Arkansas Administrative Code
Agency 168 - Arkansas Economic Development Commission
Rule 168.00.01-004 - Arkansas Economic Development Incentive Act (Create Rebate)
Universal Citation: AR Admin Rules 168.00.01-004
Current through Register Vol. 49, No. 2, February 2024
I. Introduction
In highly competitive situations, the director of the Arkansas Department of Economic Development is authorized to negotiate proposals with eligible businesses considering locating a new facility or expanding an existing facility that would employ the requisite number of net new full-time permanent employees. This incentive is offered at the discretion of the Director of the Department of Economic Development and may be up to an amount equal to three and nine-tenths percent (3.9%) of the business' annual payroll for the net new full-time permanent employees. An amount up to five percent (5%) of the business' annual payroll for the new positions may be negotiated if the business locates in an area of defined high unemployment. The company being considered for this incentive must meet the eligibility requirements as well as demonstrate the competitive situation. See Arkansas Code Annotated § 15-4-1601 et. seq.
For more information please contact:
Arkansas Department of Economic Development
Business Development Section
One Capitol Mall
Little Rock, Arkansas 72201
(501) 682-7675
II. Definitions
A.
"Annual payroll"
means the wages of the net new full-time permanent employees based on the
payroll for the previous twelve (12) months reported to the Employment Security
Department and is computed by using the total of the net new full-time
permanent employees' reported taxable earnings, including overtime
pay.
B.
"Corporate or
Regional Headquarters" means the home or center of operations,
including research and development, of a national or multi-national
corporation.
C.
"Defense Industry Project" means an investment of at
least five million dollars ($5,000,000) and an increase in employment of at
least two hundred and fifty (250) full-time permanent employees by a company
which manufacturers components for the defense industry and whose unit cost
exceeds five hundred thousand dollars ($500,000).
D.
"Department"means
the Department of Economic Development.
E.
"Director" is the
director of the Department.
F.
"Distribution center" means a facility for the
reception, storage, or shipping:
1. Of a
business' own products or products which the business wholesales to retail
businesses or ships to its own retail outlets; or
2. Of products owned by other companies with
which the business has contracts for storage and shipping if seventy-five
percent (75%) of the sales revenues are from out-of-state customers;
or
3. Of products for sale to the
general public if seventy-five percent (75%) of the sales revenues are from
out-of-state customers;
G.
"Existing
employees" means those employees hired by the business prior to
the date of the signed financial incentive agreement. Existing employees may be
considered "net new full-time permanent employees" only if:
1. The position or job filled by the existing
employee was created in accordance with the signed financial agreement;
and
2. The position vacated by the
existing employee was either filled by a subsequent employee or no subsequent
employee will be hired because the business no longer conducts the particular
business activity requiring such classification. To count existing employees
that have no replacements, there must be sufficient evidence that the business
is clearly discontinuing its old operations and beginning a new business
activity.
H.
"Financial incentive plan" means an agreement entered
into by a business and the Department to provide the business an incentive to
locate a new facility or expand an existing facility in Arkansas. Within this
regulation, the "financial incentive plan" is referred to as a "financial
incentive agreement."
I.
"Fund" means the Economic Development Incentive
Fund.
J.
"High
unemployment" means an unemployment rate equal to or in excess of
one hundred fifty percent (150%) of the state's average unemployment rate for
the preceding calendar year as specified by statewide annual labor force
statistics compiled by the Arkansas Employment Security Department, when the
state's annual average unemployment rate is six percent (6%) or below. When the
state's annual average unemployment rate is above six percent (6%), "high
unemployment" means equal to or in excess of three percent (3%) above the
state's average unemployment rate for the preceding calendar year as specified
by statewide annual labor force statistics compiled by the Arkansas Employment
Security Department.
K.
"Net new full-time permanent employee" means a
position or job which was created pursuant to the signed financial incentive
agreement and which is filled by one (1) or more employees or contractual
employees who were Arkansas taxpayers during the year in which the tax credits
or incentives were earned.
1. The position or
job held by such employee or employees must have been filled for at least
twenty-six (26) consecutive weeks with an average of at least thirty (30) hours
per week.
2. A contractual employee
must be offered a benefits package comparable to a direct employee of the
business seeking incentives.
L.
"Office sector"
means control centers that influence the environment in which data processing,
customer service, credit accounting, telemarketing, claims processing, and
other administrative functions that act as production centers are
performed.
III. To Qualify for Consideration A Business Must
A. Be an eligible
business, as defined by one or more of the following;
1. A manufacturer classified in the Federal
Standard Industrial Classification (SIC) codes 20-39, including semiconductor
and microelectronic manufacturers, which will employ one hundred (100) or more
net new fulltime permanent employees;
2. Computer businesses primarily engaged in
providing computer programming services; the design and development of
prepackaged software; businesses engaged in digital content production and
preservation; computer processing and data preparation services; information
retrieval services; computer and data processing consultants and developers.
All businesses in this group must employ twenty-five (25) or more net new
full-time permanent employees, derive at least seventy-five percent (75%) of
their revenue from out of state sales and have no retail sales to the general
public;
3. Businesses primarily
engaged in commercial physical and biological research as classified by SIC
code 8731, which will employ fifty (50) or more net new full-time permanent
employees;
4. Businesses primarily
engaged in motion picture production which will employ fifty (50) or more net
new full-time permanent employees. All businesses in this group must derive at
least seventy-five percent (75%) of their revenue from out of state sales and
have no retail sales to the general public;
5. An office sector business which will
employ fifty (50) or more net new permanent employees and have no retail sales
to the general public;
6. A
national, corporate or regional headquarters which will employ fifty (50) or
more net new full-time permanent employees and have no retail sales to the
general public; or
7. A
distribution center or facility which will employ one hundred (100) or more net
new full-time permanent employees and have no retail sales to the general
public, unless seventy-five percent (75%) or more of the sales revenues are
from out-of-state customers.
B. The requisite number of net new full-time
permanent employees must be hired within twenty-four (24) months following the
date the financial incentive agreement with the Department was signed. In the
event that the requisite number of net new full-time permanent employees cannot
be employed within the twenty-four (24) month period, the business can file a
written application with the department explaining why additional time is
necessary. The business can be afforded up to twenty-four (24) more months to
hire the requisite number of employees if the Director and the Chief Fiscal
Officer of the State agree.
C.
Company must agree to certify to the Department of Finance and Administration
(DF&A) the number of net new full-time permanent employees and their
payroll once the requisite number of net new full-time permanent employees has
been attained. It also must recertify the number and payroll of the net new
full-time permanent employees annually thereafter during the term of the
incentive agreement.
D. Company
must agree to certify to DF&A within thirty (30) days after the number of
net new full-time permanent employees falls below the requisite number required
to qualify.
IV. Powers and Duties of the Department of Economic Development
A. In highly
competitive situations, the Director of the Department is authorized to
negotiate proposals on behalf of the state with prospective businesses that are
considering locating a new facility that would create significant economic
benefit.
B. The Department will
enter into a financial incentive agreement with the company. The agreement will
specify the number of the net new permanent employees to be hired, the
percentage of the company's annual payroll to be rebated, the amount and
intended use of the funds rebated to the company, and the number of years the
company is to receive the rebate.
V. Terms of the Incentive Agreement
A. The term of a
financial incentive agreement shall not exceed one hundred twenty-six (126)
months.
1. For defense industry projects, the
term shall be calculated forward from the date certification of the mandatory
number of employees is granted by the Department of Finance and
Administration.
2. For all other
projects, the term will be calculated forward from the date the financial
incentive agreement was signed by the business and the Department.
B. The business will be eligible
for its first financial incentive payment twelve (12) months after it has hired
the requisite number of net new full-time permanent employees and has certified
that fact to DF&A.
C. The
agreement will specify the number of new employees to be hired, the percentage
of the company's annual payroll to be rebated, the amount and intended use of
the funds rebated to the company, and the number of years the company is to
receive the rebate.
D. Once the
requisite number of net new full time permanent employees have worked
twenty-six (26) consecutive weeks, with an average of thirty (30) hours a week
or more, the company will then certify to the Department of Finance and
Administration (DF&A) . A certification form will be provided to the
company.
E. Upon receipt of the
certification form, DF&A will schedule an audit at the company's facility.
An employee work sheet will be provided to the company for tracking the new
permanent employees.
F. The
certification form is the mechanism for DF&A to schedule annual audits.
Therefore, the company must certify annually to DF&A. (The certification is
at the end of the company tax year).
G. For each tax year, an annual incentive
agreement expenditure report must be provided to DF&A. As designated by the
Department, any funds received through this program must be used according to
the financial incentive agreement. An itemized schedule must be maintained
detailing such information as vendor, invoice numbers, payment date, cost
center codes, and other information substantiating amounts shown on the form.
H. DF&A has the authority to
obtain whatever information necessary from the Arkansas Employment Security
Division or from the company to verify that the company is complying with the
terms of the financial incentive agreement concerning the number of employees
and their annual payroll.
I. If the
business fails to maintain the requisite number of employees, the business has
thirty (30) days to notify DF&A in writing that the number of net new
full-time permanent employees has fallen below the requisite number. If the
number of net new full-time permanent employees drops below the requisite
number, all benefits under the financial incentive agreement entered into with
the department shall be terminated unless the director and the Chief Fiscal
Officer of the State approve a written request filed by the business explaining
why the number of net new full-time permanent employees fell below the
requisite number. The director and the Chief Fiscal Office of the State may
grant the business up to twenty-four (24) months to bring the number of net new
full-time permanent employees back up to the requisite number and may approve
the continuation of benefits during that period.
J. If the company fails to notify DF&A
that the number of employees has fallen below the requisite number, the company
will be liable for the repayment of all benefits which were paid to the company
after it no longer qualified for the benefits. Interest shall also be due at
the rate of ten percent (10%) per annum.
VI. Administration of Benefits
The rebate received by a business shall be used in accordance with the financial incentive agreement with the department. Employee training, infrastructure, or construction costs are eligible expenditures for the rebate. The Director is authorized to allow other expenditures in the agreement provided such expenditures adhere to the intent of the legislation.
VII. Restrictions
Businesses participating in the Create Rebate Program may not participate in the Arkansas Biotechnology Development and Training Act (ACA § 2-8-101 et seq.) or the Arkansas Economic Development Act (ACA § 15-4-1901 et seq.) for the same project.
Disclaimer: These regulations may not be the most recent version. Arkansas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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