Northern Kentucky's Poised for New Incentives

Only months since it became law, the economic impact of "Incentives for a New Kentucky" (INK) legislation enacted in late June have been realized largely downstate -- until now.  Northern Kentucky is on the verge of  a rush of qualified projects for Kentucky's new incentives, state officials say. 

"From our perspective, Northern Kentucky is one of the 'hotspots' — one of the top areas of the state that will capitalize the most with the new incentive package," said Jim Navolio, commissioner of the Kentucky Cabinet for Economic Development's (CED) business development department. "Right now, we're working with a lot of companies in Northern Kentucky. We have people from Frankfort up there at least two to three times a week, helping companies participate in the incentive programs."

Championed by Gov. Steve Beshear, the majority of INK was originally approved by both chambers of the General Assembly at its regular session after months of consultation. It failed to move forward before the body adjourned, but later returned and was passed during the General Assembly's Extraordinary Session in June. The law consolidates four previous incentive programs into a single, more flexible program for extending a hand to both new businesses and Kentucky's existing companies. It was the first re-working of the commonwealth's incentive packages since the early 1990s.
 
New incentives ultimately approved by the Kentucky Economic Development Finance Authority range from aiding capital investment for companies in order to remain competitive to sales and use tax refunds for firms upgrading computer systems and electronic processing systems.
 
"The biggest change was the Kentucky Reinvestment Act," Navolio claimed, "because, for the first time, it allowed us to help companies who are realizing that they need to make investments that don't necessarily lead to new jobs. Before, if it wasn't going to create jobs, we couldn't do anything for them. We have companies in Kentucky and across the nation that, because of the economy they are in survival mode. Now we can offer them help."
 

Because of confidentiality requirements, INK success stories such as Lightyear Network Solution's $4.3 million, 148-job expansion in Louisville, have been slowly trickling out. With a number of firms completing the vetting process with the cabinet in the coming weeks, the state will be open to announce approved incentives and that trickle will soon become a torrent, Navolio said.

Northern Kentucky will likely be at the forefront.
 
"The area hasn't heard much about these programs, but if you were to talk to us in another 90 days, it'll be a much different story," Navolio added, hinting that one pending announcement, should it be approved, could be one of INK's largest success stories. 
 
An early example of INK's effectiveness can be found in Wolf Steel USA, a Crittenden-based manufacturing firm that produces stoves, fireplaces and related parts sold under the Napoleon Quality Fireplaces brand name, made news last month as the first company in the state to have its incentive agreement with the state approved. Kentucky granted tax incentives nearing $360,000 for a planned expansion of the Wolf Steel factory and warehouse plant that will add more than 72,000 square feet to the facility and, ultimately, an additional 18 jobs. The 10-year agreement calls for corporate income tax credits and wage assessments for the company.
 
Dave Combs, Wolf Steel's manufacturing coordinator, said the new incentives were crucial to the firm's expansion decision. The company considered expanding in 2007, but in the end shied away after not finding enough support from the state and private development groups.
 
After previously getting far along in the process "we got cold feet and figured it wasn't the right time. We had already started looking at it again by the time these new incentives passed, but the fact that we were able to get more support from the state was a huge factor in deciding to go ahead with the expansion," Combs said.
 
In all, according to KCED, the company's expansion will result in a $3.2 million capital investment in the state's economy.
 
"I think if companies are thinking about expanding, whether it's something our size or larger, it's worth their time to sit down with the people from (KCED) and go through the process," Combs said. "It was certainly worth it for us and, hopefully, it will turn out to be worth it to our community."
 
In time, the state may even go further in looking to bring new business to Kentucky and keeping in-state business healthy, KCED officials said. The cabinet, which brought more than $1.7 billion in new business investment and 7,750 new jobs in 2008, is determined to monitor the economic atmosphere and adjust aid when needed, said Donna Duncan, the cabinet's Department of Financial Incentives commissioner.
 
"It will be a continuing process, with feedback from businesses, area economic developers and legislators to make sure that we're as competitive as we need to be to keep businesses coming to Kentucky," she said.

Sources: 

Sources: Jim Navolio, Commissioner, Department of Business Development, Kentucky Cabinet of Economic Development; Donna Duncan, Commissioner, Department of Financial Incentives, Kentucky Cabinet of Economic Development; Dave Combs, Manufacturing Coordinator, Wolf Steel USA, Inc.