Red River Gorge resort revived? KY bill could apply larger tax incentive to project
A tax incentive bill introduced and passed swiftly by the Kentucky House on Tuesday would make a potential development in the Red River Gorge area more lucrative for investors.
A development proposal to build a large resort in the popular climbing and hiking destination, which made headlines for years as it was first floated more than six years ago, was not explicitly mentioned in the text of the new House Bill 775.
However, the bill, which was entirely revamped during a committee meeting Tuesday morning, would provide a significant sales tax-based incentive to a project that meets very specific criteria. Those criteria happen to match up with the 800-plus acre project located near Slade in Powell County as it was most recently presented a few years ago.
To be eligible for the incentive, the “lodging facility” project must be built in a low-population, relatively high unemployment county. It must be located in a county within a half-mile of a state resort park in a designated National Forest. It must create at least 50 full-time jobs, include an investment of at least $100 million and house at least 100 guests, among other things.
House Speaker David Osborne, R-Prospect, said on Tuesday that a Red River Gorge project “could potentially fit” in the category prescribed by the bill.
“(The bill language) can apply to multiple things,” he said. “I do know that there’s one that has been proposed over in that area that could potentially fit in that category, but it’s not limited to those.”
It’s unclear if anything has changed with the previous plans to build the resort on the large tract of land purchased four years ago for $2.25 million.
When the subject was first broached, proponents framed the project as a major economic boon to an Eastern Kentucky region that has been flagging in recent years.
Some opponents like the organization Red River Gorge United said it would threaten the character of the area, raise costs for existing residents and overburden the already-busy roads, hiking trails and climbing routes.
The nonprofit group Red River Economic Development, which led the charge in creating the initial plans for the resort and pushing for the project, still exists and most recently filed its organization paperwork with the Kentucky Secretary of State’s Office last month.
It consists of three area county judge-executives — Steve Mays in Lee County, Eddie Barnes in Powell County and Rick Stiltner in Menifee County — as well as a number of prominent area business executives. Its website, redriverky.com, is no longer active.
The group is chaired by former Kentucky Chamber of Commerce CEO Dave Adkisson, who owns the building listed as the principal office. Adkisson did not return calls from the Herald-Leader on the project, stating via text that he was “not in a position to comment.”
Barnes, the Powell County leader, told the Herald-Leader he had not heard of any recent movement on the project.
He said he sympathizes with both supporting and opposing groups on the project. Barnes added that he shares concerns about the proliferation of capital — a flood of vacation rentals have cropped up in recent years — making it harder for current residents to pay taxes. However, he ultimately supports the investment if its coming.
“If so, I’m excited about it,” Barnes said. “It would be a big boost to our economy here in Powell County.”
The sales tax-based incentive, per the bill, would last 20 years. The incentive cannot exceed whichever is lesser between the total sales tax liability of the project or up to 50% of “approved costs” via an agreement between the state and the developer; such agreements usually allow developers to recoup the cost of building the project.
The specific incentive written into House Bill 775 appears to be somewhat more expansive than the normal incentive granted under the Kentucky Tourism Development Act. That act currently allows projects to “recover up to 25 percent of approved development costs over a 10-year term through the recovery of incremental sales tax generated by the project.”
The incentive as written by House Bill 775 would double both the timeline of the incentive as well as the percentage of potentially covered costs.
In a story posted last year, radio station WEKU wrote that the general manager of Miguel’s Pizza and Rock Climbing Shop — a prominent business staple in the area — believes the creation of a destination resort is “a question of when and not if.”
The specific incentive that could apply to a Red River Gorge resort could also apply to a similar facility near Kentucky Lake or Lake Barkley in West Kentucky.
The wording of the bill extends the tax benefit to projects “adjacent to or includ(ing) a portion of parallel reservoirs of water surrounding a national recreation area.” That would appear to be aimed at the area surrounding the Land Between the Lakes National Recreation Area.
