More details have emerged on a planned economic development package that could result in 150 new jobs to the city of Fort Smith.
City Administrator Carl Geffken called for and received a special Board of Directors meeting for Monday (Nov. 20) at the River Park-West Events Building at last Tuesday’s study session. On Thursday (Nov. 16), City Clerk Sherri Gard sent a meeting notification detailing the items to be discussed without naming the job creator.
On Monday at 6 p.m., city directors will consider two resolutions. The first will certify endorsement of the business to participate in the Tax Back Program authorized by Section 15-4-2706(d) of the Consolidated Incentive Act of 2003. The second is a resolution of intent of the city’s Board regarding issuance of bonds for the purpose of assisting in the financing “of an industrial facility” to be located within the city.
An accompanying memo from Deputy City Administrator Jeff Dingman referred to the business as [Project Platinum], a codename for the actual entity, which plans to invest $38 million in “new manufacturing equipment and construction of buildings.” The facility is expected to be 100,000 square feet.
“The proposed project could add up to 150 jobs to the region,” Dingman wrote.
The Tax Back Program is a state and local sales tax refund incentive to attract business growth or expansion to Arkansas. The incentive applies to capital purchases associated with construction of new facilities or expansion of existing facilities (such as equipment or building materials) and does not apply to ongoing purchases. The majority of the incentive will be derived from the state sales tax rate. However, in order to participate in the program, local governments must also agree to the sales tax refund.
The city receives 3.25% of the area’s 9.75% sales tax. From that figure, 2% is a city sales tax divvied up between the streets, drainage, and bridges program (1%), collections for bond issues (0.75%), and fire and parks (0.25%, evenly split between the two). The state receives the remaining 6.5%. At the 9.75% sales tax rate, Project Platinum would receive a $3.705 million tax incentive statewide ($1.235 million of which would come from the city) on $38 million in eligible purchases.
Also, Project Platinum requested the use of industrial revenue bonds (IRBs) for building its manufacturing facility in Fort Smith. The principal advantage of IRBs is a property tax reduction on both real estate and personal property taxes. The state will also be supporting Project Platinum’s project with incentives.
“Because the equipment and building purchased with the bond proceeds is technically owned by the city through provisions the state’s Municipalities and Counties Industrial Development Revenue Bond Law, [A.C.A. §§14-164-201 et seq. (1998 Repl. & 2013 Supp.), the real property and equipment is exempt from property taxation,” Dingman explained, adding that “[Project Platinum] would make annual payments in lieu of taxes in the amount of 50% of the normal taxes due for a period of ten years.”
Dingman continued: “The payments would be distributed to the school district, the county and the city in the same fashion as property tax payments are distributed. The bonds are not general obligations of the city. They are payable solely by [Project Platinum] and the city bears no responsibility to pay them.”
The memo did not note whether the business would be named on Monday night.
Following Tuesday’s study session, Geffken declined to answer when Talk Business & Politics asked for the name, industry, and potential investment size of the entity as well as the pay scale and location of jobs within city limits. He also would not provide details on whether the entity will be an established presence or a newcomer to the city.