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RES NO 07-04-2021 CITY OF VAN BUREN, ARKANSAS RESOLUTION NO.t7 - Oy- 2021 13F 1'1ENACIFD 13Y I I If;CITY COUNCIL, FOR THE CITY OF VAN BUREN, ARKANSAS, A RESOLU"I'[ON '1'0 BE LN'I I ILED: A RESOLUTION OF THE CITY OF VAN BUREN, ARKANSAS CERTIFYING LOCAL GOVERNMENT ENDORSEMENT OF A 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 governmmtl 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 WI-IFREAS, said endorsement must be made on specific forms available from the Arkarme, Economic Development Commission; and WI IFRFAS, Bekaert Corporation located at IRRI 13ekaert Drive, 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, Bekaert Corporation 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 1. Bekaert Corporation is endorsed by the Van Buren City Council for benefits from the sales& use tax refunds as provided by Section 15-4-2706(d)of the Consolidated Incentive Act of 2003. SEC HON 2: 'The Department of Finance and Administration is authorized to refund local sales and use lases to Bekaert Corporation. IN WITNESS WHEREO , the City of Van Buren, Arkansas, by its City Council, did pass, approve, and adopt, by a vote of �for and Q against, the foregol)g Resolution at its special meeting held on the 26"'of July 202E Jose P. Ifars Ma ATTESTED: PROV''dYAS'P Ph 'I is Thomas we I City Clerk/Treasurer City Attorney JAN BUPEN vanburenchambecorg Prim 510 Main St. -. Van Buren,AR 72956 - (479)474-2761 July 19, 2021 Honorable Joe Hurst Van Buren City Council Members City of Van Buren 1003 Broadway Van Buren,AR 72956 Dear Mayor Hurst and Van Buren City Council Members, I am pleased to inform you that Bekaert Corporation is expanding their existing facility and wire stranding production capabilities to fulfill the FCC plans for the expansion of internet into rural areas. This expansion will include 50,000 new square feet with an estimated cost of$8.4 million. This will enable Bekaert to add 35 newjobs with an average salary of$37,000. The estimated construction start date is November 2021 with an estimated completion date of April 2022. The Arkansas Economic Development Commission has qualified this project for the Tax Back incentive, which provides sales and use tax refunds on the purchase of building materials, machinery,and equipment to qualifying businesses that create new jobs as a result of construction,expansion, orfacility modernization projects in Arkansas. To qualifyforthe Tax Back program,a business must: •Invest in excess of one hundred thousand dollars ($100,000); •Obtain an endorsement resolution from the local governing authority(city, county,or both) in which the project is located that authorizes the refund of local taxes; •Within twenty-four(24) months of signing the Tax Back agreement, sign a job creation agreement underthe Advantage Arkansas program (§ 15-4-2705)or the Create Rebate program (§ 15-4-2707) unless the eligible business has met the requirements of a jab creation financial incentive agreement under§ 15-4-2705 or§ 15-4-2707 within the previous forty-eight(48) months; •Submit an application for Tax Back on forms provided by the Arkansas Economic Development Commission and; • Receive Commission approval prior to incurring expenditures This incentive program is available to any eligible business that meets the qualifications for investment and payroll thresholds for the tier in which it locates or expands and is approved for benefits by the Commission.The Commission's approval is contingent upon receipt of a completed application and a local endorsement resolution from the city,county o-both which authorizes the refund of its local taxes to the eligible business. The purpose of the resolution is to:A) approve the business's participation in the program;and B)specify that the municipality or county authorizes the DEA to refund all or part of any sales and use tax levied at the local level.The municipality or county in which the eligible business is located may authorize the refund of any sales or use tax levied by it but may not authorize the refund of any sales and use tax not levied by it. For projects approved on or after July 1,2005,the refund of state sales and use taxes shall not include the refund of taxes dedicated to the Educational Adequacy Fund (.875%) provided in 419-5-1227 or the taxes dedicated to the Conservation Tax Fund(.125%) provided in 419-15-484. 1 have attached the complete description of the Tax Back Program for your convenience. If you have any questions or require additional information, please do not hesitate to call me. Sincerely, 9LG` Aw� Julie Murray President&CEO TAX BACK Program Summary The Tax Back program provides sales and use tax refunds on the purchase of building materials, machinery, and equipment to qualifying businesses that create new jobs as a result of construction, expansion, or facility modernization projects in Arkansas. To qualify for the Tax Back program, a business must: • Invest in excess of one hundred thousand dollars ($100,000); • Obtain an endorsement resolution from the local governing authority(city, county, or both) in which the project is located that authorizes the refund of local taxes; • Within twenty-four(24) months of signing the Tax Back agreement, sign a job creation agreement under the Advantage Arkansas program (§ 15-4-2705) or the Create Rebate program (§ 15-4-2707) unless the eligible business has met the requirements of a job creation financial incentive agreement under § 15-4-2705 or § 15-4-2707 within the previous forty-eight (48) months; • Submit an application for Tax Back on forms provided by the Arkansas Economic Development Commission (Commission); and • Receive Commission approval prior to incurring expenditures. For convenience,the section of the Final Rules that contains the major requirements of the program is reproduced below. For all the requirements of this and other incentive programs, see the entire Final Rules, particularly the"Definitions"section on pages 2— 10 and the "Administration"section on pages 12— 15. D. Sales and Use Tax Refund for New and Expanding Eligible Businesses(Tax Back)—Act 182 of 2003,as amended, § 15-4-2706(d). This incentive program is available to any eligible business that meets the qualifications for investment and payroll thresholds for the tier in which it locates or expands and is approved for benefits by the Commission. The Commission's approval is contingent upon receipt of a completed application and a local endorsement resolution from the city, county or both which authorizes the refund of its local taxes to the eligible business. To qualify, the eligible business must invest in excess of one hundred thousand dollars ($100,000) and meet the eligibility criteria of the Advantage Arkansas (§ 15-4-2705) or Create Rebate (§ 15-4-2707)job creation incentive programs. The financial incentive agreement for the job creation tax credit (Advantage Arkansas) or payroll rebate (Create Rebate) must be signed within twenty-four(24) months of signing a financial incentive agreement for a sales and use tax refund unless the eligible business has met the requirements of a job creation financial incentive agreement under § 15-4-2705 or§ 15-4- 2707 within the previous forty-eight (48) months. Tax Back Program Summary (R-01/02/2018)2018 AEDC Rules Book P a g e 1 In the event an eligible business has an existing Tax Back agreement,the business may apply for additional Tax Back if it has signed a job creation financial incentive agreement under§ 15-4-2705 or § 15-4-2707 within the previous forty-eight (48) months. In the event the business does not have an existing Tax Back agreement,the business may apply for Tax Back benefits if it has signed a job creation financial incentive agreement under § 15-4-2705 or§ 15-4-2707 within the previous forty-eight (48) months. An application, accompanied by local endorsement resolution(s), must be filed with the Commission. The application should clearly identify the intent of the project, the expenditures planned, the start and end date of the project and an estimate of total project costs. The local endorsement resolution(s) from the governing authority (city council, quorum court or both) in which the project is located must authorize the refund of its local sales and use taxes. The purpose of the resolution is to: A)approve the business's participation in the program; and B) specify that the municipality or county authorizes the DFA to refund all or part of any sales and use tax levied at the local level. The municipality or county in which the eligible business is located may authorize the refund of any sales or use tax levied by it but may not authorize the refund of any sales and use tax not levied by it. This incentive program grants a refund of state and local sales and use taxes paid on the purchases of the material used in the construction of a building or buildings or any addition, modernization, or improvement to a new or expanding eligible business. A sales and use tax refund is also allowed for the purchases of taxable machinery or equipment associated with the building or project. A refund shall not be authorized for: • Routine operating expenditures; • The purchase of replacements of items previously purchased as part of a project unless the items previously purchased will not enable the project to function as originally intended; • Licensed motor vehicles; or • Expenditures for routine repair and maintenance that do not result in new construction or expansion. For projects approved on or after July 1,2005,the refund of state sales and use taxes shall not include the refund of taxes dedicated to the Educational Adequacy Fund (.875%) provided in § 19-5-1227 or the taxes dedicated to the Conservation Tax Fund (.125%) provided in § 19-6-484. All project costs must be incurred within four(4)years from the date the project is approved by the Commission.The project plan may be revised by written amendment filed with the Commission. The Commission's approval of an amendment will not extend the time period in which project costs may be incurred. Amendments that exceed twenty-five percent (25%) of the original project plan's estimated cost will not be considered and shall be submitted as a new project. Tax Back Program Summary (R-01/02/2018)2018 AEDC Rules Book P a g e 12 Eligible Businesses Tax Back Refunds For an eligible business to receive a refund, the business must file an Annual Sales and Use Tax Refund Request Form (Form Tax Back 1000) and schedule (Schedule A) listing the qualified purchases at the end of each calendar year. An approved eligible business may receive a sales and use tax refund on eligible purchases made by a contractor or developer performing work, or building a structure for lease or sale to the approved eligible business provided the eligible business submits to the DFA Tax Credits/Special Refunds Section a notarized Contractor's/Developer's Waiver of Refund Form (Form Tax Back 1100)completed by the contractor or developer waiving any and all rights to claim a refund of sales and use taxes. An approved business is prohibited from claiming a refund for the same amount of local tax that: • The approved business has received, or will be receiving, for a local tax cap rebate on qualifying Tax Back purchases, either on the approved business's Sales and Use Tax Report or as a refund from the Sales and Use Tax Section; or • The contractor or developer has received, or will be receiving, a local tax cap rebate on qualifying Tax Back purchases, either on the contractor's or developer's Sales and Use Tax Report or as a refund from the Sales and Use Tax Section. Example: An eligible business approved for the Tax Back program makes a purchase of eligible items on an invoice totaling ten thousand dollars($10,000).Assuming a local tax rate of one percent(1%), the total local tax due is one hundred dollars ($100). The local tax cap for business purposes is limited to the tax due on two thousand five hundred dollars ($2,500). If the business claims a local tax cap rebate for the seventy-five dollars($75) (the tax paid in excess of the tax due on two thousand five hundred dollars ($2,500)) on its Sales and Use Tax Report or as a refund from the Sales and Use Tax Section; the business's Tax Back refund is limited to twenty-five dollars ($25)for this invoice. If the business has not claimed, or does not plan to claim, the local tax cap rebate, it may claim the full amount of local tax paid on its Tax Back Sales and Use Tax Refund Request. Refunds to Developers/Contractors Developers building a structure for lease to an approved eligible business and contractors performing work for an approved eligible business may be permitted to receive a sales and use tax refund on eligible purchases directly from the state only when the approved eligible business requests the DFA Tax Credits/Special Refunds Section, in writing, that this be permitted and states the basis for this request. This request must be approved by the DFA prior to the signing of the financial incentive agreement. The DFA Revenue Division will authorize this procedure only when it is satisfied that: • The written request sufficiently states the basis for this request and provides a satisfactory Tax Back Program Summary(R-01/02/2018)2018 AEDC Rules Book P a g e 13 explanation why this arrangement is crucial to the success of the project; • All requirements of the Consolidated Incentive Act of 2003, as amended, and Commission rules will be adhered to; • The requisite affidavit indicating to whom the benefit accrues is submitted to the DFA. o If the business receives the benefit, a notarized affidavit(Form Tax Back 1400) is presented to the DFA Revenue Division from the contractor or developer stating the eligible business will receive the benefit of the sales and use tax refunds by having the cost of construction or lease payments reduced by the amount of the tax refund; or o If the contractor receives the benefit, a notarized affidavit(Form Tax Back 1300) is presented to the DFA Revenue Division from the approved eligible business waiving the right to claim a refund of sales and use taxes, and passing on the right to claim refunds to the contractor or developer. The affidavit must state that the eligible business acknowledges that if the eligible business fails to comply with the conditions contained in the Act or this rule, that the business will be liable for the payment of all sales and use taxes which were refunded to the contractors and developers under this Act, plus interest; and • The eligible business's incentive agreement with the Commission must include a provision for recapture of the sales and use tax refunds from the contractor or developer if the eligible business closes and ceases operations within a short period. If a developer or contractor has been authorized by the DFA to receive the refund,the developer or contractor must file an Annual Sales and Use Tax Refund Request by Developer Form (Form Tax Back 1200)and schedule (Schedule A) listing the qualified purchases. A developer or contractor is prohibited from claiming the same amount of local tax that it has received, or will be receiving,for a local tax cap rebate on qualifying Tax Back purchases, either on its Sales and Use Tax Report or as a refund from the Sales and Use Tax Section. Example: A developer or contractor makes a purchase of eligible items on an invoice totaling ten thousand dollars($10,000). Assuming a local tax rate of one percent (1%), the total local tax due is one hundred dollars ($100). The local tax cap for business purposes is limited to the tax due on two thousand five hundred dollars ($2,500). If the developer or contractor claims a local tax cap rebate for the seventy-five dollars ($75) (the tax paid in excess of the tax due on two thousand five hundred dollars ($2,500)) on its Sales and Use Tax Report or as a refund from the Sales and Use Tax Section; its Tax Back refund is limited to twenty-five dollars ($25)for this invoice. If the contractor or developer has not claimed, or does not plan to claim, the local tax cap rebate, it may claim the full amount of local tax paid on its Tax Back Sales and Use Tax Refund Request. Filing Requirements It is the responsibility of the eligible business to file an Annual Sales and Use Tax Refund Request Form (Tax Back 1000) and supporting schedule (Schedule A)with the DFA at the end of each calendar year. Tax Back Program Summary(R-01/02/2018)2018 AEDC Rules Book P a g e 14 Upon determining the amount of eligible refund, the DFA shall issue a refund to the eligible business. All claims for sales and use tax refunds under this incentive program must be filed within three (3) years from the date of the qualified purchase or purchases or those claims will be denied. Example: An eligible business is planning to expand its operations in a Tier 3 county and has signed an Advantage Arkansas agreement with the Commission. The business plans to hire seven (7) new full-time permanent employees at twelve dollars($12) per hour($12/hour X 2080 hours = $24,960 average annual wage X seven (7) new employees=$174,720 annual payroll). The business would meet the seventy-five thousand dollar($75,000) payroll threshold for a Tier 3 county. The business will renovate an existing building in the community and will spend approximately one hundred and twenty-five thousand dollars($125,000) in renovation costs. This investment is above the one hundred thousand dollar ($100,000) threshold required. The sales tax paid on all renovation costs subject to the sales tax is eligible to be refunded at the sales or use tax rate in effect at the time of the purchase, excluding the taxes dedicated to the Educational Adequacy Fund and the Conservation Tax Fund. The eligible business must file for the sales or use tax refund within three (3)years of purchase or the claim will be denied. This example assumes all new full-time permanent employees are hired at the beginning of the first year and work forty(40) hours per week. Notes: The refund of sales and use tax for eligible businesses is dependent upon the following: • The refund is made contingent upon the signing of a financial incentive agreement for a jobs creation incentive (Advantage Arkansas or Create Rebate) within twenty-four(24) months of signing a financial incentive agreement for a sales and use tax refund for new and expanding eligible businesses; • The items purchased being subject to the sales or use tax; • The payroll threshold under the Advantage Arkansas or Create Rebate job creation financial incentive agreements being met within twenty-four(24) months of the signing of the financial incentive agreement unless the eligible business has met the requirements of a job creation financial incentive agreement under § 15-4-2705 or § 15-4-2707 within the previous forty-eight(48) months; and • The documentation of the minimum investment of one hundred thousand dollars ($100,000) needed to qualify for the sales and use tax refund. Combination with other incentives: The sales and use tax refund for new and expanding eligible businesses, authorized by§ 15-4-2706(d), may be combined with: • Advantage Arkansas as authorized by§ 15-4-2705 or Create Rebate as authorized by § 15-4- 2707, if approved by the Executive Director; and • The research and development income tax credit for university-based research authorized by § 15-4-2708(a); and • The research and development income tax incentive for in-house research authorized by § 15-4-2708(b). Tax Back Program Summary(R-01/02/2018)2018 AEDC Rules Book P a g e 15