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.

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 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 Environmental Quality. 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 the Department of Environmental Quality. The construction or modification of air contaminant sources also requires a permit.

Contact the Arkansas Department of Environmental Quality at 501-562-7444 or at www.adeq.state.ar.us.

The City of Fordyce
101 S. Main Street
Fordyce, AR 71742
(870) 352-2198
(870) 352-8610 ( fax)
E-mail: cityoffordyce@alltel.net