Request By:
Donald W. Webb, Esq.
267 West Vine Street
Court Plaza
Lexington, Kentucky 40507
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising a question involving KRS 154.001 to 154.170, the Kentucky Industrial Development Finance Authority, hereafter referred to as K.I.D.F.A. An inquiry has been made as to K.I.D.F.A. participating with the Business Development Corporation and several private financial institutions in an undertaking to loan money to refurbish a privately owned hotel in downtown Louisville.
The board of K.I.D.F.A. has asked you to seek an opinion concerning the interpretation of KRS Chapter 154 and, more specifically, the limitation as to the type of business for which K.I.D.F.A. may make a loan in participation with the Business Development Corporation and whether the revitalization of a privately owned hotel would be a proper loan under the Industrial Development Finance Act.
Reference is made to KRS 154.125 which states in part that K.I.D.F.A. may lend money to any applicant on a coparticipation basis with a Business Development Corporation established pursuant to KRS Chapter 155 provided K.I.D.F.A. has determined that the project for which the loan is made has accomplished or will accomplish the public purpose of this chapter.
KRS 154.005 sets forth the purpose of the chapter:
"It is the purpose of this chapter to promote the health, safety, morals, right to gainful employment, business opportunities and general welfare of the inhabitants of the Commonwealth by the creation of a body corporate and politic to be known as the 'industrial development finance authority' which shall exist and operate for the public purpose of alleviating unemployment and furthering the utilization of natural and man-made resources by the promotion and development of industrial and manufacturing enterprises in local communities of the Commonwealth. Such purposes are hereby declared to be public purposes for which public money must be spent."
In
Industrial Development Authority v. Eastern Kentucky Regional Planning Commission, Ky., 332 S.W.2d 274 (1960), the Court said that the central aim of the Act is to foster industrial development by attracting new industry to all parts of the state in order to reduce unemployment and to use the natural and man-made resources of the state as a whole. The Court further concluded that the Act serves a public purpose in the sense that the state as a whole will receive a benefit therefrom.
While loans to industrial building projects and subdivision projects are authorized by KRS 154.080 and 154.110, note the definitions of "industrial building project" and "industrial subdivision project" set forth in KRS 154.010(3) and (4). An "industrial building project" means any site, structure, facility or undertaking comprising or being connected with or being part of an industrial or manufacturing enterprise established or to be established by a local development agency.
On the basis of the information with which we have been furnished, it is our opinion that the Industrial Development Finance Act (KRS 154.001 to 154.170) does not authorize the K.I.D.F.A. to loan funds for the revitalization of a privately owned hotel in downtown Louisville. Such a project is not within the purpose of the Act as defined in KRS 154.005 as it does not involve the promotion and development of industrial and manufacturing enterprises in the local communities. Any loans made by the K.I.D.F.A. must be made pursuant to the statutory authority contained in KRS Chapter 154.