Arkansas Administrative Code › Agency 168 - Arkansas Economic Development Commission › Rule 168.00.07-002 - Tourism Development Incentive Act Rules

Current through Register Vol. 49, No. 6, June, 2024
I.
Introduction
To encourage growth in Arkansas's tourism industry, Act 291 was
			 passed by the 81st General Assembly in 1997 and amended in 1999, 2001, 2005 and
			 2007. The legislation's purpose is to stimulate expansion of Arkansas's tourism
			 industry by offering economic incentives to qualified private development
			 projects in the form of sales and income tax credits. Since the intent is to
			 generate additional tourist traffic to Arkansas, each proposed project must
			 develop a marketing plan that targets 25% of its visitors from out-of-state,
			 meet other requirements and submit a completed application prior to incurring
			 any project costs. See Arkansas Code Annotated § 15-11-501 et seq.
For more information, please contact:
Arkansas Economic Development Commission
Business Development Section
One Capitol Mall
Little Rock, AR 72201
(501) 682-7675
II.
Definitions
A. "Agreement" means a financial incentive
		  agreement entered into pursuant to § 15-11-506, by and between the
		  director and an approved company, with respect to a tourism attraction
		  project;
B. "Approved company"
		  means any eligible company that is seeking to undertake a tourism attraction
		  project that has been approved by the Director after obtaining the review and
		  advice of the Director of the Department of Parks and Tourism;
C. "Approved costs" mean:
1. Obligations incurred on or after the
		  effective date of the financial incentive agreement associated with the
		  construction, or expansion of a tourism attraction for labor and to vendors,
		  contractors, subcontractors, builders, suppliers, delivery men, and material
		  men in connection with the acquisition, construction, equipping, and
		  installation of a tourism attraction project;
2. The costs of acquiring real property or
		  rights in real property in connection with a tourism attraction project, and
		  any costs incidental thereto;
3.
		  The cost of contract bonds and of insurance of all kinds that may be required
		  or necessary during the course of the acquisition, construction, equipping, and
		  installation of a tourism attraction project which is not paid by the vendor,
		  supplier, delivery man, contractor, or otherwise provided;
4. All costs of architectural and engineering
		  services, including, but not limited to, estimates, plans and specifications,
		  preliminary investigations, and supervision of construction and installation,
		  as well as for the performance of all the duties required by or consequent to
		  the acquisition, construction, equipping, and installation of a tourism
		  attraction project;
5. All costs
		  required to be paid under the terms of any contract for the acquisition,
		  construction, equipping, and installation of a tourism attraction
		  project;
6. All costs required for
		  the installation of utilities in connection with a tourism attraction project,
		  including, but not limited to, water, sewer, sewage treatment, gas,
		  electricity, and communications, and including off-site construction of utility
		  extensions paid for by the approved company; and
7. All other costs comparable with those
		  described in this subsection.
8.
		  "Approved costs" does not include:
(a) Costs
		  incurred prior to the effective date of the financial incentive agreement,
		  except for pre-construction costs.
(b) Expenditures for routine repair and
		  maintenance that do not result in new construction, or expansion;
(c) Routine operating expenditures;
(d) Expenditures incurred at multiple
		  facilities.
D. "Director" means the director of the
		  Arkansas Economic Development Commission or the director's designated
		  representative;
E. "Eligible
		  company" means any corporation, limited liability company, partnership,
		  registered limited liability partnership, sole proprietorship, or business
		  trust, or any other entity that invests a minimum of five hundred thousand
		  dollars ($500,000) in a high unemployment county or one million dollars
		  ($1,000,000) in any other county for the purpose of constructing, operating or
		  intending to operate a tourism attraction project, whether owned or leased,
		  within the state that meets the standards promulgated by the director pursuant
		  to § 15-11-504;
F. "Final
		  approval" means the action taken by the director authorizing the eligible
		  company to receive inducements under § 15-11-507 and Section 5 of Act 1135
		  of 1999;
G. "High unemployment"
		  means an unemployment rate equal to or in excess of one hundred fifty percent
		  (150%) of the state's average unemployment rate for the preceding calendar year
		  as specified by statewide annual labor force statistics compiled by the
		  Arkansas Department of Workforce Services, when the state's annual average
		  unemployment rate is six percent (6%) or below. When the state's annual average
		  unemployment rate is above six percent (6%), "high unemployment" means equal to
		  or in excess of three percent (3%) above the state's average unemployment rate
		  for the preceding calendar year as specified by statewide annual labor force
		  statistics compiled by the Arkansas Department of Workforce Services.
H. "Increased state sales tax liability"
		  means that portion of an approved company's reported state sales (gross
		  receipts) tax liability resulting from taxable sales of goods and services to
		  its customers at the tourism attraction for any monthly sales tax reporting
		  period after the approved company provides the certification required by §
		  15-11-507(b) of Act 1135 of 1999, which exceeds the reported state sales tax
		  liability for sales to its customers for the same month in the calendar year
		  immediately preceding such certification. If an approved company purchases an
		  existing tourism attraction which was selling goods and services at the time of
		  purchase and which may or may not have been entitled to the benefits of this
		  subchapter prior to such purchase, the 'increased state sales tax liability'
		  resulting from any investments in the tourism attraction by the new owners
		  means that portion of the approved company's reported state sales (gross
		  receipts) tax liability resulting from taxable sales of goods and services to
		  its customers at the tourism attraction for any monthly sales tax reporting
		  period after the approved company provides the certification required by §
		  15-11-507(b) of Act 1135 of 1999, which exceeds the reported state sales tax
		  liability for sales made by the seller of the tourism attraction for the same
		  month in the calendar year immediately preceding such certification. The
		  prohibitions against disclosure of confidential tax information provided in
		  § 26-18-301 shall not apply for purposes of computing the credit
		  available.
I. "Inducements" means
		  the Arkansas sales tax credit as prescribed in § 15-11-507 and/or the
		  Arkansas income tax credit as prescribed in Section 5 of Act 1135 of
		  1999;
J. "Investment Threshold"
		  means the minimum amount of eligible project costs that must be incurred in
		  order to qualify for eligibility;
K. "New full-time permanent employee" means a
		  position or job which was created as a result of a tourism attraction project,
		  and which is filled by one (1) or more employees or contractual employees who
		  were Arkansas taxpayers during the year in which the tax credits or incentives
		  were earned or claimed. The employee or employees must work an average of at
		  least thirty (30) hours per week. Provided, however, in order to qualify for
		  the provisions of this subchapter, a contractual employee must be offered a
		  benefits package comparable to a direct employee of the business seeking
		  incentives;
L. "Payroll" means the
		  total taxable wages, including overtime and bonuses, paid during the preceding
		  tax year of the approved tourism attraction to the new full-time permanent
		  employees hired after the date of the signed financial incentive
		  agreement;
M. "Preconstruction
		  costs" means the cost of eligible items incurred before the start of
		  construction, including:
1. Project planning
		  costs;
2. Architectural and
		  engineering fees;
3.
		  Land
4. Feasibility
		  Studies
5. Right-of-way
		  purchases;
6. Utility
		  extensions;
7. Site
		  preparations;
8. Purchase of
		  mineral rights;
9. Building
		  demolition;
10. Builders risk
		  insurance;
11. Capitalized start-up
		  costs;
12. Deposits and process
		  payments on eligible machinery and equipment; and
13. Other costs necessary to prepare for the
		  start of construction;
N.
		  "Tourism attraction" includes:
1. A cultural
		  or historical site;
2. A
		  recreational or entertainment facility;
3. An area of natural phenomenon or scenic
		  beauty;
4. A theme park;
5. An amusement or entertainment
		  park;
6. An indoor or outdoor play
		  or music show;
7. Botanical
		  gardens; and
8. Cultural or
		  educational centers.
O.
		  "Tourism attraction" does not include:
1.
		  Lodging facilities, unless the facilities constitute a portion of a tourism
		  attraction project and represent less that sixty percent (60%) of the total
		  approved costs of the tourism attraction project, or unless the approved costs
		  for the lodging facility exceeds five million dollars ($5,000,000) and is
		  attached to a convention center containing seventy-five thousand (75,000)
		  square feet or contains a minimum of twelve thousand (12,000) square feet of
		  meeting or exhibit space;
2.
		  Facilities that are primarily devoted to the retail sales of goods, unless the
		  goods are created at the site of the tourism attraction project or if the sale
		  of goods is incidental to the tourism attraction project;
3. Facilities that are not open to the
		  general public;
4. Facilities that
		  do not serve as a likely destination where individuals who are not residents of
		  the state would remain overnight in commercial lodging at or near the tourism
		  attraction project such as:
a. Movie
		  Theaters
b. Bowling
		  alleys
c. Fitness centers
d. Miniature Golf Courses
e. Go-Kart Tracks
f. Skating Rinks
g. Night Clubs
h. Retail Stores
i. Restaurants
j. Any other establishments deemed by the
		  Director to primarily serve the local community and in-state
		  residents.
5. Facilities
		  owned by the State of Arkansas or a political subdivision of the state;
		  or
6. Facilities established for
		  the purpose of conducting legalized gambling. However, a facility regulated
		  under § 23-110-101 et seq. or § 23-111-101 et seq. shall be a tourism
		  attraction for purposes of this subchapter for any approval project as outlined
		  in subsection (j)(1) of Act 1135 of 1999 or for an approved project relating to
		  pari-mutuel racing at the facility and not for establishing a casino or for
		  offering casino-style gambling.
P. "Tourism attraction project" or "project"
		  means the acquisition, including the acquisition of real estate by leasehold
		  interest with a minimum term of ten (10) years, construction, and equipping of
		  a tourism attraction; the construction and installation of improvements to
		  facilities necessary or desirable for the acquisition, construction, and
		  installation of a tourism attraction, including, but not limited to, surveys;
		  installation of utilities, which may include, water, sewer, sewage treatment,
		  gas, electricity, communications, and similar facilities; and off-site
		  construction of utility extensions to the boundaries of the real estate on
		  which the facilities are located, all of which are to be used to improve the
		  economic situation of the approved company in a manner that shall allow the
		  approved company to attract persons.