. These functions include reviewing zoning permits, handling board of adjustments issues, pursuing zoning violations, reviewing zoning text and map amendments, and meeting requests for zoning information. PRODUCTS, SERVICES, AND ACTIVITIES APPLICATIONS AND FORMS Provided online this collection includes, but is not limited to: building permits and checklists, HVAC applications, plat applications, and survey information. LONG-RANGE PLANNING SERVICES Includes the state-mandated updates to the area-wide comprehensive plan as well as any other local planning initiatives pursued by any of Kenton County’s local governments. LONG-RANGE PLANNING, CURRENT PLANNING, AND INFRASTRUCTURE ENGINEERING SERVICES Services provided to the Kenton County Planning Commission by way of a professional services agreement. This includes technical assistance to the planning commission and applicants preparing to go before it, review of and recommendation on all map and text amendments to the 20 local zoning ordinances, review of and recommendation on all stage I and stage II development plans, and maintenance of all official zoning ordinances and maps. It also includes administration of the county’s subdivision regulations, technical assistance to the planning commission and all local public works departments, review of all conveyance plats, review of all preliminary and final plats and any improvement plans submitted with them, and field inspections of all infrastructure required by the regulations. FULL COMPLIMENT OF LINK-GIS SERVICES Offers an interlocal agreement creating the LINK-GIS/Kenton County partnership. Partners include the Kenton County Fiscal Court, the Kenton County Property Valuation Administrator (PVA), PDS (managing partner), the Northern Kentucky Water District, and Sanitation District No. 1. STATE-LEVEL BUILDING CODE SERVICES Delivered by way of authority granted to Kenton County Fiscal Court by the Kentucky Office of Housing, Buildings, and Construction and then delegated to PDS by the Fiscal Court. This includes administration of the Kentucky Building Code and attendant National Electric Code on all state-level construction projects, technical assistance to all local fire departments, review of all building permit applications, review of all required building plans, and field inspections of all construction through issuance of a Certificate of Occupancy. P A G E 36
SERVICE AREA Kenton County, Kentucky and all cities and unincorporated areas within Kenton County CONTACT INFORMATION Mr. Dennis Gordon Executive Director 2332 Royal Drive Fort Mitchell, KY 41017 Phone: (859) 331-8980 Fax: (859) 331-8987 dgordon@pdskc.org www.pdskc.org www.linkgis.org
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NORTHERN KENTUCKY EZONE The Northern Kentucky ezone, a division of Northern Kentucky Tri-County Economic Development Corporation (Tri-ED), provides a support program for businesses ranging from start-up entrepreneurs to established companies commercializing a new product, technology or process. Support includes early stage capital in the form of grants, loans, forgivable loans and equity investments, through the Kentucky Enterprise Funds and the Kentucky Department of Commercialization and Innovation. The ezone accelerates, mentors, and helps gain exposure for start-up, emerging, and existing entrepreneurs on the pathway to success. The ezone has assisted over 200 companies that have brought more than $121 million in investments to Northern Kentucky. Since the program began in 2001, it has assisted clients in achieving 44 awards through the Kentucky Enterprise Funds. Currently, ezone is working with a portfolio of approximately 70 companies that include people with nothing more than an idea all the way through multi-million dollar international corporations. Northern Kentucky ezone is actively looking for client companies who share its commitment and passion in developing the Northern Kentucky entrepreneur community. PRODUCTS, SERVICES, AND ACTIVITIES • Mentoring residents toward success • Facilitating connections and networking • Assisting companies in locating and obtaining early stage funding • The ezone provides: - Executive boardroom - Faxing/copying - Wireless internet access - High-speed Internet access - Network printing - Access to entrepreneur-friendly office - Local telephone service and voicemail space SERVICE AREA Counties of Boone, Campbell, and Kenton, Kentucky as well as all cities and unincorporated areas within those counties. CONTACT INFORMATION Mr. R. Casey Barach VP of Entrepreneurship 535 Madison Ave. Suite 400 Covington, KY 41011 Phone: (859) 292-7781 Fax: (859) 292-7793 cbarach@nkyezone.org www.nkyezone.org
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NORTHERN KENTUCKY CHAMBER OF COMMERCE The Northern Kentucky Chamber provides a wide range of services to its members such as connecting small businesses to customers, problem solving, assistance finding employees, and help for non-profits in building community relationships.
PRODUCTS, SERVICES, AND ACTIVITIES The Chamber’s programs, events, and advocacy initiatives include: SMALL BUSINESS SEMINARS Designed to assist small business owners and entrepreneurs, the seminars provide support services for startup businesses by providing members with guidance on funding opportunities, strategy and business models. SCORE SEMINARS SCORE seminars help entrepreneurs learn how to improve existing business operations and run a new business. BUSINESS REFERRAL NETWORKS (BRN) The Business Referral Networks (BRN) offer opportunities for members to connect directly with new customers through trusted referrals. Groups range from 15 to 30 people and are limited to one person per industry/profession per group. Professionals exchange qualified business referrals through this program. BUSINESS ROUNDTABLES Roundtables are forums for company owners, presidents, CEOs and other senior managers to share ideas and engage in mutual problem solving and goal tracking. GREEN PARTNERSHIP The Green Partnership’s mission is to challenge businesses to be environmentally responsible by educating and communicating financial and sustainable benefits to the community including information on access to financial incentives and technical assistance for greening business operations. PROCUREMENT SOLUTIONS The Chamber offers a monthly program called “A Chance to Meet” that provides an opportunity for local vendors and suppliers to connect with buyers and purchasing managers from large highly sought after corporations. Past presenters include Toyota Motor Engineering and Manufacturing North America Inc., Kroger, Procter and Gamble, Cincinnati Bell, NKU, and Mazak Corporation. POLICY DEVELOPMENT The Chamber actively identifies critical legislative issues affecting its members and serves as the voice of its members on key legislative and regulatory issues in Northern Kentucky, Frankfort and Washington, D.C. NORTHERN KENTUCKY INTERNATIONAL TRADE ASSOCIATION (NKITA) NKITA aims to enhance economic opportunities for business members who are currently involved and/or want to become involved in international trade. The program connects members with global businesses and networking opportunities through programs, trade education seminars, special events, P A G E 39
trade missions, and the planning of several foreign Embassy visits to the Greater Cincinnati region. In addition, NKITA committees address community issues such as supporting the Trade Promotion Authority and Free Trade Agreements. LEADERSHIP DEVELOPMENT The Chamber is committed to keeping local community and business professionals engaged through its Leadership Northern Kentucky program. WORKFORCE DEVELOPMENT Assists in creating a talent pipeline to meet employer needs by providing programs and resources that facilitate partnerships between the business community and educators, which can help answer questions on compensation, training, and legal employment matters. SERVICE AREA Northern Kentucky
CONTACT INFORMATION Trey Grayson President & CEO 300 Buttermilk Pike, Suite 330 PO Box 17416 Fort Mitchell, Kentucky 41017 tgrayson@nkychamber.com Phone: (859) 578-8800 Fax: (859) 578-8802 www.nkychamber.com
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STATE & REGIONAL DEVELOPMENT PROGRAMS/INCENTIVES KENTUCKY BUSINESS INVESTMENT (KBI) PROGRAM (See Appendix for full description) Provides income tax credits and wage assessments to new and existing agribusinesses, regional and national headquarters, manufacturing companies, and non-retail service or technology-related companies that locate or expand operations in Kentucky. Requirements to qualify for the incentives: • •
Employment minimum requirement - Create a minimum of 10 new, full-time jobs for Kentucky residents. Eligible Costs - Eligible costs include costs incurred after the date of preliminary approval. Eligible costs for owned projects include 100 percent of the land, building, site development and start - up costs. Eligible costs for leased projects include 100 percent of the start-up costs and 50 percent of the estimated annual rent payments for each year of the tax incentive agreement. Start-up costs include the costs incurred to furnish and equip a facility, such as computers, furnishings, office equipment, manufacturing equipment, fixtures, relocation of out-of-state equipment and nonrecurring costs of fixed telecommunication equipment.
Incentives - Tax incentives are available for the approved company for up to 10 years in via: • •
Tax Credits up to 100 percent of corporate income or limited liability entity tax liability arising from the project. Wage Assessment incentives up to four percent (including up to one percent required local participation) of gross wages of each employee.
KENTUCKY TOURISM DEVELOPMENT ACT (See Appendix for full description) A sales tax credit incentive program designed to develop Kentucky’s tourism industry. Approved attractions may recover up to 25% of initial investment through a sales tax credit over a 10- year period. Qualified tourism projects must: • • • •
Cost a minimum of $1 million; Attract at least 25% of visitors from out-of-state by the fourth year; Be open to the public at least 100 days a year, and Demonstrate that the project will generate tax revenues to the state that will exceed the credit given to company and shall not adversely affect existing employment in Kentucky
KENTUCKY TOURISM LOAN PROGRAM (See Appendix for full description) This program is in place to assist small tourism attractions obtain financing necessary for the development or expansion of small tourism attractions. An additional benefit of the program is below market interest rates. The annual percentage rate is based upon the term of the credit. Rates range from one percent (1%) to six percent (6%) as summarized below.
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TERM Less than 3 years 3 – 5 Years 5 – 7 years 7-10 Years 10 – 15 Years
RATE 1% 2% 3.5% 5% 6%
The program seeks to assist those operations that are unique to the area in which development or expansion is proposed. The project must show the ability to either attract individuals into an area in which travel was not planned or will extend the stay of travelers in an area in which travel has been planned. Those applying for assistance under this program will typically have total development costs of less that $1 million. Funding is limited to the financing of fixed assets. The maximum credit amount per borrower is $250,000 or fifty percent of project costs whichever is less. All credits must be secured and personally guaranteed. THE KENTUCKY HISTORIC PRESERVATION TAX CREDIT (See Appendix for full description) This program is administered by the Kentucky Heritage Council / State Historic Preservation Office (SHPO), an agency of the Kentucky Tourism Arts and Heritage Cabinet. For owner occupied properties, up to 30% of qualified rehabilitation expenses is offered as a state tax credit. A minimum investment of $20,000 is required, with the total credit not to exceed $60,000. For income-producing properties, up to 20% of qualified rehabilitation expenses is available, requiring a minimum investment of $20,000 or the adjusted basis, whichever is greater. The total credit for a project must not exceed $400,000. “Other” properties include commercial and industrial buildings, incomeproducing properties, historic landscapes and properties owned by governments and non-profit organizations. KENTUCKY WINS (See Appendix for full description) The mission of Kentucky Community and Technical College System (KCTCS) is to serve as "the primary provider" of workforce training "to meet the needs of existing and new business and industry". KY WINS will support projects for: • • •
Existing Kentucky companies who are expanding and creating new jobs Existing Kentucky companies who are requiring employees to learn new skills in order to retain their jobs Companies who are contributing to Kentucky's economic development
Reimbursable expenses through KY WINS include: • • • •
Instruction Purchased training materials In-house produced training materials Assessments
• • • •
Job profiling Travel Facility rental Equipment
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KY WINS will provide funding for 75% of the total cost of the services to be delivered through the project. KCTCS will add a 10% administrative fee to all KY WINS projects based on the total cost of the services outlined in the Budget and Training Plan. The company will be responsible for paying the remaining 25% plus the 10% KCTCS administrative fee. KENTUCKY ENTERPRISE INCENTIVE ACT (KEIA) (See Appendix for full description) A KEIA approved company is eligible to receive a refund of sales and use tax paid for construction materials, building fixtures, and for equipment used in research and development purchased during the life of the project not to exceed the amount authorized in the memorandum of agreement. An approved company has 18 months from the date of Kentucky Economic Development Finance Authority (KEDFA) approval to purchase materials eligible for refund. The total tax refund incentive available for commitment by KEDFA for all projects, for each fiscal year, is limited to $20,000,000 for building and construction materials and $5,000,000 for equipment used for research and development.
LOAN PROGRAMS KENTUCKY ECONOMIC DEVELOPMENT FINANCE AUTHORITY (KEDFA) (See Appendix) KEDFA encourages economic development, business expansion, and job creation by providing business loans to supplement other financing. This program provides low interest mortgage loans to industrial, service, tourism and agribusiness firms that do not use the KIDA or KJDA programs. Loans up to $500,000 are available at interest rates ranging from 1% to 7% on terms of 3 to 20 years to finance fixed assets. Terms and conditions apply. (See Appendix for full description) COMMONWEALTH SMALL BUSINESS DEVELOPMENT CORPORATION (CSBDC) The Commonwealth Small Business Development Corporation (CSBDC) is an economic development entity created under the auspices of the Small Business Administration (SBA) to foster development. The CSBDC is certified to make SBA 504 loans anywhere in the Commonwealth of Kentucky. Loans up to $750,000 are available, with the maximum loan term of 20 years for land and buildings and 10 years for equipment. COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) Loans Businesses in Northern Kentucky can obtain low-interest loans through the federally funded CDBG system. Entitlement cities and counties can lend the grant funds to businesses for the creation or retention of jobs, 51% of which must be for low- to moderate-income families. Interest rates usually are below the market rate and usually are fixed for the life of the loans. Federal regulations apply to all loans. LINKED DEPOSIT PROGRAM (See Appendix) Provides loans up to $100,000 for small business and agribusiness for a period not to exceed seven years. The state will purchase certificates of deposit from participating lenders through the State Investment Commission, at the New York prime interest rate less 4%, but never less than 2%. Loans for small business will be reviewed by the Cabinet for Economic Development to ensure that loans comply with the statute. INDUSTRIAL REVENUE BONDS (IRB) (See Appendix) IRBs issued by state and local governments in Kentucky can be used to finance manufacturing projects and their warehousing areas, major transportation and communication facilities, most healthcare facilities, and mineral extraction and processing projects. Bond funds may be used to finance the total P A G E 44
project costs including engineering, site preparation, land, buildings, machinery and equipment, and bond issuance costs. Typically, Northern Kentucky communities issue IRB’s subject to full state and local property tax. KENTUCKY SMALL BUSINESS CREDIT INITIATIVE (KSBCI) (See Appendix) The initiative includes three distinct credit enhancement programs designed to generate jobs and increase the availability of credit to small businesses by reducing the risk participating lenders, credit unions, and community development financial institutions assume. KSBCI will leverage funding from these private lenders to help finance creditworthy small businesses that would typically fall just outside a lender’s normal underwriting standards. The three programs that compose KSBCI are: •
•
•
Kentucky Capital Access Program (KYCAP): Offers loan portfolio insurance to private financial institutions, thus encouraging them to lend to creditworthy small businesses, by providing a matching contribution to a lender’s loan loss reserve account when they extend credit to qualified small businesses. In the case of a loss, the lender may draw against the account to offset a loss. For more information about KYCAP, see the KYCAP Guidelines. Kentucky Loan Participation Program (KYLPP): Assists borrowers whose cash flow does not meet a lender’s coverage requirements by allowing CED to purchase (or participate in) a portion of the loan from the lender and offer the borrower, on that portion, a payment-free grace period up to 24 months. For more information about KYLPP, see the KYLPP Guidelines. Kentucky Collateral Support Program (KYCSP): Provides a pledged asset (cash) to a lender for consideration in making a loan to a small business, thereby enhancing the lender’s ability to underwrite the loan. For more information about KYCSP, see the KYCSP Guidelines.
Loan proceeds may be used for eligible purposes such as start-up costs, working capital, business acquisitions and expansions, franchise financing, equipment loans, inventory financing, owner occupied commercial real estate acquisitions, renovation, and construction. No passive real estate or speculative investment projects are available. The terms and conditions of the loans will be determined by the lenders and borrowers. Loans may be in the form of lines of credit, in which case the amount of each loan will be calculated as the maximum amount that can be drawn down against that line of credit. In some cases, refinancing may be available.
UTILITY INCENTIVES Duke Energy offers three programs that will encourage economic development through reductions in electric rates for use of unoccupied buildings, brownfield sites, major expansions, and new businesses: URBAN REDEVELOPMENT Designed to help revitalize areas with abandoned buildings of 50,000 square feet or more, and would apply to customers with a minimum electric loan of 500 kilowatts. This program provides for a 50% reduction in base bill electric charges for one year. BROWNFIELD REDEVELOPMENT Encourages development of areas defined by Kentucky or federal law as a property site whose use may be compromised by the presence of a hazardous substance or contaminant. Electric demand P A G E 45
charges may be reduced by 50% in the first year, declining by 10% per year through the fifth year. ECONOMIC DEVELOPMENT Applies to customers with a minimum electric usage of 1,000 kilowatts and would require that the new or expanding customer create at least 25 new full-time jobs with a minimum investment of $1 million. Duke Energy will reduce base electric rates by 50% for the first year.
PROGRAMS AVAILABLE THROUGH THE NORTHERN KENTUCKY AREA DEVELOPMENT DISTRICT (NKADD) REVOLVING LOAN FUND Loans available for start-up and expanding businesses that cannot access full traditional bank financing: • •
Loan amounts $10K - $100K Low interest, can be used as gap financing CONTACT INFORMATION Andrew Baker NKADD (859) 283-1885 Andrew.Baker@nkadd.org
BROWNFIELD PROGRAMS Assists private businesses/entities with redeveloping underused properties •
Licking River Greenway Brownfield Assessment Grant -
•
Assessments (at no cost to the business owner) of properties No financial match or repayment required Used for both Phase I and Phase II Environmental Assessments Provides remediation planning based on future intended use Reports provided as well as certificates
Brownfield Revolving Loan Fund -
Available for cleanup of sites/redevelopment Offered to both private and public entities Offered at an interest rate lower than the suggested prime rate Businesses that meet a certain criteria will not be required to provide the 10% match CONTACT INFORMATION Sara Jo Shipley NKADD (859) 283-1885 Sarajo.shipley@nkadd.org P A G E 46
PROGRAMS FOR EARLY-STAGE COMPANIES AND START-UPS KENTUCKY INNOVATION NETWORK The Kentucky Innovation Network is a program of the Office of Entrepreneurship in the Cabinet for Economic Development. The 13-office network encourages business innovation, builds and promotes technology-driven, research-intensive industries and creates clusters of innovation throughout the state. www.kyinnovation.com NORTHERN KENTUCKY OFFICE OF THE KENTUCKY INNOVATION NETWORK The Northern Kentucky region of the Kentucky Innovation Network covers 11 counties including Boone, Kenton, and Campbell counties. www.nkyezone.org The office serves as the regional contact for a number of entrepreneur support programs: EZONE ENTREPRENEUR SUPPORT PROGRAM Since 2011, the ezone program has assisted over 300 technology entrepreneurs raised over $160M in capital. The ezone works on a specific commercialization process sometimes referred to as the ABC Process of technology commercialization: - Assessment - Business Planning, and - Capitalization KENTUCKY ENTERPRISE FUND Provides capital to early-stage technology companies. Companies may apply for a $30,000 grant, an initial investment of up to $250,000, or follow-on funding up to $750,000. KENTUCKY SCIENCE AND ENGINEERING FOUNDATION Invests in research and development activity to promote innovation, new product development and commercialization, and to build a pipeline of new ideas and technologies. • • • •
Research and Development Excellence Program makes proactive investments in innovation and technology development in existing and emerging areas of research through a peer-reviewed competitive process. Kentucky Commercialization Fund Program supports efforts made by faculty in the Commonwealth of Kentucky to commercialize a technology, product, or process that they have developed but not yet licensed. Kentucky SBIR/STTR Phase Zero and Phase Double Zero Program funding for development of Federal Phase I and Phase II Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) proposals. Kentucky SBIR/STTR Matching Funds Program matching funds of Federal Phase I or Federal Phase II Awards.
COMMONWEALTH SEED CAPITAL COMMONWEALTH SEED CAPITAL, LLC (CSC) An independent fund that makes debt or equity investments in early-stage Kentucky business entities to facilitate the commercialization of innovative ideas and technologies. Investments are typically made in these specified innovation areas: health and human development; information technology and communications; bioscience; environmental and energy technologies; and materials science and advanced manufacturing. P A G E 47
OTHER EARLY STAGE GROWTH FUNDS AND INVESTOR GROUPS: • • • • • •
The NKY Growth Fund (NKY focused) Queen City Angels (Cincinnati, NKY focused but not limited) UpTech Fund I, LLC (NKY located and focused) Catalytic Innovation Fund, LLC (Regional focus) Bluegrass Angels (based in Lexington and Kentucky focused) Enterprise Angels (based in Louisville, KY focused but not limited)
OTHER ENTREPRENEUR SUPPORT PROGRAMS UpTech - informatics business accelerator -
$50,000 in seed capital Six months of business accelerator support Legal, financial, and marketing mentorship team Office space
iNKUbator - Northern Kentucky University College of Business incubator -
Open to students and graduates of NKU Mentorship Seed money Workspace
bioLOGIC - life science incubator CONTACT INFORMATION Casey Barach NKY ezone (859) 292-7781 cbarach@nkyezone.org
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FINANCIAL INCENTIVES FOR ENERGY EFFICIENT CONSTRUCTION/RETROFIT GREATER CINCINNATI ENERGY ALLIANCE The Energy Alliance’s mission is to facilitate investment in energy efficiency for homeowners, non-profit organizations, and commercial building owners through outreach and education, project management, and financing solutions. The Energy Alliance provides reduced-cost energy assessments, project management, and energy improvement incentives to residents of 1-2 family owner-occupied homes and building owners of Hamilton County in Ohio and Boone, Kenton, and Campbell counties in Kentucky. Anyone can participate in the Energy Alliance's programs: no income restrictions apply. The Energy Alliance Commercial Building Retrofit Program offers the following incentives: • • •
Subject to funding availability, the Energy Alliance can provide non-repayable grants up to 15% of total project costs to a maximum grant amount of $200,000 per eligible project. Subsidized technical assistance for project identification, completion, financing assistance, post project measurement, verification, and reporting. Loans for components of project cost related to energy efficient systems.
The Energy Alliance also has incentives for homeowners installing home energy improvements in singlefamily residences. CONTACT INFORMATION Andy Holzhauser Chief Executive Officer Greater Cincinnati Energy Alliance 200 W 4th St., Suite 600 Cincinnati, OH 45202 (513) 621-GCEA (4232)
MORTGAGE FINANCING FOR URBAN REVITALIZATION PROJECTS CINCINNATI DEVELOPMENT FUND The Cincinnati Development Fund (CDF) is a non-profit lending institution established in 1988 to finance affordable housing development and community revitalization in the Greater Cincinnati Area. CDF fills a critical niche that is not sought after by traditional lenders, such as small projects, new developers, and complex financing structures. The primary business of the organization is to underwrite and service community development real estate loans that result in the creation or preservation of affordable housing, or revitalization of urban communities. CDF's flexible loan funds exist to achieve specific community development goals, primarily in the area of community revitalization and affordable housing development. Eligible borrowers include individuals, corporations, limited or general partnerships, non-profit organizations and limited liability corporations. Loan applications should meet any one of the following criteria to be eligible:
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• • • • • •
Construction and/or permanent loans for the development of affordable rental or for-sale housing; Construction and/or permanent loans for the development of non-rent restricted housing in low or moderate income census tracts; Construction and permanent loans for real estate that will be utilized for a community purpose; Construction and permanent financing that will result in the removal of blight and/or contribute to community revitalization; Other purposes as agreed upon by the CDF Board of Directors and Loan Committee; and Loans to Qualified low income community businesses located in Uptown Cincinnati. CONTACT INFORMATION Joe Huber Chief Operating Officer Cincinnati Development Fund 1100 Walnut St. Cincinnati, OH 45202 jhuber@cincinnatidevelopmentfund.org www.cincinnatidevelopmentfund.org
THE CATALYTIC FUND The Catalytic Fund is a private sector, not for profit organization providing financing assistance and related services for developers of quality residential and commercial real estate projects in Northern Kentucky’s urban cities. Its mission is to accelerate Northern Kentucky’s urban renaissance though targeted investments in catalytic real estate development and redevelopment projects in urban neighborhoods. The Catalytic Fund addresses the need for patient capital to support construction and/or rehabilitation of market rate housing and mixed-use real estate projects that are essential to the revitalization and repopulation of our urban communities. The Catalytic Fund provides capital via a $10,000,000 investment fund to fill gaps between traditionally underwritten loans, developer’s equity, and project costs. Although the Catalytic Fund expects its capital to be returned, it can be patient and flexible allowing time for the project to succeed. The Catalytic Fund selects projects for investment meeting the following criteria: •
Target areas/neighborhoods – Areas having a high probability of market potential as indicated by the following: - Are adjacent or connected to areas, projects or facilities where significant public or private investment has already occurred - Are “anchored” by a significant public/community facility or natural amenity such as the Licking River access, a park, church, emerging retail district, arts center, etc. - Have high quality, attractive housing or commercial building stock, or have large amounts of underutilized land (vacant lots, blighted properties or non conforming uses) that can be assembled for higher and better use
•
Feasibility – Projects demonstrating financial viability given reasonable assumptions regarding P A G E 50
• • •
•
market potential. Projects approved for loans or investments must demonstrate the ability to repay the Catalytic Fund capital through vigorous underwriting procedures. Quality - Projects with quality design and materials that blends with or complements neighborhood character. Need – Projects not able to be financed entirely through conventional lending sources or in which lenders prefer to invest via pooled funds to limit their exposure to a particular location or property. Diversity – Projects that provide a mix of housing options to a neighborhood. It has been proven that a key part of revitalizing a distressed neighborhood is restoring a vibrant and diverse housing market that attracts newcomers while preserving affordable housing options for current moderate-income residents. Leverage of Catalytic Fund capital and resources – Projects that maximize use of public funds and subsidies available for urban projects such as New Market Tax Credits, CDBG funds, Tax Increment Financing, Neighborhood Stabilization Act funds, HUD 108 loans, etc.
The Catalytic Fund’s general portfolio management and underwriting criteria are as follows: • • • • •
•
Transaction size – Loans and investments range from $100,000 - $500,000 based on initial capitalization of $10,000,000. As the Fund grows, no more than 10% of Fund capital will be invested in any one project. Borrower exposure – No more than 10% of the Fund is disbursed to any one borrower. Security – All Catalytic Fund transactions are secured in some manner, i.e., mortgage, borrower guarantee, pledge of partnership interests, etc. Equity – Borrower provides at least 10% of verified and certified project costs in demonstrated equity. Use of funds – Funds are used for direct project costs only. The Catalytic Fund does not provide financing for any project that does not have an identified source of funding for all project costs. The Catalytic Fund does not make loans for pre-development costs unless a take out source (construction financing) has been identified and committed. Land banking and property acquisition – The Catalytic Fund may acquire and warehouse land for future redevelopment projects only when there is a compelling opportunity to do so and when there is an exit plan based on realistic assumptions. Assuming a $10,000,000 initial investment Fund, no more than 20% of capital will be invested in land/buildings held for future developments. As the Fund grows, this percentage will be adjusted downward to 10%. CONTACT INFORMATION Jeanne Schroer President/CEO The Catalytic Development Funding Corp. of Northern Kentucky 50 East RiverCenter Blvd., Suite 429 Covington, KY 41011 (859) 757-0519 office (859) 760-9398 mobile jschroer@cdfcnky.org www.facebook.com/thecatalyticfund www.thecatalyticfund.org
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SOUTHBANK CITIES CENSUS TRACKS !
Kentucky Economic Development Finance Authority (KEDFA)
Kentucky Business Investment (KBI) Program
This fact sheet provides an overview of the Kentucky Business Investment (KBI) Program. For a full discussion of the program requirements, please see KRS 154.32. As with all state administered tax incentive programs, any inducements offered to an eligible company under the KBI program are negotiated by Cabinet for Economic Development officials and subject to approval by the Kentucky Economic Development Finance Authority (KEDFA).
Eligible Companies Any business entity engaged in one or more of the following activities: - Manufacturing - Agribusiness - Regional and national headquarters (regardless of the underlying business activity) - Nonretail service or technology activities must be: o Designed to serve a multistate, national or international market; o Provided to a customer base that includes more than 50% non-residents; and o May Include, but are not limited to, call centers, centralized administrative or processing centers, telephone or internet sales order or processing centers, distribution or fulfillment centers, data processing centers, research and development facilities and other similar activities. Eligible company does not include companies where the primary activity to be conducted within the Commonwealth is forestry, fishing, mining, coal or mineral processing, the provision of utilities, construction, wholesale trade, retail trade, real estate, rental and leasing, educational services, accommodation and food services or public administration services. Enhanced Incentive Counties Kentucky counties are designated “enhanced incentive” eligible by meeting at least one of the three following criteria: (1) counties with an average annual unemployment rate exceeding the state average annual unemployment rate in the five preceding calendar years; (2) counties with an unemployment rate greater than 200 percent of the statewide unemployment rate for the preceding year; and (3) counties identified as one of the sixty most distressed counties based on a three part test (three-year unemployment, education attainment and road quality). Once a company enters into a tax incentive agreement, the company maintains its enhanced benefits for the term of the agreement regardless of any change in the county's status. Any project located in an enhanced incentive county that has been decertified shall have until July 1 of the third year following the decertification to obtain final approval. If an “industrial park”, as outlined in the criteria in KRS 154.32, is located in two or more counties, one of which is an enhanced incentive county, projects undertaken in the industrial park may be approved for enhanced incentive county incentives. Minimum Requirements for Eligible Projects Requirements to qualify for the incentives: - Employment minimum requirement o Create a minimum of 10 new, full-time jobs for Kentucky residents. Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Kentucky Business Investment (KBI) Program
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o Maintain an annual average of at least 10 new, full-time jobs for Kentucky residents. Investment minimum requirement o Incur eligible costs of at least $100,000. Wage minimum requirement o For enhanced incentive counties, at least 90 percent of the new, full-time, Kentucky resident employees must receive hourly wages of at least $9.06 (125 percent of the federal minimum wage). o For other counties, at least 90 percent of the new, full-time Kentucky resident employees must receive hourly wages of at least $10.88 (150 percent of the federal minimum wage). Employee benefit minimum requirement o The term “employee benefits” is defined as “non-mandated payments by an approved company for its full-time employees for health insurance, life insurance, dental insurance, vision insurance, defined benefits, 401(k), or similar plans.” o Any company participating in this program is required to provide the new, full-time Kentucky resident employees with employee benefits equal to 15 percent of the required minimum hourly wage. o If employee benefits are less than 15 percent of the required minimum hourly wage, a company may utilize a combination of wages and employee benefits equivalent to 115 percent of the required minimum hourly wage. At least one company paid benefit is required. For enhanced incentive counties, at least 90 percent of the new, full-time, Kentucky resident employees must receive total hourly compensation (hourly wages plus employee benefits) of at least $10.42. For other counties, at least 90 percent of the new, full-time Kentucky resident employees must receive total hourly compensation (hourly wages plus employee benefits) of at least $12.51.
If each of the above minimum requirements is not met as of the activation date, the agreement is considered cancelled and the approved company will not be eligible for any of the incentives. If the above minimum requirements are met as of the activation date and are not met at the annual review date(s), the incentives may be suspended or, with the appropriate approval from KEDFA, terminated. For new projects locating to the Commonwealth, the company will be required to certify that the project could reasonably and efficiently locate outside of the Commonwealth and, without the incentives offered, the project would likely locate outside of the Commonwealth. For existing location projects considering expansions in the Commonwealth, the company will be required to certify that the tax incentives are necessary for the project to occur. Eligible Costs Eligible costs will only include costs incurred after the date of preliminary approval. - For a project to be considered an “owned” project, the approved company or an affiliate either owns the project in fee simple or possesses the project pursuant to a capital lease. Eligible Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Kentucky Business Investment (KBI) Program
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costs for owned projects include 100 percent of the land, building, site development and startup costs. For a project to be considered a “leased” project, the approved company occupies the site of the project pursuant to an operating lease agreement with an unrelated entity that reflects an arms’ length transaction. Eligible costs for leased projects include 100 percent of the start-up costs and 50 percent of the estimated annual rent payments for each year of the tax incentive agreement.
Start-up costs include the costs incurred to furnish and equip a facility, such as computers, furnishings, office equipment, manufacturing equipment, fixtures, relocation of out-of-state equipment and nonrecurring costs of fixed telecommunication equipment. For projects not located in enhanced incentive counties, the cost of equipment eligible for recovery as an eligible cost is limited to $20,000 for each new, full-time job for Kentucky residents created as of the activation date. Incentives Tax incentives are available for the approved company for up to 15 years in enhanced incentive counties or up to 10 years in other counties via: - Tax Credits up to 100 percent of corporate income or limited liability entity tax liability arising from the project. - Wage Assessment incentives up to five percent of gross wages of each employee in enhanced incentive counties or up to four percent (including up to one percent required local participation) of gross wages of each employee in other counties. The employee receives credits for the fees against state income taxes and local occupational taxes so there is no impact on the employee. If the local community does not have a local occupational fee, then an alternative form of participation may be required. Local jurisdictions that impose a local occupational license fee may request to waive the local occupational fee requirement if the local jurisdiction offers alternative inducements of similar value satisfactory to KEDFA. The tax incentives remain in place until the authorized recovery amount (approved cost) is realized or for the term of the tax incentive agreement, whichever occurs first. Unused credits that have been authorized for the project may be carried forward for the term of the tax incentive agreement; however, unused credits expire at the maturity of the agreement. Targets and Potential Adjustments of Approved Cost for Eligible Projects The tax incentive agreement will include the total maximum approved costs that may be recovered over the term of the agreement in addition to the annual maximum approved costs for each year of the agreement. Job and wage (including employee benefits) targets higher than the minimum requirements will be negotiated and included in the agreement. These targets will be measured against actual amounts as of the activation date and averaged annually for the company’s fiscal year throughout the term of the tax incentive agreement. - Projects that achieve actual job and wage results equal to or greater than 90 percent of the targets will be eligible to claim 100 percent of the annual maximum approved cost for the following year. Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Kentucky Business Investment (KBI) Program
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Projects that achieve actual job and wage results less than 90 percent of the targets will incur a reduction of the annual maximum approved cost for the following year equal to the same proportion by which the project fell below its targets. If both targets are missed, the greater percentage reduction will be required. If the eligible costs incurred as of the activation date are less than the maximum approved costs, the maximum approved costs will be reduced to the confirmed amount of eligible costs and the annual maximum approved costs will be modified accordingly.
The Process The company makes application to the Kentucky Economic Development Finance Authority (KEDFA) with the assistance of a Project Manager from Business Development. The total amount of incentives to be recommended for approval of a project is negotiated with the Cabinet along with the annual maximum incentives available, job targets and wage (including employee benefits) targets as well as any project-specific terms that may apply. The project is presented to KEDFA for preliminary approval and, if approved, KEDFA enters into a memorandum of agreement with the company that sets forth the maximum incentives available and the various requirements. The company completes its project and provides KEDFA with documentation in connection with the project’s eligible costs. For projects not located in enhanced incentive counties, a resolution is adopted by the local jurisdiction setting forth its participation prior to final approval of the project. The project is presented to KEDFA for final approval at which time a Tax Incentive Agreement is approved by KEDFA that authorizes the incentives for the company and sets forth the terms and conditions. The agreement must be fully negotiated at the time of final approval and all fees due to KEDFA must be paid. The activation date must be identified in the agreement and should be no later than two years from the date of final approval. The company activates the Tax Incentive Agreement, initiates its recovery period and begins to utilize the incentives. The company submits exhibits annually throughout the term of its project in compliance with the Tax Incentive Agreement. Fees A non-refundable application fee of $1,000 is payable upon submission of the KBI application. Prior to final approval, the company will be required to pay an administrative fee equal to one-fourth of one percent (0.25%) of the final KBI amount authorized in the Tax Incentive Agreement up to a maximum of $50,000. In addition, the company will pay all legal fees, including expenses of counsel to KEDFA, necessary for the preparation of the Tax Incentive Agreement.
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Kentucky Business Investment (KBI) Program
2012/2013 ENHANCED INCENTIVE COUNTIES 1. Adair 2. Allen 3. Bath 4. Bell 5. Boyle 6. Bracken 7. Breathitt 8. Breckinridge 9. Bullitt 10. Butler 11. Carroll 12. Carter 13. Casey 14. Christian 15. Clay
16. Clinton 17. Crittenden 18. Cumberland 19. Edmonson 20. Elliott 21. Estill 22. Fleming 23. Floyd 24. Fulton 25. Garrard 26. Grant 27. Grayson 28. Green 29. Harlan 30. Harrison
31. Hickman 32. Jackson 33. Johnson 34. Knott 35. Knox 36. Lawrence 37. Lee 38. Leslie 39. Letcher 40. Lewis 41. Lincoln 42. Lyon 43. Magoffin 44. Marion 45. Martin
46. Mason 47. McCreary 48. McLean 49. Meade 50. Menifee 51. Metcalfe 52. Monroe 53. Montgomery 54. Morgan 55. Muhlenberg 56. Nelson 57. Nicholas 58. Owsley 59. Pendleton
60. Perry 61. Powell 62. Robertson 63. Rockcastle 64. Russell 65. Spencer 66. Taylor 67. Todd 68. Trigg 69. Trimble 70. Washington 71. Wayne 72. Whitley 73. Wolfe
JUNE 30, 2012 DECERTIFIED ENHANCED INCENTIVE COUNTIES Must have final approval by June 30, 2015 1. Pulaski
2. Owen
JUNE 30, 2011 DECERTIFIED ENHANCED INCENTIVE COUNTIES Must have final approval by June 30, 2014 1. Union JUNE 30, 2010 DECERTIFIED ENHANCED INCENTIVE COUNTIES Must have final approval by June 30, 2013 1. Carlisle For further information contact:
2. Graves
3. Pike
J. Don Goodin,Director Kentucky Cabinet for Economic Development Incentive Assistance Division Old Capitol Annex 300 West Broadway Frankfort, Kentucky 40601 502-782-1978 Don.Goodin@ky.gov
6/30/2012
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
KENTUCKY TOURISM DEVELOPMENT ACT This landmark legislation, the first of its kind in the nation, provides a state sales tax incentive program for tourism development projects.
The Incentive The incentive for developers of approved new or expanding tourism projects is the ability to recover up to 25% of the project’s development costs over a ten year term. Projects including, but not limited to lodging facilities, that are constructed on state park, federal park and national forest lands are eligible to recover up to fifty percent (50%) of development costs over a twenty year term. An expanding attraction receives the incentive on increased sales tax due to the expansion. On an annual basis the Kentucky Department of Revenue will return to developers of approved projects the state sales tax paid by visitors to the attraction on admission tickets, food and gift sales and lodging costs.
Eligible Projects The Act defines tourism attractions as: Ø Ø Ø Ø Ø Ø Ø
cultural or historical sites; recreation or entertainment facilities; areas of scenic beauty or distinctive natural phenomena; Entertainment Destination Centers; Kentucky Crafts and Products Centers; Theme Restaurant Destinations; and, Lodging, when: • built in conjunction with a tourism attraction and the tourism attraction cost more than the lodging facility; or • built on state or federal parks and recreational lands; or • involves restoration or rehabilitation of a historic structure; or • involves the restoration or renovation of a lodging facility having no less that 500 rooms with project costs exceeding $10,000,000; or • Involves the construction, restoration, or renovation of a full service lodging facility which is or will be a part of a major convention or sports facility with project cost exceeding $6,000,000; or • Involves the construction, restoration, or renovation of a facility which is or will be located: § In the Commonwealth within a 50 mile radius of a property located on the National Register of Historic Places with a current function of recreation and culture; and § Located within any of the 100 least populated counties in terms of population density.
Projects that do not qualify are strictly retail businesses and recreational facilities that are used primarily by local residents and are not a likely destination for out-of-state travelers.
The Application Process Applications are submitted to the Secretary of the Tourism, Arts and Heritage Cabinet for an initial review. Should the Secretary decide the project will likely meet all the broad requirements of the Act, the application will be forwarded to the Kentucky Tourism Development Finance Authority with the recommendation the project be given preliminary approval. The Authority is attached to the Tourism, Arts and Heritage Cabinet. Should preliminary approval be granted by the Authority, an independent consultant selected by the Tourism, Arts and Heritage Cabinet will do an in-depth study on the proposed project. The cost of the study will be the responsibility of the developer. A public hearing on each project is required between preliminary and final approval. Based on the consultant’s study, related materials and the report from the public hearing, the Secretary will determine whether to request final approval by the Authority. Upon final approval by the Authority, an agreement will be signed between the state and the project developers allowing the developer to recover the state sales tax during the term of the agreement. For a project to be eligible, it must receive approval from the state before construction commences on the project.
The Consultant's Study For the project to be considered for final approval, the consultant's report must determine that the project: Ø will attract the minimum number of out of state visitors required by statute; Ø will have costs meeting or exceeding statute minimums; Ø will have a significant and positive economic impact on the Commonwealth by considering, among other factors, the extent to which the tourism attraction project will compete directly with existing tourism attractions in the Commonwealth and the amount by which increased tax revenues from the tourism attraction project will exceed the refund given to the approved company; Ø will be open to the public for a minimum of the number of days required by statute; Ø will not adversely affect existing employment in the Commonwealth; and, Ø will, if an Entertainment Destination Center, be using the state sales tax refund for a public infrastructure purpose. Ø Additional requirements are in place for Theme Restaurant Destinations.
More Information For more information or to request an application, contact the Tourism, Arts and Heritage Cabinet at the following address: M. Todd Cassidy Tourism, Arts and Heritage Cabinet Economic & Community Development 2400 Capital Plaza Tower 500 Mero Street Frankfort, Kentucky 40601 Phone: (502) 564-8067 Fax: (502) 564-1512 Todd.Cassidy@ky.gov
Kentucky Tourism Development Loan Program This program is in place to assist small tourism attractions obtain financing necessary for the development or expansion of small tourism attractions.
Program Mission Tourism attractions tend to have difficulty obtaining financing through conventional lending sources. Many conventional lending sources find these operations to have high risk factors because they tend to be seasonal and are typically nontraditional business operations. This program was established to encourage the participation of conventional lenders by reducing their capital exposure. This is accomplished by the Tourism Development Loan Program lending up to fifty percent of development costs. An additional benefit of the program is below market interest rates. The annual percentage rate is based upon the term of the credit. Rates range from one percent (1%) to six percent (6%) as summarized below. Term
Rate
Less than 3 years
1%
3 – 5 Years
2%
5 – 7 years
3.5%
7-10 Years
5%
10 – 15 Years
6%
Eligible Projects The program seeks to assist those operations that are unique to the area in which development or expansion is proposed. The project must show the ability to either attract individuals into an area in which travel was not planned or will extend the stay of travelers in an area in which travel has been planned.
Those applying for assistance under this program will typically have total development costs of less that $1 million. Funding is limited to the financing of fixed assets. The maximum credit amount per borrower is $250,000 or fifty percent of project costs whichever is less. All credits must be secured and personally guaranteed.
The Application Process In order to apply for funding under the program a pre-application must be submitted for review to insure the project appears to have the ability to meet the program mission. The pre-application is a five-question document requesting basic information about the project. Once this document is completed it is returned to the Department of Tourism. The completed document is forwarded to two members of the Kentucky Tourism Development Finance Authority for their review to determine if it appears the project has the ability to accomplish the mission of the program. Should they agree this is the case a full application will be provided to the applicant.
Applicants are required to provide the information necessary for staff to fully review the credit request. Necessary information includes but is not limited to: sources and uses of funds, marketing plan, cash flow projections, personal tax returns, and a personal financial statement. The request is underwritten by staff using the information provided and presented to the Kentucky Tourism Development Finance Authority for decision.
More Information For more information about this program please contact:
M. Todd Cassidy, Director Kentucky Tourism, Arts and Heritage Cabinet Economic and Community Development 2400 Capital Plaza Tower 500 Mero Street Frankfort, Kentucky 40601 Office (502) 564-8067 Fax (502) 564-1512 Todd.Cassidy@ky.gov
Kentucky Heritage Council
More information about
The Kentucky Historic Preservation Tax Credit Table of Contents
The Kentucky Historic Preservation Tax Credit Frequently Asked Questions 2 program is administered by the Kentucky Heritage National Register of Historic Places 4 Application – Part 1 5 Council / State Historic Preservation Office – Part 2 Application 8 (SHPO), an agency of the Kentucky Tourism Arts – Part 3 Application 11 and Heritage Cabinet. Established following the 13 Claiming a Tax Credit passage of the National Historic Preservation Act Disqualifications 14 of 1966, the Kentucky Heritage Council is charged Definitions 14 with identifying, preserving and protecting the Contacts 16 historic resources of Kentucky. Its mission is to Internet Resources 16 partner with Kentuckians to strengthen preservation networks so that our historic places are valued, protected and used to enhance the quality and economy of our communities. To this end, the Heritage Council has successfully encouraged the adaptive reuse of historic buildings in all contexts and advocated that historic preservation should be a key public policy initiative to encourage economic development, provide affordable housing, revitalize downtowns and neighborhoods, provide life-long learning opportunities and enhance Kentucky’s quality of life. This guide to the Kentucky Historic Preservation Tax Credit describes the program in detail, so please read it carefully. Pages 2 and 3 contain an overview of the program in the form of Frequently Asked Questions, while more detailed instructions for applying for a tax credit may be found on pages 5 to 14. Before beginning any work on a potential tax credit project, please read this guide and consult with Kentucky Heritage Council staff by calling 502-564-7005 or visiting the agency’s Web site at www.heritage.ky.gov. A list of key staff members is located on page 16 of this guide. Distributed by: Kentucky Heritage Council An agency of the Kentucky Tourism Arts and Heritage Cabinet and the State Historic Preservation Office
300 Washington Street Frankfort, KY 40601 502-564-7005 502-564-5820 (fax) www.heritage.ky.gov
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percentage for which the project is eligible.
Kentucky Historic Preservation Tax Credit
What buildings qualify?
Kentucky historic preservation tax credits are available for buildings listed in the National Register of Historic Places or located within a historic district listed in the National Register and certified by the Kentucky Heritage Council as contributing to the historic significance of the National Register district.
Frequently Asked Questions What is a tax credit?
A tax credit lowers the tax owed by an individual. A tax credit differs from a tax deduction in that an income tax deduction lowers the amount of income subject to taxation, while a tax credit is a dollar-fordollar reduction in income tax liability. In other words, a tax credit of one dollar reduces the amount of income tax owed by one dollar. Taxpayers are urged to seek the advice of a qualified tax professional before proceeding with any tax credit rehabilitation project.
What is the National Register of Historic Places? Administered by the National Park Service, an agency of the U.S. Department of the Interior, the National Register of Historic Places officially recognizes a property's archeological, architectural or historical significance and provides a measure of protection against adverse impacts from federally funded projects. National Register listing can be applied to buildings, objects, structures, districts and archaeological resources that are significant in architecture, engineering, American history or culture, and that possess special roles in the development of our country. The status does not affect property ownership rights
What are key points of the Kentucky Historic Preservation Tax Credit? •
•
Up to 30% of qualified rehabilitation expenses is offered as a state tax credit for owner-occupied residential properties. A mini-mum investment of $20,000 is required, with the total credit not to exceed $60,000
For more information about the National Register in Kentucky, see page 4 of this guide or http://www.heritage.ky.gov/natreg/
Up to 20% of qualified rehabilitation expenses is available for all other properties, requiring a minimum investment of $20,000 or the adjusted basis, whichever is greater. The total credit for a project must not exceed $400,000. “Other” properties include commercial and industrial buildings, income-producing properties, historic landscapes and properties owned by governments and non-profit organizations
What work qualifies for the credit?
A building must be rehabilitated according to standards set by the Secretary of the United States Department of the Interior. Compliance with the Secretary of the Interior's Standards for Rehabilitation must be certified by the Kentucky Heritage Council. For more information and a copy of these standards, visit http://www.nps.gov/history/hps/tps/tax/rehabstandard s.htm
Those eligible to apply for the credit include: Individuals Businesses Non-profit organizations Governments We recommend that non-profit organizations and Governments contact us for more information. •
The standards are intended to provide guidance to historic building owners and building managers, preservation consultants, architects, contractors and project reviewers prior to rehabilitation. According to these standards, “rehabilitation” is “the process of returning a property to a state of utility, through repair or alteration, which makes possible an efficient contemporary use while preserving those portions and features of the property which are significant to its historic, architectural and cultural values.”
Currently the amount of historic preservation tax credits allowed for all taxpayers for each calendar year is $5 million. If that limit is exceeded by approved projects, an apportionment formula will be applied to determine the amount of the credit that will be awarded per project. As a result, the final credit awarded to each project may be less than the entire
For example: • The historic character of a property shall be retained and preserved. The removal of
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historic materials or alteration of features and spaces that characterize a property shall be avoided. • Each property shall be recognized as a physical record of its time, place, and use. Changes that create a false sense of historical development, such as adding conjectural features or architectural elements from other buildings, shall not be undertaken. • Most properties change over time; those changes that have acquired historic significance in their own right shall be retained and preserved • Distinctive features, finishes and construction techniques or examples of craftsmanship that characterize a property shall be preserved • Deteriorated features shall be repaired rather than replaced The Kentucky Heritage Council must certify all rehabilitation project plans as well as the amount of the credit, including any amendments, before a tax credit will be approved.
What is the process for applying for the tax credit? The Kentucky Heritage Council reviews all tax credit projects for eligibility and should be consulted regularly to ensure that the proper standards are followed throughout the rehabilitation process. Applying for the credit is a three-part process: PART 1 is the preliminary application, Evaluation of National Register Status, to determine if the proposed property is historic and listed in the National Register or in a National Register district. PART 2 is the Description of Rehabilitation application, which outlines in detail the proposed rehabilitation work. PART 3 is the Request for Certification of Completed Work form, submitted once the rehabilitation work is completed. Parts 1 and 2, the preliminary application and the description of proposed rehabilitation, may be submitted simultaneously. However, any work done prior to certification of these applications by the Heritage Council is done at the applicant’s own risk, and may result in disqualification of the project.
Which rehabilitation expenses count? Within a consecutive 24-month period, rehabilitation expenses for owner-occupied buildings must exceed $20,000. Rehabilitation expenses for commercial or other property must be $20,000 or the adjusted basis of the structure, whichever is greater.
Photographic documentation of the project prior to rehabilitation and at each phase of the certification process is required.
There is no allowance in Kentucky for “phased projects”, so each rehabilitation project submitted for a tax credit should be self-contained.
Guidelines for the Kentucky Historic Preservation Tax Credit are modeled on the Federal Historic Rehabilitation Tax Credit program. If a federal tax credit is also being sought, the appropriate corresponding federal tax credit forms should be attached to the state forms. This will avoid substantial delays in approving rehabilitation projects.
How does the state tax credit differ from the federal rehabilitation credit? In addition to the new Kentucky Historic Preservation Tax Credit, the Kentucky Heritage Council also administers the Federal Historic Rehabilitation Tax Credit in Kentucky. This program of the National Park Service offers a federal tax credit of up to 20% for certified rehabilitation expenses for income-producing properties listed in or eligible for the National Register.
More detailed information about each part of this process is listed on pages 5 to 12 of this guide.
When are the tax credits allocated?
Owner-occupied residences are not eligible for the federal tax credit. However, commercial or incomeproducing properties may use a combination of federal and state rehabilitation tax credits .
Applications may be submitted at any time during the year. Credits will be allocated to approved Part 2 projects received by April 29 of each year. The apportionment formula will be applied if the total amount of approved credits exceeds the $5 million cap. The Kentucky Heritage Council will notify the applicants on or after June 29th of the allocated credit amount.
For more information about the Federal Historic Rehabilitation Tax Credit, see http://www.heritage.ky.gov/incentives/fedtaxcred/
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National Register of Historic Places
•
Contact your community’s local historic preservation office. Many Kentucky cities and counties have “Certified Local Government” (CLG) status with historic preservation staff, and more than 100 communities participate in the Kentucky Main Street Program. CLG and/or Main Street managers maintain lists of local historic buildings and may be able to advise you whether your building is listed. For more information about these programs, see the Kentucky Heritage Council Web site at http://www.heritage.ky.gov/mainstreet/
•
Contact the Kentucky Heritage Council National Register coordinator at 502-5647005, ext. 132, or see the agency’s Web site at www.heritage.ky.gov. Staff can assist you with determining a property’s National Register status.
The first step in applying for the Kentucky Historic Preservation Tax Credit is determining whether a property is listed in the National Register of Historic Places. With more than 3,100 districts, sites and structures encompassing more than 41,000 historic features – including nearly 300 individual districts – Kentucky has the fourth highest number of National Register listings than any state. Generally, properties eligible for listing in the National Register must be at least 50 years old and meet at least one of four criteria for evaluation of significance, properties: A. That are associated with events that have made a significant contribution to the broad patterns of our history; or B. That are associated with the lives of persons significant in our past; or C. That embody the distinctive characteristics of a type, period, or method of construction, or that represent the work of a master, or that possess high artistic values, or that represent a significant and distinguishable entity whose components may lack individual distinction; or D. That have yielded, or may be likely to yield, information important in prehistory or history.
What if my property isn’t listed in the National Register? Property is listed when a National Register nomination is completed and (1) meets with successful review by the Kentucky Historic Preservation Review Board, then (2) meets with successful review by the National Park Service. National Register nomination requires a comprehensive evaluation of the property under consideration, and once a nomination is submitted to the Heritage Council, listing can take from six to nine months. Property owners have the option of hiring a historic preservation consultant or completing the form themselves, however:
For more information, see the National Park Service (NPS) National Register Web site, http://www.nps.gov/history/nr/
Is my property listed in the National Register? Several resources exist to help determine a property’s National Register status. Sometimes more than one source may have to be consulted, as various issues may affect the outcome. For example, if a town has renamed its streets or reassigned street address numbers since the property was first listed, or if a property lies within a National Register district, determination of an individual property’s status may require further investigation. •
Search online at the NPS National Register Web site, http://www.nps.gov/history/nr/. At the home page, click on the “Database/Research” button to the left, then follow the instructions to specify your search mode.
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•
Hiring an experienced consultant can be more reliable and simpler for the property owner. Costs can range from $2,000 for nomination of a single building to more depending on the complexity of the property, such as for multiple building nominations or for properties of questionable eligibility that may require additional research.
•
Homeowners or other interested individuals who prepare the nomination form themselves should allow 60-80 hours of preparation time for an individual property; more for multiple building nominations or for properties that may require additional research.
What steps do I take to get my property listed?
Instructions and Guidance for Part 1 – Evaluation of National Register Status
Contact the Kentucky Heritage Council National Register coordinator to discuss your options and whether to hire a consultant or prepare the nomination yourself. Should you choose to complete the nomination yourself, the National Register Coordinator can assist you: •
•
PART 1 is the preliminary application, Evaluation of National Register Status, to determine if the proposed property is historic and listed in the National Register or in a National Register district.
Determine whether the Heritage Council has a record of your property. If no information is found in the Heritage Council’s National Register or survey files, you will be asked to fill out a Kentucky Historic Resources Inventory Form, also known as a “survey form,” which asks for a basic description and visual image of the property. Survey forms help determine how a National Register nomination may be structured.
Information required: • Name, description, determination of National Register eligibility, statement of significance, photographs and maps (see more details, following) Based on information provided, the Heritage Council will certify one of three options: • The property is listed individually in the National Register and is a “certified historic structure” for the purpose of rehabilitation • The property contributes to the historic significance of the district listed in the National Register and is a “certified historic structure” for the purpose of rehabilitation • The property is not a contributing building to the district listed in the National Register nor is it individually listed and is not a “certified historic structure” for the purpose of rehabilitation
Gather National Register nominations for similar properties, to help guide you as you structure your argument for National Register eligibility.
Discuss your approach with the Heritage Council’s National Register coordinator, who can answer questions and help fine-tune drafts as you prepare to submit the nomination to the Kentucky Historic Preservation Review Board, which must approve it before it can be forwarded to the National Park Service. If National Register eligibility is not proven, either the review board or the NPS may return the nomination for revision or deny it. Once a property is accepted by the NPS and listed, the Heritage Council will notify the owner and local officials.
What are “certified historic structures”? The state historic preservation tax credit applies to income-producing property including either commercial or residential rental property. Additionally, a taxpayer’s personal residence can qualify for the state credit if the property is historic and if the minimum investment threshold is met.
For more information: Marty Perry, National Register Coordinator Kentucky Heritage Council 300 Washington Street Frankfort, KY 40601 502-564-7005, ext. 132 Email: marty.perry@ky.gov Web site: www.kyheritage.gov National Register Web site: www.cr.nps.gov/nr
To be eligible for the Kentucky Historic Preservation Tax Credit, a building must be either: •
•
Listed individually in the National Register of Historic Places, which generally means the property is considered a “certified historic structure”; or Located in a National Register district and certified by the Kentucky Heritage Council as contributing to the historic significance of that district
For properties that are listed individually in the National Register or those in a National Register district, applicants seeking a state historic preservation tax credit are first required to gain
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certification of a property’s status from the Council by filing Part 1 – Evaluation of National Register Status.
alteration if any rehabilitation has been completed, ensuring that the listed property has not lost the characteristics which caused it to be nominated to the National Register originally; and
Local designation of an historic district or area is insufficient. The building must be in a district listed in the National Register of Historic Places. Also as a general rule, buildings that have been built within the past 50 years are not considered contributing to National Register districts.
•
What information is required for Part 1? For Part 1 – Evaluation of National Register Status, applicants are asked to provide the following documentation:
What about National Register properties with multiple structures?
1. Name and address of property; 2. National Register listing (if known) and/or name of the historic district, including a map clearly delineating the property’s location within the district; 3-4. Project contacts and name(s) and mailing address(es) of owner(s), including signatures; 5. Description of appearance including alterations, distinctive feature and spaces, and dates(s) of construction; 6. Statement of significance. For properties in a National Register district, the statement of significance should summarize how the property does or does not reflect the values that give the district its distinctive historical and visual character. The summary should relate to the significance of the district (including the district’s period of significance) as identified in the National Register documentation, and should relate to the National Register Standards for Evaluating Significance (see below). It should also explain any significance attached to the property itself (i.e., unusual building techniques, important event that took place there, etc.); 7. Current photographs of the property prior to alteration, including photographs of the building and its site and landscape features, photographs showing the property along with adjacent properties and structures on the street, and photographs of interior features and spaces adequate to document significance.
Properties containing more than one building – where the Council determines that the buildings have been functionally related historically to serve an overall purpose, such as a mill complex or a residence and carriage house – will be treated as a single certified historic structure, whether the property is individually listed in the National Register or is located within a National Register district. Buildings that are functionally related historically are those that have functioned together to serve an overall purpose during the property’s period of significance.
How are applications processed?
The Council will promptly review Evaluation of National Register Status forms upon receipt of a complete, adequately documented application. Where adequate information is not provided, the Council will notify the applicant of additional information needed to complete the review. Failure to supply additional information may result substantial delays or possible disapproval of the application. If a federal tax credit is also being sought, only the first page of theKY Part 1 - Evaluation of National Register Status needs to be completed. Also, to avoid substantial delays in approving rehabilitation projects, the appropriate corresponding federal tax credit forms should be attached to the state forms.
Before certifying the property as a certified historic structure, the Council may request additional information in the following situations: •
For properties containing more than one building, documentation of all buildings within the listing and a determination by the Council utilizing the Standards for Evaluating Significance, of which buildings included within the listing are of historic significance to the property.
The Council will determine whether the property for which a complete application is received meets the Standards for Evaluating Significance. If the property meets the Standards for Evaluating Significance, the Council will approve the application. If the property does not meet these standards, the application will be denied.
Documentation, including current photographs of the property, the building and its site and landscape features prior to
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If the application is approved, the Council will issue a written notice to the applicant confirming that the property is individually listed in the National Register or certifying that the historic structure contributes to the significance of National Register district. If the application is disapproved, the Council will issue a written notification of denial to the applicant and state the grounds for denial.
Some properties individually listed in the National Register or within districts listed in the National Register are resources whose concentration or continuity possesses greater historical significance than many of their individual component buildings and structures. These usually are documented as a group rather than individually. Accordingly, this type of National Register documentation is not conclusive for evaluating significance. Applicants for certifications of National Register status must supplement documentation with information of the significance of the individual component buildings and structures.
Applicants must notify the Council of any substantial damage, alteration or changes to a property that occurs after the Council certifies the property as a certified historic structure and prior to a final certification of rehabilitation. The Council may, upon 30 days written notice to the applicant, withdraw a certification of National Register status, and the property may be removed from the National Register, in accordance with the procedures in Title 36, Part 60, of the Code of Federal Regulations.
If a non-historic surface material obscures a façade, it may be necessary to remove a portion of the surface materials prior to requesting certification so that a determination of National Register status can be made. After the material has been removed, if the obscured façade has retained substantial historic integrity and the property otherwise contributes to the historic district it may be determined to be a certified historic structure.
Standards for Evaluating Significance Certification of National Register status will be made based on the appearance and condition of the property before rehabilitation is begun. Properties located within a National Register district are reviewed by the Council to determine if they contribute to the historic significance of the district. In conformance with Title 36, Part 67.5 of the Code of Federal Regulations, the following standards apply when seeking to determine whether properties located within National Register districts are considered to be contributing:
Checklist for Part 1
One copy of a completed Part 1 –
Evaluation of National Register Status with the owner’s original signature.
Map locating the property within the
boundaries of the historic district. (Maps of historic districts are available from the Kentucky Heritage Council.)
1. A property contributing to the historic significance of a district is one, which by location, design, setting, materials, workmanship, feeling and association adds to the district’s sense of time and place and historical development; 2. A property not contributing to the historic significance of a district is one which does not add to the district’s sense of time and place and historical development; or one where the location design, setting, materials, workmanship, feeling and association have been so altered or have so deteriorated that the overall integrity of the property has been irretrievably lost; and 3. Ordinarily buildings that have been built within the past 50 years will not be considered to contribute to the significance of a district unless a strong justification concerning their historical or architectural merit is given or the historical attributes of the district are considered to be less than 50 years old.
One set of labeled photographs depicting
the streetscape, all sides of the building, major interior spaces and specific character-defining features. Key photos to a floor plan, and if applicable, to a site plan. Send to: Kentucky Heritage Council 300 Washington Street Frankfort, KY 40601
Please note, if also applying for Federal Rehabilitation Tax Credits, include two (2) copies of Federal Part 1 application with page one of the KY Part 1 – Evaluation of National Register Status form
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“Substantial” means rehabilitation of a certified historic structure for which the qualified rehabilitation expenses, during a 24-month period selected by the applicant or tax-exempt entity, ending with or within the taxable year, must exceed: • $20,000 for an owner-occupied residential property • For all other property, the greater of: The adjusted basis of the structure; or $20,000
Instructions and Guidance for Part 2 – Description of Rehabilitation PART 2 is the Description of Rehabilitation application, which outlines in detail the proposed rehabilitation work. Information required: • Detailed description of rehabilitation / preservation work • List of architectural features such as windows, roof and exterior walls • Description of work and impact on existing features • Applicable drawings and photos
The adjusted basis of a building is essentially the current book value of the building. It is determined by taking the purchase price of the building and subtracting the value of the land (which does not depreciate). Any previously claimed depreciation is subtracted from this figure and the value of any previous improvements is added to the figure. A taxpayer’s accountant can provide information on determining the basis of a property.
Based on information provided, the Heritage Council will certify one of three options: • That the rehabilitation as described is consistent with the Secretary of the Interior’s Standards for Rehabilitation. This approval is a preliminary determination. A formal certification of rehabilitation will be issued after the work is completed • That the rehabilitation as proposed will be consistent with the Secretary of the Interior’s Standards only if the attached conditions are met • That the rehabilitation as proposed is not consistent with the Secretary of the Interior’s Standards
There is no allowance in Kentucky for “phased projects” exceeding a two-year period. Each 24month project should be self-contained. Any subsequent project must be submitted as if it were a new project. Start of rehabilitation is the date upon which the applicant applies for the building permit for work contemplated by the rehabilitation plan, or the date upon which actual work contemplated by the plan of rehabilitation begins. The completion year for the rehabilitation is the calendar year in which the last eligible rehabilitation expense is incurred or in which the certificate of occupancy (if appropriate) is issued.
What are rehabilitation projects?
Rehabilitation for the purposes of Kentucky Historic Preservation Tax Credit means the process of returning a building or buildings to a state of utility, through repair or alteration, which makes possible an efficient use while preserving those portions and features of the building and its site and environment which are significant to its historic, architectural and cultural values, as certified by the Kentucky Heritage Council.
What are eligible rehabilitation expenses?
The rehabilitation must be certified, meaning it must approved by the Council and must conform to the Secretary of the Interior’s Standards for Rehabilitation.
Qualified rehabilitation expenses upon which a credit can be claimed essentially include all work done to structural components of the building within the footprint of the historic structure, if they are permanent.
Qualified, or eligible rehabilitation expenses include only those expenses for a certified and substantial rehabilitation of a certified historic structure, incurred during a 24-month period selected by the applicant or tax-exempt entity, and are properly chargeable to a capital account, whether or not depreciation is allowed under Section 168 of the Internal Revenue Code.
The rehabilitation must be substantial, meaning that a minimum amount as set out by statute must be invested in the property during the rehabilitation.
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Examples of qualified rehabilitation expenses include architectural and engineering fees, legal expenses, the cost of restoring historic landscapes that contribute to the historic significance of the structure, development fees and other construction-related costs if such costs are added to the basis of the property and are determined to be reasonable and related to the services performed. Expenses related to new heating, plumbing and electrical systems are eligible, as well as expenses related to updating kitchens and bathrooms, compliance with the Americans with Disabilities Act, and fire suppression systems and fire escapes. Qualified rehabilitation expenses do not include the cost of acquisition of a certified historic structure, enlargement of or additions to an existing building, new building construction, parking lots, sidewalks or the purchase of personal property. If expenditures only partially qualify as eligible rehabilitation expenditures because some of the expenditures are attributable to the enlargement of the building, the expenditures must be apportioned between the original portion of the building and the enlargement.
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Each rehabilitation project will be performed in accordance with the rehabilitation plan submitted to the Council. The plan must contain sufficient information to determine whether the rehabilitation qualifies for certification. The burden is on the applicant to supply sufficient information to the Council for a determination.
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For purposes of certification, the Council’s review of a rehabilitation project will encompass all work, whether qualified or unqualified eligible expense, on the certified historic structure(s), including interior and exterior, and its site and environment, as determined by the Council, as well as related demolition, new construction or rehabilitation work that may affect the historic qualities, integrity or site, landscape features and environment of the certified historic structure.
Applicants may submit the Part 2 – Description of Rehabilitation form before, during or after completion of a rehabilitation project. However, when feasible, applicants should submit the Description of Rehabilitation prior to beginning any work. An applicant who undertakes a rehabilitation project prior to submission of a Description of Rehabilitation form for review and certification by the Council assumes the risk that the project will not be certified.
How do I get a proposed project approved? To initiate review of a proposed rehabilitation project, applicants must submit a Part 2 – Description of Rehabilitation form to the Council. Documentation should include: 1. Name and address of the property; 2. Tax credit being sought; 3. Data on estimated costs for labor, materials, and project outcomes; 4-5. Name(s) and address(es) of project contact(s) and property owner(s), including signatures; 6. Detailed descriptions of all the work to be performed, including photographs adequate to document the appearance of the structure, both on the interior and exterior, and its site and environment before rehabilitation. Attachments should include plans, specifications and surveys for the work to be performed and plans for any attached, adjacent or related new construction, where applicable. Applicants requesting that the Council certify that a rehabilitation plan for a certified historic structure meets the Secretary of the Interior’s Standards for Rehabilitation must comply with the following procedures:
How are rehabilitation projects reviewed?
The Council will promptly review Description of Rehabilitation Application forms upon receipt of complete, adequately documented application. Where adequate information is not provided, the Council will notify the applicant of the additional information needed to complete the review. Failure to supply additional information may result in substantial delays or possible disapproval of the application. If a federal tax credit is also being sought, only the first page of the Kentucky Description of Rehabilitation form needs to be completed. Also, to avoid substantial delays in approving rehabilitation projects, the appropriate corresponding federal tax credit forms should be attached to the state forms. The Council will determine whether the rehabilitation plan for which a completed application was received meets the Secretary of the Interior’s Standards for Rehabilitation. If the property meets the Standards for Rehabilitation, the Council will approve the
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application. If the property does not meet these standards, the application will be denied.
improperly applied, or certain materials by their physical properties, may cause or accelerate physical deterioration of historic buildings. Inappropriate rehabilitation measures include, but are not limited to, improper masonry repointing techniques, improper exterior masonry cleaning methods, improper introduction of insulation where damage to historic fabric would result, and incompatible additions and new construction. In almost all instances, these measures and treatments will result in denial of a rehabilitation plan.
The Director or an authorized representative of the Council shall be permitted to conduct an inspection of the project to determine if the work meets the Standards for Rehabilitation. If the application is approved, the Council will issue a written notice to the applicant approving the rehabilitation plans. If the application is disapproved, the Council will issue a written notification of denial to the taxpayer. Where appropriate, the Council may advise the applicant of revisions necessary to meet the Standards for Rehabilitation. The Council will not be responsible for any delays in making revisions to the rehabilitation plan.
Conformance to the Standards for Rehabilitation will be determined based on application documentation and other available information and by evaluating the property as it existed prior to the start of rehabilitation.
Applicants must notify the Council of any substantial damage, alteration or changes to a property that occurs after the Council certifies the property as a certified historic structure and prior to a final certification of rehabilitation. The Council may, upon 30 days written notice to the taxpayer, withdraw a certification of National Register status, and the property may be removed from the National Register, in accordance with the procedures in Title 36, Part 60, of the Code of Federal Regulations.
Checklist for Part 2
One copy of a completed Part 2 –
Description of Rehabilitation with the owner’s original signature.
One set of labeled photographs showing the
condition of the property prior to rehabilitation. Include photographs of all areas where significant work is proposed. Key photos to a floor plan, and if applicable, a site plan.
Where appropriate, the Council may require the applicant to submit a copy of the Part 2 – Description of Rehabilitation form to an authorized entity of local government for review with recommendations to the Council. Local government includes cities, counties, charter counties or consolidated local governments.
One set of architectural drawings clearly showing conditions before rehabilitation.
Standards for Rehabilitation
One set of architectural drawings and
All elements of the rehabilitation project must meet the Secretary of the Interior’s Standards for Rehabilitation. Portions of a project that are not in conformance with these standards may not be exempted.
specifications describing the proposed rehabilitation – noting specifically any floor plan changes and demolition.
Check payable to Kentucky State Treasurer
The Secretary of the Interior’s Standards for Rehabilitation is a uniform set of established standards adopted by the U.S. Secretary of the Interior for determining appropriate treatment for historic structures. Choosing the most appropriate methods, materials and treatment for historic structures requires careful decision-making to avoid loss of the property’s historic features. The quality of materials, craftsmanship and related new construction in a rehabilitation project should be commensurate with the quality of materials, craftsmanship and design of the historic structure under consideration. Certain treatments, if
for review fee.
Send to: Kentucky Heritage Council 300 Washington Street Frankfort, KY 40601
Please note, if also applying for Federal Rehabilitation Tax Credits, include two (2) copies of Federal Part 2 application with page one of the KY Part 2 – Description of Work form
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To request certification of a completed project, the applicant must submit a Part 3 – Request for Certification of Completed Work and a Summary of Investment form with the Council. To avoid substantial delays, the appropriate corresponding federal tax credit form should be attached if the federal tax credit is also being claimed.
Amendments
Once a proposed or ongoing project has been approved, an applicant can request review and approval of any changes in the work described in the original application by filing a Certification Application Continuation/Amendment form with the Council. Written notification must be received from the Council certifying that the revised project continues to meet the Secretary of the Interior’s Standards for Rehabilitation.
Documentation on the Request for Certification should include: 1. Name and address of property; 2. Project data including start and end date and credit sought; 3. Name(s) and mailing address(es) of owner(s) including signatures; 4. Photographs of the property showing the completed rehabilitation work, including exterior and interior features and spaces, sufficient to demonstrate that the completed work is consistent with the Standards for Rehabilitation and is consistent with the work described in the Description of Rehabilitation application form; 5. Project expenses and final cost of the rehabilitation work.
Instructions and Guidance for Part 3 – Request for Certification of Completed Work PART 3 is the Request for Certification of Completed Work form, submitted once the rehabilitation work is completed. Information required: • Ownership data • List of eligible expenses • Tax credit sought • Summary of Investment form
The Council will determine whether the Request for Certification of Completed Work complies with approved work as certified in Part 2 – Description of Rehabilitation. If the rehabilitation is complete as certified in Part 2 and meets the Standards for Rehabilitation, the Council will approve the application. If the property does not meet these standards, the application will be denied.
Based on information provided, the Heritage Council will certify one of two options: • That the completed rehabilitation is consistent with the Secretary of the Interior’s Standards. Effective on the date indicated, the rehabilitation of this “Certified Historic Structure” is hereby designated a “Certified Rehabilitation.” This letter of certification is to be used in conjunction with appropriate Kentucky Income Tax forms • That the completed rehabilitation is not consistent with the Secretary of the Interior’s Standards and this project as submitted is not eligible for a Kentucky Historic Preservation Tax Credit
If the application is approved, the Council will issue a written notice to the applicant approving the completed project. If the application is disapproved, the Council will issue a written notification of denial to the taxpayer. Where appropriate, the Council may advise the applicant of revisions necessary to meet the Standards for Rehabilitation. The Council will not be responsible for any delays in making revisions to the rehabilitation plan.
Summary of Investment
When is a project complete?
The Summary of Investment form must be signed by the owner. This form must be notarized if the project is an owner-occupied residence. For all other properties, the form must be prepared by a certified public accountant (CPA).
A project does not become a certified rehabilitation eligible for Kentucky Historic Preservation Tax Credit until the project is completed and so certified by the Council. The completion year for the rehabilitation is the calendar year in which the last eligible rehabilitation expense is incurred or in which the certificate of occupancy (if appropriate) is issued.
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proceed with the project at the risk that the rehabilitation project will not be certified.
Checklist for Part 3
One copy of a completed Part 3: Request for
The Council will not be responsible for any delays that may arise in an attempt to list the property in the National Register of Historic Places. The Council will not be responsible for any delays in making revisions to the applications or the rehabilitation plan.
Certification of Completed Work, with the owner’s original signature.
One set of labeled photographs showing the
condition of the property after rehabilitation, including all exterior elevations, significant interior spaces, major alterations and new construction. These should be taken of the same features and from the same locations as photographs presented with Part 2. Key photos to a floor plan, and if applicable, a site plan.
Taxpayers are cautioned that the process of listing property in the National Register of Historic Places can be time-consuming and must be performed in conformance with very strict federal rules and regulations.
How is the credit awarded?
One copy of a completed Summary of
The Kentucky Heritage Council will review all Part 2 applications received as of April 29 of each year. Those projects approved will be allocated a tax credit, if necessary adjusted by the apportionment formula. Applicants will receive a letter from the Kentucky Heritage Council on or after June 29th advising them of the allocated tax credit.
Investment Form. This form must be notarized if the project is an owner-occupied residence. For all other properties, the form must be certified by a certified public accountant (CPA).
A complete listing of owners, partners
Once rehabilitation work is completed and Part 3 application is reviewed and approved, a copy of the Request for Certification of Completed Work signed by the Director and remitted to the taxpayer will serve as the taxpayer’s notification as to the total amount of eligible expenses reported and the total approved credit amount.
and/or shareholders must be attached for buildings with more than one owner.
Check payable to Kentucky State Treasurer for review fee.
Send to: Kentucky Heritage Council 300 Washington Street Frankfort, KY 40601
Currently the amount of historic preservation tax credits allowed for all taxpayers for each calendar year is $5 million. If that limit is exceeded by approved projects, an apportionment formula will be applied to determine the amount of the credit that will be awarded per project. As a result, the final credit awarded to each project may be less than the entire percentage for which the project is eligible.
Please note, if also applying for Federal Rehabilitation Tax Credits, include two (2) copies of Federal Part 3 application with page one of the KY Part 3 – Request for Certification of Completed Work form
There is no recapture provision for the state historic preservation tax credit if the taxpayer disposes of the taxpayer’s interest in the property after a credit is awarded, provided any changes to the certified historic structure meet Secretary of Interior Standards, for three year period.
Plan Ahead
Amount of the credit
A state tax credit in an amount equal to 30% of the qualified rehabilitation expenses is allowed for owner-occupied residential property. The maximum credit that may be claimed for owner-occupied residential property is $60,000, subject to the state certified rehabilitation credit cap. The credit must be
Taxpayers are cautioned that if the Evaluation of National Register Status and Description of Rehabilitation application forms are not submitted prior to beginning work on the rehabilitation, they
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claimed for the taxable year in which the certified rehabilitation is completed. For a husband and wife filing separate returns or filing separately on joint returns, the credit may be taken by either or divided equally, but the combined credit cannot exceed $60,000 subject to the annual cap.
For purpose of the state historic preservation tax credit, a lessee of a certified historic structure shall be treated as the owner of the structure if the remaining lease period is at least 27.5 years for residential property and 39 years for all other property. A tax exempt entity for purposes of the state historic preservation tax credit is any tax exempt organization pursuant to Section 501 (c) (3) of the Internal Revenue Code, any political subdivision of the Commonwealth, and state or local agency, board or commission or any quasi-governmental entity. In the event that an exempt entity has incurred qualified rehabilitation expenses, the credit may be available for transfer or assignment as set forth in the Act.
A state tax credit in an amount equal to 20% of the qualified rehabilitation expenses is allowed for all property other than owner-occupied residential property. For property not deemed to be owneroccupied residential property, there is a maximum credit of $400,000 that may be claimed; however, the credit is subject to the annual cap. The state historic preservation tax credit amount approved for a calendar year for all taxpayers is limited to the certified rehabilitation credit cap. That cap is currently $5 million. When the total credit amount approved exceeds the certified rehabilitation credit cap, the following formula will apply for determining the maximum individual state historic preservation tax credit allowable: $5,000,000 x (approved tax credit for individual taxpayer ÷ total approved credits for all taxpayers)
If the taxpayer is a pass–through entity not subject to the corporate income tax imposed by KRS 141.040, the credit shall pass through in the same proportion as the distributive share of income or loss is passed through. The purchaser of a certified historic structure that has been substantially rehabilitated by a previous owner may be able to claim a credit if: • The purchaser is the first purchaser of the structure after the date of completion of substantial rehabilitation; and • The structure or a portion thereof will be the principal residence of the taxpayer; if • Credit was issued to the seller, and transferred to the purchaser.
Who can claim a credit?
For purposes of the Kentucky Historic Preservation Tax Credit, “taxpayer” is defined as any individual, corporation, limited liability company, business development corporation, partnership, limited partnership, registered limited liability partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization, or other legal entity through which business is conducted.
It is recommended that the advice of a qualified tax professional be sought before proceeding with any tax credit project.
Can the credits be carried over?
Preservation tax credits can be transferred or assigned to financial institutions that are subject to annual state franchise tax under KRS 136.505, for some or no consideration, along with any related benefits, rights, responsibilities and liabilities. Within thirty (30) days of the date of any transfer of credits to the financial institution subject to KRS 136.505, the party transferring the credits must provide the Department of Revenue with the following information: • The name, address, employer identification number, and bank routing and transfer number, of the party to which the credits are to be transferred; • The amount of credits transferred; and • Any additional information that the Department deems necessary These provisions also apply to any credits that pass through to a successor or beneficiary of a taxpayer.
Tax credits for applications received on or after April 30, 2010 exceeding taxpayer’s total tax liability will be refunded.
Is there an application fee? Beginning June 1, 2007, the Kentucky Heritage Council will require payment of review fees for Part 2 and Part 3 Applications for the Kentucky Historic Preservation Tax Credit. Payment of fees for review of Parts 2 and 3 shall be submitted when applications are filed and are nonrefundable. If a Part 2 application is denied, there will be no charge for a Part 3 review fee. Certification shall not be issued until the appropriate remittance is received. Payment shall be made by check or money order payable to the Kentucky State Treasurer. Fees for reviewing rehabilitation certification
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requests of owner-occupied residential property are charged in accordance with the following schedule. Rehabilitation Costs for Owner-Occupied Residences Less than $100,000 $100,000 or greater
Part 2 Review Fee
Part 3 Review Fee
$60 $150
$40 $100
“Adjusted basis” is the cost of the property (excluding land) plus or minus adjustments, including but not limited to capital improvements. “Certified historic structure” is a structure that is located within the Commonwealth of Kentucky and is either listed individually on the National Register of Historic Places or is located in a historic district listed on the National Register of Historic Places and is certified by the Kentucky Heritage Council as contributing to the historic significance of the district.
Fees for reviewing rehabilitation certification requests for commercial properties and all property other than owner-occupied residential property are charged in accordance with the following schedule. Rehabilitation Costs for Commercial and Other Buildings Less than $50,000 $50,000-$100,000 $100,000-$499,999 $500,000-$999,999 $1 million or greater
Part 2 Review Fee
Part 3 Review Fee
$60 $150 $300 $450 $900
$40 $100 $200 $300 $600
“Certified rehabilitation” is defined as a completed substantial rehabilitation of a certified historic structure that the Kentucky Heritage Council certifies as meeting the United States Secretary of the Interior’s Standards for Rehabilitation. “Certified rehabilitation credit cap” means $5 million ($5,000,000). “Code” means Title 36, part 67, United States Code of Federal Regulations.
Disqualifications Work that is performed within three (3) years of the completion of the certified rehabilitation is considered disqualifying work if, performed as part of the rehabilitation certified under this section, the work would have made the rehabilitation ineligible for certification.
“Completion year” means the calendar year in which the last eligible rehabilitation expense is incurred or when the certificate of occupancy (if appropriate) is issued. “Council” means the Kentucky Heritage Council / State Historic Preservation Office.
The Council shall be permitted to conduct an inspection of the project at any time beginning from the start of rehabilitation up to three years after completion of the rehabilitation to determine if the work meets the Secretary of the Interior’s Standards.
“Department” mean the Kentucky Department of Revenue. “Director” means the Executive Director of the Kentucky Heritage Council.
If the Council determines that the rehabilitation project was not undertaken as represented by the owner in his or her application and supporting documentation, or the owner upon obtaining certification undertook disqualifying work, the Council may revoke a certification, after giving the owner thirty (30) days to comment on the matter.
“Disqualifying work” is any work that is performed within three (3) years of the completion of the certified rehabilitation, that if performed as a part of the rehabilitation certified under this section, would have made the rehabilitation ineligible for certification. “Exempt entity” means any tax-exempt organization pursuant to Section 501(c)(3) of the Internal Revenue Code, any political subdivision of the Commonwealth, any state or local agency, board or commission, or any quasi–governmental entity.
If the Council determines to revoke certification after taking into consideration the owner’s comments, the Council will notify the Kentucky Department of Revenue, which will assess a penalty on any taxpayer or exempt entity who performs disqualifying work in an amount equal to one hundred percent (100%) of the tax credit allowed on the rehabilitation.
“Inspection” means a visit by the Director or an authorized representative of the Council to a property for the purposes of reviewing and evaluating the significance of the structure and the ongoing or completed rehabilitation work.
Definitions “Act” means Section 151 of 2005 Ky. Acts, Chapter 168.
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“Local government” means a city, county, urbancounty, charter county, or consolidated local government.
use while preserving those portions and features of the building and its site and environment which are significant to its historic, architectural, and cultural values as determined by the Director.
“National Register of Historic Places” means the National Register of districts, sites, buildings, structures, and objects significant in American history, architecture, archeology, engineering, and culture that the United States Secretary of the Interior is authorized to expand and maintain pursuant to Section 101(a)(1) of the National Historic Preservation Act of 1966, as amended, and implemented through Title 36, Part 60, Code of Federal Regulations, et seq.
“Rehabilitation plan” means a plan pursuant to which a certified historic structure will be substantially rehabilitated. “Standards for Rehabilitation” mean the Secretary of the Interior’s Standards for Rehabilitation, Title 36, Part 67.7, and 67.6(b)(1)-(7) of the Code of Federal Regulations, as amended. In those standards, any reference to the Internal Revenue Code shall mean the Kentucky Revised Statutes, the Internal Revenue Service shall mean the Kentucky Department of Revenue, and the Secretary shall mean the Director.
“Owner-occupied residential property” means a building or portion thereof, condominium, or cooperative occupied by the owner as his principal residence.
“Start of rehabilitation” means the date upon which the taxpayer applies for the building permit for work contemplated by the rehabilitation plan, or the date upon which actual work contemplated by the plan of rehabilitation begins.
“Owner” means the person, partnership, corporation, public agency, or other entity holding a fee simple interest in a property, or any other person or entity recognized by the Department for purposes of the applicable tax benefit under the Act.
“Substantial rehabilitation” means rehabilitation of a certified historic structure for which the qualified rehabilitation expenses, during a 24-month period selected by the taxpayer or exempt entity, ending with or within the taxable year, exceed $20,000 for an owner-occupied residential property; or for all other property, the greater of: the adjusted basis of the structure; or $20,000.
“Property” means a building and its site and landscape features. “Qualified purchased historic home” means any substantially rehabilitated certified historic structure if: (a) The taxpayer claiming the credit authorized under the Act is the first purchaser of the structure after the date of completion of substantial rehabilitation; and (b) The structure or a portion thereof will be the principal residence of the taxpayer; and (c) No credit was allowed the seller under the Act. A qualified purchased historic home is deemed to be an owneroccupied residential property.
“Taxpayer” means any individual, corporation, limited liability company, business development corporation, partnership, limited partnership, registered limited liability partnership, sole proprietorship, association, joint stock company, receivership, trust, professional service organization, or other legal entity through which business is conducted.
“Qualified rehabilitation expense” means any amount that is properly chargeable to a capital account, whether or not depreciation is allowed under Section 168 of the Internal Revenue Code, and is expended in connection with the certified substantial rehabilitation of a certified historic structure. It does include the cost of restoring historic landscapes that contributes to the historic significance of this structure. It does not include the cost of acquisition of a certified historic structure, enlargement of or additions to an existing building, or the purchase of personal property. “Rehabilitation” means the process of returning a building or buildings to a state of utility, through repair or alteration, which makes possible an efficient
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Contacts
Internet Resources
For additional information and assistance with historic preservation and rehabilitation tax credit projects, contact the following Kentucky Heritage Council staff members:
Kentucky Heritage Council www.heritage.ky.gov Preservation Kentucky, Inc. www.preservationkentucky.org
Michael Radeke Restoration Project Manager (502) 564-7005, ext. 141 mike.radeke@ky.gov
Kentucky Department of Revenue www.revenue.ky.gov Illustrated Secretary of the Interior’s Standards for Rehabilitation www.cr.nps.gov/hps/tps/tax/rhb/index.htm
Jen Spangler Williamson Staff Architect (502)564-7005, ext 135 jen.williamson@ky.gov
A Guide to the Federal Historic Presrvation Tax Incentives Program for Income-Producing Properites http://www.nps.gov/history/hps/tps/tax/incentive s/index.htm
Marty Perry National Register Coordinator (502) 564-7005, ext. 132 marty.perry@ky.gov
National Register of Historic Places http://www.nps.gov/history/nr/
Scot Walters Site Development Program Manager (502) 564-7005, ext. 133 scot.walters@ky.gov
Federal Historic Preservation Tax Incentives http://www.nps.gov/history/hps/tps/tax/
Peggy Guier Staff Attorney / Community Preservation Coordinator (502) 564-7005, ext. 129 peggy.guier@ky.gov
Kentucky Legislative Resources http://lrc.ky.gov/ National Park Service / Technical Preservation Services Interpreting the Standards http://www.nps.gov/history/hps/tps/tax/ITS/itsho me.htm National Park Service / Technical Preservation Services Preservation Briefs http://www.nps.gov/history/hps/tps/briefs/presbh om.htm
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What companies are eligible for KY WINS funding? When can you apply for KY WINS? What is the process for obtaining KY WINS funding? Does KY WINS fund training delivered by company employees? Can KY WINS be used to pay for employee wages while in training or off-the-job-training? What type of training is funded by KY WINS?
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Is there a dollar limit on KY WINS funding? What is the time limit on KY WINS projects? How many times can a company apply for KY WINS funding? What is the company cash match for KY WINS projects? Can equipment be purchased for companies using KY WINS?
What companies are eligible for KY WINS funding? All companies* in the Commonwealth of Kentucky are eligible for KY WINS funding. KY WINS will support projects for: existing Kentucky companies that are expanding and creating new jobs existing Kentucky companies that are requiring employees to learn new skills in their jobs companies that are contributing to Kentucky’s economic development new companies locating in Kentucky *Government agencies, non-profit organizations and educational institutions are not eligible.
When can you apply for KY WINS? Companies can apply at any time; projects are reviewed on a daily basis.
What is the process for obtaining KY WINS funding? Contact your local college Workforce Solutions department to obtain more information. The college will complete the application and submit the project for approval.
Can KY WINS funds be used for in-house training? No, KY WINS does not fund in-house training. Bluegrass State Skills Corporation provides funding for company in-house training.
Can KY WINS be used to pay for employee wages while in training or off-the-job-training? No, KY WINS does not pay for employee wages or off-the-job-training. Bluegrass State Skills Corporation provides funding for off-the-jobtraining.
What type of training is funded by KY WINS? Most of the customized training programs delivered to business and industry by a KCTCS college is eligible for funding.
Is there a dollar limit on KY WINS funding? No, all usual and customary fees charged by the college are eligible for funding.
What is the time limit on KY WINS projects? All projects are funded for a period of one year.
How many times can a company apply for KY WINS funding? There is no limit on the number of times a company can receive funding.
What is the company cash match for KY WINS projects? Companies are required to pay 35% of the cost and KY WINS reimburses the college directly for the remaining 65%. Colleges will work with the company to identify a schedule for invoicing and companies are invoiced after services are delivered.
Can equipment be purchased for companies using KY WINS? No, KY WINS will not purchase equipment for a company. Equipment may be purchased for a project but will remain the property of KY WINS. The cost of the equipment is not included in the company cash match. 0 Kentucky Community and Technical College System 300 North Main Street, Versailles, KY 40383 Phone (859) 256-3100 | Toll-Free (Kentucky only) (877) 528-2748 | Emergency Notification KCTCS is an equal opportunity employer and educational institution. KCTCS does not discriminate on the basis of race, color, national origin, sex, disability, or age in its programs or activities.
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Kentucky Economic Development Finance Authority
Kentucky Enterprise Initiative Act (KEIA) This fact sheet provides an overview of the Kentucky Enterprise Initiative Act (KEIA) program. For a full discussion of the program requirements, please see KRS 154.31. As with all state administered tax incentive programs, any inducements offered to an eligible company under the KEIA program are negotiated by Cabinet for Economic Development officials and subject to approval by the Kentucky Economic Development Finance Authority (KEDFA).
Eligible Companies Any business entity primarily engaged in manufacturing or service or technology activities, or in operating or developing a tourism attraction in Kentucky. Eligible company does not include any company whose primary activity is retail sales.
Minimum Requirements for Eligible Projects To qualify for the incentives available under the KEIA program, an eligible company must make a minimum investment of $500,000 in an economic development project as that term is defined in KRS 154.31. Eligible investment costs include expenditures for building and construction materials, research and development equipment, and acquisition of real property that is owned, used or occupied by the approved company. Electronic processing equipment, defined as the use of technology having electronic, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities, now in existence or later developed to perform a service or technology activity, is also an eligible cost. Labor costs are excluded from eligible investment costs.
Eligible Expenses and Incentives A KEIA approved company is eligible to receive a refund of sales and use tax paid for the following items purchased during the term of the project and not to exceed the approved recovery amount authorized in the memorandum of agreement: - Building and construction materials - Research and development equipment - Electronic processing equipment (minimum $50,000 investment) Sales and use tax paid on expenditures made prior to KEDFA approval as an “approved company” will not be eligible for the refund.
Upon approval by KEDFA, the approved entity enters into an agreement with KEDFA. The term of the agreement is negotiated with Cabinet staff prior to KEDFA approval and may be extended by approval of KEDFA for good cause shown. However, the term shall not be extended beyond seven (7) years from the date of approval. The maximum sales and use tax refund incentive available for commitment by KEDFA in each fiscal year for all projects is limited to $20,000,000 for building and construction materials and $5,000,000 for equipment used for research and development or electronic processing. Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority
Kentucky Enterprise Initiative Act (KEIA)
The Process • The company makes application to KEDFA with the assistance of a Project Manager from Business Development. The application will require a timeline for completion of the project. • The total amount of incentives to be recommended for approval of a project is negotiated with the Cabinet. • The project is presented to KEDFA for approval at which time an Agreement is approved by KEDFA that authorizes the incentives for the company and sets forth the maximum approved recovery amount and the terms and conditions. • The company completes its project and submits the required documentation throughout the term of its project in compliance with the Agreement. o KEDFA requires documentation in connection with the project’s KEIA eligible investment costs as outlined in Exhibit A to the Agreement. o The Department of Revenue requires documentation in connection with the project and communicates directly with the approved company. o Projects with a term of three (3) years from approval or less shall submit their application for refund to the Department of Revenue within 60 days of project completion. o Projects with a term greater than three (3) years from approval shall submit annual information returns and any supporting documentation to the Department of Revenue within 60 days following the end of the calendar year beginning in the third year of the project term. The application for refund should be submitted to the Department of Revenue within 60 days of the earlier of completion of the project or the expiration of the project term as provided in the Agreement. • The Department of Revenue will issue a refund check not to exceed the amount authorized to the approved company following verification of the sales and use tax paid. Fees There is a non-refundable application fee of $500 payable upon submission of the KEIA application. The application fee will be waived if a project applies for KEIA and another tax incentive program. For further information contact:
Sheri Fisher Kentucky Cabinet for Economic Development Department of Financial Incentives Old Capitol Annex 300 West Broadway Frankfort, Kentucky 40601 502-782-1977 Sheri.Fisher@ky.gov 6/2011
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA) Direct Loan Program KEDFA offers a mortgage loan program to work in conjunction with private financing. The program is designed to allow businesses to obtain the long term financing needed to encourage growth. Program Guidelines ●
Projects financed must be agribusiness, tourism, industrial ventures, or service industry. No retail projects are eligible.
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KEDFA may participate in projects with loans ranging from $25,000 to $500,000. The amount of KEDFA participation is dependant on the project fixed asset cost, based on the following: Project Cost Up to $200,000 $200,000 to $500,000 Above $500,000
KEDFA Participation 50% 40% 30%
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The project owners must inject a minimum of 10% toward the fixed assets.
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KEDFA financing may be combined with a Community Development Block Grant, however, in no case will the total involvement from both exceed 33% of the project cost.
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KEDFA financing may be combined with SBA 504 financing.
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Projects must create new jobs or have a significant impact on the economic growth of a community.
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Only fixed assets (land, building, and equipment) may be financed.
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No refinancing will be undertaken.
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Term and repayments are based on that of the private lending institution.
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Personal guarantees are required of the company's owners who control at least 20% of the stock of the company.
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The borrower must provide KEDFA proof that the project is underway (invoices, etc.) within 4 months of the approval date, or the commitment will expire.
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KEDFA funds are not disbursed until the entire project, as outlined in the application, is complete.
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA) Direct Loan Program Interest Rates and Fees ● The interest rate is fixed, and is tied to the term of the loan. Rates are as follows: Term Interest Rate 3 yrs. 1.0% 5 yrs. 2.0% 7 yrs. 3.5% 10 yrs. 5.0% ● A $500 non-refundable application fee must be submitted with the application. ● A 1% commitment fee (minimum of $1,000) is due within one month of the date the loan is approved. Loan Process ● Applicant should contact his bank to discuss funding for the project. ● KEDFA is contacted to discuss project eligibility, proposed financing structure, and collateral requirements. ● If project is eligible, an application must be submitted to KEDFA for staff review and preliminary approval. ● KEDFA reviews staff recommended loans and makes final decisions at its monthly meeting. For further information or assistance, please contact: Don Goodin Kentucky Economic Development Finance Authority Old Capitol Annex 300 West Broadway Frankfort, KY 40601 (502) 782-1978 Fax: (502) 564-7697 don.goodin@ky.gov 06/2011
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
LINKED DEPOSIT LOAN PROGRAM Under the Kentucky Linked Deposit Investment Loan Program, the State Investment Commission invests funds from the state’s Abandoned Property Cash Account at a set rate with eligible lenders. In turn, the financial institution agrees to lend the proceeds of the funds to eligible small-business borrowers at an attractive rate. The maximum loan rate charged by the lender will be the current Wall Street Journal prime rate, but not less than 5%. The maximum loan amount is $100,000 per business and the maximum loan term is 7 years. Prepayment and early payoff of the loan is available without penalty. Loan proceeds may be used for working capital, interest costs, capital expenses, or debt refinancing. Eligible borrowers must meet the following criteria: Must be established as a for-profit entity Must be headquartered and maintain offices and operate facilities in Kentucky Must employ fewer than 50 full-time employees, the majority of whom must be from Kentucky Must have gross earnings of $1 million or less per year Business principals can’t be officers or directors of eligible lending institutions Potential borrowers should contact their preferred lending institution to see if the lender offers Linked Deposit Loans. Lenders interested in participating in the Linked Deposit Loan Program can contact Mark Johnson for additional information. Typical steps for a small business interested in obtaining a Linked Deposit Loan: An eligible borrower identifies a lending institution willing to consider his or her loan application and comply with Linked Deposit Loan policies. The lender obtains a Linked Deposit Investment Program Loan Application from Mark Johnson and provides the application to the borrower, along with any other paperwork required for a loan application. The borrower completes and submits all required loan documentation to the lender, including the Linked Deposit Investment Program Loan Application. The lender makes all credit decisions and determines necessary collateral requirements on its behalf. If the lender is willing to make the loan, a copy of the Linked Deposit Investment Program Loan Application, along with the borrower’s personal financial statement, is submitted to Mark Johnson for approval and to assure compliance with program regulations. An approval letter will be forwarded to the State Investment Commission by Mark Johnson and, subject to projected availability of funds by the Department of Treasury, the State Investment Commission will notify the lender and discuss the specific type of investment, terms, and settlement date for the transaction. Firms that derive more than one-half of their annual gross income from farming can contact Tim Hughes in the Governor’s Office of Agricultural Policy to learn about Linked Deposit Loans for agribusiness firms. For additional information about the Linked Deposit Loan Program, please email MarkL.Johnson@ky.gov or call 800-626-2250.
Industrial Revenue Bonds (IRB)
Industrial Revenue Bonds (IRB) may be issued by state and local governments in Kentucky to help finance industrial buildings as defined by KRS 103.200. Bond funds may be used to finance the total project costs, including engineering, site preparation, land, buildings, machinery and equipment, and bond issuance costs. •
Generally, the issuer serves as a conduit to provide a lower interest rate to the borrower, but the issuer is not obligated for debt repayment. Bondholders look to the “revenue” arising from the project to cover debt service. Bond proceeds from bond issues can be lent directly by the issuer.
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KRS 103 also permits the issuer to hold title to the improvements financed with IRB proceeds. In this instance, the property owned by the issuer may be exempt from local property taxes during the duration of the bond issue. This property may also be eligible to be taxed at a reduced state rate of $0.015 per $100 of leasehold value, if such reduction receives the prior written approval by the Kentucky Economic Development Finance Authority (KEDFA) as required by KRS 103.210 and KRS 132.020. (See KEDFA operating procedures as it relates to this review process.) Any portions of such projects financed by private capital are subject to the full state and local property taxes applicable to private ownership.
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Communities may negotiate for payments by industrial tenants to replace portions of local property taxes lost through public title to the property. These agreements are commonly referred to as Payment In Lieu of Tax (PILOT) agreements.
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The Kentucky Private Activity Bond Allocation Committee (KPABAC) administers bonds regulated by the Internal Revenue Code. The Committee approves the issuance of industrial revenue bonds with tax-free interest earnings (to bond buyers) for qualifying projects within annual ceiling amounts authorized by the I.R.C. For CY 2011, the total state-ceiling amount is approximately $412,239,865. KPABAC meets quarterly to allocate the cap. Issuers have 90 days from the date of allocation to issue the bonds.
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The state ceiling on private activity is divided into two pools, with twenty percent (20%) reserved for the Local Issuer Pool and eighty percent (80%) for the State Issuer Pool. For CY2011, the administrative regulation requiring the 80/20 split between the Local Issuer Pool and State Issuer Pool was temporarily suspended due to the market dislocation in the municipal bond market. An emergency regulation was enacted to divide the pools with forty percent (40%) reserved for the Local Issuer Pool ($164,895,946) and sixty percent (60%) reserved for the State Issuer Pool ($247,343,919). "Local Issuer Pool" means the portion of the state ceiling from which allocations for local projects are made to issuers of affected bonds issued on behalf or for the benefit of an entity which is not a state agency. "State Issuer Pool" means the portion of the state ceiling from which allocations for state projects are made to issuers of affected bonds issued on behalf or for the benefit of a state agency. On July 1st of each year, the remainder of any unallocated state ceiling in the Local Issuer Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Industrial Revenue Bonds (IRB)
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Pool will become available volume cap from which allocations are made to any issuer, in accordance with the procedure set forth in 200 KAR 15.010. (Additional information can be found at http://finance.ky.gov/ourcabinet/caboff/OOC/ofm/) No local project can be allocated more than twenty-five percent (25%) of the amount of the Local Issuer Pool pursuant to the individual local project limitation in 200 KAR 15:010. For CY2011, the local project limitation of twenty-five percent (25%) was temporarily suspended. Local projects will be evaluated by KPABAC using the following criteria: creation of new jobs or retention of existing jobs, average hourly wages and benefits, capital investment, unemployment rate in the county of the project, any state economic development incentives awarded to the company and previous private activity bond cap allocated to the company. (KRS 103.285; 132.020; 132.095; 132.200 and 200 KAR 15:010)
Contact:
Katie Smith, Deputy Commissioner Kentucky Cabinet for Economic Development Department of Financial Incentives Old Capitol Annex 300 West Broadway Frankfort, KY 40601 Phone: (502) 782-1987 Fax: (502) 564-7697 Katie.Smith@ky.gov
July 2011
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Small Business Credit Initiative (KSBCI) Fact Sheet
The Kentucky Small Business Credit Initiative (KSBCI), administered by the Kentucky Cabinet for Economic Development (the Cabinet) and the Kentucky Economic Development Finance Authority (the Authority) is designed to generate jobs and increase the availability of credit to small businesses by reducing the risk assumed by participating Kentucky lenders, credit unions, and Community Development Financial Institutions. The initiative will leverage funding from these private sector sources to help finance creditworthy small businesses that would typically fall just outside a lender’s normal underwriting standards. The three programs that compose KSBCI are the: Kentucky Capital Access Program (KYCAP): Offers loan portfolio insurance to private financial institutions, thus encouraging them to lend to creditworthy small businesses, by providing a matching contribution to a lender’s loan loss reserve account when they extend credit to qualified small businesses. In the case of a loss, the lender may draw against the account to offset a loss. Kentucky Loan Participation Program (KYLPP): Assists borrowers whose cash flow does not meet a lender’s coverage requirements by allowing the Cabinet to purchase (or participate in) a portion of the loan from the lender and offer the borrower, on that portion, a payment-free grace period up to 24 months. Kentucky Collateral Support Program (KYCSP): Provides a pledged asset (cash) to a lender for consideration in making a loan to a small business, thereby enhancing the lender’s ability to underwrite the loan. Eligible Borrowers: Eligible Borrowers include corporations, partnerships, joint ventures, sole proprietorships, state-designated charitable, religious, and other nonprofits, government-owned corporations, consumer and marketing cooperatives, and faith-based organizations, provided the loan is for a qualified business Purpose. An Eligible Borrower, including its affiliates and subsidiaries, must have 500 or fewer employees and eligible borrowers must be Kentucky residents. Borrowers may not be executive officers, directors, or principal shareholders of the financial institution enrolling the loan; a member of the immediate family of an executive officer, director, or principal shareholder of the financial institution enrolling the loan; or a related interest of such an executive officer, director, principal shareholder, or member of the immediate family. Eligible Loan Purposes: Loan proceeds may be used for eligible purposes such as, but not limited to, start-up costs, working capital, business acquisitions and expansions, franchise financing, equipment loans, inventory financing, owner occupied commercial real estate acquisitions, renovation, and
construction. In some cases, refinancing may be available. No passive real-estate or speculative investment projects are eligible. Other criteria are noted in the programs’ guidelines. Participating Lenders: Loans are private transactions between participating lenders and eligible borrowers. Neither the Cabinet nor the Authority play a role in participating lenders’ decision making processes nor in their setting of terms, conditions, loan loss reserve requirements or interest rates. Borrower Application Process: A borrower should consult the Participating Lenders webpage to determine if their bank has enrolled in the program. All requested information must be submitted to a participating lender. For loans in which the state’s participation will exceed $250,000, additional processes may be necessary. For additional information or assistance, please contact: J. Don Goodin Kentucky Cabinet for Economic Development 300 West Broadway Frankfort, KY 40601 502-782-1978 don.goodin@ky.gov
Kentucky Economic Development Finance Authority (KEDFA)
Tax Increment Financing (TIF)
This fact sheet provides an overview of the TIF program. For a full discussion of the program requirements, please see KRS Chapter 65 and 154. As with all state administered incentive programs, any inducements offered under the TIF program are negotiated by Cabinet for Economic Development officials and presented as a recommendation to the Kentucky Economic Development Finance Authority for approval. Overview Tax Increment Financing (TIF) is a tool to use future gains in taxes to finance the current improvements that will create those gains. When a public project is carried out, there is an increase in the value of surrounding real estate, and often new investment (new or rehabilitated buildings, for example). This increased site value and investment creates increases in values of taxable properties and taxable activities, which increases tax revenues. The increased tax revenues are the "tax increment." Tax Increment Financing dedicates that increased revenue to finance debt issued to pay for the public infrastructure of the project. TIF is designed to channel funding toward the public improvements in distressed or underdeveloped areas where development would not otherwise occur. TIF creates funding for public projects that may otherwise be unaffordable to localities. The first step for all programs is the establishment of a TIF development area by a city, a county, or one of the eligible agencies identified in statute as eligible. The statutes authorize two types of TIF development areas. A development area on vacant land is eligible for local participation only. A development area which includes a developed area in need of redevelopment or other blight conditions may be eligible for both state and local participation. There are three separate state participation programs available, each of which has its own distinct requirements for eligibility. Local Development Areas There are two types of local tax development areas that can be established. Statute provides detailed requirements for the establishment of a development area, including public hearing requirements, ordinance requirements, and parameters for agreements establishing the development area and pledging financial support. Support at the local level can be provided through the entire development area, or on a project by project basis. The Three types of local development areas are as follows: Local Only Development Areas – The local only TIF development area may be established by a local government or eligible agency on vacant land. The local government may pledge up to 100 percent of incremental property taxes and occupational license taxes or fees for up to 20 years. All local only development areas are subject to the following conditions: The land must be a previously undeveloped tract of land; The maximum size cannot exceed 1,000 acres in a calendar year; and The total amount of property within a city or county that may be in a TIF development area cannot exceed 20 percent of the total value of taxable real property within the jurisdiction(s) establishing the TIF development area. Blighted Urban Redevelopment Areas – These development areas may be established by a local government or eligible agency in an area that meets two of seven specified blight/deterioration conditions established in KRS 65.7049(3), such as abandonment or deterioration of structures, presence of environmentally contaminated land, and inadequate or deteriorating public infrastructure. The local government may pledge up to 100 percent of incremental property taxes and occupational license taxes or fees for up to 30 years. Projects in this type of development area are eligible for state participation if they meet certain requirements. Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Tax Increment Financing (TIF)
All blighted urban redevelopment areas are subject to the following conditions: The maximum size cannot exceed three square miles; and The total amount of property within a city or county that may be in a TIF development area cannot exceed 20 percent of the total value of taxable real property within the jurisdiction(s) establishing the TIF development area. Vacant Land with 5,000 Seat Arena – Development areas may be established by a local government or eligible agency in an area of vacant land if the development contains an arena. The arena must be a facility for athletic events, live entertainment, and other performances, and which has a permanent seating capacity of at least 5,000. These development areas may be established by a local government or eligible agency in an area that meets two of seven specified blight/deterioration conditions established in KRS 65.7049(3), such as abandonment or deterioration of structures, presence of environmentally contaminated land, and inadequate or deteriorating public infrastructure. The local government may pledge up to 100 percent of incremental property taxes and occupational license taxes or fees for up to 30 years. Projects in this type of development area are eligible for state participation if they meet certain requirements. All vacant land with 5,000 seat arena development areas are subject to the following conditions: The maximum size cannot exceed three square miles; and The total amount of property within a city or county that may be in a TIF development area cannot exceed 20 percent of the total value of taxable real property within the jurisdiction(s) establishing the TIF development area. State Participation Programs There are three state participation programs available. State participation is limited to a specific project within a blighted urban redevelopment or vacant land with 5,000 seat arena development area. Only the tax revenues generated within the footprint of the specific identified project are included in the increment. The footprint is defined as the actual perimeter of a discreet, identified project within a development area within which capital investments are made. Commonwealth Participation Program for Real Property Ad Valorem Tax Revenues The project must represent net positive impact in the Commonwealth as certified by a qualified independent outside consultant on contract with CED; The minimum capital investment is $10 million; Not more than 20 percent of the approved project costs or 20 percent of the finished square footage shall be devoted to retail; Up to 100 percent of the state real property incremental tax revenue may be pledged from the footprint of the project; The amount of state revenues pledged shall not exceed 100 percent of approved public infrastructure costs; and Amounts can be pledged for a maximum of 20 years. Commonwealth Participation Program for Signature Projects Requires a minimum capital investment of $200,000,000; Not more than 20 percent of the approved project costs or 20 percent of the finished square footage shall be devoted to retail;
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Tax Increment Financing (TIF)
The project must result in a net positive economic impact to the Commonwealth, as certified by the consultant’s report; State taxes that may be pledged include real property ad valorem taxes, individual and corporate income taxes, the limited liability entity tax, and sales taxes; Up to 80 percent of incremental state revenues may be pledged from the footprint of the project; May recover up to 100 percent of approved public infrastructure costs less sales taxes paid, signature project costs less sales taxes paid, and financing costs related to public infrastructure costs over a period of up to 30 years; Qualifies for a sales tax refund on the purchase of construction materials that do not qualify as an approved public infrastructure cost or an approved signature project cost.
Commonwealth Participation Program for Mixed Use Redevelopment in Blighted Urban Areas Defines mixed use as including at least two of the following: retail, residential, office, restaurant, or hospitality – to qualify as a use, the use must comprise at least 20 percent of the total finished square footage or 20 percent of the total capital investment. In addition the area cannot include any retail establishment that exceeds twenty thousand (20,000) square feet of finished square footage. To qualify a project must: o Be located in an area with at least three of the following blight/deterioration conditions; Substantial loss of residential, commercial, or industrial activity or use; Forty percent (40%) or more of the households are low-income households; More than fifty percent (50%) of residential, commercial, or industrial structures are deteriorating or deteriorated; Substantial abandonment of residential, commercial, or industrial structures; Substantial presence of environmentally contaminated land; Inadequate public improvements or substantial deterioration in public infrastructure; or Any combination of factors that substantially impairs or arrests the growth and economic development of the city or county; impedes the provision of adequate housing; impedes the development of commercial or industrial property; or adversely affects public health, safety, or general welfare due to the
development area's present condition and use. o o o o o
Be a mixed use project; Represent new economic activity in the Commonwealth; Result in a minimum capital investment of at least $20 million but not over $200 million; and Result in a net positive impact to the Commonwealth. May recover up to 100 percent of approved public infrastructure costs, and costs related to land preparation, demolition and clearance over up to 20 years.
Process After establishing local TIF development area by local ordinance, local agency submits TIF application for state increments to CED. CED staff reviews TIF application for completeness and evaluate whether, based solely on information submitted by the applicant, the project is likely to meet the minimum requirements for the program. CED staff presents TIF project to KEDFA board for preliminary approval. Upon KEDFA preliminary approval, CED staff works with Department of Revenue and the Office of State Budget Director to develop criteria for TIF consultant’s report. Consultant researches potential TIF project and projections submitted by local agency and determines if the projections are accurate and if the project results in a net positive impact for the commonwealth. Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Kentucky Economic Development Finance Authority (KEDFA)
Tax Increment Financing (TIF)
If the consultant’s report reflects a net positive impact to the commonwealth, CED staff negotiates the TIF available to the project and drafts a grant agreement detailing the specific taxes, amounts of increments available, and infrastructure expenditures along with reporting requirements. CED staff presents the TIF project to KEDFA Board for final approval. Upon final approval, the TIF project can activate and increments can begin to accrue.
For further information contact: Brad Thomas Kentucky Cabinet for Economic Development Department of Financial Incentives Old Capitol Annex 300 West Broadway Frankfort, Kentucky 40601 (502) 564-4554 brad.thomas@ky.gov
Chuck Willis Kentucky Cabinet for Economic Development Department of Financial Incentives Old Capitol Annex 300 West Broadway Frankfort, Kentucky 40601 (502) 564-4554 chuck.willis@ky.gov
Revised October 29, 2009
Old Capitol Annex · 300 West Broadway · Frankfort, KY 40601-1975 · Phone 502.564.7140 · Fax 502.564.3256 · www.thinkkentucky.com
Local Only
Common Name Bill Section Minimum Threshold Investment Funding Mechanism
Tax Increment Financing (TIF) Options KRS 65.7041 -‐ 65.7083; KRS 154.30-‐010 -‐ 154.30.090 State Real Property Tax Blighted Urban Mixed Use
KRS 65.7047 KRS 6 5.7049-‐7053 Local Development Area Development Area1 Vacant Land Redevelopment No Minimum Not Eligible for State participation
No Minimum
Signature TIFs
KRS 154.30-‐040
KRS 154.30-‐060
KRS 154.30-‐050
$10 million
$20 million to $200 million
$200 million
Eligible for Local and State Must meet requirements for Development Area TIF Must meet requirements for Development Area TIF participation
Must meet requirements for Local Only Devlopment Area TIF for project after 1/1/08
State Property Tax Local Taxes Individual Income Tax Corporation Income Tax Sales Taxes Sales tax refund during construction
No Yes No No No No
No Yes No No No No
Yes Yes No No No No
Yes Yes Yes Yes, Including 141.0401 Yes No
Yes Yes Yes Yes, Including 141.0401 Yes Yes
Other Taxes
No
No
No
No
Local Transient Room Taxes for Cities of 1st Class
Percent Recovery (amount that can be recovered) Recover of Financing Costs Percentage of Increment Certification of Net Positive Economic Impact Consultants Report Requires State Commision Approval Retail Restrictions Size of Development Area Duration of Agreement
No State Revenues
If Local Only Up to 100% of Approved Public Infrastructure Cost No State Revenues
Up to 100% of Approved Public Up to 100% of Approved infrastructure Costs and Infrastructue Costs and land Approved S ignature costs less amount of sales preparation, demolition and clearance taxes paid on public portion
Yes
Yes
No
No
Up to 100%
Up to 100%
Up to 100%
Up to 80%
No
No
No
No
No
No
Yes by Finance, Revenue OSBD Outside Consultant Report/Financial Analysis
No
No
Yes
None
None
20%
1,000 acres per year
Up to 3.0 Square miles
Up to 3.0 Square miles
Up to 3.0 Square miles
Up to 30 Years
Up to 30 Years
Up to 20 Years2
Up to 20 Years2
1
Yes
While local revenues may be pledged for up to 30 years, state revenues may be pledged for up to 20 years.
Up to 80%
No Prior to 1/1/08 Yes after 1/1/08
No Prior to 1/1/08 Yes after 1/1/08
Yes
Must be Mixed Use 20% No Retail establishment over 20,000 Sq. ft
Development Areas established under KRS 65.7049-‐7053 are eligible to use both local and state incremental tax revenues (if it meets state threshold requirements). If approved by the state for one of the state participation programs, the column that applies to that state participation program also applies to the project. 2
Yes
Up to 3.0 Square miles Up to 30 Years