The Ouachita Partnership for Economic Development Works with Cities and Counties to Offer Several Different Local Business Incentives
- Industry Incentive Offered to both existing and relocating manufacturers who increase employment in Ouachita or Calhoun Counties, Arkansas.
- Service Sector Incentive Offered to businesses making investments in the Camden area economy.
- Tax Abatement Incentive Offered to businesses for the financing of equipment or buildings/structures for which property liens can be established. A tax abatement of up to 65% can be negotiated with the city or county. The state enabling law requires that the properties be financed by city or county bonds, that property title be held by the city or county, and that the properties be leased back to the manufacturer at a rate sufficient to retire the debt financing
Industry Incentive Program
Industry Incentives may be awarded only upon approval of the Board of Directors after determination by the Board of Directors that it will benefit the citizens of Ouachita County, Arkansas. It is understood that employment by industry situated in the westerly part of Calhoun County will benefit the citizens of Ouachita County and such industries are eligible for our incentives program.
No Industry Incentive shall be effective and no payment made thereunder until a written contract has been executed by the Ouachita Partnership for Economic Development and the employer.
Industry Incentives may be awarded to new industries and to existing industries based on increased employment.
Industry Incentives may be awarded based on the increased employment under the following scale.
Incentive Paid Wage Range of Job
$200.00 per job Up to $8.99 per hour
$300.00 per job $9.00 to $11.99 per hour
$600.00 per job $12.00 to $19.99 per hour
$900.00 per job $20.00 and over per hour
The time frame for crediting an increase in the number of jobs is generally two years, but can be modified by the Board and set forth in a written contract.
The maximum Industry Incentive is generally $100,000.00 per company per contract, unless an exception is made by the Board.
The Board may also take into consideration the amount of capital investment and approve a different Industry Incentive based thereon.
With some exceptions granted by the Board, all Ouachita Partnership for Economic Development Industry Incentives are issued in the form of ‘Doing Business Locally Drawdown Accounts’ awarded to the recipient, requiring a purchase order endorsed by the Ouachita Partnership for Economic Development, and providing for payments to be made directly by the Ouachita Partnership for Economic Development to Ouachita County businesses for services or goods provided to the recipient up to the Industry Incentive amount awarded.
“Claw back” provisions are included in incentive contracts providing for reimbursement of a prorated amount of the Industry Incentive for net jobs that are not maintained for 24 months after payment.
Availability of funds for this purpose will be considered before an Industry Incentive is awarded.
The Partnership’s Service Sector Incentive Program
The Ouachita Partnership for Economic Development (OPED) invites service sector businesses to make investments in the local economy. To encourage such investments, the OPED Board will consider applications for service sector incentive awards on a case by case basis. In its review, the OPED Board will look for evidence that the total public dollars invested in the award of an incentive would have a high probability of being exceeded, over at least a five-year period, by the business’s cumulative impact on the local economy, considering such things as capital investment, the renovation of blighted and vacant properties, payroll, higher than average wages, employee spending, the purchase of goods and services, the attraction of other supply chain or customer businesses, and the deposit of dollars in local institutions. In any case, Service Sector Incentive Awards will be targeted to businesses which pledge the creation of a minimum of 25 jobs within a five-year period. The OPED Board will consider awarding up to $100,000 total within the service sector incentive program.
Businesses in the services sector primarily produce business services rather than goods. Business services are activities where people provide knowledge, information, technical assistance, administrative transactions, customer support, or servicing for maintenance, repair or upgrades. Where there is a question of whether a business qualifies as a service sector business, the Ouachita Partnership for Economic Development Board of Directors may review and approve its inclusion.
The Board’s decision on whether to award such an incentive is completely discretionary. The dollar value of a Service Sector Incentive Award is not fixed by any formula; it will be determined by the Board on a case by case basis with reference to the business’s projected five-year cumulative impact on the local economy. No Service Sector Incentive Award may be effective and no payment made thereunder until a written contract has been negotiated and executed by the Ouachita Partnership for Economic Development and the business owners. “Claw back” provisions are included in the contract providing for reimbursement of a prorated amount of a Service Sector Incentive Award for failure to meet negotiated performance goals. With some exceptions granted by the Board, all Ouachita Partnership for Economic Development Service Sector Incentive Awards are issued in the form of ‘Doing Business Locally Drawdown Accounts’ requiring either invoices and payment receipts or a purchase order endorsed by the Ouachita Partnership for Economic Development, in both cases providing for reimbursements or payments to be made for services or goods provided by Ouachita County businesses up to the Service Sector Incentive Award amount.
Tax Abatement Incentive
PILOT agreements may be negotiated between local governments and industrial users to cover the costs to make improvements and/or acquire equipment. In Arkansas, it is the only way by which a local government can offer a property tax abatement.
PILOT payments cannot be set at a level less than 35% of what property tax payments would otherwise have been, unless a lesser amount is approved by Director of the Arkansas Economic Development Commission and by the Chief Fiscal Officer of the State of Arkansas.
Properties covered by a city or county PILOT agreement must be the subject of an Act 9 Bond issue by that city or county and must be held in the name of that city or county. The properties are leased back to the industrial user for a term consistent with the time necessary to retire the bond debt.
The industrial user repays the bonds through lease payments on the properties. Lease payments must be in an amount high enough to service the debt incurred. Repayment of bonds are secured by a lien on and security interest in the properties comprising the project.
When the bond is repaid, the tax abatement ends and title to the properties reverts back to the industrial user.
Bond Counsel needs to be involved, not only to put together the bond offering, but also to prepare a Memorandum of Intent detailing the terms negotiated and attaching a PILOT Agreement and a Lease Agreement.