Transcript Slide 1

Financial Incentives Programs
October 18, 2012
West Kentucky Office
• Support new business site selection
across the Commonwealth in 120 counties
• Support existing businesses in 47 counties
• Corky Peek, Senior Project Manager
• Patty Lockhart, Project Manager
• Jamie Bundren, Project Manager
Tax Incentive Programs
• Kentucky Business Investment Program
• Kentucky Reinvestment Act
• Kentucky Enterprise Initiative Act
Kentucky Business Investment
(KBI) Program
KBI Program
With the enactment of HB 3 in 2009, the
following programs were replaced by one
new, flexible, consolidated program for new
and expanding industry :
• Kentucky Rural Economic Development Act
(KREDA)
• Kentucky Industrial Development Act (KIDA)
• Kentucky Jobs Development Act (KJDA)
• Kentucky Economic Opportunity Zone
(KEOZ)
KBI – Eligible Companies
• Manufacturing
• Agribusiness
• Service and technology
(activities provided
predominately outside the
commonwealth; regional/
multinational/international
market)
• Regional and
multinational
headquarters
KBI Requirements
• Minimum
Qualifications:
– $100,000 investment
– 10 new, full-time
Kentucky resident jobs
– 90% of new jobs must
be paid minimum
wage requirement
depending on location
• All Projects:
– Must achieve 90% of
the established jobs
target and the
established wage
target by activation
date and maintain
those averages or
better through the term
to maximize approved
costs
– May be owned or
leased
KBI Projects in Enhanced
Incentive Counties
• Same criteria used to determine enhanced incentives
counties as formerly used to determine KREDA counties
• $9.06/$10.42 hourly wage/fringe requirement
• 15 year term for tax incentive agreement
• Wage assessment of 5% (all state) and corporate
income tax credit/LLET available for recovery of
incentives
• Equipment expense unlimited as part of approved costs
• Counties maintain eligibility for enhanced benefits for 3
years after certification lapses
KBI Projects in Other Counties
• Ten year term for tax incentive agreement
• $10.88/$12.51 hourly wage/fringe requirement
• Eligible for up to 4% wage assessment (3% state/1%
local assessment fee) and corporate income/LLET tax
credits as recovery methods
• Local jurisdictions with an occupational fee may offer
less than the full amount available, and the state wage
assessment portion will be pro-rata; if no local
occupational fee is assessed, then another form of
participation will be expected
• Equipment expense is limited to $20,000 for new, fulltime Kentucky resident jobs created as part of the total
approved costs
KBI Eligible Costs
• For OWNED projects, including those with
capital leases, eligible costs include 100% of
the cost of land, building, and attendant
construction, labor, installation, etc. costs,
and start up costs, including equipment
(subject to $20,000 per job created in other
counties)
• For LEASED projects, eligible costs include
start up costs and 50% of estimated annual
rent for each year of the tax incentive
agreement
KBI Approved Costs
• KEDFA will set approved costs at final approval,
however, all expenditures must be made by
activation and it is the “confirmed approved
costs” that will be the final, eligible recovery
amount
• Annual recovery limits will be set in the
agreement and may be adjusted annually to
reflect a company’s success in meeting job and
wage targets
KBI Administrative Matters
• Application
Process/Preliminary
Approval
• Fees
• Final Approval/Activation
• Disclosure
• Monitoring
• Ongoing reporting
requirements
Kentucky Reinvestment Act (KRA)
• Assists existing
manufacturers who
need to make
significant capital
investments in order
to remain competitive
• Requires minimum
$2.5 million in new
investment
KRA Program
• Existing manufacturers may recover:
– Up to 50% of the cost of new equipment
– Up to 100% of eligible skills upgrade training costs
• Recovery of approved costs will be through corporate
income/LLET tax credits
• Cabinet to negotiate minimum number of jobs to be
retained, with 85% of pre-project base being the
statutory floor
• An approved company will have 3 years from preliminary
in which it must enter into a final reinvestment
agreement
KRA Program, continued
• The term of the Reinvestment Agreement
is limited to 10 years
• The maximum annual recovery is limited
to 20% of approved costs, plus tax credit
carry forwards
• The company may not have received
benefits under KIRA within the last 5 years
KRA Administrative Matters
• Application
Process/Preliminary
Approval
• Fees
• Final Approval
• Disclosure
• Monitoring
• Ongoing reporting
requirements
Kentucky Enterprise
Initiative Act (KEIA)
• Sales & Use Tax
Refund Program
• No job or wage
requirement
• Minimum $500,000
project investment
• Project term is negotiated, but may not
exceed 7 years including any extensions
KEIA Eligibility
Who is eligible?
• New or Expanded Manufacturing Projects
• New or Expanded Service & Technology
• Regional or headquarter operations
• Tourism Attraction
KEIA Investment
Minimum Investment includes:
• Acquisition of Real Property
• Building Fixtures
• Construction Materials
• Cost associated with construction,
installation, and rehabilitation of
fixtures
• Research & Development
Equipment
• Electronic Processing Equipment
($50,000 minimum)
The Financial Incentives
Searchable Database
• This database is accessible from the
cabinet’s website: www.thinkkentucky.com
• It is also accessible through the state’s
transparency portal,
http://opendoor.ky.gov/Pages/default.aspx
KEDFA Tax Incentive
Programs
QUESTIONS?
Corky Peek, Senior Project Manager
West Kentucky Office
Madisonville
[email protected]
270-210-0033