307 KAR 1:040. Application process for incentives for energy independence

Link to law: http://www.lrc.ky.gov/kar/307/001/040.htm
Published: 2015

Subscribe to a Global-Regulation Premium Membership Today!

Key Benefits:

Subscribe Now
      307 KAR 1:040. Application process for incentives

for energy independence.


      RELATES TO: KRS 61.878, 154.27-010 -154.27-090

      STATUTORY AUTHORITY: KRS 154.27-030,

154.20-020, 154.20-033


154.27-030(10) requires the Kentucky Economic Development Finance Authority to

establish standards and requirements for the application process for incentives

for energy independence, and KRS 154.27-030(2)(f) authorizes fees in

conjunction with the application process. This administrative regulation clarifies

the application process, identifies the information required for purposes of

application, and clarifies the steps that shall be taken by the authority and

the applicant between preliminary approval and final approval.


      Section 1. Definitions. (1) "Affiliate"

is defined by KRS 154.27-010(2).

      (2) "Agreement" means a "tax

incentive agreement" as defined by KRS 154.27-010(28).

      (3) "Application" means the form

"Application for Incentives for Energy Independence Act (IEIA) Tax Incentive


      (4) "Authority" is defined by

KRS 154.27-010(6).

      (5) "Capital investment" is

defined by KRS 154.27-010(9).

      (6) "Carbon capture ready" is

defined by KRS 154.27-010(10).

      (7)"Project" means an "eligible

project" as defined by KRS 154.27-010(15).

      (8) "Retrofit" is defined by

KRS 154.27-010(26).

      (9) "Upgrade" is defined by KRS



      Section 2. Application. (1) An applicant

for incentives pursuant to KRS Subchapter 154.27 shall submit an application to

the authority at the applicable address stated in the application instructions.

      (a) If the applicant is retrofitting or

upgrading an existing facility, the applicant shall notify the appropriate

regional office within the Department for Existing Business Development within

the Cabinet for Economic Development. That office shall assign a project

manager to assist the applicant in any matters concerning the Kentucky Cabinet

for Economic Development.

      (b) If the applicant is a new business

locating in Kentucky, the applicant shall notify the Department for New

Business Development in the Cabinet for Economic Development. That office shall

assign a project manager to assist the applicant in any matters concerning the

Kentucky Cabinet for Economic Development.

      (c) An application shall not receive

consideration without the signature of an agent of the cabinet from the

appropriate office as identified in the application instructions.

      (d) An application shall be received by

the office identified in the application instructions as appropriate, prior to

the last Friday of the month to be considered at the following month’s meeting

of the authority.

      (2) In addition to the information

required by KRS 154.27-030, the applicant shall provide as part of the

application the following information:

      (a) Identification of the applicant’s

affiliates as required by KRS 154.27-030 shall include:

      1. Entity name;

      2. State of incorporation or


      3. Federal tax identification number or Social

Security numbers for individual partners;

      4. Agent for service of process;

      5. Street address;

      6. Telephone number; and

      7. If there are more than two (2)

affiliates, a diagram of the ownership structure of the affiliated companies.

      (b)1. Identification of each anticipated

source of eligible project funding as required by KRS 154.27-030 shall include


      a. Name of any agencies or institutions

to which loan or grant applications have been submitted or are anticipated;

      b. Date of the loan or grant application

submission or the anticipated date of submission;

      c. Amount and type of funds requested or

to be requested; and

      d. Current status of each loan or grant

application, date of closing, and award or transfer of funds.

      2. Copies of grant or loan applications, agreements

or contracts related to funding shall be provided upon request of the


      (c) An itemized list of the capital

investment, including specific estimated cost by line item, identification of

items expected to qualify for sales tax exemption, and projected date of

completion of the project;

      (d) Identification of the proposed feedstock

and, for each type of feedstock, either anticipated or confirmed sources;

      (e) A business plan for the facility,

including a full analysis of the product to be produced, market potential for

the product identified and any long term contracts that are already in place

for sale of the product, legal structure of the applicant and identification of

the management team for the applicant and, if different, at the project site;

      (f) A financial statement from the

applicant for the most recent fiscal year end, and if the applicant is a newly

formed entity, a financial statement from the entity or individuals forming the


      (g) A letter from the applicant


      1. If the project is a new location, a

statement that the economic development project may reasonably and efficiently

locate outside of the Commonwealth and, without the inducements offered by the

authority, the eligible company would likely locate outside the state; or

      2. If the project is a retrofit or

upgrade, a statement that the tax incentives are necessary for the retrofit or

upgrade to occur.

      (h) A plan for employment of Kentucky

residents during construction required by KRS 154.27-030, which shall include

an explanation of methods to be employed and shall describe specific actions

that shall be taken by the applicant to ensure that Kentucky residents shall

have opportunities for employment;

      (i) If requested by the authority, a

letter of support from the local government describing local economic

development funding or incentive and giving general support for the proposed

project; and

      (j) An application fee in the amount of



      Section 3. Use and Costs of Consultant. (1)

If the authority determines pursuant to KRS 154.27-030(5)(c) that there is a

need to consult with an outside expert, after preliminary approval, the authority

shall contract with an outside consultant with the expertise required to

analyze the project.

      (2) The consultant shall review the work

to be completed and provide an estimate of the cost;

      (3) The applicant shall pay to the authority

the total estimated cost upon execution of the consultant payment agreement.

      (4) The authority shall pay the

consultant from the consultant funds paid by the applicant in accordance with

the terms and conditions of the consultant payment agreement.

      (5) Any balance of funds remaining after

completion and delivery of the consultant’s analysis to the authority shall be

returned to the applicant.


      Section 4. Memorandum of Agreement. If the

authority grants preliminary approval of the application, it shall enter into a

Memorandum of Agreement with the applicant which shall include:

      (1) The maximum incentive amount

preliminarily approved by the authority;

      (2) The amount and the percentage of

incentives to be provided under each available recovery method, if applicable;

      (3) Conditions for final approval,


      (a) Verification of representations made

in the application and other documents submitted in association with the


      (b) Payment for all professional services

that may result from the application including legal fees and expenses of

counsel through the authority pursuant to KRS 154.20-033;

      (c) A date by which the applicant shall

request the final approval from the authority;

      (d) Verification of information necessary

for calculation of advance payment incentive if requested by applicant; and

      (e) Terms and standards for amendment of

the Memorandum of Agreement.


      Section 5. Information Sharing. (1) The authority

may seek comments and recommendations from the Governor’s Office of Energy

Policy and the Center for Applied Energy Research with regard to the following:

      (a) Whether the facility, as proposed, is

eligible for incentives pursuant to KRS Subchapter 154.27;

      (b) Whether the facility is carbon

capture ready, if applicable, including comments regarding appropriate

equipment and floor plan required for compression and storage of carbon;

      (c) Feasibility of the project, including

the product, the market for the product, and the process employed;

      (d) Applicable permits that shall be

required and projection of eligibility of the facility; and

      (e) Issues or questions relating to the

application and applicant eligibility for incentives.

      (2) Information provided to the authority

in conjunction with the application may be shared with the Office of Energy

Policy, the Department of Revenue, the Center for Applied Energy Research, and

other appropriate experts or consultants, and those agencies, experts, or

consultants shall maintain the confidentiality of the information provided to

the extent that the information is exempt from disclosure under the Kentucky

Open Records Act, KRS 61.878.


      Section 6. Payment of Administrative

Fees. (1) Upon final approval and execution of the agreement, the applicant

shall remit to the authority an administrative fee equal to..25 percent of the incentives authorized in the tax

incentive agreement, not to exceed $50,000. This administrative fee shall be exclusive

of any expert consultant or legal fees which may be due.

      (2) The applicant shall not be eligible

for incentives until the administrative fee, any consultant payments or legal

fees, and expenses are paid in full.


      Section 7. Incorporation by Reference. (1)

"Application for Incentives for Energy Independence Act (IEIA) Tax

Incentive Program, November, 2007", is incorporated by reference.

      (2) This material may be inspected,

copied, or obtained, subject to applicable copyright law, at the following

locations of the Cabinet for Economic Development, Monday through Friday, 8:00

a.m. to 4:30 p.m.:

      (a) Central Kentucky Office, 2300 Capital

Plaza Tower, 500 Mero Street, Frankfort, Kentucky 40601;

      (b) East Kentucky Office, 530

South Lake Drive Prestonsburg, Kentucky 41653;

      (c) West Kentucky Office, 145 East Center

Street, Suite 28, Madisonville, Kentucky 42431 if the applicant is an existing

business considering a retrofit or upgrade; and

      (d) Department for New Business

Development, Old Capitol Annex, 300 West Broadway, Frankfort, Kentucky 40601 if

the applicant is a new business. (34 Ky.R. 1311; Am. 1719; eff. 2-1-2008.)