Tax Increment Financing

Kentucky Cabinet for Economic Development

Program Type:

Tax Increment Financing

Eligible Geography:

Kentucky

Summary:

Tax Increment Financing is an economic development tool used by public agencies to finance needed infrastructure improvements for a project by earmarking future tax gains resulting from the development for the improvements. Its purpose is to encourage infrastructure investments. This public investment will increase the value of the property as well as in the surrounding area and may spur further development. This increased tax revenue is the increment which TIF dedicates toward public infrastructure improvements in distressed or underdeveloped areas where private development would not otherwise occur.

The first step for all TIF programs in Kentucky is the establishment of a TIF development area by a city, county or one of the agencies identified in statute as eligible. The statutes authorize two types of TIF development areas: Areas for local incentives only Areas for state and local incentives.

Support at the local level can be provided through the entire development area or on a project-by-project basis. There are two types of local development areas: local only development areas, which are eligible for up to 100% of incremental property taxes and occupational license taxes or fees for up to 20 years blighted urban development areas, which are eligible for up to 100% of incremental property taxes and occupational license taxes or fees for up to 30 years Local revenues pledged to support the project must be of a sufficient amount to warrant state participation. There are three state participation programs available, each of which has its own distinct requirements for eligibility: Real Property Ad Valorem Tax Revenues, Signature Projects, Mixed-Use Redevelopment in Blighted Urban Areas.

Eligible Recipients:

Local Government; For-Profit Business

Eligible Recipients Detail:

Eligible Purpose:

General Infrastructure; Last Mile Connectivity; Building Connectivity; Anchor Institution Connectivity

Eligible Purpose Detail:

Eligible development activities include:

Infrastructure and environmental projects for industrial enterprises and retail establishments; Infrastructure, environmental and building projects for manufacturers, hospitals, convention centers and associated hotels; Utilization of abandoned or underutilized industrial, commercial, military, previously mined institutional sites or buildings; or undeveloped sites planned and zoned for development in accordance with any existing comprehensive municipal plan.

Other Eligibility Criteria:

Tax Increment Financing Zones The first step for all TIF programs in Kentucky is the establishment of a TIF development area by a city, county or one of the agencies identified in statute as eligible.

There are three state participation programs available, each of which has its own distinct requirements for eligibility. Eligibility information for all TIF programs can be found on the program website.