The sixth meeting of the Interim Joint Committee on Economic Development and Tourism was held on Thursday, October 21, 1999, at 1:00 PM, in Room 149 of the Capitol Annex. Representative Tom Kerr, Co-Chair, called the meeting to order, and the secretary called the roll.

Present were:

Members: Senator Glenn Freeman, Co-Chair. Senators Dick Adams, Walter Blevins, Charlie Borders, Vernie McGaha, Dick Roeding, and Katie Stine. Representative Tom Kerr, Co-Chair. Representatives Royce Adams, Scott, Hoby Anderson, Bo Ausmus, Eddie Ballard, Carolyn Belcher, John Bowling, Kevin Bratcher, Buddy Buckingham, Philip Childers, Perry Clark, Howard Cornett, Joseph Fischer, Danny Ford, Gippy Graham, Gross Lindsay, Thomas McKee, Ruth Ann Palumbo, Marie Rader, Chris Ratliff, Tom Riner, Gary Tapp, Jim Thompson, Johnnie Turner, Ken Upchurch, Charles Walton, Mike Weaver, and Robin Webb.

LRC Staff: Mary Yaeger, John Buckner, Mary Scott Lee, and Ellen Steinberg.

A motion was made and seconded to approve the minutes of the September 16, 1999 meeting.

Representative Palumbo submitted the final report on the Subcommittee on Small Business Regulation as required by 1998 HB 780, for approval by the Interim Committee. Upon motion by Senator Blevins, seconded by Representative Cornett, the report was accepted by voice vote.

Next on the agenda was a presentation by Secretary Ann Latta, Tourism Development Cabinet, on BR 528- An Act Relating to Reorganization, sponsored by Senator Ed Worley. Secretary Latta explained that the 1998 legislature appropriated $6 million to construct a state-wide artisan center near Berea for the purpose of promoting Economic Development, Education and Tourism. She said the facility will be built off of Interstate Highway 75 and will include retail vendors and an education center. She stated that the center will become a state-wide icon for Kentucky's nationally known arts and crafts products.

A motion was made by Representative Ford and seconded by Representative Bowling for the Committee to approve BR 528 as prefiled with a recommendation for passage by the Interim Joint Committee. Upon a roll call vote of 33 yeas, 0 nays, and 0 passes, the motion was approved.

Next, Senator Adams explained BR 327-An Act Relating to Economic Development. The bill is an expansion of the Kentucky Rural Economic Development Act (KREDA) certification for those counties that are decertified to allow project benefits for two years instead of one. He stated that now once a county loses its KREDA certification there is a one year grace period. Certain counties are competing for industry with counties that receive Enterprise Zone benefits. These enterprise zone areas will not lose their certification until the years 2004, 2006, or 2008. The 58 counties that qualify for KREDA certification will continue to compete against those Enterprise Zones for at least four to five more years. Senator Adams stated that this bill does not expand the treatment that the KREDA counties receive, but it protracts the period that they would be able to provide the KREDA economic incentives for one year.

Representative Buckingham asked if there were other KREDA counties that would be affected by the bill. Senator Adams said that all KREDA counties would be affected.

Upon motion of Senator Adams, seconded by Representative Ballard, BR 327 was approved for prefiling by the Committee on a roll call vote of 33 yeas, 0 nays, 0 pass.

The next item on the agenda was the acceptance of the final report of the Special Task Force on Fishtrap Lake. Representative Ratliff said that the Task Force was a result of a resolution he filed during the 1998 session of the General Assembly. He stated that they studied the feasibility of Fish Trap Lake being designated as a state park. They also looked at a number of different development plans that were proposed over the years. The Task Force decided to use existing proposals with cost estimates and testimony presented to the Task Force as the basis for identifying a priority list of recreational facility designs. The Lake area would not be immediately suitable for a state park designation but it would not preclude future state park designation.

Upon motion by Representative Cornett, seconded by Representative McKee, the Report of the Special Task Force on Fishtrap Lake was accepted by voice vote.

Jim Roberts, Deputy Commissioner, Department of Vehicle Regulation, gave a response to the study relating on Off-Premise Advertising Devices Adjacent to Federal Interstate Highways, Mandated by 1998 HCR 119.

Mr. Roberts said the staff that administers the sign program spent many hours reviewing the study. Those reviewing the study thought that the study omitted material and contained inaccuracies in the discussion of several issues. Instead of providing the Committee with the mark up of the study, he said they felt that an appropriate alternative would be to review their policy on highway signs and provide the Committee with recent actions taken by the Transportation Cabinet.

Mr. Roberts said that the policy statement on highway signs should read: "Kentucky Transportation Cabinet is responsible for the administration of the highway signage program which complies with the Highway Beautification Act; honors the historical commitments of the Bonus Agreement, and working within these guidelines, erects signs that will assist the traveling public, by promotion and support of business activity within this state." He said the policy statement is based on federal and state statutes, federal and state regulations, federal administrative interpretation and federal and state court decisions. In addition, he said this issue is under constant scrutiny by federal administrative agencies and private sector interests, Congress and the Kentucky General Assembly. He said if a change in policy direction is to occur, they believe that as a minimum the physical integrity of the road fund should not be compromised.

Mr. Roberts said that at today's meeting the Transportation Cabinet would like to focus on sign activities by the Cabinet. He stated that in 1992 a Task Force appointed by the Governor made the following request for action which was thought to be improvements to the signing policy. Those actions included the following: expansion and privatization of the existing logo system, use of tourist oriented directional signs, adoption of a fifth logo for tourist attractions, and creation of an interagency advisory group between the Tourism and Transportation Cabinet to promote collaboration on issues which affect the tourism industry. Mr. Roberts stated that all of the action items of this group which were assigned to the Transportation Cabinet have been implemented.

Mr. Roberts stated that the Kentucky Transportation Cabinet has been a leader in the development of the logo program. Coupled with the logo program, the Cabinet has been in front of most states with programs for tourism oriented directional signs, the fifth logo which promotes tourism activities and the implementation of cultural and recreational signs. In addition, the Tourism Cabinet will announce at a Tourism conference this week a new type of sign, which is called the post interchange sign.

The next speaker was Mike Helton, Government Affairs Representative, Outdoor Advertising Association of Kentucky. He stated that the Association believes that the study accurately reflects and addresses the mandate of HCR 119. His Association believes the study erases some of the confusion and myths surrounding several of the billboard issues that have been considered by the General Assembly in recent years. Mr. Helton said that the study shows that, and industry data confirms, the vast majority of billboard messages are tourist and travel related and not tobacco and alcohol related. The data also shows that 66% of local advertisers in rural areas are travel and tourism businesses. He said the study found, and they agree, that the application of agreements between state and federal government is sometimes vague, as well as more restrictive than most other states including many of the surrounding states. The current regulations pertaining to outdoor advertising are more restrictive than what is required by federal law. He said they also agree with findings that the impact on tourism is felt most in areas where the need is the greatest: in rural areas, among small tourist attractions and businesses.

He stated that while the study includes no formal recommendations, it does have conclusions and suggestions that the Association would like to address. The study suggests that the General Assembly consider a statutory definition of commercial and industrial areas, one that is less confusing and more reasonable than what is currently in the regulation. He said they agree not only with this proposed change, but believe that other provisions of the regulations appear to be more stringent than current federal rules are in surrounding states. The use of the unzoned area definition is used only in those areas where there is no comprehensive zoning regulations in place and Kentucky's definition of ten businesses within 1620 feet is one of the most stringent of any state in the country that has provisions for unzoned areas. He said they would like to see definitions more consistent with the surrounding states. He also said they would like to see the billboard regulations more consistent with what is allowed under the Federal Highway Beautification Act and they have been working with the Cabinet on maintenance regulations that the Association addressed, but were not passed in the last legislative session. Mr. Helton said that vegetation control, which was not addressed in the study, is a major concern.

Representative Lindsay asked Mr. Helton if it was the desire of the Association to change the law so there can be billboards on interstates where they are not allowed now. Mr. Helton said they would like to see a little less stringent definition of unzoned commercial and industrial areas. The current state law requires ten businesses within a 1620 foot area to be defined as an unzoned commercial area. In many rural areas this has the impact of prohibiting any signage at those locations. He said many of the surrounding states, which are also bonus states, require one business within 800 ft.

Representative Lindsay asked if the law was changed, if that would over-rule any local counties zoning as to signs. Mr. Helton said the proposed legislation by some tourism groups during the last session provided for local option within county jurisdictions.

Representative McKee said he hoped that the issue of trimming trees and vegetation would be solved. Mr. Helton said in the 1998 session they proposed a permitting system that the Cabinet develop a definition of vegetation. He said they proposed that a vegetation control program be reinstated, and that a permitting system be developed. Representative McKee said he would like to see that worked out because it was a very controversial part of the 1998 bill.

Upon motion by Senator Freeman, seconded by Senator Roeding the Study relating to Office-Premise Advertising Devices Adjacent to Federal Interstate Highways, was accepted by voice vote.

Next, Mark Cassis, President, Kentucky Speedway gave a presentation. Mr. Cassis said that NASCAR racing is the biggest sport in the country. He stated that Kentucky Speedway is working on their schedule for the year 2000 and it will be opening in June of 2000. Phase I will have 65,000 grandstand seats, and 50 luxury suites. Forty-four of the 50 luxury suites are sold for the next three years.

Mr. Cassis stated that they are building a 4,000 sq. ft. conference center that will hold 250 people for luncheon banquets, and it will also have a stock car driving school and will hold concerts and festivals.

Representative Ballard asked what the projected attendance was for the speedway. Mr. Cassis said their annual projected attendance on the events already scheduled will be around 400,000 - 500,000. Depending on the events scheduled, there could be an attendance of over a million a year. Representative Ballard asked how many of the tourists stay over night. Mr. Cassis said it would depend on the race. He said as they start to expand, the hotels in Northern Kentucky and in Cincinnati will become full.

Representative Walton asked what type of economic impact this will have on Gallatin County. He asked if there were any projections as to the number of jobs and the number of people available to work. Mr. Cassis said that the NASCAR Winston Cup Series has the impact of the Superbowl. He said the revenue generated from the series on Sundays is $60 to $70 million. He said at the Gallatin County site there will be thirty to forty full-time jobs and employment will escalate to 70 or 75, and during the weekend when they hold races there could be up to 500 part time employees.

Representative Fisher presented BR 280-An Act Relating to Revenue and Taxation. Representative Fisher reviewed for the committee the reason for asking for the tax credit in BR 280. He said they tried to fill a void in economic development incentive programs found in KRS Chapter 154. He said that one of the problems that firms in Northern Kentucky have found with the existing programs is that they are tied directly to the creation of new jobs, and in Northern Kentucky they are facing a shortage of workers.

Representative Fisher said that BR 280 parallels the earlier federal investment tax credit. It provides a direct business investment tax credit for firms that purchase qualified property or structures, and are not otherwise eligible for incentives under Chapter 154. He said that often capital expenditures are needed to improve productivity, and are needed to remain competitive. The bill provides a credit against personal and corporate income taxes and against the corporate license tax equal to 8% of the cost of the investment. Representative Fisher explained that qualified property is defined as new machinery used in manufacturing, agriculture, horticulture, or breeding stock. If a taxpayer disposes or fails to continue to use this property in the state anytime within four years, there are penalty provisions that require repayment of the credit. To assist the businesses in economically distressed counties with unemployment rates exceeding 200% in the most recent five consecutive calendar years, the credit has been extended to a 12% credit.

Representative Lindsay asked about the fiscal impact of the bill. Senator Roeding said there should not be a fiscal impact because the credit is to offset new income that comes in.

Upon motion by Senator Roeding, seconded by Representative Tapp, BR 280 was accepted by the committee for prefiling on a roll call vote of 26 yeas, 0 nays, 0 passes.

Being no further business before the Committee, the meeting adjourned.