FRANKFORT, Ky. - Governor Ernie Fletcher today signed HB 549, which expands and restructures tax increment financing (TIF) tools for use by state and local governments to provide incentives for public and private redevelopment and investment in the communities of the Commonwealth.
"Expanding and restructuring TIF tools will have a long-term positive impact on the future economic development of the entire Commonwealth," said Governor Fletcher. "I applaud the members of the 2007 General Assembly - particularly Senate President David Williams and Rep. Larry Clark - for passing this very important piece of legislation."
Immediately, the funding mechanisms in the bill will aid in the development of two major projects: the soon-to-be-built $465 million Museum Plaza project in downtown Louisville and a $1 billion mixed-use development along the Newport riverfront, known as Ovation, both of which have a significant impact on the Commonwealth.
"The TIF legislation can be a valuable tool to help development that otherwise would not be feasible," said Senate President David Williams (R-Burkesville). "This bill represents the best in state government incentive programs for Kentucky's future."
"I am pleased that enactment of HB 549 will help make Museum Plaza a reality," said Rep. Larry Clark (D-Louisville). "Projects that will economically and culturally transform the communities where they are located are exactly what we had in mind when we put HB 549 together."
"This legislation will help ensure the success of Museum Plaza, a major economic catalyst for Louisville and the Commonwealth," said Louisville Mayor Jerry Abramson.
Statewide, this bill will create a mechanism for offering state and local financial incentives for projects of various sizes and is available for all communities.
Local tax incentives are available both for local development of vacant land and brownfields, as well as for local redevelopment projects and projects that qualify for state incentives. State incentives will be available to support public infrastructure necessary to facilitate private development, with increasing levels of incentives on larger projects. The minimum capital investment for state incentives is $10 million.
State and local incentives are provided through a percentage of incremental taxes generated by the development of the projects. At the local level, occupational and local property taxes may be pledged to aid the projects, but no school property taxes are involved. At the state level, a portion of individual income taxes, corporation income taxes, limited liability entity taxes, sales taxes and state real property taxes may be pledged, depending upon the size and nature of the project and area being developed. There are enhanced incentives for mixed use projects in blighted urban areas of the Commonwealth.
The largest level of state participation is reserved for the development of "signature projects" that will result in capital investments of more than $200 million and represent new economic activity to the Commonwealth.
HB 549 makes significant improvements to existing TIF laws by increasing accountability for the programs through the creation of the State Tax Increment Financing Commission. This state review board will be responsible for approving and administering all TIF projects with state involvement. It will be staffed by the Finance and Administration Cabinet.