ARKANSAS SPOTLIGHT
Setting
the Stage
the Stage
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rkansas may soon be in the catbird seat when it comes to attracting much-coveted megaprojects. The Consolidated Incentive Act of 2003, signed into law in February, gives the state more ammunition to recruit companies such as Toyota, which nearly picked Marion, Ark., before choosing San Antonio.
"It's the cornerstone of our economic development package," says Jim Pickens, director of the Arkansas Dept. of Economic Development. "The primary benefits are that it took all our existing incentives and rolled them into one comprehensive act. It's more user-friendly."
The bill was created in response to a study commissioned by the legislature that found the state needed to restructure its incentive program. The recommendations adopted from the Fluor Global Location Services study include:
• Basing incentives on payroll in-stead of number of jobs.
• Creating a county tier system
• Allowing a greater combination of incentives.
• Separating incentives into categories.
• Broadening the categories of targeted incentives.
"One of our strategies is to develop a regional approach," Pickens says. "Arkansas has 75 counties, and this legislation allows four or more to share resources and work together. It allows us to target more industries – for certain types of industries, we can be more aggressive and therefore more competitive."
The Fluor study also suggested the state establish a financing mechanism to help attract a super project. In response, the legislature passed two pieces of legislation. So, in November, Arkansas voters will have the opportunity to give economic developers another tool to help pull in major investment:
Act 1751 creates the Economic Development Superprojects Bond & Project Fund in the state treasury to be used to pay all or part of the debt service on general obligation bonds issued under the act. Voters will decide whether to authorize issuing up to US$400 million in bonds. This act defines a super project as a minimum creation of at least 400 jobs and investment of $400 million – the same dollar amount that triggered $80 million in state incentives for a BMW expansion last year in South Carolina.
House Joint Resolution 1028 will ask voters to give the General Assembly, in regular or special session, the authority to issue general obligation bonds in an amount up to 5 percent of state general revenues collected in the most recent fiscal year. The Dept. of Economic Development would have to bring forward a project with a minimum investment of $500 million and the creation of 500 new jobs.
Pickens says it would be speculative to say the new legislation would have made the difference in the Toyota chase, but he says it would have simplified the process. The publicity generated by Toyota's interest put the Marion site on the map, he says, and several manufacturing prospects are looking at it.
"It's got everything that an auto assembly or similar type project needs," Pickens says. "It's a highly marketable site, and we plan to aggressively market it." Arkansas boasts two other super sites, one in Jonesboro and one in Little Rock, he says. (Look for more coverage of "super sites" in a special report in the November 2003 issue of Site Selection.)
Arkansas' new incentive treasure chest has caught the attention of nationally recognized site consultants.
"Arkansas has had pretty good incentive programs, but they've been pretty diffused," says Dennis J. Donovan, director of global site selection for the Wadley Donovan Group, a Grubb & Ellis company, based in Edison, N.J. "The legislation recasts them into a big package and redefines eligibility requirements. It's a win-win proposition. Most of the incentives are performance-based and a company has to produce jobs to earn them. It's meaningful and fair."
Donovan says the new economic development tool makes the state even more attractive. It enhances the state's other attributes, which include a strong work force, accessibility and a good power system, he says. The new incentives will build on the groundwork laid by a 1999 bond issue which addressed the state's infrastructure and education needs, he says.
Arkansas is already on the plus side in attracting new residents. Allied Van Lines gave the state the top spot in its latest annual Magnet States Report. Allied defines a "magnet" state as having a minimum of its total interstate relocations moving into the state. Arkansas' percentage of inbound moves during 2002 was 71.2 percent. The state was No. 7 in 2001.
"It's the cornerstone of our economic development package," says Jim Pickens, director of the Arkansas Dept. of Economic Development. "The primary benefits are that it took all our existing incentives and rolled them into one comprehensive act. It's more user-friendly."
The bill was created in response to a study commissioned by the legislature that found the state needed to restructure its incentive program. The recommendations adopted from the Fluor Global Location Services study include:
• Basing incentives on payroll in-stead of number of jobs.
• Creating a county tier system
• Allowing a greater combination of incentives.
• Separating incentives into categories.
• Broadening the categories of targeted incentives.
"One of our strategies is to develop a regional approach," Pickens says. "Arkansas has 75 counties, and this legislation allows four or more to share resources and work together. It allows us to target more industries – for certain types of industries, we can be more aggressive and therefore more competitive."
The Fluor study also suggested the state establish a financing mechanism to help attract a super project. In response, the legislature passed two pieces of legislation. So, in November, Arkansas voters will have the opportunity to give economic developers another tool to help pull in major investment:
Act 1751 creates the Economic Development Superprojects Bond & Project Fund in the state treasury to be used to pay all or part of the debt service on general obligation bonds issued under the act. Voters will decide whether to authorize issuing up to US$400 million in bonds. This act defines a super project as a minimum creation of at least 400 jobs and investment of $400 million – the same dollar amount that triggered $80 million in state incentives for a BMW expansion last year in South Carolina.
Arkansas 2003: Population: 2,714,720A Demographic Profile Population Growth (1990-2002) 5.3% Urban Population: 51.1% Rural Population: 48.9% Households: 1,060,868 Median Household Size: 2.56 Median Household Income: $31,799 Median Age: 37.2 Per Capita Income: $20,634 Annual Spending Per Capita: $15,283 White-Collar Occupations: 49.5 Blue-Collar Occupations: 37.1 Percent with College Degree: 13.1% Total Work Force: 1,170,000 Total Crime Index (US avg.=100): 115.0 Annual Avg. Temperature: 61.4°F Consumer Price Index: 145.6 EASI Quality of Life Index: 81.0 Source: Development Alliance (www.developmentalliance.com) |
House Joint Resolution 1028 will ask voters to give the General Assembly, in regular or special session, the authority to issue general obligation bonds in an amount up to 5 percent of state general revenues collected in the most recent fiscal year. The Dept. of Economic Development would have to bring forward a project with a minimum investment of $500 million and the creation of 500 new jobs.
Pickens says it would be speculative to say the new legislation would have made the difference in the Toyota chase, but he says it would have simplified the process. The publicity generated by Toyota's interest put the Marion site on the map, he says, and several manufacturing prospects are looking at it.
"It's got everything that an auto assembly or similar type project needs," Pickens says. "It's a highly marketable site, and we plan to aggressively market it." Arkansas boasts two other super sites, one in Jonesboro and one in Little Rock, he says. (Look for more coverage of "super sites" in a special report in the November 2003 issue of Site Selection.)
Arkansas' new incentive treasure chest has caught the attention of nationally recognized site consultants.
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"Arkansas has had pretty good incentive programs, but they've been pretty diffused," says Dennis J. Donovan, director of global site selection for the Wadley Donovan Group, a Grubb & Ellis company, based in Edison, N.J. "The legislation recasts them into a big package and redefines eligibility requirements. It's a win-win proposition. Most of the incentives are performance-based and a company has to produce jobs to earn them. It's meaningful and fair."
Donovan says the new economic development tool makes the state even more attractive. It enhances the state's other attributes, which include a strong work force, accessibility and a good power system, he says. The new incentives will build on the groundwork laid by a 1999 bond issue which addressed the state's infrastructure and education needs, he says.
Arkansas is already on the plus side in attracting new residents. Allied Van Lines gave the state the top spot in its latest annual Magnet States Report. Allied defines a "magnet" state as having a minimum of its total interstate relocations moving into the state. Arkansas' percentage of inbound moves during 2002 was 71.2 percent. The state was No. 7 in 2001.