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1 State of Arkansas A Bill
2 95th General Assembly
3 Regular Session, 2025 SENATE BILL 647
4
5 By: Senator J. Dismang
6 By: Representative Beaty Jr.
7
8 For An Act To Be Entitled
9 AN ACT TO CREATE THE ECONOMIC DEVELOPMENT DISTRICT
10 ACT OF 2025; AND FOR OTHER PURPOSES.
11
12
13 Subtitle
14 TO CREATE THE ECONOMIC DEVELOPMENT
15 DISTRICT ACT OF 2025.
16
17 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
18
19 SECTION 1. Arkansas Code Title 14 is amended to add an additional
20 chapter to read as follows:
21 CHAPTER 177
22 ECONOMIC DEVELOPMENT DISTRICT ACT OF 2025
23
24 Subchapter 1 -- General Provisions
25
26 14-177-101. Title.
27 This chapter shall be known and may be cited as the "Economic
28 Development District Act of 2025".
29
30 14-177-102. Definitions.
31 As used in this chapter:
32 (1) "Alcoholic beverage sales tax" means the taxes levied under
33 �� 3-7-201 and 3-9-213;
34 (2) "Available funds" means revenues, grant funds, and other
35 moneys received by an economic development district minus:
36 (A) The property charge baseline;
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1 (B) The sales charge baseline;
2 (C) Any reserved property charge; and
3 (D) Any reserved sales charge;
4 (3) "Cooperative area" means an area designed by one (1) or more
5 municipalities, one (1) or more counties, or a combination of one (1) or more
6 municipalities and one (1) or more counties operating under a written
7 agreement in which the participating municipalities or participating
8 counties, or both, agree to establish an economic development district by
9 mutually adopting a formation charter;
10 (4) "Economic development" means one (1) or more of the
11 following:
12 (A) Job creation;
13 (B) Job retention;
14 (C) Job attraction;
15 (D) Economic growth; and
16 (E) Economic diversification;
17 (5)(A) "Economic development construction" means the process of
18 constructing, improving, modifying, or removing improvements within an
19 economic development district for purposes that directly contribute to the
20 economic development goals of the economic development district in accordance
21 with the economic development plan.
22 (B) "Economic development construction" includes without
23 limitation manufacturing, technology, research and development, business
24 incubators, retail, entertainment, housing, healthcare, restaurants,
25 hospitality, childcare, energy production, infrastructure projects, and any
26 other type of venture or facility that the board of an economic development
27 district determines is beneficial to an economic development district under �
28 14-177-304;
29 (6) "Economic development district" means a designated area
30 within a municipality, county, or cooperative area that is established under
31 this chapter to promote, facilitate, or secure economic development and
32 revitalization within the designated area;
33 (7) "Economic development plan" means a document detailing the
34 goals, strategies, and initiatives to be undertaken to stimulate economic
35 development within an economic development district;
36 (8) "Establishing authority" means:
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1 (A) For a municipality or county, the governing body of
2 the municipality or county; and
3 (B) For a cooperative area, the group of persons
4 designated for the cooperative area in the written agreement establishing the
5 cooperative area;
6 (9) "Formation charter" means the foundational governing
7 document of the economic development district that establishes the formation
8 of the economic development district under � 14-177-204;
9 (10) "Property charge" means a monetary charge equal to what the
10 applicable ad valorem property tax and special assessments would be if the
11 economic development district did not exist, including any additional ad
12 valorem-based charge equal to an additional millage rate assessed by the
13 board of an economic development district;
14 (11) "Property charge baseline" means an amount equal to a
15 property's ad valorem property tax and special assessments due the year
16 before the property became part of an economic development district;
17 (12) "Property charge increment" means the amount by which the
18 property charge exceeds the property charge baseline;
19 (13)(A) "Public infrastructure" means a facility, service, or
20 installation that is useful for the operation and growth of an economic
21 development district.
22 (B) "Public infrastructure" includes without limitation:
23 (i) A transportation system, including without
24 limitation a road, a trail, lighting, a traffic signal, a sidewalk, and
25 parking;
26 (ii) Demolition;
27 (iii) A public safety measure;
28 (iv) Stormwater drainage;
29 (v) A utility, including without limitation a water
30 utility, a sewer utility, an electric power utility, and a gas utility;
31 (vi) Digital infrastructure, including without
32 limitation broadband and telecommunications infrastructure;
33 (vii) Energy production; and
34 (viii) Green infrastructure, including without
35 limitation parks, green spaces, and renewable energy systems;
36 (14) "Reserved property charge" means the portion of a property
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1 charge, if any, in excess of the property charge baseline reserved by an
2 establishing authority in the formation charter;
3 (15) "Reserved sales charge" means the portion of a sales
4 charge, if any, in excess of the sales charge baseline reserved by an
5 establishing authority in the formation charter;
6 (16)(A) "Sales charge" means a monetary charge equal to what the
7 following taxes would be if the economic development district did not exist:
8 (i) Sales and use tax, including without limitation
9 the taxes levied under Title 26, Chapters 52, 53, 74, and 75; and
10 (ii) Alcoholic beverage sales tax.
11 (B) "Sales charge" includes:
12 (i) The sales and use tax on a transaction in which
13 the end-user or purchaser takes possession of tangible personal property,
14 specified digital products, or a digital code or makes the first use of a
15 taxable service; and
16 (ii) Any additional percentage-based charge equal to
17 an additional rate assessed by the board of an economic development district.
18 (C) "Sales charge" does not include any tax applicable to
19 the possession of tangible personal property by a shipping company on behalf
20 of a purchaser;
21 (17) "Sales charge baseline" means the amount of sales and use
22 tax and alcoholic beverage sales tax generated from transactions occurring
23 within a property the year before the property became part of an economic
24 development district; and
25 (18) "Sales charge increment" means the amount by which the
26 sales charge exceeds the sales charge baseline.
27
28 14-177-103. Assistance from Department of Commerce.
29 (a) The Department of Commerce shall:
30 (1) Provide ongoing support and assistance to municipalities,
31 counties, cooperative areas, and economic development districts in the
32 establishment, management, and strategic development of economic development
33 districts;
34 (2) Allocate resources, including without limitation expert
35 advice, administrative guidance, and access to state-level economic
36 development tools, to assist municipalities, counties, cooperative areas, and
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1 economic development districts;
2 (3) Offer technical assistance to assist municipalities,
3 counties, and cooperative areas in drafting an initial proposal to form an
4 economic development district, defining the boundaries of a proposed economic
5 development district, and conducting the economic and impact assessments
6 necessary for the establishment of an economic development district;
7 (4) Provide training programs for municipality and county
8 officials and members of a board of an economic development district on
9 topics that include economic development strategies, financial management,
10 and grant administration;
11 (5)(A) Assist in setting up systems for monitoring and
12 evaluating the performance of an economic development district to ensure that
13 each economic development district meets the economic development objectives
14 for the economic development district.
15 (B) To facilitate meeting the requirements of subdivision
16 (a)(5)(A) of this section, the department shall maintain an online repository
17 of projects that includes publicly available information about each project;
18 (6) Assist economic development districts in establishing clear
19 and effective grant application processes to ensure transparency and fairness
20 in the distribution of funds under this chapter; and
21 (7)(A) Provide guidance to economic development districts on
22 financial oversight practices to ensure that all grant funds are used
23 appropriately and effectively.
24 (B) To facilitate meeting the requirements of subdivision
25 (a)(7)(A) of this section, the department may:
26 (i) Review and conduct audits of any economic
27 development district; and
28 (ii) Adopt appropriate rules to promote the orderly
29 administration of economic development districts and prevent malfeasance,
30 mismanagement, or fraud in the operation of an economic development district.
31 (b) To compensate the department for its obligations under this
32 section, each board of an economic development district shall remit to the
33 department the following:
34 (1) Two percent (2%) of the property charge increment, minus the
35 reserved property charge, received by the economic development district
36 annually; and
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1 (2) Two percent (2%) of the sales charge increment, minus the
2 reserved sales charge, received by the economic development district
3 annually.
4
5 Subchapter 2 -- Economic Development Districts -- Creation and Termination
6
7 14-177-201. Authorization to establish economic development district.
8 (a) A municipality, county, or cooperative area may establish one (1)
9 or more economic development districts within the boundaries of the
10 municipality, county, or cooperative area.
11 (b) A county may establish an economic development district within the
12 boundaries of a municipality only with consent of the mayor of the
13 municipality.
14 (c) A municipality may use county tax revenues for an economic
15 development district only with the consent of the county judge of the county
16 that levied the tax.
17 (d) An economic development district is not required to have
18 contiguous boundaries.
19
20 14-177-202. Proposal to create economic development district.
21 (a) The creation of an economic development district may be proposed
22 by the:
23 (1) Delivery of a proposal signed by the owners of at least
24 twenty-five percent (25%) of the assessed value of the property within the
25 boundaries of the proposed economic development district to the proposed
26 establishing authority;
27 (2) Delivery of a proposal by a mayor or county judge to the
28 proposed establishing authority; or
29 (3) Creation of a proposal by the proposed establishing
30 authority.
31 (b) A proposal for the creation of an economic development district
32 under this section shall include:
33 (1) A map of the boundaries of the proposed economic development
34 district;
35 (2) A preliminary economic development plan; and
36 (3) An assessment of the current economic conditions within the
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1 boundaries of the proposed economic development district and the expected
2 impact of the proposed economic development district.
3
4 14-177-203. Approval process for establishment of economic development
5 district.
6 (a) An establishing authority considering the creation of a proposed
7 economic development district under this subchapter shall:
8 (1) Conduct a public hearing on the creation of the proposed
9 economic development district within ninety (90) days after receiving a
10 proposal under this subchapter; and
11 (2)(A) Provide notice of the public hearing required under
12 subdivision (a)(1) of this section at least thirty (30) days before the
13 public hearing.
14 (B) Notice provided under subdivision (a)(2)(A) of this
15 section shall be:
16 (i) Published in a newspaper of general circulation
17 in the proposed economic development district; or
18 (ii) Provided by means of public notification other
19 than a newspaper of general circulation that is authorized by the
20 establishing authority and reasonably calculated to provide notice to
21 property owners within the boundaries of the proposed economic development
22 district.
23 (b) After holding the public hearing required under subsection (a) of
24 this section, an establishing authority may create an economic development
25 district by approving a formation charter that meets the requirements of �
26 14-177-204 by the adoption of an ordinance by a majority vote of the present
27 and participating members of the establishing authority.
28
29 14-177-204. Formation charter -- Amendment.
30 (a) A formation charter shall include:
31 (1) The boundaries of the economic development district;
32 (2) The term of the economic development district, which shall
33 not exceed thirty (30) years;
34 (3) The economic development plan for the economic development
35 district;
36 (4) The number of members of the board of the economic
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1 development district;
2 (5) Any reserved property charge;
3 (6) Any reserved sales charge; and
4 (7) Any restrictions on the powers of the board of the economic
5 development district.
6 (b)(1) The establishing authority for an economic development district
7 may amend the formation charter upon the petition of the:
8 (A) Mayor of the municipality governed by the establishing
9 authority;
10 (B) County judge of a county governed by the establishing
11 authority;
12 (C) Mayor of any municipality or the county judge of any
13 county participating in a cooperative area governed by the establishing
14 authority;
15 (D) Board of the economic development district; or
16 (E) Establishing authority.
17 (2) An amendment to a formation charter under this subsection
18 may expand or contract the:
19 (A) Boundaries of the economic development district; or
20 (B) Authority granted to the board of the economic
21 development district.
22 (3) If an economic development district is party to an executory
23 contract or has outstanding bonds secured by revenue of the economic
24 development district, the establishing authority for the economic development
25 district shall not amend the formation charter to do any of the following in
26 a manner that would reasonably impair the performance of the executory
27 contract or the repayment of the outstanding bonds, unless the establishing
28 authority agrees to assume the economic development district's obligations
29 under the executory contract or the repayment of the outstanding bonds:
30 (A) Reduce the boundaries of the economic development
31 district;
32 (B) Increase the reserved property charge;
33 (C) Increase the reserved sales charge;
34 (D) Decrease the term of the economic development
35 district; or
36 (E) Modify the powers of the board of the economic
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1 development district.
2 (4) A petition to amend a formation charter under this
3 subsection is subject to the same approval process and requirements provided
4 for the establishment of an economic development district under � 14-177-203.
5
6 14-177-205. Renewal of term of economic development district.
7 (a) The establishing authority for an economic development district
8 may renew the economic development district for successive terms of up to
9 thirty (30) years each upon the petition of the:
10 (1) Mayor of the municipality governed by the establishing
11 authority;
12 (2) County judge of a county governed by the establishing
13 authority;
14 (3) Mayor of any municipality or the county judge of any county
15 participating in a cooperative area governed by the establishing authority;
16 (4) Board of the economic development district; or
17 (5) Establishing authority.
18 (b) A petition to renew the term of an economic development district
19 under this subsection is subject to the same approval process and
20 requirements provided for the establishment of an economic development
21 district under � 14-177-203.
22
23 14-177-206. Termination of economic development district.
24 (a)(1) Except as provided in subdivision (a)(2) of this section, the
25 establishing authority of an economic development district may terminate the
26 economic development district upon the petition of the board of the economic
27 development district or by revoking the formation charter.
28 (2) If an economic development district is party to an executory
29 contract or has outstanding bonds secured by revenue of the economic
30 development district, the establishing authority for the economic development
31 district shall not terminate the economic development district to do any of
32 the following in a manner that would reasonably impair the performance of the
33 executory contract or the repayment of the outstanding bonds, unless the
34 establishing authority agrees to assume the economic development district's
35 obligations under the executory contract or the repayment of the outstanding
36 bonds:
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1 (A) Reduce the boundaries of the economic development
2 district;
3 (B) Increase the reserved property charge;
4 (C) Increase the reserved sales charge;
5 (D) Decrease the term of the economic development
6 district; or
7 (E) Modify the powers of the board of the economic
8 development district.
9 (b) Upon termination of an economic development district, all assets
10 remaining with the economic development district shall be turned over to the
11 establishing authority to be used for the purposes stated in the economic
12 development plan for the economic development district.
13 (c) A petition to terminate an economic development district and the
14 revocation of a formation charter under this section are subject to the same
15 approval process and requirements provided for the establishment of an
16 economic development district under � 14-177-203.
17
18 14-177-207. Cooperative areas.
19 (a) An agreement creating a cooperative area may allocate the:
20 (1) Property charge baseline, reserved property charge, sales
21 charge baseline, and reserved sales charge among the municipalities and
22 counties participating in the economic development district based on an
23 agreed-upon percentage allocation of the entire economic development district
24 instead of basing the revenue on the physical nexus from where the revenue is
25 generated; and
26 (2) Provision of governmental services within the economic
27 development district among the taxing authorities participating in the
28 economic development district.
29 (b) The ad valorem property tax rate used to establish the property
30 charge, property charge baseline, and property charge increment for a
31 cooperative area shall be:
32 (1) Uniform throughout the economic development district; and
33 (2) Equal to the highest ad valorem tax of the municipalities
34 and counties participating in the economic development district.
35 (c) The percentage-based sales and use tax rate and the alcoholic
36 beverage sales tax rate used to establish the sales charge, sales charge
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1 baseline, and sales charge increment for a cooperative area shall be:
2 (1) Uniform throughout the economic development district; and
3 (2) Equal to the highest sales and use tax rate and the
4 alcoholic beverage sales tax rate of the municipalities and counties
5 participating in the economic development district.
6
7 14-177-208. Annexation prohibited.
8 Property within the boundaries of an economic development district
9 shall not be involuntarily annexed into a municipality.
10
11 Subchapter 3 -- Boards of Economic Development Districts
12
13 14-177-301. Board of economic development district generally.
14 (a) An economic development district shall be governed by a board
15 consisting of at least five (5) but not more than nine (9) members.
16 (b) Except as provided in subsection (d) of this section, the
17 formation charter shall provide that:
18 (1) At least one (1) member of the board of the economic
19 development district shall be a property owner or business owner within the
20 economic development district; and
21 (2) At least one (1) member of the board of the economic
22 development district shall be an individual who holds no ownership interest
23 in any property or business within the economic development district.
24 (c) All members of the board of an economic development district shall
25 be qualified electors of the establishing authority.
26 (d) The establishing authority may serve as the board of the economic
27 development district.
28 (e) For a board of an economic development district established in a
29 cooperative area, the agreement establishing the cooperative area shall
30 provide for the allocation of members of the board of the economic
31 development district among the participants of the cooperative area.
32
33 14-177-302. Appointment -- Terms.
34 (a)(1) The members of the board of an economic development district
35 shall be appointed:
36 (A) By the mayor if the establishing authority is a
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1 municipality;
2 (B) By the county judge if the establishing authority is a
3 county; and
4 (C) As designated in the agreement establishing the
5 cooperative area if the economic development district was established in a
6 cooperative area.
7 (2)(A) An appointee to a board of an economic development
8 district is subject to confirmation by the establishing authority of the
9 person making the appointment.
10 (B) If an appointee is not ratified or rejected by a
11 majority of the establishing authority present and participating within sixty
12 (60) days of the appointment, the appointment is deemed to be rejected.
13 (b)(1) Except as provided in subdivision (b)(2) of this section, the
14 formation charter shall reserve a seat on the board of the economic
15 development district for a person appointed by the:
16 (A) Mayor of each municipality having corporate limits
17 within the economic development district at the time of formation; and
18 (B) County judge of each county in which the economic
19 development district is located.
20 (2) The establishing authority of an economic development
21 district may elect not to provide a seat on the board of the economic
22 development district to a municipality or county in which the economic
23 development district is located if the formation charter designates a
24 reserved property charge and a reserved sales charge in favor of the excluded
25 municipality or county equal to the ad valorem property tax, sales and use
26 tax, and alcoholic beverage sales tax that would have been received by the
27 municipality or county but for the existence of the economic development
28 district.
29 (c)(1) A member of a board of an economic development district:
30 (A) Shall serve a term of four (4) years; and
31 (B) Is eligible for reappointment for additional terms.
32 (2) Initial appointments to a board of an economic development
33 district shall be staggered so that:
34 (A) One (1) member serves an initial term of one (1) year;
35 (B) One (1) member serves an initial term of two (2)
36 years; and
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1 (C) One (1) member serves an initial term of three (3)
2 years.
3 (d) A vacancy on a board of an economic development district shall be
4 filled in the same manner as provided for appointments under this section.
5
6 14-177-303. Conflicts of interest -- Removal.
7 (a) A member of a board of an economic development district shall:
8 (1) Disclose any potential conflicts of interest arising from
9 his or her duties on the board of the economic development district; and
10 (2) Recuse from any decisions in which a conflict of interest is
11 present unless the conflict of interest is disclosed and waived by a majority
12 vote of the other members of the board of the economic development district.
13 (b) A member of a board of an economic development district may be
14 removed by the establishing authority for the economic development district
15 for cause, including without limitation nonperformance, malfeasance, or
16 conflict of interest.
17
18 14-177-304. Powers and duties.
19 (a) The board of an economic development district shall:
20 (1) Develop and approve a strategic plan outlining the vision,
21 goals, and strategies for economic development within the economic
22 development district;
23 (2) Annually review and update the strategic plan approved under
24 subdivision (a)(1) of this section;
25 (3) Approve an annual budget and oversee the financial
26 management of the economic development district, ensuring that funds are used
27 efficiently and aligned with the strategic plan of the economic development
28 district;
29 (4) Oversee the distribution of grant funds, ensuring that all
30 grants align with the economic development district's objectives and comply
31 with established criteria for the grants;
32 (5) Establish and monitor performance metrics for the economic
33 development district's initiatives and use the data obtained to guide the
34 strategic decisions of the board of the economic development district; and
35 (6)(A) Prepare an annual report detailing the economic
36 development district's financial status, progress toward the goals of the
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1 economic development district, and ongoing and planned activities of the
2 economic development district.
3 (B) The annual report prepared under subdivision (a)(6)(A)
4 of this section shall be:
5 (i) Made publicly available; and
6 (ii) Presented to the establishing authority of the
7 economic development district.
8 (b) The board of an economic development district may:
9 (1) Exercise zoning and land use planning authority within the
10 economic development district in accordance with rules established by the
11 board of the economic development district;
12 (2) Reduce or waive franchise fees as an incentive for utilities
13 to provide or enhance services within the economic development district;
14 (3) Determine that a venture or facility is beneficial to the
15 economic development district if the venture or facility promotes economic
16 development;
17 (4) Enter into and enforce contracts in accordance with the
18 procurement requirements of the establishing authority of the economic
19 development district;
20 (5) Acquire, hold, and possess real and personal property; and
21 (6)(A) Except as provided in subdivision (b)(6)(B) of this
22 section, exercise any lawful powers not denied the economic development
23 district by the formation charter.
24 (B) The board of an economic development district shall
25 not exercise the powers granted under this section in a manner that adversely
26 impairs any outstanding debt obligations that are specifically secured by
27 fees and charges or that would reasonably impair the repayment of an
28 outstanding bond.
29 (c) A board of an economic development district has the powers stated
30 in this section unless specifically restricted under the formation charter.
31
32 14-177-305. Meetings of board of economic development district.
33 (a) A board of an economic development district shall meet at least
34 quarterly but may meet more frequently as needed.
35 (b)(1) A meeting of a board of an economic development district shall
36 be open to the public, except when the board of the economic development
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1 district calls an executive session under subdivision (b)(2) of this section.
2 (2) A board of an economic development district may call an
3 executive session to discuss matters that:
4 (A) Require confidentiality under state or federal law;
5 (B) Require confidentiality under a contract to which the
6 economic development district is a party; or
7 (C) Constitute records that are exempt from the Freedom of
8 Information Act of 1967, � 25-19-101 et seq.
9 (c) Minutes of all meetings of a board of an economic development
10 district shall be recorded and made available to the public.
11
12 14-177-306. Records exempt from disclosure.
13 (a) Records of a board of an economic development district and records
14 of employees of the economic development district that, if disclosed, would
15 give an advantage to competitors or bidders are exempt from the Freedom of
16 Information Act of 1967, � 25-19-101 et seq., unless approval for release of
17 the records is granted by the business entity that is the subject of the
18 records.
19 (b) The exemption allowed under subsection (a) of this section does
20 not apply to records of expenditures or grants that are made or administered
21 by the board of the economic development district and are otherwise
22 disclosable under this chapter.
23
24 14-177-307. Financial oversight and transparency.
25 (a)(1) The financial operations of an economic development district
26 shall be audited annually by an independent auditor to ensure proper use of
27 funds and adherence to all legal requirements.
28 (2) The audit report obtained under subdivision (a)(1) of this
29 section shall be submitted to the establishing authority of the economic
30 development district within ninety (90) days after receipt of the audit
31 report by the board of the economic development district.
32 (b) Financial records related to the economic development district's
33 operations, including the sources and uses of funds received by the economic
34 development district, shall be accessible to the public to ensure
35 transparency and accountability.
36
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1 14-177-308. Authority to place economic development district in
2 receivership -- Appointment of receiver -- Bankruptcy prohibited.
3 (a) The establishing authority or the board of an economic development
4 district may place the economic development district into receivership if:
5 (1) The board of the economic development district fails to
6 fulfill its duties or obligations under this chapter;
7 (2) The economic development district becomes insolvent or lacks
8 sufficient financial resources to meet the obligation of the economic
9 development district; or
10 (3) There is evidence of malfeasance, mismanagement, or fraud by
11 the board of the economic development district that threatens the effective
12 operation of the economic development district or the proper administration
13 of the financial resources of the economic development district.
14 (b)(1) The board of an economic development district or the
15 establishing authority of the economic development district may petition the
16 circuit court in the county where the economic development district is
17 located for an order placing the economic development district into
18 receivership.
19 (2) A petition under subdivision (b)(1) of this section shall
20 demonstrate the specific grounds for the receivership, including without
21 limitation documentation of the failures of the board of the economic
22 development district or the insolvency of the economic development district.
23 (3) The circuit court receiving a petition filed under this
24 subsection shall hear the petition on an expedited basis.
25 (c) Upon the determination by a circuit court that grounds for
26 receivership of an economic development district exist, the circuit court
27 shall:
28 (1) Appoint the establishing authority of the economic
29 development district or its designee as the receiver of the economic
30 development district; and
31 (2) Grant the receiver full authority to suspend the board of
32 the economic development district and administer the economic development
33 district with all rights, privileges, and obligations conferred on the board
34 of the economic development district under this chapter.
35 (d) The establishing authority of the economic development district
36 may replace any members of the board of the economic development district
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1 during the receivership.
2 (e) A receivership authorized under this section shall:
3 (1) Continue until the economic development district is able to
4 fulfill its statutory and financial obligations, as determined by the
5 establishing authority of the economic development district; and
6 (2) End upon petition by the establishing authority of the
7 economic development district to the circuit court certifying that the need
8 for the receivership has ended.
9 (f) An economic development district shall not file for bankruptcy.
10
11 Subchapter 4 -- Economic Development District Funding
12
13 14-177-401. Funds and use of funds.
14 (a) Funding for grants, credits, or abatements under this chapter
15 within an economic development district may be derived from any combination
16 of the following sources:
17 (1) The payment of a property charge under � 14-177-402;
18 (2) The payment of a sales charge under � 14-177-403;
19 (3) The payment of an additional property charge under � 14-177-
20 406;
21 (4) The payment of an additional sales charge under � 14-177-
22 407; and
23 (5) Public and private grants.
24 (b) An economic development district may:
25 (1) Solicit and accept grants and other funds from public
26 sources; and
27 (2) Accept contributions and donations from private sources.
28 (c) An economic development district may pledge any available funds in
29 whole or in part to the repayment of bond financing.
30 (d) All available funds of an economic development district shall be
31 used exclusively within the boundaries of the economic development district:
32 (1) For economic development construction and public
33 infrastructure in accordance with the economic development plan for the
34 economic development district; or
35 (2) To pay expenses necessary to accomplish the economic
36 development goals of the economic development district as stated in the
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1 formation charter.
2
3 14-177-402. Property charge -- Exemption from ad valorem taxation.
4 (a) All property within an economic development district is exempt
5 from the payment of ad valorem property taxes.
6 (b)(1) Property located within the boundaries of an economic
7 development district is subject to a property charge.
8 (2) A property charge shall be collected at the same time and in
9 the same manner as ad valorem property taxes.
10 (3) Property that would be exempt from ad valorem property taxes
11 outside of an economic development district is exempt from a property charge
12 imposed by an economic development district.
13 (c)(1) As long as property is within an economic development district,
14 the county collector of the county in which the economic development district
15 is located shall remit:
16 (A) A pro rata portion of the property charge equal to the
17 property charge baseline:
18 (i) To the taxing authorities and improvement
19 districts that would have received ad valorem property taxes if the property
20 were not in an economic development district; or
21 (ii) For a cooperative area, in accordance with the
22 allocation agreed to by municipalities and counties participating in the
23 cooperative area; and
24 (B) Any remaining amount to the economic development
25 district.
26 (2) If the property charge is less than the property charge
27 baseline in any year, the property charge baseline shall be reduced to the
28 amount of the property charge actually received by the county collector.
29 (d) A board of an economic development district may receive, spend,
30 pledge, save, grant, allocate, or abate the property charge increment for
31 property located within the boundaries of the economic development district
32 unless specifically prohibited in the formation charter.
33 (e) The failure to pay a property charge under this section is subject
34 to the same remedies and enforcement as would otherwise apply to the failure
35 to pay ad valorem property taxes if the property were not within an economic
36 development district.
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1
2 14-177-403. Sales charge -- Exemption from sales and use tax and
3 alcoholic beverage sales tax.
4 (a) A sales transaction sourced within an economic development
5 district is exempt from sales and use tax and the alcoholic beverage sales
6 tax.
7 (b)(1) A sales transaction sourced to property within an economic
8 development district is subject to a sales charge.
9 (2) A business operating within an economic development district
10 shall collect and remit a sales charge to the economic development district
11 that imposed the sales charge.
12 (3) A sales charge shall be collected and administered at the
13 same time and in the same manner as sales and use taxes.
14 (4) A sales transaction that would be exempt from sales and use
15 tax or the alcoholic beverage sales tax outside of an economic development
16 district is exempt from a sales charge imposed by an economic development
17 district.
18 (c)(1) As long as property is within an economic development district,
19 the Department of Finance and Administration shall remit:
20 (A) A pro rata portion of the sales charge imposed on
21 sales transactions sourced to property within the economic development
22 district equal to the sales charge baseline:
23 (i) To the taxing authorities that would have
24 received sales and use taxes and alcoholic beverage sales taxes if the sales
25 transaction had not occurred in an economic development district; or
26 (ii) For a cooperative area, in accordance with the
27 allocation agreed to by the municipalities and counties participating in the
28 cooperative area; and
29 (B) Any remaining amount to the economic development
30 district.
31 (2) If the sales charge is less than the sales charge baseline
32 in any year, the sales charge baseline shall be reduced to the amount of the
33 sales charge actually received by the department.
34 (d)(1) The state is entitled to the portion of the sales charge that
35 would have been received by the state if the sales transaction were not
36 sourced to property within an economic development district.
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1 (2) The board of an economic development district may receive,
2 spend, pledge, save, grant, allocate, or abate the sales charge increment
3 unless specifically prohibited in the formation charter.
4 (e) The failure to collect and remit a sales charge under this section
5 is subject to the same remedies and enforcement as would otherwise apply to
6 the failure to pay sales or use tax or the alcoholic beverage sales tax if
7 the sales transaction were not sourced to property within an economic
8 development district.
9
10 14-177-404. Reserved property charge -- Allocation.
11 (a)(1) Except as provided in subdivision (a)(2) of this section, the
12 establishing authority for an economic development district may designate a
13 reserved property charge in the formation charter as a percentage of the
14 total property charge in excess of the property charge baseline.
15 (2) A reserved property charge shall not include any additional
16 property charge authorized by the board of an economic development district
17 under � 14-177-406.
18 (b) The formation charter may designate a reserved property charge
19 that applies for only a specified time period.
20 (c) A reserved property charge is invalid unless the reserved property
21 charge is expressly provided for in the formation charter.
22 (d)(1) If there is a reserved property charge, the reserved property
23 charge shall be remitted in accordance with:
24 (A) The allocation provided by the formation charter; or
25 (B) For a cooperative area, the agreement of the
26 municipalities and counties participating in the cooperative area.
27 (2) Unless otherwise provided by agreement among the taxing
28 authorities that would otherwise have received ad valorem property taxes if
29 the economic development district did not exist, the formation charter shall
30 provide that any reserved property charge be allocated among the taxing
31 authorities in the same percentage as the ad valorem property taxes would
32 otherwise have been allocated if the economic development district did not
33 exist.
34
35 14-177-405. Reserved sales charge -- Allocation.
36 (a)(1) Except as provided in subdivision (a)(2) of this section, the
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1 establishing authority for an economic development district may designate a
2 reserved sales charge in the formation charter as a percentage of the total
3 sales charge in excess of the sales charge baseline.
4 (2) A reserved sales charge shall not include any additional
5 sales charge authorized by the board of an economic development district
6 under � 14-177-407.
7 (b) The formation charter may designate a reserved sales charge that
8 applies for only a specified time period.
9 (c) A reserved sales charge is invalid unless the reserved sales
10 charge is expressly provided for in the formation charter.
11 (d)(1) If there is a reserved sales charge, the reserved sales charge
12 shall be remitted in accordance with:
13 (A) The allocation provided by the formation charter; or
14 (B) For a cooperative area, the agreement of the
15 municipalities and counties participating in the cooperative area.
16 (2) Unless otherwise provided by agreement among the taxing
17 authorities that would otherwise have received sales and use taxes and
18 alcoholic beverage sales tax if the economic development district did not
19 exist, the formation charter shall provide that any reserved sales charge be
20 allocated among the taxing authorities in the same percentage as the sales
21 and use taxes and alcoholic beverage sales tax would otherwise have been
22 allocated if the economic development district did not exist.
23
24 14-177-406. Additional property charge.
25 (a)(1) The board of an economic development district may impose an
26 additional millage rate-based charge on the value of property within the
27 economic development district.
28 (2) An additional property charge imposed under subdivision
29 (a)(1) of this section shall be collected and allocated in the same manner as
30 the property charge that applies to property within the economic development
31 district.
32 (b) The additional property charge allowed under this section shall
33 not apply to property that would be exempt from ad valorem tax if the
34 property were not located within an economic development district.
35 (c)(1) Except as provided in subdivision (c)(2) of this section, a
36 board of an economic development district shall not increase an additional
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1 property charge imposed under this section by more than ten percent (10%) of
2 the millage rate that would have applied to the property if the property were
3 not located in an economic development district.
4 (2) A board of an economic development district may increase an
5 additional property charge imposed under this section by more than ten
6 percent (10%) of the millage rate that would have applied to the property if
7 the property were not located in an economic development district if, at the
8 time of the proposed increase, all property owners within the economic
9 development district to which the additional property charge would apply
10 provide written consent to the increase.
11
12 14-177-407. Additional sales charge.
13 (a)(1) The board of an economic development district may impose an
14 additional percentage-based charge on sales transactions occurring within the
15 economic development district.
16 (2) An additional sales charge imposed under subdivision (a)(1)
17 of this section shall be collected and allocated in the same manner as the
18 sales charge that applies to sales transactions sourced to property within
19 the economic development district.
20 (b) The additional sales charge allowed under this section shall not
21 apply to sales transactions that would be exempt from sales and use taxes if
22 the sales transaction did not occur within an economic development district.
23 (c)(1) Except as provided in subdivision (c)(2) of this section, a
24 board of an economic development district shall not increase an additional
25 sales charge imposed under this section by more than ten percent (10%) of the
26 sales and use tax rate that would have applied to the sales transaction if
27 the sales transaction had not been sourced to property within an economic
28 development district.
29 (2) A board of an economic development district may increase an
30 additional sales charge imposed under this section by more than ten percent
31 (10%) of the sales and use tax rate that would have applied to the sales
32 transaction if the sales transaction had not been sourced to property within
33 an economic development district if, at the time of the proposed increase,
34 all property owners within the economic development district to which the
35 additional sales charge would apply provide written consent to the increase.
36
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1 14-177-408. Cooperation of county officials and Department of Finance
2 and Administration.
3 (a)(1) A county assessor serving an area within the boundaries of an
4 economic development district shall cooperate with the board of the economic
5 development district to assess property within the economic development
6 district for the amount of the property charge for the economic development
7 district.
8 (2) A county assessor shall calculate the property charge for an
9 economic development district applying the same timing, methods, and
10 penalties used to appraise and assess the property located in the economic
11 development district that would apply if the property were not in an economic
12 development district.
13 (3)(A) A county assessor is entitled to any commission to which
14 the county assessor would be entitled if the economic development district
15 did not exist, based on the amount of the property charge baseline and the
16 reserved property charge.
17 (B) Any commission to which a county assessor is entitled
18 shall be paid out of the property charge baseline and any reserved property
19 charge.
20 (b)(1) A county collector serving an area within the boundaries of an
21 economic development district shall cooperate with the board of the economic
22 development district to collect the property charge for the economic
23 development district.
24 (2) A county collector shall apply the same timing, methods, and
25 penalties used for the collection of the property charge that would be
26 applicable if the property were not in an economic development district.
27 (3)(A) A county collector is entitled to any commission to which
28 the county collector would be entitled if the economic development district
29 did not exist, based on the amount of the property charge baseline and any
30 reserved property charge.
31 (B) Any commission to which a county assessor is entitled
32 shall be paid out of the property charge baseline and any reserved property
33 charge.
34 (c) The Department of Finance and Administration shall:
35 (1) Receive and collect the sales charge for an economic
36 development district from all retailers and persons responsible for paying
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1 the sales charge within the economic development district; and
2 (2) Apply the same timing, methods, and penalties for the
3 collection of the sales charge that would be applicable if the sales
4 transaction were not sourced to property within an economic development
5 district.
6
7 Subchapter 5 -- Economic Development District Grants
8
9 14-177-501. Authorization for grants.
10 (a) The formation charter may authorize the board of an economic
11 development district to provide assistance in the form of grants of
12 forgivable loans or transferable credits against future payments of the
13 property charge for the economic development district above the property
14 charge baseline or the sales charge for the economic development district
15 above the sales charge baseline, or both.
16 (b) The board of an economic development district may waive or reduce
17 utility franchise fees that would have otherwise been due within the economic
18 development district.
19 (c) The board of an economic development district may make payments of
20 cash for economic development construction and public infrastructure within
21 the economic development district.
22
23 14-177-502. Grant eligibility and terms.
24 (a) A grant under this subchapter may be made available only to:
25 (1) An owner of property within the boundaries of an economic
26 development district;
27 (2) A tenant of property within the boundaries of an economic
28 development district if the tenant has a lease term that extends beyond the
29 loan forgiveness period under the grant; or
30 (3) A public or franchised utility service provider.
31 (b)(1) A grant may be awarded under this subchapter in the form of a
32 forgivable loan in an amount based on the scope and expected impact of the
33 proposed project, as evaluated and determined by the board of the economic
34 development district.
35 (2) A grant awarded under this subchapter as a forgivable loan
36 may be structured so that some or all of the amount due may be forgiven if
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1 the conditions of the grant are met.
2 (3) The interest rate for a forgivable loan granted under this
3 subchapter may be below market or zero percent (0%) to encourage uptake and
4 project initiation.
5 (4) The board of an economic development district may require
6 security for the repayment of a forgivable loan granted under this
7 subchapter.
8 (c) A grant may be awarded under this subchapter in the form of
9 transferable credits useable against future payments of the property charge
10 above the property charge increment or the sales charge above the sales
11 charge increment, or both.
12 (d) The recipient of a grant under this subchapter shall submit an
13 annual report to the board of the economic development district detailing the
14 recipient's progress toward meeting the criteria for the forgivable loan or
15 transferable credits awarded under the grant.
16 (e) The board of an economic development district may employ an
17 independent review committee or third-party auditor to verify that a
18 recipient of a grant awarded under this subchapter has met the criteria for
19 the grant before approving forgiveness of the loan or additional allocation
20 of transferable credits.
21
22 14-177-503. Grant application process.
23 (a) An applicant for a grant under this subchapter shall submit to the
24 board of the economic development district a detailed proposal outlining the
25 proposed project, the expected outcomes of the proposed project, the budget
26 for the proposed project, and the alignment of the proposed project with the
27 objectives of the economic development district.
28 (b)(1) A grant awarded under this subchapter is contingent on the
29 recipient's meeting predefined performance targets established by the board
30 of the economic development district.
31 (2) The predefined performance targets for a grant awarded in
32 the form of transferable credits shall be based on any combination of job
33 creation, job retention, average salary increases, investment of funds other
34 than grant funds received from the economic development district and spent
35 within the economic development district, and the provision of specific
36 services or amenities within the economic development district.
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1 (c) The board of an economic development district shall review an
2 application submitted under this section and evaluate the application based
3 on the strategic fit, potential impact, and feasibility of the proposed
4 project.
5
6 14-177-504. Reporting requirement.
7 (a) A recipient of a grant under this subchapter shall submit to the
8 board of the economic development district that awarded the grant an annual
9 accounting of the use of the grant funds and an annual report detailing the
10 recipient's compliance with the terms of the grant, including without
11 limitation updates on investment levels, employment figures, and other
12 relevant performance-based criteria.
13 (b) The failure of a recipient of a grant awarded under this
14 subchapter to meet the agreed-upon terms of the grant may result in the
15 recapture of benefits received under the grant, repayment of any disbursed
16 loan funds, renegotiation of any loan terms, or other remedies deemed
17 appropriate by the board of the economic development district, including
18 without limitation foreclosure of the security for a forgivable loan awarded
19 under this subchapter.
20
21 Subchapter 6 -- Abatement of Property Charge Increment or Sales Charge
22 Increment
23
24 14-177-601. Abatement authorized.
25 (a) The formation charter may authorize the board of the economic
26 development district to grant temporary abatement of the property charge
27 increment or the sales charge increment, or both, to eligible businesses and
28 developers within the economic development district to promote economic
29 development, attract investments, mitigate blight, and increase or retain
30 employment opportunities.
31 (b) Abatement of the property charge increment or the sales charge
32 increment, or both, under this subchapter may take the form of a freeze or
33 reduction in the future assessment of the property charge increment or the
34 sales charge increment, or both.
35
36 14-177-602. Eligibility and terms for abatement.
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1 (a) To qualify for abatement of the property charge increment or the
2 sales charge increment, or both, under this subchapter, an applicant shall
3 demonstrate to the board of the economic development district that the
4 applicant's business or project will contribute to or facilitate job
5 creation, job retention, job attraction, economic growth, or economic
6 diversification within the economic development district.
7 (b)(1) Criteria for abatement of the property charge increment or the
8 sales charge increment, or both, under this subchapter may include without
9 limitation the scale of the investment by the applicant, the number of jobs
10 created or retained by the applicant, the longevity and sustainability of the
11 applicant's business, and the strategic importance of the applicant's
12 business to the economic objectives of the economic development district.
13 (2) Abatement of the property charge increment or the sales
14 charge increment, or both, under this subchapter may also be granted to
15 applicants whose business or project is complimentary to the goals of the
16 economic development district.
17 (c) An applicant for abatement of the property charge increment or the
18 sales charge increment, or both, under this subchapter shall not be granted
19 an abatement under this subchapter unless the applicant is in good standing
20 with the State of Arkansas.
21 (d)(1) The terms of an abatement of the property charge increment or
22 the sales charge increment, or both, under this subchapter, including the
23 duration and percentage of the abatement, shall be determined by the board of
24 the economic development district based on the expected economic impact of
25 the applicant's proposed business or project.
26 (2) The duration of any abatement of the property charge
27 increment or the sales charge increment, or both, under this subchapter shall
28 not exceed thirty (30) years.
29 (e) The board of an economic development district may require periodic
30 reviews of a business or project for which an applicant has been granted an
31 abatement of the property charge increment or the sales charge increment, or
32 both, under this subchapter to ensure that the business or project continues
33 to meet the eligibility criteria established at the time the abatement was
34 granted.
35
36 14-177-603. Application process for abatement -- Agreement.
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1 (a) An applicant seeking abatement of the property charge increment or
2 the sales charge increment, or both, under this subchapter shall submit a
3 detailed proposal to the board of the economic development district
4 outlining:
5 (1) The nature of the proposed business or project;
6 (2) The expected economic benefits of the proposed business or
7 project; and
8 (3) A justification for the request for abatement of the
9 property charge increment or the sales charge increment, or both.
10 (b) The board of an economic development district shall:
11 (1) Review all applications submitted under this section; and
12 (2) Determine whether to approve each application based on the:
13 (A) Strategic fit of the proposed business or project with
14 the goals of the board of the economic development district;
15 (B) Potential economic benefit of the proposed business or
16 project to the economic development district; and
17 (C) Any other criteria as provided in � 14-177-602.
18 (c) If a board of an economic development district approves an
19 application submitted under this section, the board of the economic
20 development district and the applicant shall execute an agreement concerning
21 the terms of the abatement of the property charge increment or the sales
22 charge increment, or both, under this subchapter.
23
24 14-177-604. Reporting requirement.
25 (a) A recipient of an abatement of the property charge increment or
26 the sales charge increment, or both, under this subchapter shall submit an
27 annual report to the board of the economic development district that awarded
28 the abatement detailing the recipient's compliance with the terms of the
29 abatement agreement, including without limitation updates on investment
30 levels, employment figures, and other relevant performance-based criteria.
31 (b) The failure of a recipient of an abatement under this subchapter
32 to meet the agreed-upon terms of the abatement may result in the:
33 (1) Revocation of the abatement of the property charge increment
34 or the sales charge increment, or both; and
35 (2) Board of the economic development district's requiring:
36 (A) Repayment of the abated property charge increment and
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1 the sales charge increment; or
2 (B) Payment of any performance security.
3
4 Subchapter 7 -- Economic Development District Bonds
5
6 14-177-701. Issuance of bonds -- Terms and conditions.
7 (a) The formation charter may authorize the board of the economic
8 development district being formed to issue bonds to finance economic
9 development construction within the economic development district in
10 accordance with the economic development plan.
11 (b) The board of an economic development district shall determine the
12 terms of bonds issued under this subchapter, including the maturity, interest
13 rate, and repayment schedule for the bonds, based on the projected cash flow
14 from available funds and the financial needs of the projects proposed to be
15 funded by the bonds.
16 (c) A two-thirds majority vote of the board of an economic development
17 district is required to approve bonds issued under this subchapter.
18 (d) Approval for the issuance of bonds from the establishing authority
19 of the economic development district may be included in the formation
20 charter.
21
22 14-177-702. Repayment of bonds -- Oversight.
23 (a) The repayment of bonds issued under this subchapter may be funded
24 through, paid for, and secured by available funds as determined by the board
25 of the economic development district.
26 (b)(1) Available funds may be pledged as security for bonds issued
27 under this subchapter to allow the economic development district to use the
28 available funds to service debt obligations related to the bonds.
29 (2) If available funds are pledged for the repayment of bonds
30 under this subsection, the board of an economic development district shall
31 establish a detailed plan demonstrating the sufficiency of the available
32 funds to cover debt service requirements while maintaining the operational
33 and developmental objectives and obligations of the economic development
34 district.
35 (c) The board of an economic development district shall:
36 (1) Establish a bond oversight committee to:
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1 (A) Monitor the use of bond proceeds under this
2 subchapter; and
3 (B) Ensure that the bond proceeds are used for the
4 purposes specified in the bond issuance documents; and
5 (2) Conduct regular audits to assess the:
6 (A) Management and utilization of bond proceeds under this
7 subchapter; and
8 (B) Adequacy of the available funds to service debt
9 obligations related to the bonds issued under this subchapter.
10
11 14-177-703. Guarantee of bond repayment.
12 (a) To enhance the creditworthiness of bonds issued under this
13 subchapter and to support substantial economic development initiatives, an
14 establishing authority may guarantee the repayment of bonds issued by an
15 economic development district using any portion or combination of the
16 property charge baseline, sales charge baseline, reserved property charge,
17 and reserved sales charge received by the establishing authority.
18 (b) An establishing authority's guarantee of bonds under this section
19 shall be structured as follows:
20 (1) For the first three (3) years after the issuance of the
21 bonds, the establishing authority may guarantee up to one hundred percent
22 (100%) of the bond repayments;
23 (2) For the fourth and fifth year after the issuance of the
24 bonds, the establishing authority may guarantee up to fifty percent (50%) of
25 the bond repayments; and
26 (3) For the sixth and seventh years after the issuance of the
27 bonds, the establishing authority may guarantee up to thirty-three percent
28 (33%) of the bond repayments.
29 (c) The maturity date of bonds guaranteed under this section may
30 extend beyond the term of the guarantee provided by the establishing
31 authority.
32 (d) A decision to guarantee the repayment of bonds under this section
33 shall be approved by a majority vote of the members of the establishing
34 authority.
35 (e) An establishing authority that guarantees the repayment of bonds
36 under this section shall:
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1 (1)(A) Establish a special guarantee fund from which guaranteed
2 amounts will be paid.
3 (B) The special guarantee fund established under
4 subdivision (e)(1)(A) of this section shall be replenished annually with the
5 specified portion of the property charge baseline, reserved property charge,
6 sales charge baseline, and reserved sales charge received by the economic
7 development district.
8 (C) An establishing authority that establishes a special
9 guarantee fund under subdivision (e)(1)(A) of this section shall establish
10 protocols to manage the special guarantee fund to ensure that there are
11 sufficient funds available to meet the guarantee obligations of the
12 establishing authority under this section as they become due;
13 (2) Conduct an annual independent audit of the special guarantee
14 fund established under subdivision (e)(1)(A) of this section and the
15 management of the special guarantee fund to ensure transparency and proper
16 use of the establishing authority's revenues; and
17 (3) Implement risk mitigation strategies, including without
18 limitation setting aside reserve funds or obtaining reinsurance, to manage
19 the potential fiscal impact of the guarantee provided under this section.
20 (f)(1) Before approving a guarantee under this section, an
21 establishing authority shall conduct a risk assessment to evaluate the
22 potential financial impact on the establishing authority's finances.
23 (2) The risk assessment required under subdivision (f)(1) of
24 this section shall consider the:
25 (A) Viability of the projects funded by the bonds issued
26 under this chapter; and
27 (B) Expected revenues of the economic development
28 district.
29
30 SECTION 1. DO NOT CODIFY. Contingent effective date.
31 This act is effective on and after January 1, 2027, contingent on
32 Senate Joint Resolution 15 of the Ninety-Fifth General Assembly being
33 referred to the people and adopted at the 2026 general election.
34
35
36
31 04/16/2025 9:25:56 AM JLL259Every fact on this page links to its source, starting with the official bill record.