Sam Walls, President and CEO of Arkansas Capital Corp.
Arkansas Capital Corp. of Little Rock received word Thursday that it has once again received new markets tax credits, this time totaling $35 million.
The latest allocation brings the total Arkansas Capital Corp. has received in new markets tax credits to approximately $300 million, President and CEO Sam Walls told Arkansas Business. The previous awards have resulted in 1,777 direct jobs and 924 construction jobs, and have helped fund more than 30 projects.
He also explained that the program’s intent is to drive investment in underserved census tracts.
In addition, the credits can be used very broadly, according to Walls. Some projects the firm has used them for are:
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Updates to a Husqvarna supplier’s plant in Nashville, Arkansas, which saved 300 jobs;
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Solar projects;
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Redevelopment in downtown Fayetteville; and
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Expansion of a facility in Rogers for use by the nonprofit Open Avenues.
ACC will now partner with state and local entities, such as the Arkansas Economic Development Commission and chambers of commerce, to identify projects for this latest round of funding within the next 60 days.
By fall, Walls said it should be closing deals on four to six projects that will cost between $6 million and $10 million apiece. Arkansas Capital Corp. will administer the credits over a seven-year period.
“I assure you there’s more than $35 million dollars in projects out there,” Walls said. “So we’re going to find the best $35 million that we can find that are ready to move forward and structure a deal, and deploy these as quickly as possible.”
What the firm looks for in projects is whether they make good business sense, because the credits “don’t make a bad deal good,” and whether they offer the “biggest bang for the buck” when it comes to impact, Walls said.
He also emphasized that applying for the credits is “extremely competitive.” Less that one-third of the entities that apply receive them and, while $3.5 billion was available, $14 billion was requested, Walls said. The firm was one of 73 applicants and the only entity in Arkansas to receive the credits this year.
To apply, an entity must be designated a Community Development Entity through the U.S. Department of Treasury’s Community Development Financial Institutions Fund.
The program, which is run by the CDFI fund, began in 2002. It was created at the end of President Bill Clinton’s administration, and the first credits were awarded while President George W. Bush was in office.
“I think, for President Clinton’s perspective, certainly as governor of Arkansas, he probably appreciated as well as anybody the challenges at times areas of Arkansas had just to get people to put money in,” Walls said. “Various real and perceived risk factors precluded banks and investment to go to those areas. So he was trying to figure out a way to prime the pump, and this is one of those efforts.”
Arkansas Capital Corp. created its Heartland Renaissance Fund to apply for and administer credits when it discovered that there weren’t many entities in the state that qualified for the CDE designation and had the resources to apply for the credits. A core group of five work for the fund, but all of the 20 or so staff at the firm have a hand in it, Walls said.
Also, he said, Arkansas is still close to the bottom 10 in using of the credits, though Arkansas Capital Corp. has encouraged out-of-state entities to use their credits for Arkansas projects.
Walls added that one more round of credits is authorized and that Congress is debating extending the program, which typically has bipartisan support.
“It’s a phenomenal program … You always want to see more in Arkansas. I feel like we could use more. It’s a limited resource. Some years we get them, some years we don’t,” Walls said. “It’s really a great asset. It’s a great resource. It’s a very valuable tool. Arkansas has benefited greatly from them, and we’re proud to have brought them to the state.”
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