56.510 Conveyance of title of industrial development project to industrial entity -- Acquisition of public project by state -- Lease agreement or financing agreements.
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agreements. (1) In carrying out the purposes of this chapter, and in providing for the expenditure of funds for the acquisition of real estate or for a building project for the state or for
any state agency, the cabinet may find that the cost may be paid in whole or in part:
(a) Out of the funds appropriated specifically for capital outlay purposes;
(b) Out of funds directly appropriated to the involved state agency which may legally be available for the purpose; (c) Out of funds derived or which may be derived by the issuance and sale of revenue bonds by the commission (but only for the purpose of acquiring
property for use by the state government or one of its departments or agencies,
but not including any independent municipal corporation or political
subdivision); or (d) By any one (1) or a combination of said methods of financing. Any such findings providing for the issuance and sale of bonds shall be submitted to the
commission for final determination. When any funds appropriated to or
standing to the credit of a particular state agency are to be used for a purpose
of the character above contemplated, the head of the agency may direct that
the funds be transferred to the credit of the Finance and Administration
Cabinet and made available for expenditure by the Finance and
Administration Cabinet for the agreed purpose. Industrial development
projects may be financed by the issuance of revenue bonds of the commission
only at the request of the Cabinet for Economic Development, subject to the
provisions of subsection (3) of this section. (2) In any case where the expenditures for the acquisition of real estate or for a building project for the state or any state agency are to be financed in whole or in part by the
issuance or sale of revenue bonds, the commission may provide that the title to any
real estate which may be so acquired shall not vest in the Commonwealth until the
revenue bonds, together with interest thereon, have been paid in full. In such cases
the commission may, by agreement or in a trust indenture securing the payment of
such revenue bonds, provide that the title of such real estate may be vested in some
other state agency, or in a trustee named in such indenture, until the revenue bonds,
together with the interest thereon, have been paid in full. It shall be provided in any
such financing:
(a) That upon the retirement and discharge of the bonds, notes, or other obligations issued by the commission at the direction of and on behalf of a
state agency, title to the public project or public projects so acquired shall vest
in the Commonwealth; (b) That in the event of default with respect to such bonds, notes, or other obligations, the Commonwealth shall have the exclusive option to acquire the
public project or public projects for the amount required to discharge such bonds, notes, or other obligations, and is provided a reasonable time to
exercise such option; (c) That the issuance of such bonds, notes, or other obligations shall be directed by and approved by such state agency not more than sixty (60) days prior to
the date of issue of such obligations; and (d) That no bonds, notes, or other obligations shall be issued by the commission for and on behalf of such state agency except upon express direction of such
state agency. (3) (a) In any case where the expenditures for the acquisition, installation and construction of an industrial development project will be financed in whole or
in part by the issuance or sale of revenue bonds, the commission may provide
that the title to the industrial development project which may be so acquired
shall be conveyed to the industrial entity which will occupy and utilize the
industrial development project; provided, however, that such conveyance shall
only be made if: 1. The subject industrial entity agrees in writing prior to the issuance of any
revenue bonds to construct and acquire in connection with the industrial
development project manufacturing, processing and assembling facilities
satisfactory to the commission; 2. The commission makes a finding in writing, that, based upon diligent
investigation, the aggregate incremental taxes to be received by the
Commonwealth as a result of such industrial development project are
reasonably expected, over the life of the revenue bond issue, to be at
least equal to the principal amount of any revenue bonds issued to
finance such industrial development project; 3. The industrial development project is separately approved in writing by
the Governor; 4. The industrial development project is separately approved and
authorized by the General Assembly; and 5. Any revenue bond proceedings for the financing of an industrial
development project provide that in the event of any disposition by an
industrial entity of any such industrial development project previously
conveyed to such industrial entity prior to the collection by the
Commonwealth of incremental taxes in the amount specified in
subparagraph 2. of this paragraph, the subject industrial entity shall pay
to the Commonwealth an amount equal to the difference between the
aggregate incremental taxes collected by the Commonwealth to such
date of disposition and the principal amount of such revenue bonds; (b) As an alternate to the initial conveyance of an industrial development project to an industrial entity, such industrial development project may be leased to
such industrial entity upon such terms as the commission and the Cabinet for
Economic Development shall determine to be proper, and in such case,
subject to the provisions of subparagraphs 1., 2. and 3. of paragraph (a) of this subsection, provision may also be made for title to such industrial
development project to be conveyed to the subject industrial entity at such
time as the Commonwealth has collected incremental taxes in respect of the
industrial development project in an amount equal to the principal amount of
any revenue bonds issued to finance such industrial development project; (c) It is hereby determined and declared as a legislative finding of fact that the provisions and requirements of paragraphs (a) and (b) of this subsection
provide for the receipt by the Commonwealth of fair market value for any
industrial development project conveyed to an industrial entity pursuant to this
subsection; and (d) The Cabinet for Economic Development is authorized and empowered to initiate industrial development projects and to finance such projects pursuant
to the provisions of this chapter. When revenue bonds are issued for the
financing of any such industrial development project, the Cabinet for
Economic Development is authorized and empowered to enter into financing
agreements or lease agreements with the commission providing for the
making of financing payments by the Cabinet for Economic Development
from appropriations made to the Cabinet for Economic Development as, if
and when received, for the amortization of revenue bonds so issued, provided
that no such obligation shall be binding upon the Cabinet for Economic
Development for a period extending beyond the legislative biennium during
which such obligation is incurred, but such obligation may be renewed during
successive biennial periods by the Cabinet for Economic Development. The
issuance of any revenue bonds, notes or other obligations for the financing of
industrial development projects shall be directed by and approved by the
Cabinet for Economic Development not more than sixty (60) days prior to the
date of the issue of such obligations, and no bonds, notes or other obligations
shall be issued by the commission for and on behalf of the Cabinet for
Economic Development, except upon such express direction and upon
compliance with this subsection. Any portion of an industrial development
project may be financed by a city or county of the Commonwealth in the same
manner as a financing by the commission under this section, KRS 56.513 and
56.514 or pursuant to the statutory authority of such city or county. In such
event, the Cabinet for Economic Development may enter into similar
financing agreements or lease agreements with such city or county in order to
make proper provision for such financing. (4) The cabinet, in providing for the expenditure of funds for any of the purposes mentioned in this section, or the commission in providing for the issuance and sale
of revenue bonds, shall have power to provide by agreement with the state agency
affected, or by provision in the trust indenture securing the bonds, such terms and
conditions as may be considered appropriate and reasonable so as to permit either
the leasing to, and use by, any state agency of any building project or the
conveyance or lease of any industrial development project to any industrial entity,
any such building project to be paid for by such state agency either: (a) From its own appropriation;
(b) By the issuance of revenue bonds; or
(c) By means of a proposal to pay a rental for the use of all or any part of any building proposed to be constructed and any such industrial development
project to be paid for by the Cabinet for Economic Development by the
issuance of revenue bonds of the commission, subject to the provisions of
subsection (3) of this section, and amortization of such revenue bonds by the
Cabinet for Economic Development. The cabinet or the commission, in making any such lease agreement or financing
agreement, or in making provision in any trust indenture securing revenue bonds, is
authorized and empowered to lease all or any part of the facility financed for such
term and upon such conditions and for such considerations or enter into financing
agreements with the Cabinet for Economic Development in respect of any industrial
development project as may appear to be in the public interest. Effective: April 8, 1986
History: Amended 1986 Ky. Acts ch. 350, sec. 3, effective April 8, 1986. -- Amended 1976 Ky. Acts ch. 205, sec. 3, effective October 1, 1976. -- Amended 1956 (1st
Extra. Sess.) Ky. Acts ch. 7, Art. XVI, sec. 9. -- Created 1949 (1st Extra. Sess.) Ky.
Acts ch. 11, sec. 8.