Pursuant to the authority granted by Ark. Code Ann. &
Ark. Code Ann. &
and Act 1629 of 2001, the Director of the Arkansas Department of Finance and
Administration and the Director of the Arkansas Department of Economic
Development, in compliance with Ark. Code Ann. Sec.
do hereby promulgate the following regulation governing the application for and
approval of payments in lieu of ad valorem tax under Ark. Code Ann. &
From July 1, 2001, through June 30, 2003, the following
provisions apply if a city or county enters into a lease or sale contract of
city or county property to a for-profit entity for the purpose of securing and
1. The lease or
contract shall include an obligation that the lessee or purchaser make payments
in lieu of property taxes in an amount as negotiated between the
2. The aggregate amount of
the payments during the initial term of the lease or sale contract shall be not
less than thirty-five percent (35%) of the aggregate amount of ad valorem taxes
that would be paid if the property were on the tax rolls unless the Director of
the Department of Economic Development (ADED) and the Chief Fiscal Officer
(CFO) of the State approve a lesser amount.
The city or county shall give at least ten
(10) days written notice to each school district superintendent in which school
district all or part of the property subject to the lease or sale contract is
located and to the Chief Fiscal Officer of the State informing them that a
meeting is to be held by city or county officials where action might be taken
regarding approval of in-lieu-of-tax payments. The notification must include
the date, time, and place of the meeting.
Upon receipt of the required notice of a
meeting to be held by a city or county, the Chief Fiscal Officer, or his
designate, shall review information to determine if the notice includes a
request to exceed the 35% minimum and a written response will be issued to the
city or county confirming that the notice has been received.
a) If the notice does not contain information
regarding the amount and percent of the in-lieu-of-tax payment, the response
letter will explain that such information is required, reminding the city or
county that approval will be needed by both ADED and the CFO if the
in-lieu-of-tax payment is less than 35% of the taxes that would be paid if the
property were on the tax rolls.
If the notice does contain information regarding the amount and percent of the
in-lieu-of-tax payment, and it does not exceed 35%, the response letter will
include a reminder to the city of county that in the event the approved payment
is less than 35%, then approval will be needed.
c) If the notice contains a request for
approval for a payment of less than 35%, the response letter shall notify the
city or county that the request will be considered by ADED and the CFO only
after the city or county has obtained written approval from the city council,
the quorum court, and each school district impacted by the tax abatement. The
notice from the city or county requesting a payment of less than 35% must
contain the names, addresses, and telephone numbers of contact persons with the
local government, the business, and the school districts who can provide
information related to the proposed agreement.
2. Immediately upon receipt of approval from
the city or county in support of the business' request for an in-lieu-of-tax
payment of less than 35%, ADED will conduct a cost benefit analysis, to review
the effects of the proposed agreement on public school funding, and consider
other relevant matters. The CFO shall assist ADED, as requested, in obtaining
all information needed for ADED to conduct the cost benefit analysis. The
proposed agreement will be evaluated considering the amount of capital
investment anticipated, the number of jobs to be created, the anticipated
additional payroll to be created, the amount of property taxes to be abated,
the anticipated additional state tax collections resulting from the project,
and all other factors relevant to the project.
3. As soon as the analysis described above is
completed, the Director of ADED and the CFO shall issue a joint letter to the
mayor of the city or county judge of the county either approving or denying the
request for a payment of less than 35% of the property tax on the new
The CFO will monitor
all agreements entered into by cities and counties and maintain files and
statistics regarding activity for all in-lieu-of-tax payments for use by the
General Assembly in conducting a study of the impact of in-lieu-of-tax payments
as provided in Act 1629 of 2001.
Richard A. Weiss, Director Arkansas Department of Finance and
Date: ______________________ , 2002
Jim Pickens, Director Arkansas Department of Economic
Date: ____________________ , 2002