Kentucky Enterprise Initiative Act (KEIA)
The Enterprise Zone Act created by KRS 154.45-90 provided that the 10 enterprise zones in Kentucky would all ultimately expire within 20 years. All enterprise zones excluding Lexington and Owensboro (scheduled to expire December 31, 2005), Knox County (12/31/06), Campbell County and Paducah (12/31/07) and Hopkinsville (12/31/08) have expired. The major benefit to a business designated as such in an Enterprise Zone is the abatement of sales tax on most purchases including construction materials and supplies. In a response to the expiration of the Enterprise Zones, the 2005 General Assembly enacted the Kentucky Enterprise Initiative Act (KEIA). This Act permits companies to apply for a sales tax rebate on construction materials for Economic Development Projects in the Commonwealth which projects may include new or expanded service or technology, manufacturing, or tourism attraction activity in Kentucky.
The Kentucky Economic Development Finance Authority (KEDFA) will oversee KEIA and companies will apply to KEDFA to be considered eligible as a "Approved Company." If approved, the sales and use tax on the cost of building and construction materials purchased in connection with the acquisition, construction, installation, equipping and rehabilitation of a Economic Development Project during the construction period will be rebated to the company. The program is limited so that the total tax refund incentive available each fiscal year may not exceed $20 million. Additionally, up to $5 million will be eligible for equipment purchases for "research and development projects." This Act also creates "Preference Zones" which are and were the ten Enterprise Zones in Kentucky. Preference Zones, as the name implies, will be given some preference in considering the standards for approval. Eligible companies may apply to be designated an Approved Company only on or after October 1, 2005 and no approvals will be effective until January 1, 2006.
