Request By:
Mr. William S. O'Daniel
Commissioner
Department for Local Government
909 Leawood Drive
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Charles W. Runyan, Assistant Deputy Attorney General
Your questions relate to the coal severance economic aid fund [KRS 42.332] and the area development fund [KRS 42.355] designed to finance various enumerated capital projects on a local level.
The Department for Local Government is required to examine and approve such proposed projects under the above cited statutes.
Under subsection (4) of the above statutes the Secretary of the Department of Finance is authorized to make direct grants out of the fund to any beneficiary agency for the construction or acquisition of any approved capital project, the estimated cost of which does not exceed $50,000. The secretary, after consultation with you, may make direct grants to beneficiary agencies in amounts greater than $50,000, provided the grant does not exceed one-third (1/3) of the total cost of the proposed capital project.
As a part of the review and approval process, the Department for Local Government has required applicants to furnish to it certain information on a "check list" you have prepared.
Your question is what information must be furnished to the Department for Local Government by such applicants in those cases involving direct grants?
Since the review checklist contains approximately 49 items, we will answer this question only in terms of the basic categories of review interest.
We concluded in OAG 79-182 that where a direct grant in aid is made, the Department of Finance is not required to approve a title report, appraisal and survey on acquisition of real property. Further, we were of the opinion that the general provisions relating to budget and financial administration and land acquisition controls, as set forth in KRS Chapters 45 and 56, must give way to the specific provisions of KRS 42.332(3) and 42.355(3). This simply means that in direct grant cases the beneficiary agency must accept the responsibility for observing the various and applicable statutory principles contained in KRS Chapters 45 and 56.
This leaves us finally with the question: What does the applicant need to tell you in order that your department can effect its review and recommendation for approval of the secretary?
The checklist furnished by the applicant should at least address these major areas: (1) Detailed description of an eligible project; (2) Adequate identity of applicant as a qualifying beneficiary agency; (3) Detailed statement of the public purpose and public benefit to be derived from the project; (4) If available, designs, plans, specifications and estimates of cost for the proposed project; (5) A statement of the sources and amount of funds available from any other source for construction, acquisition or commencement of the project; (6) A showing that the beneficiary agency will be reasonably able to finance the operation of and maintain the capital project during its estimated useful life; (7) An assurance that the Commonwealth, a political subdivision of the Commonwealth, or beneficiary agency has a good and marketable title to the land in question, free of encumbrances, or that the beneficiary agency of the project has the right to uninterrupted and peaceful enjoyment, use, occupancy and possession for a period longer than the estimated useful life of the capital project [of course there may be construction or renovation of public buildings on land with an existing encumbrance to secure payment of funds obtained from the acquisition or improvement of said land]; (8) The written assurances of the beneficiary agency guaranteeing that, during its estimated useful life, the capital project shall be operated and maintained for public purposes and pledging that no mortgage or other encumbrances shall be placed against any capital project wholly financed out of the fund, except industrial development projects etc. [Similar assurances shall be executed and delivered to the Commonwealth by the beneficiary agencies of capital projects financed in part out of one of these funds. See KRS 42.332(5) for exceptions]; and (9) A copy of the Interlocal Cooperation agreement [KRS 65.210 et seq.] if involved in the project. See KRS 42.330(6), 42.332(1), and 200 KAR 4:020, Section 4.
Of course, pursuant to KRS 42.330, the coal severance economic board is required, inter alia, to submit to the Finance Department, in connection with each project selected, a description of the project, a program statement [includes location of project, a plat or map, acreage involved, names of present owners etc.] and designation of a beneficiary agency to accept conveyance of the capital project after completion. 200 KAR 4:020, Section 3.
In determining what the applicant must show in his application, we must simply be guided by the expressed policy and purpose of the statutes.