Request By:
Honorable Donald W. Webb
Webb and Webb
267 West Vine Street
Court Plaza
Lexington, KY 40507
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas C. Jacobs, Deputy Attorney General
As counsel to the Kentucky Industrial Development Finance Authority (KIDFA), a statutory body created by the Kentucky Revised Statutes Chapter 154, you have requested of this office an interpretation of KRS 154.125.
You have stated that KIDFA has received a loan application for a co-participation loan with the Business Development Corporation (BDC) for a loan to purchase and develop a privately owned industrial subdivision or industrial park. In actuality the applicant has indicated that this will be a "partnership financing project" between private financing sources and the Business Development Corporation of Kentucky and KIDFA. The industrial park would include a facility for "energy production" utilizing the conversion of Kentucky coal and would include an industrial building designed to attract new jobs quickly for companies that could not wait for construction periods, and the balance of the industrial subdivision project would be available for any type of new industry or jobs.
KRS 154.125 requires in summary that in order to be eligible for a KIDFA/BDC loan (a) the project must be one which will accomplish the public purpose described in KRS 154.105; (b) that the security given to the authority shall be at least equal to the security given to BDC, (whether it be a co-first or a co-second mortgage) ; (c) that the amount loaned by KIDFA shall not exceed forty (40%) percent of the project; and, (d) that a minimum of ten (10%) percent of the total project cost must be provided by the applicant.
In your opinion it is obvious that this application meets the public purpose requirements of KRS 154.125(a) and since KIDFA and BDC would jointly hold either a "co-first mortgage" or a "co-second mortgage" the requirements of KRS 154.125(b) would likewise be met. The amount of the loan requested from KIDFA does not exceed the forty (40%) percent of the total estimated project cost and thus the requirements of subsection (c) of KRS 154.125 are met. Further the applicant offers to provide at least ten (10%) percent of the project cost in accordance with requirements of KRS 154.125(d).
We have examined the proposed project in light of the requirements of KRS 154.125 et seq. and concur in your opinion that KIDFA can participate in this loan.
If further information or assistance from this office is needed, please feel free to request same at your convenience.