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,
NECESSITY, FUNCTION AND CONFORMITY: KRS
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
(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
(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
(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.)