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Industrial Revenue Bonds

Within Arkansas, companies involved in manufacturing, processing, warehousing, distribution or other related activities will find several different ways to meet capital requirements. Some alternatives can provide 100 percent financing on an industrial project. As an example, companies which build or expand facilities in Arkansas can utilize tax-free industrial revenue bonds. Municipalities and counties are authorized to issue both revenue and general obligation bonds. A single industrial project may utilize both types of bonds and may retire either type first.

Several types of industrial revenue bonds may be issued:
Sources of information about financing programs in Arkansas include:

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 have 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 Department of Economic Development 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.

Taxable Revenue Bonds

Taxable bonds may be issued by the company backed by the collateral of the project and the corporate guaranty of the company. 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.

General Obligation Bonds

Cities and counties may issue general obligation bonds to finance land, building 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.

Pollution Control Bonds

Environmental controls in Arkansas are administered by the Department of Pollution Control and Ecology. To assist industries in financing pollution control measures, 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 Arkansas Department of Pollution Control and Ecology at (501) 562-7444.

Sources of Information about Financing Programs in Arkansas

The Arkansas Department of Economic Development works with industries to provide them with information about financing programs and is involved in bond guaranty programs. The Arkansas Department of Economic Development may be contacted at (501) 682-1121.

The 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 the Arkansas Department of Economic Development on the bond guarantee to earn a getter rating on the bonds. Contact:

Derek Rose
P. O. Box 8023
100 Main Street, Suite 200
Little Rock, AR 72203
Phone: (501) 682-5904

The Arkansas Capital Corporation is a non-profit financial institution developed by the State of Arkansas that provides a channel for financing industrial projects in cooperation with commercial banks, institutional investors, and federal and state agencies. Contact:

Sam Walls, Executive Vice President
225 S. Pulaski
Little Rock, AR 72201
Phone: (501) 374-9247

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. Contact ASTA at (501) 324-9006.