Stricken language would be deleted from and underlined language would be added to present law.
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State of Arkansas 1
95th General Assembly A Bill 2
Regular Session, 2025 SENATE BILL 647 3
4
By: Senator J. Dismang 5
By: Representative Beaty Jr. 6
7
For An Act To Be Entitled 8
AN ACT TO CREATE THE ECONOMIC DEVELOPMENT DISTRICT 9
ACT OF 2025; AND FOR OTHER PURPOSES. 10
11
12
Subtitle 13
TO CREATE THE ECONOMIC DEVELOPMENT 14
DISTRICT ACT OF 2025. 15
16
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS: 17
18
SECTION 1. Arkansas Code Title 14 is amended to add an additional 19
chapter to read as follows: 20
CHAPTER 177 21
ECONOMIC DEVELOPMENT DISTRICT ACT OF 2025 22
23
Subchapter 1 — General Provisions 24
25
14-177-101. Title. 26
This chapter shall be known and may be cited as the “Economic 27
Development District Act of 2025”. 28
29
14-177-102. Definitions. 30
As used in this chapter: 31
(1) “Alcoholic beverage sales tax” means the taxes levied under 32
§§ 3-7-201 and 3-9-213; 33
(2) “Available funds” means revenues, grant funds, and other 34
moneys received by an economic development district minus: 35
(A) The property charge baseline; 36 SB647
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(B) The sales charge baseline; 1
(C) Any reserved property charge; and 2
(D) Any reserved sales charge; 3
(3) “Cooperative area” means an area designed by one (1) or more 4
municipalities, one (1) or more counties, or a combination of one (1) or more 5
municipalities and one (1) or more counties operating under a written 6
agreement in which the participating municipalities or participating 7
counties, or both, agree to establish an economic development district by 8
mutually adopting a formation charter; 9
(4) “Economic development” means one (1) or more of the 10
following: 11
(A) Job creation; 12
(B) Job retention; 13
(C) Job attraction; 14
(D) Economic growth; and 15
(E) Economic diversification; 16
(5)(A) “Economic development construction” means the process of 17
constructing, improving, modifying, or removing improvements within an 18
economic development district for purposes that directly contribute to the 19
economic development goals of the economic development district in accordance 20
with the economic development plan. 21
(B) “Economic development construction” includes without 22
limitation manufacturing, technology, research and development, business 23
incubators, retail, entertainment, housing, healthcare, restaurants, 24
hospitality, childcare, energy production, infrastructure projects, and any 25
other type of venture or facility that the board of an economic development 26
district determines is beneficial to an economic development district under § 27
14-177-304; 28
(6) “Economic development district” means a designated area 29
within a municipality, county, or cooperative area that is established under 30
this chapter to promote, facilitate, or secure economic development and 31
revitalization within the designated area; 32
(7) “Economic development plan” means a document detailing the 33
goals, strategies, and initiatives to be undertaken to stimulate economic 34
development within an economic development district; 35
(8) “Establishing authority” means: 36 SB647
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(A) For a municipality or county, the governing body of 1
the municipality or county; and 2
(B) For a cooperative area, the group of persons 3
designated for the cooperative area in the written agreement establishing the 4
cooperative area; 5
(9) “Formation charter” means the foundational governing 6
document of the economic development district that establishes the formation 7
of the economic development district under § 14 -177-204; 8
(10) “Property charge” means a monetary charge equal to what the 9
applicable ad valorem property tax and special assessments would be if the 10
economic development district did not exist, including any additional ad 11
valorem-based charge equal to an additional millage rate assessed by the 12
board of an economic development district; 13
(11) “Property charge baseline” means an amount equal to a 14
property’s ad valorem property tax and special assessments due the year 15
before the property became part of an economic development district; 16
(12) “Property charge increment” means the amount by which the 17
property charge exceeds the property charge baseline; 18
(13)(A) “Public infrastructure” means a facility, service, or 19
installation that is useful for the operation and growth of an economic 20
development district. 21
(B) “Public infrastructure” includes without limitation: 22
(i) A transportation system, including without 23
limitation a road, a trail, lighting, a traffic signal, a sidewalk, and 24
parking; 25
(ii) Demolition; 26
(iii) A public safety measure; 27
(iv) Stormwater drainage; 28
(v) A utility, including without limitation a water 29
utility, a sewer utility, an electric power utility, and a gas utility; 30
(vi) Digital infrastructure, including without 31
limitation broadband and telecommunications infrastructure; 32
(vii) Energy production; and 33
(viii) Green infrastructure, including without 34
limitation parks, green spaces, and renewable energy systems; 35
(14) "Reserved property charge” means the portion of a property 36 SB647
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charge, if any, in excess of the property charge baseline reserved by an 1
establishing authority in the formation charter; 2
(15) “Reserved sales charge” means the portion of a sales 3
charge, if any, in excess of the sales charge baseline reserved by an 4
establishing authority in the formation charter; 5
(16)(A) “Sales charge” means a monetary charge equal to what the 6
following taxes would be if the economic development district did not exist: 7
(i) Sales and use tax, including without limitation 8
the taxes levied under Title 26, Chapters 52, 53, 74, and 75; and 9
(ii) Alcoholic beverage sales tax. 10
(B) “Sales charge” includes: 11
(i) The sales and use tax on a transaction in which 12
the end-user or purchaser takes possession of tangible personal property, 13
specified digital products, or a digital code or makes the first use of a 14
taxable service; and 15
(ii) Any additional percentage -based charge equal to 16
an additional rate assessed by the board of an economic development district. 17
(C) “Sales charge” does not include any tax applicable to 18
the possession of tangible personal property by a shipping company on behalf 19
of a purchaser; 20
(17) “Sales charge baseline” means the amount of sales and use 21
tax and alcoholic beverage sales tax generated from transactions occurring 22
within a property the year before the property became part of an economic 23
development district; and 24
(18) “Sales charge increment” means the amount by which the 25
sales charge exceeds the sales charge baseline. 26
27
14-177-103. Assistance from Department of Commerce. 28
(a) The Department of Commerce shall: 29
(1) Provide ongoing support and assistance to municipalities, 30
counties, cooperative areas, and economic development districts in the 31
establishment, management, and strategic development of economic development 32
districts; 33
(2) Allocate resources, including without limitation expert 34
advice, administrative guidance, and access to state -level economic 35
development tools, to assist municipalities, counties, cooperative areas, and 36 SB647
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economic development districts; 1
(3) Offer technical assistance to assist municipalities, 2
counties, and cooperative areas in drafting an initial proposal to form an 3
economic development district, defining the boundaries of a proposed economic 4
development district, and conducting the economic and impact assessments 5
necessary for the establishment of an economic development district; 6
(4) Provide training programs for municipality and county 7
officials and members of a board of an economic development district on 8
topics that include economic development strategies, financial management, 9
and grant administration; 10
(5)(A) Assist in setting up systems for monitoring and 11
evaluating the performance of an economic development district to ensure that 12
each economic development district meets the economic development objectives 13
for the economic development district. 14
(B) To facilitate meeting the requirements of subdivision 15
(a)(5)(A) of this section, the department shall maintain an online repository 16
of projects that includes publicly available information about each project; 17
(6) Assist economic development districts in establishing clear 18
and effective grant application processes to ensure transparency and fairness 19
in the distribution of funds under this chapter; and 20
(7)(A) Provide guidance to economic development districts on 21
financial oversight practices to ensure that all grant funds are used 22
appropriately and effectively. 23
(B) To facilitate meeting the requirements of subdivision 24
(a)(7)(A) of this section, the department may: 25
(i) Review and conduct audits of any economic 26
development district; and 27
(ii) Adopt appropriate rules to promote the orderly 28
administration of economic development districts and prevent malfeasance, 29
mismanagement, or fraud in the operation of an economic development district. 30
(b) To compensate the department for its obligations under this 31
section, each board of an economic development district shall remit to the 32
department the following: 33
(1) Two percent (2%) of the property charge increment, minus the 34
reserved property charge, received by the economic development district 35
annually; and 36 SB647
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(2) Two percent (2%) of the sales charge increment, minus the 1
reserved sales charge, received by the economic development district 2
annually. 3
4
Subchapter 2 — Economic Development Districts — Creation and Termination 5
6
14-177-201. Authorization to establish economic development district. 7
(a) A municipality, county, or cooperative area may establish one (1) 8
or more economic development districts within the boundaries of the 9
municipality, county, or cooperative area. 10
(b) A county may establish an economic development district within the 11
boundaries of a municipality only with consent of the mayor of the 12
municipality. 13
(c) A municipality may use county tax revenues for an economic 14
development district only with the consent of the county judge of the county 15
that levied the tax. 16
(d) An economic development district is not required to have 17
contiguous boundaries. 18
19
14-177-202. Proposal to create economic development district. 20
(a) The creation of an economic development district may be proposed 21
by the: 22
(1) Delivery of a proposal signed by the owners of at least 23
twenty-five percent (25%) of the assessed value of the property within the 24
boundaries of the proposed economic development district to the proposed 25
establishing authority; 26
(2) Delivery of a proposal by a mayor or county judge to the 27
proposed establishing authority; or 28
(3) Creation of a proposal by the proposed establishing 29
authority. 30
(b) A proposal for the creation of an economic development district 31
under this section shall include: 32
(1) A map of the boundaries of the proposed economic development 33
district; 34
(2) A preliminary economic development plan; and 35
(3) An assessment of the current economic conditions within the 36 SB647
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boundaries of the proposed economic development district and the expected 1
impact of the proposed economic development district. 2
3
14-177-203. Approval process for establishment of economic development 4
district. 5
(a) An establishing authority considering the creation of a proposed 6
economic development district under this subchapter shall: 7
(1) Conduct a public hearing on the creation of the proposed 8
economic development district within ninety (90) days after receiving a 9
proposal under this subchapter; and 10
(2)(A) Provide notice of the public hearing required under 11
subdivision (a)(1) of this section at least thirty (30) days before the 12
public hearing. 13
(B) Notice provided under subdivision (a)(2)(A) of this 14
section shall be: 15
(i) Published in a newspaper of general circulation 16
in the proposed economic development district; or 17
(ii) Provided by means of public notification other 18
than a newspaper of general circulation that is authorized by the 19
establishing authority and reasonably calculated to provide notice to 20
property owners within the boundaries of the proposed economic development 21
district. 22
(b) After holding the public hearing required under subsection (a) of 23
this section, an establishing authority may create an economic development 24
district by approving a formation charter that meets the requirements of § 25
14-177-204 by the adoption of an ordinance by a majority vote of the present 26
and participating members of the establishing authority. 27
28
14-177-204. Formation charter — Amendment. 29
(a) A formation charter shall include: 30
(1) The boundaries of the economic development district; 31
(2) The term of the economic development district, which shall 32
not exceed thirty (30) years; 33
(3) The economic development plan for the economic development 34
district; 35
(4) The number of members of the board of the economic 36 SB647
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development district; 1
(5) Any reserved property charge; 2
(6) Any reserved sales charge; and 3
(7) Any restrictions on the powers of the board of the economic 4
development district. 5
(b)(1) The establishing authority for an economic development district 6
may amend the formation charter upon the petition of the: 7
(A) Mayor of the municipality governed by the establishing 8
authority; 9
(B) County judge of a county governed by the establishing 10
authority; 11
(C) Mayor of any municipality or the county judge of any 12
county participating in a cooperative area governed by the establishing 13
authority; 14
(D) Board of the economic development district; or 15
(E) Establishing authority. 16
(2) An amendment to a formation charter under this subsection 17
may expand or contract the: 18
(A) Boundaries of the economic development district; or 19
(B) Authority granted to the board of the economic 20
development district. 21
(3) If an economic development district is party to an executory 22
contract or has outstanding bonds secured by revenue of the economic 23
development district, the establishing authority for the economic development 24
district shall not amend the formation charter to do any of the following in 25
a manner that would reasonably impair the performance of the executory 26
contract or the repayment of the outstanding bonds, unless the establishing 27
authority agrees to assume the economic development district’s obligations 28
under the executory contract or the repayment of the outstanding bonds: 29
(A) Reduce the boundaries of the economic development 30
district; 31
(B) Increase the reserved property charge; 32
(C) Increase the reserved sales charge; 33
(D) Decrease the term of the economic development 34
district; or 35
(E) Modify the powers of the board of the economic 36 SB647
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development district. 1
(4) A petition to amend a formation charter under this 2
subsection is subject to the same approval process and requirements provided 3
for the establishment of an economic development district under § 14 -177-203. 4
5
14-177-205. Renewal of term of economic development district. 6
(a) The establishing authority for an economic development district 7
may renew the economic development district for successive terms of up to 8
thirty (30) years each upon the petition of the: 9
(1) Mayor of the municipality governed by the establishing 10
authority; 11
(2) County judge of a county governed by the establishing 12
authority; 13
(3) Mayor of any municipality or the county judge of any county 14
participating in a cooperative area governed by the establishing authority; 15
(4) Board of the economic development district; or 16
(5) Establishing authority. 17
(b) A petition to renew the term of an economic development district 18
under this subsection is subject to the same approval process and 19
requirements provided for the establishment of an economic development 20
district under § 14-177-203. 21
22
14-177-206. Termination of economic development district. 23
(a)(1) Except as provided in subdivision (a)(2) of this section, the 24
establishing authority of an economic development district may terminate the 25
economic development district upon the petition of the board of the economic 26
development district or by revoking the formation charter. 27
(2) If an economic development district is party to an executory 28
contract or has outstanding bonds secured by revenue of the economic 29
development district, the establishing authority for the economic development 30
district shall not terminate the economic development district to do any of 31
the following in a manner that would reasonably impair the performance of the 32
executory contract or the repayment of the outstanding bonds, unless the 33
establishing authority agrees to assume the economic development district’s 34
obligations under the executory contract or the repayment of the outstanding 35
bonds: 36 SB647
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(A) Reduce the boundaries of the economic development 1
district; 2
(B) Increase the reserved property charge; 3
(C) Increase the reserved sales charge; 4
(D) Decrease the term of the economic development 5
district; or 6
(E) Modify the powers of the board of the economic 7
development district. 8
(b) Upon termination of an economic development district, all assets 9
remaining with the economic development district shall be turned over to the 10
establishing authority to be used for the purposes stated in the economic 11
development plan for the economic development district. 12
(c) A petition to terminate an economic development district and the 13
revocation of a formation charter under this section are subject to the same 14
approval process and requirements provided for the establishment of an 15
economic development district under § 14 -177-203. 16
17
14-177-207. Cooperative areas. 18
(a) An agreement creating a cooperative area may allocate the: 19
(1) Property charge baseline, reserved property charge, sales 20
charge baseline, and reserved sales charge among the municipalities and 21
counties participating in the economic development district based on an 22
agreed-upon percentage allocation of the entire economic development district 23
instead of basing the revenue on the physical nexus from where the revenue is 24
generated; and 25
(2) Provision of governmental services within the economic 26
development district among the taxing authorities participating in the 27
economic development district. 28
(b) The ad valorem property tax rate used to establish the property 29
charge, property charge baseline, and property charge increment for a 30
cooperative area shall be: 31
(1) Uniform throughout the economic development district; and 32
(2) Equal to the highest ad valorem tax of the municipalities 33
and counties participating in the economic development district. 34
(c) The percentage-based sales and use tax rate and the alcoholic 35
beverage sales tax rate used to establish the sales charge, sales charge 36 SB647
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baseline, and sales charge increment for a cooperative area shall be: 1
(1) Uniform throughout the economic development district; and 2
(2) Equal to the highest sales and use tax rate and the 3
alcoholic beverage sales tax rate of the municipalities and counties 4
participating in the economic development district. 5
6
14-177-208. Annexation prohibited. 7
Property within the boundaries of an economic development district 8
shall not be involuntarily annexed into a municipality. 9
10
Subchapter 3 — Boards of Economic Development Districts 11
12
14-177-301. Board of economic development district generally. 13
(a) An economic development district shall be governed by a board 14
consisting of at least five (5) but not more than nine (9) members. 15
(b) Except as provided in subsection (d) of this section, the 16
formation charter shall provide that: 17
(1) At least one (1) member of the board of the economic 18
development district shall be a property owner or business owner within the 19
economic development district; and 20
(2) At least one (1) member of the board of the economic 21
development district shall be an individual who holds no ownership interest 22
in any property or business within the economic development district. 23
(c) All members of the board of an economic development district shall 24
be qualified electors of the establishing authority. 25
(d) The establishing authority may serve as the board of the economic 26
development district. 27
(e) For a board of an economic development district established in a 28
cooperative area, the agreement establishing the cooperative area shall 29
provide for the allocation of members of the board of the economic 30
development district among the participants of the cooperative area. 31
32
14-177-302. Appointment — Terms. 33
(a)(1) The members of the board of an economic development district 34
shall be appointed: 35
(A) By the mayor if the establishing authority is a 36 SB647
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municipality; 1
(B) By the county judge if the establishing authority is a 2
county; and 3
(C) As designated in the agreement establishing the 4
cooperative area if the economic development district was established in a 5
cooperative area. 6
(2)(A) An appointee to a board of an economic development 7
district is subject to confirmation by the establishing authority of the 8
person making the appointment. 9
(B) If an appointee is not ratified or rejected by a 10
majority of the establishing authority present and participating within sixty 11
(60) days of the appointment, the appointment is deemed to be rejected. 12
(b)(1) Except as provided in subdivision (b)(2) of this section, the 13
formation charter shall reserve a seat on the board of the economic 14
development district for a person appointed by the: 15
(A) Mayor of each municipality having corporate limits 16
within the economic development district at the time of formation; and 17
(B) County judge of each county in which the economic 18
development district is located. 19
(2) The establishing authority of an economic development 20
district may elect not to provide a seat on the board of the economic 21
development district to a municipality or county in which the economic 22
development district is located if the formation charter designates a 23
reserved property charge and a reserved sales charge in favor of the excluded 24
municipality or county equal to the ad valorem property tax, sales and use 25
tax, and alcoholic beverage sales tax that would have been received by the 26
municipality or county but for the existence of the economic development 27
district. 28
(c)(1) A member of a board of an economic development district: 29
(A) Shall serve a term of four (4) years; and 30
(B) Is eligible for reappointment for additional terms. 31
(2) Initial appointments to a board of an economic development 32
district shall be staggered so that: 33
(A) One (1) member serves an initial term of one (1) year; 34
(B) One (1) member serves an initial term of two (2) 35
years; and 36 SB647
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(C) One (1) member serves an initial term of three (3) 1
years. 2
(d) A vacancy on a board of an economic development district shall be 3
filled in the same manner as provided for appointments under this section. 4
5
14-177-303. Conflicts of interest — Removal. 6
(a) A member of a board of an economic development district shall: 7
(1) Disclose any potential conflicts of interest arising from 8
his or her duties on the board of the economic development district; and 9
(2) Recuse from any decisions in which a conflict of interest is 10
present unless the conflict of interest is disclosed and waived by a majority 11
vote of the other members of the board of the economic development district. 12
(b) A member of a board of an economic development district may be 13
removed by the establishing authority for the economic development district 14
for cause, including without limitation nonperformance, malfeasance, or 15
conflict of interest. 16
17
14-177-304. Powers and duties. 18
(a) The board of an economic development district shall: 19
(1) Develop and approve a strategic plan outlining the vision, 20
goals, and strategies for economic development within the economic 21
development district; 22
(2) Annually review and update the strategic plan approved under 23
subdivision (a)(1) of this section; 24
(3) Approve an annual budget and oversee the financial 25
management of the economic development district, ensuring that funds are used 26
efficiently and aligned with the strategic plan of the economic development 27
district; 28
(4) Oversee the distribution of grant funds, ensuring that all 29
grants align with the economic development district's objectives and comply 30
with established criteria for the grants; 31
(5) Establish and monitor performance metrics for the economic 32
development district’s initiatives and use the data obtained to guide the 33
strategic decisions of the board of the economic development district; and 34
(6)(A) Prepare an annual report detailing the economic 35
development district’s financial status, progress toward the goals of the 36 SB647
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economic development district, and ongoing and planned activities of the 1
economic development district. 2
(B) The annual report prepared under subdivision (a)(6)(A) 3
of this section shall be: 4
(i) Made publicly available; and 5
(ii) Presented to the establishing authority of the 6
economic development district. 7
(b) The board of an economic development district may: 8
(1) Exercise zoning and land use planning authority within the 9
economic development district in accordance with rules established by the 10
board of the economic development district; 11
(2) Reduce or waive franchise fees as an incentive for utilities 12
to provide or enhance services within the economic development district; 13
(3) Determine that a venture or facility is beneficial to the 14
economic development district if the venture or facility promotes economic 15
development; 16
(4) Enter into and enforce contracts in accordance with the 17
procurement requirements of the establishing authority of the economic 18
development district; 19
(5) Acquire, hold, and possess real and personal property; and 20
(6)(A) Except as provided in subdivision (b)(6)(B) of this 21
section, exercise any lawful powers not denied the economic development 22
district by the formation charter. 23
(B) The board of an economic development district shall 24
not exercise the powers granted under this section in a manner that adversely 25
impairs any outstanding debt obligations that are specifically secured by 26
fees and charges or that would reasonably impair the repayment of an 27
outstanding bond. 28
(c) A board of an economic development district has the powers stated 29
in this section unless specifically restricted under the formation charter. 30
31
14-177-305. Meetings of board of economic development district. 32
(a) A board of an economic development district shall meet at least 33
quarterly but may meet more frequently as needed. 34
(b)(1) A meeting of a board of an economic development district shall 35
be open to the public, except when the board of the economic development 36 SB647
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district calls an executive session under subdivision (b)(2) of this section. 1
(2) A board of an economic development district may call an 2
executive session to discuss matters that: 3
(A) Require confidentiality under state or federal law; 4
(B) Require confidentiality under a contract to which the 5
economic development district is a party; or 6
(C) Constitute records that are exempt from the Freedom of 7
Information Act of 1967, § 25 -19-101 et seq. 8
(c) Minutes of all meetings of a board of an economic development 9
district shall be recorded and made available to the public. 10
11
14-177-306. Records exempt from disclosure. 12
(a) Records of a board of an economic development district and records 13
of employees of the economic development district that, if disclosed, would 14
give an advantage to competitors or bidders are exempt from the Freedom of 15
Information Act of 1967, § 25 -19-101 et seq., unless approval for release of 16
the records is granted by the business entity that is the subject of the 17
records. 18
(b) The exemption allowed under subsection (a) of this section does 19
not apply to records of expenditures or grants that are made or administered 20
by the board of the economic development district and are otherwise 21
disclosable under this chapter. 22
23
14-177-307. Financial oversight and transparency. 24
(a)(1) The financial operations of an economic development district 25
shall be audited annually by an independent auditor to ensure proper use of 26
funds and adherence to all legal requirements. 27
(2) The audit report obtained under subdivision (a)(1) of this 28
section shall be submitted to the establishing authority of the economic 29
development district within ninety (90) days after receipt of the audit 30
report by the board of the economic development district. 31
(b) Financial records related to the economic development district’s 32
operations, including the sources and uses of funds received by the economic 33
development district, shall be accessible to the public to ensure 34
transparency and accountability. 35
36 SB647
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14-177-308. Authority to place economic development district in 1
receivership — Appointment of receiver — Bankruptcy prohibited. 2
(a) The establishing authority or the board of an economic development 3
district may place the economic development district into receivership if: 4
(1) The board of the economic development district fails to 5
fulfill its duties or obligations under this chapter; 6
(2) The economic development district becomes insolvent or lacks 7
sufficient financial resources to meet the obligation of the economic 8
development district; or 9
(3) There is evidence of malfeasance, mismanagement, or fraud by 10
the board of the economic development district that threatens the effective 11
operation of the economic development district or the proper administration 12
of the financial resources of the economic development district. 13
(b)(1) The board of an economic development district or the 14
establishing authority of the economic development district may petition the 15
circuit court in the county where the economic development district is 16
located for an order placing the economic development district into 17
receivership. 18
(2) A petition under subdivision (b)(1) of this section shall 19
demonstrate the specific grounds for the receivership, including without 20
limitation documentation of the failures of the board of the economic 21
development district or the insolvency of the economic development district. 22
(3) The circuit court receiving a petition filed under this 23
subsection shall hear the petition on an expedited basis. 24
(c) Upon the determination by a circuit court that grounds for 25
receivership of an economic development district exist, the circuit court 26
shall: 27
(1) Appoint the establishing authority of the economic 28
development district or its designee as the receiver of the economic 29
development district; and 30
(2) Grant the receiver full authority to suspend the board of 31
the economic development district and administer the economic development 32
district with all rights, privileges, and obligations conferred on the board 33
of the economic development district under this chapter. 34
(d) The establishing authority of the economic development district 35
may replace any members of the board of the economic development district 36 SB647
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during the receivership. 1
(e) A receivership authorized under this section shall: 2
(1) Continue until the economic development district is able to 3
fulfill its statutory and financial obligations, as determined by the 4
establishing authority of the economic development district; and 5
(2) End upon petition by the establishing authority of the 6
economic development district to the circuit court certifying that the need 7
for the receivership has ended. 8
(f) An economic development district shall not file for bankruptcy. 9
10
Subchapter 4 — Economic Development District Funding 11
12
14-177-401. Funds and use of funds. 13
(a) Funding for grants, credits, or abatements under this chapter 14
within an economic development district may be derived from any combination 15
of the following sources: 16
(1) The payment of a property charge under § 14 -177-402; 17
(2) The payment of a sales charge under § 14 -177-403; 18
(3) The payment of an additional property charge under § 14 -177-19
406; 20
(4) The payment of an additional sales charge under § 14 -177-21
407; and 22
(5) Public and private grants. 23
(b) An economic development district may: 24
(1) Solicit and accept grants and other funds from public 25
sources; and 26
(2) Accept contributions and donations from private sources. 27
(c) An economic development district may pledge any available funds in 28
whole or in part to the repayment of bond financing. 29
(d) All available funds of an economic development district shall be 30
used exclusively within the boundaries of the economic development district: 31
(1) For economic development construction and public 32
infrastructure in accordance with the economic development plan for the 33
economic development district; or 34
(2) To pay expenses necessary to accomplish the economic 35
development goals of the economic development district as stated in the 36 SB647
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formation charter. 1
2
14-177-402. Property charge — Exemption from ad valorem taxation. 3
(a) All property within an economic development district is exempt 4
from the payment of ad valorem property taxes. 5
(b)(1) Property located within the boundaries of an economic 6
development district is subject to a property charge. 7
(2) A property charge shall be collected at the same time and in 8
the same manner as ad valorem property taxes. 9
(3) Property that would be exempt from ad valorem property taxes 10
outside of an economic development district is exempt from a property charge 11
imposed by an economic development district. 12
(c)(1) As long as property is within an economic development district, 13
the county collector of the county in which the economic development district 14
is located shall remit: 15
(A) A pro rata portion of the property charge equal to the 16
property charge baseline: 17
(i) To the taxing authorities and improvement 18
districts that would have received ad valorem property taxes if the property 19
were not in an economic development district; or 20
(ii) For a cooperative area, in accordance with the 21
allocation agreed to by municipalities and counties participating in the 22
cooperative area; and 23
(B) Any remaining amount to the economic development 24
district. 25
(2) If the property charge is less than the property charge 26
baseline in any year, the property charge baseline shall be reduced to the 27
amount of the property charge actually received by the county collector. 28
(d) A board of an economic development district may receive, spend, 29
pledge, save, grant, allocate, or abate the property charge increment for 30
property located within the boundaries of the economic development district 31
unless specifically prohibited in the formation charter. 32
(e) The failure to pay a property charge under this section is subject 33
to the same remedies and enforcement as would otherwise apply to the failure 34
to pay ad valorem property taxes if the property were not within an economic 35
development district. 36 SB647
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1
14-177-403. Sales charge — Exemption from sales and use tax and 2
alcoholic beverage sales tax. 3
(a) A sales transaction sourced within an economic development 4
district is exempt from sales and use tax and the alcoholic beverage sales 5
tax. 6
(b)(1) A sales transaction sourced to property within an economic 7
development district is subject to a sales charge. 8
(2) A business operating within an economic development district 9
shall collect and remit a sales charge to the economic development district 10
that imposed the sales charge. 11
(3) A sales charge shall be collected and administered at the 12
same time and in the same manner as sales and use taxes. 13
(4) A sales transaction that would be exempt from sales and use 14
tax or the alcoholic beverage sales tax outside of an economic development 15
district is exempt from a sales charge imposed by an economic development 16
district. 17
(c)(1) As long as property is within an economic development district, 18
the Department of Finance and Administration shall remit: 19
(A) A pro rata portion of the sales charge imposed on 20
sales transactions sourced to property within the economic development 21
district equal to the sales charge baseline: 22
(i) To the taxing authorities that would have 23
received sales and use taxes and alcoholic beverage sales taxes if the sales 24
transaction had not occurred in an economic development district; or 25
(ii) For a cooperative area, in accordance with the 26
allocation agreed to by the municipalities and counties participating in the 27
cooperative area; and 28
(B) Any remaining amount to the economic development 29
district. 30
(2) If the sales charge is less than the sales charge baseline 31
in any year, the sales charge baseline shall be reduced to the amount of the 32
sales charge actually received by the department. 33
(d)(1) The state is entitled to the portion of the sales charge that 34
would have been received by the state if the sales transaction were not 35
sourced to property within an economic development district. 36 SB647
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(2) The board of an economic development district may receive, 1
spend, pledge, save, grant, allocate, or abate the sales charge increment 2
unless specifically prohibited in the formation charter. 3
(e) The failure to collect and remit a sales charge under this section 4
is subject to the same remedies and enforcement as would otherwise apply to 5
the failure to pay sales or use tax or the alcoholic beverage sales tax if 6
the sales transaction were not sourced to property within an economic 7
development district. 8
9
14-177-404. Reserved property charge — Allocation. 10
(a)(1) Except as provided in subdivision (a)(2) of this section, the 11
establishing authority for an economic development district may designate a 12
reserved property charge in the formation charter as a percentage of the 13
total property charge in excess of the property charge baseline. 14
(2) A reserved property charge shall not include any additional 15
property charge authorized by the board of an economic development district 16
under § 14-177-406. 17
(b) The formation charter may designate a reserved property charge 18
that applies for only a specified time period. 19
(c) A reserved property charge is invalid unless the reserved property 20
charge is expressly provided for in the formation charter. 21
(d)(1) If there is a reserved property charge, the reserved property 22
charge shall be remitted in accordance with: 23
(A) The allocation provided by the formation charter; or 24
(B) For a cooperative area, the agreement of the 25
municipalities and counties participating in the cooperative area. 26
(2) Unless otherwise provided by agreement among the taxing 27
authorities that would otherwise have received ad valorem property taxes if 28
the economic development district did not exist, the formation charter shall 29
provide that any reserved property charge be allocated among the taxing 30
authorities in the same percentage as the ad valorem property taxes would 31
otherwise have been allocated if the economic development district did not 32
exist. 33
34
14-177-405. Reserved sales charge — Allocation. 35
(a)(1) Except as provided in subdivision (a)(2) of this section, the 36 SB647
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establishing authority for an economic development district may designate a 1
reserved sales charge in the formation charter as a percentage of the total 2
sales charge in excess of the sales charge baseline. 3
(2) A reserved sales charge shall not include any additional 4
sales charge authorized by the board of an economic development district 5
under § 14-177-407. 6
(b) The formation charter may designate a reserved sales charge that 7
applies for only a specified time period. 8
(c) A reserved sales charge is invalid unless the reserved sales 9
charge is expressly provided for in the formation charter. 10
(d)(1) If there is a reserved sales charge, the reserved sales charge 11
shall be remitted in accordance with: 12
(A) The allocation provided by the formation charter; or 13
(B) For a cooperative area, the agreement of the 14
municipalities and counties participating in the cooperative area. 15
(2) Unless otherwise provided by agreement among the taxing 16
authorities that would otherwise have received sales and use taxes and 17
alcoholic beverage sales tax if the economic development district did not 18
exist, the formation charter shall provide that any reserved sales charge be 19
allocated among the taxing authorities in the same percentage as the sales 20
and use taxes and alcoholic beverage sales tax would otherwise have been 21
allocated if the economic development district did not exist. 22
23
14-177-406. Additional property charge. 24
(a)(1) The board of an economic development district may impose an 25
additional millage rate -based charge on the value of property within the 26
economic development district. 27
(2) An additional property charge imposed under subdivision 28
(a)(1) of this section shall be collected and allocated in the same manner as 29
the property charge that applies to property within the economic development 30
district. 31
(b) The additional property charge allowed under this section shall 32
not apply to property that would be exempt from ad valorem tax if the 33
property were not located within an economic development district. 34
(c)(1) Except as provided in subdivision (c)(2) of this section, a 35
board of an economic development district shall not increase an additional 36 SB647
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property charge imposed under this section by more than ten percent (10%) of 1
the millage rate that would have applied to the property if the property were 2
not located in an economic development district. 3
(2) A board of an economic development district may increase an 4
additional property charge imposed under this section by more than ten 5
percent (10%) of the millage rate that would have applied to the property if 6
the property were not located in an economic development district if, at the 7
time of the proposed increase, all property owners within the economic 8
development district to which the additional property charge would apply 9
provide written consent to the increase. 10
11
14-177-407. Additional sales charge. 12
(a)(1) The board of an economic development district may impose an 13
additional percentage -based charge on sales transactions occurring within the 14
economic development district. 15
(2) An additional sales charge imposed under subdivision (a)(1) 16
of this section shall be collected and allocated in the same manner as the 17
sales charge that applies to sales transactions sourced to property within 18
the economic development district. 19
(b) The additional sales charge allowed under this section shall not 20
apply to sales transactions that would be exempt from sales and use taxes if 21
the sales transaction did not occur within an economic development district. 22
(c)(1) Except as provided in subdivision (c)(2) of this section, a 23
board of an economic development district shall not increase an additional 24
sales charge imposed under this section by more than ten percent (10%) of the 25
sales and use tax rate that would have applied to the sales transaction if 26
the sales transaction had not been sourced to property within an economic 27
development district. 28
(2) A board of an economic development district may increase an 29
additional sales charge imposed under this section by more than ten percent 30
(10%) of the sales and use tax rate that would have applied to the sales 31
transaction if the sales transaction had not been sourced to property within 32
an economic development district if, at the time of the proposed increase, 33
all property owners within the economic development district to which the 34
additional sales charge would apply provide written consent to the increase. 35
36 SB647
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14-177-408. Cooperation of county officials and Department of Finance 1
and Administration. 2
(a)(1) A county assessor serving an area within the boundaries of an 3
economic development district shall cooperate with the board of the economic 4
development district to assess property within the economic development 5
district for the amount of the property charge for the economic development 6
district. 7
(2) A county assessor shall calculate the property charge for an 8
economic development district applying the same timing, methods, and 9
penalties used to appraise and assess the property located in the economic 10
development district that would apply if the property were not in an economic 11
development district. 12
(3)(A) A county assessor is entitled to any commission to which 13
the county assessor would be entitled if the economic development district 14
did not exist, based on the amount of the property charge baseline and the 15
reserved property charge. 16
(B) Any commission to which a county assessor is entitled 17
shall be paid out of the property charge baseline and any reserved property 18
charge. 19
(b)(1) A county collector serving an area within the boundaries of an 20
economic development district shall cooperate with the board of the economic 21
development district to collect the property charge for the economic 22
development district. 23
(2) A county collector shall apply the same timing, methods, and 24
penalties used for the collection of the property charge that would be 25
applicable if the property were not in an economic development district. 26
(3)(A) A county collector is entitled to any commission to which 27
the county collector would be entitled if the economic development district 28
did not exist, based on the amount of the property charge baseline and any 29
reserved property charge. 30
(B) Any commission to which a county assessor is entitled 31
shall be paid out of the property charge baseline and any reserved property 32
charge. 33
(c) The Department of Finance and Administration shall: 34
(1) Receive and collect the sales charge for an economic 35
development district from all retailers and persons responsible for paying 36 SB647
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the sales charge within the economic development district; and 1
(2) Apply the same timing, methods, and penalties for the 2
collection of the sales charge that would be applicable if the sales 3
transaction were not sourced to property within an economic development 4
district. 5
6
Subchapter 5 — Economic Development District Grants 7
8
14-177-501. Authorization for grants. 9
(a) The formation charter may authorize the board of an economic 10
development district to provide assistance in the form of grants of 11
forgivable loans or transferable credits against future payments of the 12
property charge for the economic development district above the property 13
charge baseline or the sales charge for the economic development district 14
above the sales charge baseline, or both. 15
(b) The board of an economic development district may waive or reduce 16
utility franchise fees that would have otherwise been due within the economic 17
development district. 18
(c) The board of an economic development district may make payments of 19
cash for economic development construction and public infrastructure within 20
the economic development district. 21
22
14-177-502. Grant eligibility and terms. 23
(a) A grant under this subchapter may be made available only to: 24
(1) An owner of property within the boundaries of an economic 25
development district; 26
(2) A tenant of property within the boundaries of an economic 27
development district if the tenant has a lease term that extends beyond the 28
loan forgiveness period under the grant; or 29
(3) A public or franchised utility service provider. 30
(b)(1) A grant may be awarded under this subchapter in the form of a 31
forgivable loan in an amount based on the scope and expected impact of the 32
proposed project, as evaluated and determined by the board of the economic 33
development district. 34
(2) A grant awarded under this subchapter as a forgivable loan 35
may be structured so that some or all of the amount due may be forgiven if 36 SB647
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the conditions of the grant are met. 1
(3) The interest rate for a forgivable loan granted under this 2
subchapter may be below market or zero percent (0%) to encourage uptake and 3
project initiation. 4
(4) The board of an economic development district may require 5
security for the repayment of a forgivable loan granted under this 6
subchapter. 7
(c) A grant may be awarded under this subchapter in the form of 8
transferable credits useable against future payments of the property charge 9
above the property charge increment or the sales charge above the sales 10
charge increment, or both. 11
(d) The recipient of a grant under this subchapter shall submit an 12
annual report to the board of the economic development district detailing the 13
recipient's progress toward meeting the criteria for the forgivable loan or 14
transferable credits awarded under the grant. 15
(e) The board of an economic development district may employ an 16
independent review committee or third -party auditor to verify that a 17
recipient of a grant awarded under this subchapter has met the criteria for 18
the grant before approving forgiveness of the loan or additional allocation 19
of transferable credits. 20
21
14-177-503. Grant application process. 22
(a) An applicant for a grant under this subchapter shall submit to the 23
board of the economic development district a detailed proposal outlining the 24
proposed project, the expected outcomes of the proposed project, the budget 25
for the proposed project, and the alignment of the proposed project with the 26
objectives of the economic development district. 27
(b)(1) A grant awarded under this subchapter is contingent on the 28
recipient's meeting predefined performance targets established by the board 29
of the economic development district. 30
(2) The predefined performance targets for a grant awarded in 31
the form of transferable credits shall be based on any combination of job 32
creation, job retention, average salary increases, investment of funds other 33
than grant funds received from the economic development district and spent 34
within the economic development district, and the provision of specific 35
services or amenities within the economic development district. 36 SB647
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(c) The board of an economic development district shall review an 1
application submitted under this section and evaluate the application based 2
on the strategic fit, potential impact, and feasibility of the proposed 3
project. 4
5
14-177-504. Reporting requirement. 6
(a) A recipient of a grant under this subchapter shall submit to the 7
board of the economic development district that awarded the grant an annual 8
accounting of the use of the grant funds and an annual report detailing the 9
recipient's compliance with the terms of the grant, including without 10
limitation updates on investment levels, employment figures, and other 11
relevant performance -based criteria. 12
(b) The failure of a recipient of a grant awarded under this 13
subchapter to meet the agreed -upon terms of the grant may result in the 14
recapture of benefits received under the grant, repayment of any disbursed 15
loan funds, renegotiation of any loan terms, or other remedies deemed 16
appropriate by the board of the economic development district, including 17
without limitation foreclosure of the security for a forgivable loan awarded 18
under this subchapter. 19
20
Subchapter 6 — Abatement of Property Charge Increment or Sales Charge 21
Increment 22
23
14-177-601. Abatement authorized. 24
(a) The formation charter may authorize the board of the economic 25
development district to grant temporary abatement of the property charge 26
increment or the sales charge increment, or both, to eligible businesses and 27
developers within the economic development district to promote economic 28
development, attract investments, mitigate blight, and increase or retain 29
employment opportunities. 30
(b) Abatement of the property charge increment or the sales charge 31
increment, or both, under this subchapter may take the form of a freeze or 32
reduction in the future assessment of the property charge increment or the 33
sales charge increment, or both. 34
35
14-177-602. Eligibility and terms for abatement. 36 SB647
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(a) To qualify for abatement of the property charge increment or the 1
sales charge increment, or both, under this subchapter, an applicant shall 2
demonstrate to the board of the economic development district that the 3
applicant's business or project will contribute to or facilitate job 4
creation, job retention, job attraction, economic growth, or economic 5
diversification within the economic development district. 6
(b)(1) Criteria for abatement of the property charge increment or the 7
sales charge increment, or both, under this subchapter may include without 8
limitation the scale of the investment by the applicant, the number of jobs 9
created or retained by the applicant, the longevity and sustainability of the 10
applicant's business, and the strategic importance of the applicant's 11
business to the economic objectives of the economic development district. 12
(2) Abatement of the property charge increment or the sales 13
charge increment, or both, under this subchapter may also be granted to 14
applicants whose business or project is complimentary to the goals of the 15
economic development district. 16
(c) An applicant for abatement of the property charge increment or the 17
sales charge increment, or both, under this subchapter shall not be granted 18
an abatement under this subchapter unless the applicant is in good standing 19
with the State of Arkansas. 20
(d)(1) The terms of an abatement of the property charge increment or 21
the sales charge increment, or both, under this subchapter, including the 22
duration and percentage of the abatement, shall be determined by the board of 23
the economic development district based on the expected economic impact of 24
the applicant's proposed business or project. 25
(2) The duration of any abatement of the property charge 26
increment or the sales charge increment, or both, under this subchapter shall 27
not exceed thirty (30) years. 28
(e) The board of an economic development district may require periodic 29
reviews of a business or project for which an applicant has been granted an 30
abatement of the property charge increment or the sales charge increment, or 31
both, under this subchapter to ensure that the business or project continues 32
to meet the eligibility criteria established at the time the abatement was 33
granted. 34
35
14-177-603. Application process for abatement — Agreement. 36 SB647
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(a) An applicant seeking abatement of the property charge increment or 1
the sales charge increment, or both, under this subchapter shall submit a 2
detailed proposal to the board of the economic development district 3
outlining: 4
(1) The nature of the proposed business or project; 5
(2) The expected economic benefits of the proposed business or 6
project; and 7
(3) A justification for the request for abatement of the 8
property charge increment or the sales charge increment, or both. 9
(b) The board of an economic development district shall: 10
(1) Review all applications submitted under this section; and 11
(2) Determine whether to approve each application based on the: 12
(A) Strategic fit of the proposed business or project with 13
the goals of the board of the economic development district; 14
(B) Potential economic benefit of the proposed business or 15
project to the economic development district; and 16
(C) Any other criteria as provided in § 14 -177-602. 17
(c) If a board of an economic development district approves an 18
application submitted under this section, the board of the economic 19
development district and the applicant shall execute an agreement concerning 20
the terms of the abatement of the property charge increment or the sales 21
charge increment, or both, under this subchapter. 22
23
14-177-604. Reporting requirement. 24
(a) A recipient of an abatement of the property charge increment or 25
the sales charge increment, or both, under this subchapter shall submit an 26
annual report to the board of the economic development district that awarded 27
the abatement detailing the recipient's compliance with the terms of the 28
abatement agreement, including without limitation updates on investment 29
levels, employment figures, and other relevant performance -based criteria. 30
(b) The failure of a recipient of an abatement under this subchapter 31
to meet the agreed-upon terms of the abatement may result in the: 32
(1) Revocation of the abatement of the property charge increment 33
or the sales charge increment, or both; and 34
(2) Board of the economic development district's requiring: 35
(A) Repayment of the abated property charge increment and 36 SB647
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the sales charge increment; or 1
(B) Payment of any performance security. 2
3
Subchapter 7 — Economic Development District Bonds 4
5
14-177-701. Issuance of bonds — Terms and conditions. 6
(a) The formation charter may authorize the board of the economic 7
development district being formed to issue bonds to finance economic 8
development construction within the economic development district in 9
accordance with the economic development plan. 10
(b) The board of an economic development district shall determine the 11
terms of bonds issued under this subchapter, including the maturity, interest 12
rate, and repayment schedule for the bonds, based on the projected cash flow 13
from available funds and the financial needs of the projects proposed to be 14
funded by the bonds. 15
(c) A two-thirds majority vote of the board of an economic development 16
district is required to approve bonds issued under this subchapter. 17
(d) Approval for the issuance of bonds from the establishing authority 18
of the economic development district may be included in the formation 19
charter. 20
21
14-177-702. Repayment of bonds — Oversight. 22
(a) The repayment of bonds issued under this subchapter may be funded 23
through, paid for, and secured by available funds as determined by the board 24
of the economic development district. 25
(b)(1) Available funds may be pledged as security for bonds issued 26
under this subchapter to allow the economic development district to use the 27
available funds to service debt obligations related to the bonds. 28
(2) If available funds are pledged for the repayment of bonds 29
under this subsection, the board of an economic development district shall 30
establish a detailed plan demonstrating the sufficiency of the available 31
funds to cover debt service requirements while maintaining the operational 32
and developmental objectives and obligations of the economic development 33
district. 34
(c) The board of an economic development district shall: 35
(1) Establish a bond oversight committee to: 36 SB647
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(A) Monitor the use of bond proceeds under this 1
subchapter; and 2
(B) Ensure that the bond proceeds are used for the 3
purposes specified in the bond issuance documents; and 4
(2) Conduct regular audits to assess the: 5
(A) Management and utilization of bond proceeds under this 6
subchapter; and 7
(B) Adequacy of the available funds to service debt 8
obligations related to the bonds issued under this subchapter. 9
10
14-177-703. Guarantee of bond repayment. 11
(a) To enhance the creditworthiness of bonds issued under this 12
subchapter and to support substantial economic development initiatives, an 13
establishing authority may guarantee the repayment of bonds issued by an 14
economic development district using any portion or combination of the 15
property charge baseline, sales charge baseline, reserved property charge, 16
and reserved sales charge received by the establishing authority. 17
(b) An establishing authority’s guarantee of bonds under this section 18
shall be structured as follows: 19
(1) For the first three (3) years after the issuance of the 20
bonds, the establishing authority may guarantee up to one hundred percent 21
(100%) of the bond repayments; 22
(2) For the fourth and fifth year after the issuance of the 23
bonds, the establishing authority may guarantee up to fifty percent (50%) of 24
the bond repayments; and 25
(3) For the sixth and seventh years after the issuance of the 26
bonds, the establishing authority may guarantee up to thirty -three percent 27
(33%) of the bond repayments. 28
(c) The maturity date of bonds guaranteed under this section may 29
extend beyond the term of the guarantee provided by the establishing 30
authority. 31
(d) A decision to guarantee the repayment of bonds under this section 32
shall be approved by a majority vote of the members of the establishing 33
authority. 34
(e) An establishing authority that guarantees the repayment of bonds 35
under this section shall: 36 SB647
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(1)(A) Establish a special guarantee fund from which guaranteed 1
amounts will be paid. 2
(B) The special guarantee fund established under 3
subdivision (e)(1)(A) of this section shall be replenished annually with the 4
specified portion of the property charge baseline, reserved property charge, 5
sales charge baseline, and reserved sales charge received by the economic 6
development district. 7
(C) An establishing authority that establishes a special 8
guarantee fund under subdivision (e)(1)(A) of this section shall establish 9
protocols to manage the special guarantee fund to ensure that there are 10
sufficient funds available to meet the guarantee obligations of the 11
establishing authority under this section as they become due; 12
(2) Conduct an annual independent audit of the special guarantee 13
fund established under subdivision (e)(1)(A) of this section and the 14
management of the special guarantee fund to ensure transparency and proper 15
use of the establishing authority’s revenues; and 16
(3) Implement risk mitigation strategies, including without 17
limitation setting aside reserve funds or obtaining reinsurance, to manage 18
the potential fiscal impact of the guarantee provided under this section. 19
(f)(1) Before approving a guarantee under this section, an 20
establishing authority shall conduct a risk assessment to evaluate the 21
potential financial impact on the establishing authority’s finances. 22
(2) The risk assessment required under subdivision (f)(1) of 23
this section shall consider the: 24
(A) Viability of the projects funded by the bonds issued 25
under this chapter; and 26
(B) Expected revenues of the economic development 27
district. 28
29
SECTION 1. DO NOT CODIFY. Contingent effective date. 30
This act is effective on and after January 1, 2027, contingent on 31
Senate Joint Resolution 15 of the Ninety -Fifth General Assembly being 32
referred to the people and adopted at the 2026 general election. 33
34
35
36