Industrial Revenue Bonds

Industrial revenue bonds, also known as "Act 9 Bonds" in Arkansas, provide manufacturers, distribution, and corporate headquarters with below-market financing on fixed assets.

The primary goal of this financing program is to enable companies to purchase land, buildings, and equipment to expand their operations.  The program provides long-term, tax-exempt and taxable financing for businesses expanding or locating to Arkansas.

 

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Tax Free Revenue Bonds

Commonly called Act 9 Bonds, these bonds are issued by ordinance of the city council or by order of the county quorum court after a 10-day public notice has been posted. Interest on the bonds is exempt from federal and state income taxes and usually has rates three to four points below market rates. There is no limitation on the number of projects financed or upon the amount of a particular bond issue except for certain tax-exempt restrictions imposed by the U.S. Treasury.

This Act provides for up to 100 percent financing of land, buildings, machinery and equipment. The Arkansas Industrial Development Commission is authorized to guarantee Act 9 Bonds for a five percent fee. Terms can be varied with 15 years being the most common maturity for real estate.

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Taxable Revenue Bonds

The company backed by the collateral of the project and the corporate guaranty of the company may issue taxable bonds. If the city holds title to the project on a financing lease, there will be an opportunity to negotiate the property taxes for the life of the bonds.

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General Obligation Bonds

Cities and counties may issue general obligation bonds to finance land, buildings and equipment. The local residents vote on a property tax or local sales tax to retire the bonds. The interest paid on them is tax exempt.

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Pollution Control Bonds

The Department of Pollution Control and Ecology administers environmental controls in Arkansas. To assist industries in financing pollution control, municipalities and counties may issue special obligation revenue bonds. These bonds are not a state debt and require no voter approval. The bonds can mature over a maximum of 40 years.

Arkansas’ tax structure also helps industry finance pollution control devices. Equipment and machinery used to abate air or water pollution may be purchased free of sales and use tax.

All potential water contaminant sources must apply for a permit from Department of Pollution Control and Ecology. The construction or modification of air contaminant sources also requires a permit.

Contact the Water Pollution Control Division or Air Control Division, Department of Pollution Control and Ecology, 8001 National Drive, Little Rock, Arkansas 72209.

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Arkansas Development Finance Authority

ADFA handles both tax-exempt and taxable revenue bonds. ADFA has a bond guaranty program or they can work in conjunction with AIDC on the bond guaranty to earn a better rating on the bonds.

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Other Financing Methods

Arkansas Capital Corporation

The State of Arkansas has developed a non-profit financial institution that provides a channel for financing industrial projects in cooperation with commercial banks, institutional investors, and federal and state agencies.

Arkansas Capital Development Corporation

This for-profit institution works with Arkansas Capital Corporation, forming a unique partnership that utilizes both state and private funds to provide higher risk financing.

Investment Fund

The Arkansas Science and Technology Authority (ASTA) administers a special fund to provide new and developing technology based companies with seed capital through loans, royalty agreements, and limited stock purchases.

West Central Planning and Development District

WCPDD has been designated as a Certified Development Company by the Small Business Administration (SBA). This program offers 10-20 year financing at rates near long-term U.S. Treasury rates.

State and Federal Funding

All available state and federal funding sources for which you qualify will be aggressively pursued on your behalf.

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