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RES NO 03-04-2013 CITY OF VAN BUREN,, ARKANSAS RESOLUTION NO. <J A 2013 BE IT ENACTED BY THE CITY COUNCIL, FOR THE CITY OF VAN BUREN, ARKANSAS, A RESOLUTION TO BE ENTITLED: A RESOLUTION OF THE CITY OF VAN BUREN, ARKANSAS CERTIFYING LOCAL GOVERNMENT ENDORSEMENT OF BUSINESS TO PARTICIPATE IN THE TAX BACK PROGRAM (AS AUTHORIZED BY SECTION 15- 4- 2706(d) OF THE CONSOLIDATED INCENTIVE ACT OF 2003. WHEREAS, in order to be considered for participation in the Tax Back Program, the local government must endorse a business to participate in the Tax Back Program; and WHEREAS, the local government must authorize the refund of local sales and use taxes as provided in the Consolidated Incentive Act of 2003; and WHEREAS, said endorsement must be made on specific form available from the Arkansas Economic Development Commission; and WHEREAS, White Dairy Ice Cream Co Inc. located at 3203 Industrial Park Rd, Van Buren, Arkansas has sought to participate in the program and more specifically has requested benefits accruing from construction and /or expansion of the specific facility; and WHEREAS, White Dairy Ice Cream Co Inc. has agreed to furnish the local government all necessary information for compliance. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VAN BUREN, ARKANSAS, THAT: SECTION I: White Dairy Ice Cream Co Inc. be endorsed by the Van Buren City Council for benefits from the sales use tax refunds as provided by Section 1 5-4-2706(d) of the Consolidated Incentive Act of 2003. SECTION 2: The Department of Finance and Administration is authorized to refund local sales and use taxes to White Dairy Ice Cream Co Inc. SECTION 3: This resolution shall take effect immediately. IN WITNESS WHEREOF, the City of Van Bur n, A ansas, by its City Council, did pass, approve, and adopt, by a vote of Co for and 0 against, tl c fore _oing Resolution at i si gular meeting held on the 18 of March 2013. Robert D. Free May. ATT STED: PPRO,'LP ,:..[1 FORM: a Barbie Curtis Candice A. Seal! City Clerk/Treasurer City Attorney VAN BUREN ritia Wt.! CHAMBER OF COMMERCE March 8, 2013 Honorable Bob Freeman City of Van Buren 1003 Broadway Van Buren, Arkansas 72956 Dear Mayor Freeman: As you are aware, the Van Buren Chamber of Commerce is working with both new and existing businesses, the Arkansas Economic Development Commission and other regional partners to create jobs here in Van Buren. Most of the new jobs that are created in Arkansas and across the country are through business expansions. By supporting existing businesses we keep the jobs here in Van Buren. At this time we have two businesses that are looking at expanding their operations here in Van Buren. Both companies are considering making substantial capital investments in order to create new jobs and grow their businesses. These two projects have been coordinated through both my office at the Van Buren Chamber of Commerce and through Tim Allen, President of the Fort Smith Regional Chamber of Commerce. Tim has had extensive experience with AEDC, having been employed with them for several years serving the Western Arkansas region. The first is White Dairy Ice Cream Company, Inc., located at 3203 Industrial Park Road. Their investment includes new construction and equipment for their distribution operation in the $3.5 $4 million dollar range. This expansion would result in approximately 20 new jobs with wages in the $13 $16 per hour range. The second company is Arkansas Poly located at 1248 South 28th Street. Their investment includes new construction and equipment for their manufacturing operation in the $2 million dollar range. This expansion would result in approximately 12 new jobs with wages in the $15 $17 per hour range. Both of these projects qualify for an Arkansas Economic Development Commission (AEDC) incentive called Tax Back. Tax Back allows an exemption of the state and local sales tax on materials and equipment for qualifying expansion projects. This incentive is competitive with other surrounding states and is important to keeping jobs here in Arkansas. I have attached additional detailed information on the Tax Back program from the AEDC. At this time we are requesting resolutions from the City of Van Buren and from the Crawford County Quorum Court to support these projects by waiving the local sales tax only on the qualifying purchases for these projects. Without local support of the projects the AEDC will not provide the Tax Back incentive. As with all current economic development projects in the state of Arkansas, state incentives have to have some type of local match. I would like to point out two things: (1) These are not sales tax dollars that are in the current local city or county budgets. The amount of sales tax funds on these expansions are a fraction of the resulting annual payrolls that will be created if these projects are approved. (2) If approved at the local and state level, the administration of the incentive is the responsibility of the AEDC and the Arkansas Department of Finance and Administration (ADFA). The qualifying company must show documented proof of the material and equipment purchases and sales tax paid. The qualifying company must also provide proof that the jobs were actually created as stated in their applications. Once the company has submitted its required documentation to the State, then ADFA will issue their Tax Back incentive payments. If you, or any members of the Van Buren City Council have any further questions about these projects and our request for your supporting resolutions, please contact me. We would like to request that the resolutions be presented and supported at the City's March 18th City Council Meeting. Respectfully, ,jackie Krutsch Executive Director iIn,` est ent tit i6T C eat 6 Bice itif Arkansas's performance -based incentives are nationally competitive and user friendly. The Arkansas Economic Development Commission will focus on your business's specific needs, and design an incentive package to accommodate your needs. The Consolidated Incentive Act of 2003 updated many of Arkansas's incentive programs to locate them under one code of law, §15-4 -2701 et seq., and make the combination of incentives more flexible. Arkansas's job creation incentives are based on payroll instead of number of jobs and use a tier system to determine the qualification criteria and benefits, depending on where the business locates or expands their operations in Arkansas. Arkansas's tier system ranks each county, based on poverty rate, unemployment, per capita income and population growth. Tiers are assigned annually on July 1, based on the previous year's statistics. Consolidated Incentive Act Rules In addition to an array of competitive incentives, when a business locates in Arkansas, it can take advantage of the following additional benefits: Favorable unemployment insurance and workers' compensation rates; A reduced sales tax rate on manufacturing utilities; A sales /use tax exemption on manufacturing machinery and equipment; A right -to -work state, as guaranteed by the Arkansas Constitution; and Favorable individual and corporate income tax rates. mu emi nt, I� agree ei Tax Back (Sales and Use Tax Refund) Advantage Arkansas participants investing at least $100,000 are eligible for the Tax Back program. This program provides a refund of sales and use taxes for building materials and taxable machinery and equipment associated with the approved project. The business must sign a job- creation agreement under the Advantage Arkansas program within 24 months of signing the Tax Back agreement. Applicants for Tax Back must obtain an endorsement resolution from the local governing authority that authorizes the refund of its local taxes. Applicants must meet the same qualification criteria as Advantage Arkansas and must be approved by the Arkansas Economic Development Commission. Eligibility The Tax Back incentive is available for non retail businesses engaged in commerce for profit that fall into one or more of the following categories: Manufacturers in NAICS codes 31 -33 Businesses primarily engaged in the design and development of prepackaged software, digital content production and preservation, computer processing, data preparation services or information retrieval services. Eligible computer related businesses must derive at least 75 percent of their revenue from out -of -state sales Businesses primarily engaged in motion picture production that derive at least 75% of their revenue from out -of -state sales Distribution centers, including e- comrnerce distributors, that derive at least 75% of their revenue from out -of -state sales Office sector businesses that derive at least 75% of their revenue from out -of -state sales National or regional corporate headquarters as classified in the NAICS code 551114 Firms primarily engaged in commercial, physical and biological research as classified in the NAICS code 541710 Scientific and technical services businesses. The firms must derive at least 75% of theft revenue from out -of -state sales. The average hourly wage paid by these businesses must exceed 150% of the county or state average hourly wage, whichever is less. If you have any questions concerning the Tax Back Program, please call the Arkansas Economic Development Commission at 1- 800 ARKANSAS.