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Home My WebLink AboutMO # 1035200 MUNICIPAL ORDER NO. 1035 A MUNICIPAL ORDER ESTABLISHING GUIDELINES FOR PROVIDING ECONOMIC INCENTIVES TO QUALIFIED PROJECTS LOCATING WITHIN THE BOUNDARIES OF THE CITY OF PADUCAH. BE IT ORDERED BY THE CITY OF PADUCAH, KENTUCKY: I. PURPOSE. The City of Paducah ranks creating new employment opportunities for all citizens and expanding the tax base as a primary governmental priority. The City's objective is to enhance the quality of life for its citizens by seeking employers who will establish a new, qualified project within the City or McCracken County. To achieve its objective the City will, on a case by case basis, provide economic incentives as an inducement for qualified economic development. The City finds that such economic incentives fulfill a valid public purpose. The City's policy and criteria for economic incentives are provided in the Municipal Order, which may be amended from time to time. Nothing in this Municipal Order will be construed to imply or promise that the City is under an obligation to any prospective employer. II. CRITERIA FOR ECONOMIC INCENTIVES. A project may be qualified and eligible for approval if the Board of Commissioners finds that the following criteria are substantially met: 1. The project is a basic industry and brings new income and investment into the City. Types of basic industry include manufacturing, warehousing, industrial or selected service industries. A retail establishment will not be eligible. 2. The proposed project must create at least 15 permanent, full time jobs, with average wages, projected more than 3 years, unless another date is mutually agreed to, which are not less than the wages required in McCracken County by the Kentucky Industrial Development Authority (January 2004 = $9.70 per hour). 3. The employer will pay not less than 50 percent of the cost of a healthcare insurance plan for all eligible full time employees. 4. An investment of at least $350,000.00 projected over 3 years, unless another date is mutually agreed to, in improvements, either to real estate or personal/business related property, except for inventories and supplies. 5. The project must meet all licensing, zoning and environmental laws and regulations.. 6. The project must be consistent with the City's comprehensive plan. 7. If requested to do so, the County of McCracken agrees to equal the City's offer. III. TYPES OF INCENTIVES. The City of Paducah recognizes that unique aspects of each project requires flexibility in designing appropriate incentives. Therefore, the offering of an incentive, or combinations thereof, will be customized on a case by case basis. In some instances the input and assistance from other private and public partners may be needed. The list below is a brief summary of various City, County, and State programs which may be available to qualified proj ects. • City Grants. Where the City can validate, to its satisfaction, that a valid public purpose is to be served, it may consider granting reasonable cash incentives to a qualified project. The amount and terms of such grants rest solely with the Board of Commissioners. • City Real Property. When suitable real property is available, the City may consider proposals to convey or lease the property to a qualified project. The terms of transfer or lease are subject to negotiation in each � transaction but, where the City finds a valid public purpose is served, it may consider proposals to acquire Ir'1 or lease the property for consideration below market value. • Paducah Enterprise Zone. The Enterprise Zone is a specific area of the City where both State and Local Governments have created special incentives to encourage new or expanded business activity. Any new or existing business who may be willing to make a commitment in terms of capital investment and/or the creation of jobs with the Zone may qualify for Enterprise Zone benefits. State benefits for qualified businesses include: exemption from Kentucky state sales tax and use tax on the purchase, lease or rental of equipment and machinery; exemption from Kentucky motor vehicle usage tax on vehicles purchases for use in the zone and certain tax credits based on wages paid employees who were formerly unemployed. City benefits for qualified businesses include: reduced 50 percent employee earnings tax; five year abatements on designated personal property; a 50 percent reduction in the tax assessed value of real estate used in the zone and a wavier of various permit fees. �.. .�,. ._.. .. J:__�_ �. _: �..... � 1 .: ..:e��W�rtiL.�c::�d��L _u. i..—_.<, � �w�>J_L�i ��:.�.�an,L��iIJJ1W1.{iWL',,• ,f Fees. The City may waive for qualified projects all building permit fees and municipal similar KIDA Program. The Kentucky Industrial Development Act (KIDA) is a program designed to reward manufacturers for job creation and high wages. The company must have a minimum investment of $100,000.00 and create a minimum of 15 new jobs. In addition, in McCracken County, a manufacturer must pay employees $9.70 per hour. With benefits included, this increases to $11.16 per hour. This incentive may be applied against expenditures for land acquisition, site development, utility extensions, architectural and engineering services, building, construction or rehab, purchase of building fixtures (includes installation costs) and manufacturing equipment. Eligible manufacturing equipment cost is limited to $10,000.00 tax credit for every full-time job created over a two year period. In McCracken County, a company has two options: Option 1: Credits to the corporate income tax for up to 100 percent of approved costs, for up to 10 years, on land, buildings, site development, and building fixtures. Option 2: Companies may utilize a cash rebate of 3 percent of the employees' payroll for up to 10 years. KJDA. The Kentucky Jobs Development Act (KJDA) applies to new and expanding non -manufacturing and non -retail establishments. In order to qualify, a company must create 15 full-time jobs and over 75 percent of the services are generated through revenue to out-of-state customers. An eligible company can receive up to 50 percent of startup costs limited to $10,000.00 per new job and up to 50 percent of the annual rental value of the facility. In addition, the company may receive a cash rebate of up to 5 percent of the employees' payroll. Of the total amount, 80 percent comes from the state and 20 percent from local government. The maximum duration is 10 years. Note: a local government may provide services in lieu of the local job assessment credit. State Training Program. The Bluegrass State Skills Corporation's (BSSC) 50 percent reimbursement will be based on the eligible costs for the type of training requested when an educational institution or consultant is providing the training. The maximum hourly rate includes: instruction, curriculum development and customization, materials, texts, supplies, travel, and equipment rental and administration costs. The average training cost per trainee in any single training activity shall not exceed $2,000.00. Property Tax Exemption. Property owned and financed by a governmental unit through industrial revenue bonds are taxed by the state at $0.015 per $100.00 of leasehold value with approval from KEDFA. The same KEDFA approval will exempt the leasehold value from local property taxes. Exemption from local property taxes only on the leasehold value does not require KEDFA approval if an industrial revenue bond is utilized. Industrial Revenue Bonds under KRS 103.210 The following criteria shall be considered when evaluating the bond issue under KRS 103.210: A. The number of anticipated new full-time jobs to be created and the number of existing full-time jobs to be retained by the industrial project for which the bonds are to be issued. Full-time job shall be defined as a position filled by an employee (excluding contract or part-time employees) that the company projects will work, on an annual basis one thousand seven hundred fifty (1,750) hours; B. The average salary to be paid each full-time job created or maintained and the employee benefits to be offered by the company requesting the issuance of the industrial revenue bonds; C. The amount of the capital investment being made by the company in the industrial project that is being financed by the industrial bonds; D. The unemployment rate in the county of the project; E. The state tax incentive programs and grant/loan programs that the company is seeking or in which it is participating for the particular industrial project; F. The new tax revenues which the company and the tax-exempt governmental unit or statutory authority anticipate will be produced by the industrial project over the life of the bond issue; and G. The approximate amount of the state and local ad valorem taxes which will be lost as a result of the applicant company leasing all or a portion of the industrial project from the tax-exempt governmental unit or statutory authority. IN 202 IV. RECAPTURE. If the employer fails to either meet the required levels of employment or investment for the project by the end of the third year, unless another time has been mutually agreed to, then the City shall be fully reimbursed, plus interest calculated by using New York prime rates, for the value of economic incentives provided to the project. 2. If the Board of Commissioners of the City finds that the failure to attain or maintain the required levels of employment or investment, in spite of the employers good faith best efforts, were the result of unavoidable and unforeseen circumstances, including, but, not limited to an Act of God or national emergencies, then IJ the Board, at its sole discretion, may: (a) seek a pro rata reimbursement, or (b) waive any reimbursement. V. EFFECTIVE DATE. This Municipal Order shall be effective upon the date of its adoption. j;" !Jl-ZL4 . / z,ert 1< --Q Tammara S. Brock, City Clerk Adopted by the Board of Commissioners January 20, 2004 Recorded by Tan vara S. Brock, City Clerk, January 20, 2004 \mo\economicincentives 00050170