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Kentucky Direct Financial Incentives 2012

Kentucky's economic development, finance, and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include direct state loans, small business loans, and skills training grants.

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The term of the agreement is negotiated with the Kentucky Economic Development Finance Authority (KEDFA) and may be extended by approval of the KEDFA for good cause shown. However, the term shall not be extended beyond seven years from the initial 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 million for building and construction materials and $5 million for equipment used for research and development or electronic processing.

High-Tech Small Business SBIR-STTR Matching Program:
The Cabinet for Economic Development, through a competitive process, matches Phase 1 and Phase 2 federal SBIR and STTR awards received by Kentucky businesses, or those willing to relocate to Kentucky. This would include matching awards to support Phase 1 exploration of the technical merit or feasibility of an idea or technology. Phase 2 federal awards, which support full-scale research and development, can be matched by the Commonwealth in each year of the federal award.

High-Tech Investment Pool:
The Department of Commercialization and Innovation provides funds to help further the commercialization of a product or new and improved process. Incentives awarded are typically in the form of forgivable loans, with the amount of the loan primarily based on the applicant company's projected high-tech job creation and amount of wage paid.

Kentucky New Energy Ventures Fund (KNEV):
KNEV supports the development and commercialization of alternative fuel and renewable energy products, processes, and services in Kentucky. Companies must have a unique and competitive product, technology or process that can be protected in the commercial marketplace. KNEV will provide grants as well as equity investments. Companies must match the fund's investment on a one-to-one dollar ratio.

Commonwealth Seed Capital, LLC (CSC):
CSC is dedicated to creating high-tech jobs by providing needed seed capital for high-growth potential, high-tech companies. Businesses that receive investments from CSC are based on innovation, have a meaningful Kentucky presence, and are expected to generate significant profits for investors. CSC also invests in seed and venture capital funds that actively invest in these types of companies in Kentucky.

Tax Increment Financing (TIF)
TIF is a tool to use future gains in taxes to finance the current improvements that will create those gains. The state participates with local governments and eligible agencies in three TIF programs: the Commonwealth Participation Program for State Real Property Ad Valorem Tax Revenues, the Signature Project Program, and the Commonwealth Participation Program for Mixed-Use Redevelopment in Blighted Urban Areas.

TIF Loan Support Program
Any agency with a Tax Increment Financing Signature Project approved by the former Tax Increment Financing Commission and which executed its tax incentive agreement prior to January 1, 2008 may apply for The Tax Increment Financing (TIF) Loan Support Program. The Loan Support Program facilitates a supplemental reserve fund to cover debt service related to the bond financing of the TIF project.

Local Redevelopment TIF
The program is available for use to redevelop blighted areas into mixed use development by using the incremental additional local taxes such as property or occupational taxes realized as a result of the development. The community or agency can request state participation in this program with certain additional requirements.

Local Vacant Land TIF
This program is available to develop vacant land by using the additional incremental local taxes, such as property or occupational taxes, realized as a result of the new development (example: construction of infrastructure at a local industrial park). State tax increment is not available for this type of development area.

Kentucky State Contact:
Kentucky Cabinet for Economic Development
Old Capitol Annex
300 West Broadway
Frankfort, KY 40601
(800) 626-2930
Fax: (502) 564-3256

Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.