The first meeting of the Interim Joint Committee on Local Government was held on Thursday, June 19, 2003, at 8:30 AM, in the University Ballroom at Northern Kentucky University in Highland Heights, Kentucky. Senator Albert Robinson, Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Albert Robinson, Co-Chair; Representative Steve Riggs, Co-Chair; Senators Walter Blevins, Tom Buford, Julie Denton, Ernie Harris, and Alice Kerr; Representatives Adrian Arnold, Jim Callahan, James Comer, Ron Crimm, Mike Denham, Jimmy Higdon, Charlie Hoffman, Stan Lee, Reginald Meeks, Arnold Simpson, Roger Thomas, Ken Upchurch, and Jim Wayne.
Guests: Senator David Williams; Senator Paul Herron; Representative Larry Clark; Joe Wynd, Northern Kentucky University; Peter Klear and Robert Horine, Campbell County Planning and Zoning Commission; Ella Frye and Laura Litkenhaus, Covington Economic Development Office; Annette Dupont-Ewing, Greater Louisville, Inc.; Phyllis Bruning, Kentucky Enterprise Zone Program, Economic Development Cabinet; Jack Couch, Kentucky Council of Area Development Districts; Jonathon Britt, Grant County Planning Commission; Bert May, Kentucky League of Cities; Greg Jarns and Joe Meyer, City of Covington; John Mays, Northern Kentucky Area Development District, Bonnie Brinly, Department of Education; and Steve Stevens, Northern Kentucky Chamber of Commerce.
LRC Staff: Jamie Franklin, Donna Gaines, Mark Mitchell, Joe Pinczewski-Lee, Gerri Grigsby, and Susan Straub.
Senator Robinson began the meeting by asking Committee members to introduce themselves. He then turned the meeting over to Representative Riggs. Representative Riggs introduced staff. He next recognized Mr. Joe Wynd, with Northern Kentucky University, who welcomed the Committee to the University.
Representative Riggs first told members that included in their folders was a list of topics and issues remaining from the 2003 legislative session. He then announced that the purpose of this meeting was to discuss the status of the Kentucky Enterprise Zone Program, the effect of program “shutdown” on program participants and initial discussion regarding possible alternatives. Representative Riggs stated that several speakers had been invited to address the Committee. He told the speakers that the Committee would like to know why the Enterprise Zone Program has been valuable, the reason to save the program, and possible alternative incentives to help businesses grow in the most distressed areas.
The first speaker was Ms. Annette DuPont-Ewing with Greater Louisville, Inc. Ms. DuPont-Ewing told the Committee that enterprise zones were job creation and business retention tools for economic growth in blighted areas. She noted that the Louisville Enterprise Zone was not only the largest zone in the state, but also the nation. Since the zone’s inception in 1983, she said 2,400 Louisville businesses have participated in the program. The Louisville Enterprise Zone had a business investment of $287.9 million by the 88 businesses certified by the program in fiscal year 2002. Ms. DuPont-Ewing stated that when Louisville wins, the whole state wins. She said Greater Louisville, Inc. is convinced that the enterprise zone program needs saving. Ms. DuPont-Ewing quoted a 2002 study by tax consultants Deloitte and Touche that said it would be poor economic policy for Kentucky to remove the tax benefits provided by the enterprise zone program. She also referred to a state fiscal note that says the enterprise zone program is beneficial. Ms. DuPont-Ewing requested a ten-year extension of the program and encouraged the legislature to continue to fund the program with tax dollars. She said now is not the time to take your foot off the accelerator. Now is the time to put the accelerator all the way down to the floor.
Mr. Peter Klear, with the Campbell County Planning and Zoning Commission, was the next speaker. Mr. Klear told the Committee that the Campbell County Enterprise Zone expires in 2006. He noted that the enterprise zone represents the core of the economic sector of jobs, and is expected to create at least 187 jobs this fiscal year. Mr. Klear said the enterprise zone did not create successful shopping and dining centers like the Newport on the Levee entertainment complex on the Ohio River, but has contributed to secondary and tertiary industries associated with these developments. He stated that this is investment that would not otherwise occur. Mr. Klear pointed out that the housing market in his community has strengthened because of the enterprise zone. He noted that small businesses are the ones utilizing the zones now and would not be there if not for the incentives in the enterprise zone.
The next speaker was Ms. Ella Frye with the Covington Economic Development Office. Ms. Frye told the Committee that the Covington Enterprise Zone was created in 1984 and will expire December 31, 2004. She noted that the enterprise zone was not city-wide but two-thirds of the city. Ms. Frye stated that the enterprise zone was responsible for development in the distressed areas to increase employment and to help the quality of life. She pointed out two key components of an enterprise zone: 1) investors seeking incentives and must make an investment; and 2) physical benefits, such as Roebling Row in Covington, which contains one and two bedroom apartments in a four-story, all masonry, rowhouse-style building that are sensitive to the surrounding historic neighborhood. Ms. Frye said that the enterprise zone program needs improving and modifying, but does not need to be eliminated. Regarding the economical impact of enterprise zones, she stated that new tax dollars get invested back in two to three years, and that 25% of employees are local residents. As far as criticisms of the program, Ms. Frye said there needs to be closer monitoring of the businesses and more monitoring to make sure there is focus on the correct census tracks. She noted that there have been allegations of abuse of the program in that the zones are not targeting distressed areas anymore.
Representative Riggs stated that he wanted to hear how to solve the problems. He said there needs to be solutions to these criticisms. Concerned that expiration of a Kentucky program designed to draw business and jobs to low-income communities would hamper the state’s economic progress, Representative Riggs stated that he fully supports continuation of the Kentucky Enterprise Zone Program. Representatives Riggs stressed that if we just let this die on the vine, we are not going to be competitive with other states.
Senator Robinson commented that in the past, he has supported the enterprise zone program. He noted that the City of London needs jobs but Laurel County was left out and penalized for prospering. He emphasized that we also need to look at ways to help other communities in addition to the original ten enterprise zones.
Senator Harris commented that the brownfields development is being stalled due to restrictions of the Economic Development Cabinet. He noted that the redevelopment of brownfields should be a big boom to many communities by providing good developable properties within urban services areas.
Ms. Phyllis Bruning, Director of the Kentucky Enterprise Zone Program, told the Committee that it is a monitoring nightmare to know boundaries of a particular zone. She noted that abuse of the tax exemption is really just a lack of knowledge. Referring to the annual report of the program, Ms. Bruning stated that a new report will be ready on October 1st.
Ms. Frye told the Committee that those areas that are left out are at a disadvantage, but distressed areas should be targeted for enterprise zones. She noted that Ohio enterprise zones do not expire but some require yearly re-certification. Ms. Frye suggested that we need to look at other states to see what they have.
Representative Crimm commented that it is important to know the effects of the enterprise zone program not just on Covington, Louisville, etc. but the whole Commonwealth. He said we need to also be looking at legislation to reach all communities.
Senator Buford asked if names and addresses of companies located in and utilizing the benefits of the zone and the amount of tax incentives they have received could be obtained. He added that proof is needed to support keeping the enterprise zone program.
Representative Wayne commented that it is important to keep in mind that the original purpose of the law was to improve the lifestyle in blighted areas. He also said we need to be shown proof that the program has and continues to serve this purpose.
There being no further business the meeting was adjourned at 9:45 a.m.