Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
103.200(1)(k), (l), (m), (n),
(2),
103.2101,
103.282,
103.286,
26
U.S.C. 146,
Pub.L.
111-5
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
103.286(3) requires the
Secretary of the Finance and Administration Cabinet to promulgate
administrative regulations to provide for the allocation of the state ceiling
for the issuance of private activity bonds. This administrative regulation
establishes the formula for that allocation. This administrative regulation
also establishes the Commonwealth's role in the allocation of volume cap
received as a result of the American Recovery and Reinvestment Act of 2009,
Pub.L.
111-5.
Section
1. Definitions.
(1) "Affected
bonds" means "private activity bonds" as defined by
26
U.S.C. sec. 146, excluding any obligations
not subject to the state ceiling under the Code.
(2) "Allocation" means the amount of volume
cap that was approved by the Kentucky Private Activity Bond Allocation
Committee for a local issuer or state issuer.
(3) "ARRA" means the American Recovery and
Reinvestment Act of 2009,
Pub.L.
111-5.
(4) "Available volume cap" means the amount
of unallocated volume cap remaining at the close of business on June
30.
(5) "Bonds" is defined by
KRS
103.200(2).
(6) "Committee" means the Kentucky Private
Activity Bond Allocation Committee.
(7) "Eligible volume cap applicants" means
issuers and local issuers who file a notice of intent to issue bonds relating
to volume cap.
(8) "Energy
efficiency project" means a project meeting the requirements of
KRS
103.282.
(9) "Energy efficiency project reserve" means
the percentage of the state ceiling that shall be reserved for an energy
efficiency project through June 30.
(10) "Issued" means delivered and paid
for.
(11) "Issuer" means the public
or authorized governmental body which issues the bonds.
(12) "Local issuer" means a public or
authorized governmental body which issues bonds on behalf of a local
project.
(13) "Local issuer pool"
means the portion of the state ceiling from which allocations for local
projects are made to issuers of affected bonds issued on behalf or for the
benefit of an entity which is not a state agency.
(14) "Local project" means a project, other
than a project for creation or financing of residential single family or
multifamily affordable housing which are included under the "state projects",
for which bonds are issued on behalf or for the benefit of an entity which is
not a state agency.
(15) "Lottery"
means any process of random selection utilized to allocate available volume cap
and which is conducted:
(a) By staff at a
public meeting of the Committee; and
(b) In accordance with Section 4 of this
administrative regulation.
(16) "Staff" means the Office of Financial
Management of the Finance and Administration Cabinet.
(17) "State ceiling" means the cap imposed by
26
U.S.C. 146 on private activity bonds issued
within the Commonwealth of Kentucky.
(18) "State project" means a project,
including creation or financing of residential single family or multifamily
affordable housing projects and student loans, for which bonds are issued by,
on behalf, or for the benefit of a state agency.
(19) "Year" means calendar year.
Section 2. Evaluation of Local
Projects. Local projects seeking allocation from the state ceiling shall be
allocated according to rankings based on the following factors:
(1) Creation of new jobs, as well as
preservation of existing jobs, by the project;
(2) Average hourly wage and benefits of new
employees proposed for the project;
(3) Capital investment in Kentucky being made
as a result of the project;
(4)
Unemployment rate in the county of the project;
(5) Any state economic development incentives
awarded to the company; and
(6)
Previous state ceiling allocated to the benefited borrower within the last ten
(10) years.
Section 3.
Evaluation of Energy Efficiency Projects. Energy efficiency projects seeking
allocation from the state ceiling under the Energy Efficiency Project Reserve
shall be allocated according to rankings based on the following factors:
(1) Annual energy savings associated with the
project;
(2) Capital investment in
Kentucky being made as a result of the project;
(3) Unemployment rate in the county of the
project;
(4) Any state economic
development incentives awarded to the company; and
(5) Previous state ceiling allocated to the
benefited borrower within the last ten (10) years.
Section 4. Allocation of Available Volume
Cap.
(1) Allocations from the available
volume cap shall be made to eligible volume cap applicants as follows:
(a) First, a lottery shall be conducted to
determine the order of disbursement to local projects which did not receive an
allocation from the local issuer pool;
(b) Second, to the extent there is remaining
available volume cap, a lottery shall be conducted to determine the order of
disbursement to local projects which received an allocation from the local
issuer pool, whether the allocation was issued or not; and
(c) Finally, any remaining available volume
cap shall be allocated by the committee to one (1) or more state issuers for
use during the year or as carry forward.
(2) The committee shall choose a reasonable
method of random selection for the lottery process.
Section 5. Committee Meetings. The committee
shall meet as necessary to allocate the state ceiling. Special meetings may be
held on the call of the committee chairman.
Section 6. An issuer shall obtain a
confirmation authorizing the issuance of affected bonds by filing with the
committee a written notice of intent to issue bonds, using the "Notice of
Intent" form. The committee shall issue a confirmation, using the "Confirmation
of Allocation of State Ceiling" form, allocating to the issuer a portion of the
state ceiling. Affected bonds shall not be issued by any issuer prior to
receiving confirmation by the committee of an allocation under the state
ceiling. Confirmations shall be dated and numbered in the order
issued.
Section 7. Notice of
Issuance for Local Projects and Energy Efficiency Projects. A confirmation
shall expire ninety (90) calendar days from the date of allocation by the
committee, or December 15, whichever is earlier. The issuer shall deliver to
the committee a notice that the affected bonds have been issued, using the
"Notice of Issuance" form. The notice of issuance may be sent by any means, but
the committee shall receive it by the close of business on the 90th day after
the confirmation. If the notice period ends on a Saturday, Sunday, or other day
upon which state offices are closed for business, the notice period shall be
extended to the next business day.
Section
8. Notice of Issuance for State Projects. The issuer shall deliver
to the committee a notice of issuance. The notice of issuance may be sent by
any means, but the committee shall receive it by the close of business on or
before December 15. If the notice period ends on a Saturday, Sunday, or other
day upon which state offices are closed for business, the notice period shall
be extended to the next business day.
Section
9. Issuance of Bonds in Lesser Amounts than Confirmation. A
confirmation of affected bonds shall be effective if the issued amount of the
bonds is not less than eighty-five (85) percent of the original confirmation.
The issuer shall notify the committee if the bonds issued are within the
eighty-five (85) percent requirement and the unused part of the allocation
shall revert to the local issuer pool, or if this reversion occurs after June
30 of any year, the amount shall become available volume cap.
Section 10. Carry Forward Allocations.
(1) In any year, the committee shall allocate
any remaining state ceiling as carry forward allocations if the aggregate
amount of affected bonds issued during the year is less than the state ceiling
on December 15th. An issuer shall, in order to receive a carry forward
allocation, file with the committee by December 15th:
(a) A notice of intent; and
(b) A carry forward election of unused
private activity bond volume cap, using U.S. Treasury Department Form
8328.
(2) The carry
forward of any unallocated portion of the state ceiling may be for any purpose
authorized by
26
U.S.C. sec.
146(f).
(3) The committee shall issue a confirmation
of the notice and election to carry forward, using the "Confirmation of Carry
Forward Allocation of State Ceiling" form.
(4) The committee may, but shall not be
required to, allocate a carry forward notice or election filed after December
15th.
Section 11. The
committee shall not confirm a notice of intent after the aggregate amount of
bond confirmations, including carry forwards, have reached the state ceiling
for that year.
Section 12. Form and
Manner.
(1) The committee and issuer shall
use the notice and confirmation forms incorporated by reference in Section 15
of this administrative regulation.
(2) An issuer of a local project or energy
efficiency project shall not:
(a) File a
notice of intent unless the issuance will be made within the ninety (90) day
confirmation period established in Section 7 of this administrative regulation;
or
(b) Seek an allocation of the
state ceiling in excess of the amount necessary to finance all costs of a local
project.
(3) An issuer
of a state project shall not:
(a) File a
notice of intent unless the issuance will be made by December 15; or
(b) Seek allocation of the state ceiling in
excess of the amount necessary to finance all costs of a state
project.
Section
13. Delegation of Functions. The committee shall review and
allocate all requests for state ceiling. The committee shall not delegate
authority to make allocations of the state ceiling to staff except if there are
surplus or carry forward allocations. Any delegation of authority and the limit
of that authority shall be recorded verbatim in the minutes of the committee
meeting at which the delegation is made.
Section
14. Volume Cap Allocations under ARRA.
(1) If federal regulations allocate volume
cap directly to the Commonwealth or allow for transfer or waiver of any direct
volume cap allocation to a local government back to the Commonwealth, the
committee shall:
(a) Accept any notice of
waiver of volume cap as authorized by the local governing body on behalf of the
Commonwealth;
(b) Accept
applications of eligible volume cap recipients consistent with federal
regulation; and
(c) Rank each
application and allocate volume cap based upon:
1. Any federally mandated standards and
objectives; and
2. Expected value
to the Commonwealth.
(2) Notice of Issuance. The issuer shall
deliver to the committee a notice that the affected bonds have been issued
within the time constraints established in the applicable federal regulation,
if any.
Section 15.
Incorporation by Reference.
(1) The following
material is incorporated by reference:
(a)
"Notice of Intent" application, December 2014;
(b) "Confirmation of Allocation of State
Ceiling", March 1998;
(c)
"Confirmation of Carry-forward Allocation of State Ceiling", March
1998;
(d) "Notice of Issuance",
March 1998; and
(e) "U.S. Treasury
Department Form 8328".
(2) This material may be inspected, copied,
or obtained, subject to applicable copyright law, at the Office of Financial
Management, 76 Capitol Annex, Frankfort, Kentucky 40601, Monday through Friday,
8 a.m. to 4:30 p.m.
STATUTORY AUTHORITY:
KRS
103.286(3),
26
U.S.C. 146