Arkansas Administrative Code › Agency 003 - DEPARTMENT OF COMMERCE › Division 19 - Arkansas Economic Development Commission › Rule 003.19.23-001 - Arkansas Tourism Development Act

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,
				2007, 2009, and 2023. The legislation's purpose is to stimulate expansion of
				Arkansas's tourism and recreational industries by offering economic incentives
				to qualified private development projects in the form of sales and income tax
				credits. Since the intent, in part, 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
Incentives Manager
Commerce Way, Suite 601
Little Rock, AR 72202
(501) 682-1112
II.
Definitions
(a) "Agreement" means a financial incentive
			 agreement entered into pursuant to Arkansas Code Annotated §
									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 Secretary of the Department of Parks, Heritage and
			 Tourism;
(c) Approved costs means:
(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;
			 and
(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:
(1) 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 Arkansas Code Annotated §
										15-11-504; or
(2) For the purpose of constructing,
			 operating, or intending to operate a tourism attraction project, whether owned
			 or leased, located in a Natural State Initiative Opportunity Zone, that meets
			 the standards promulgated by the director pursuant to Arkansas Code Annotated
			 §§
										15-11-504 and 15-11512:
(A) A minimum of two hundred fifty thousand
			 dollars ($250,000) in a high-unemployment county; or
(B) Five hundred thousand dollars ($500,000)
			 in any other county.
(f) "Final approval" means the action taken
			 by the director authorizing the eligible company to receive inducements under
			 Arkansas Code Annotated §§
									15-11-507 and
			 15-11-509;
(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 Division 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 Division 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
			 Arkansas Code Annotated §
									15-11-507(b),
			 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 Arkansas Code Annotated
			 §
									15-11-507(b),
			 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 Arkansas Code Annotated §
									26-18-303 shall not apply for
			 purposes of computing the credit available.
(i) "Inducements" means the Arkansas sales
			 tax credit as prescribed in Arkansas Code Annotated §
									15-11-507 and/or the Arkansas
			 income tax credit as prescribed in § 1511- 509;
(j) "Investment Threshold" means the minimum
			 amount of eligible project costs that must be incurred in order to qualify for
			 eligibility;
(k) "Natural State
			 Initiative Opportunity Zone" means a geographic area designated by the Director
			 of the Arkansas Economic Development Commission under Arkansas Code Annotated
			 §
									15-11-512 where a tourism
			 attraction may be located and receive incentive benefits under the Arkansas
			 Tourism Development Act.
(l) "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;
(m) "Payroll" means the total taxable wages,
			 including overtime and bonuses, paid during the preceding tax year of the
			 approved tourism attraction to the new fulltime permanent employees hired after
			 the date of the signed financial incentive agreement;
(n) "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;
(o) "Qualified amusement park" means a
			 commercial recreational activity that:
(1)
			 Operates at least three (3) consecutive months during a calendar
			 year;
(2) Offers rides, shows,
			 games and other diversions;
(3)
			 Qualifies as an approved company under this rule;
(4) Operates withing a designated area of at
			 least one hundred (100) acres; and
(5) Has at least four million dollars
			 ($4,000,000) of annual gross receipts from paid admissions during a calendar
			 year.
(p) "Tourism
			 attraction means:
(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;
(8) Cultural or
			 educational centers; and
(9) Brick
			 and mortar restaurants located within a Natural State Initiative Opportunity
			 Zone.
(q) "Tourism
			 attraction" does not include:
(1) Lodging
			 facilities, unless the facilities:
(A)
			 Constitute a portion of a tourism attraction project and represent less than
			 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; or
(B) Are located within a Natural State
			 Initiative Opportunity Zone;
(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 located outside a Natural
			 State Initiative Opportunity Zone; and
(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 unless the facility is leased by an eligible company and is located
			 within a Natural State Initiative Opportunity Zone; or
(6) Facilities established for the purpose of
			 conducting legalized gambling. However, a facility regulated under Arkansas
			 Code Annotated §
										23-110-101 et seq. or Arkansas
			 Code Annotated §
										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.
(r) "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.