At Mitchell Williams, our Municipal and Public Finance Group has experience with taxable and tax-exempt industrial development bonds, which may also be referred to as “Act 9 bonds” in the state of Arkansas. Cities, counties and local and state authorities have the authority to issue the bonds for manufacturing and commercial projects. In cases where proceeds of the bonds are used to construct and equip a manufacturing facility, our tax and municipal finance lawyers are able to advise on appropriate structure for the bond issue and, in many cases, can ensure the interest on the private activity bonds is excluded from gross income for federal income tax purposes. This typically results in an interest rate for the bonds that is often lower than what can be obtained through conventional financing. The attorneys at Mitchell Williams have worked with a number of state and local entities and manufacturing corporations in the issue of numerous tax-exempt private activity bonds and taxable industrial development revenue bonds resulting in the creation of many area jobs and industry.
Our attorneys are able to provide bond counsel services for Act 9 bond issues, including drafting of the bond resolution, the trust indenture, the loan agreement and other bond financing documents, applicable certificates. We assist with the review and analysis of applicable law to confirm the public issuer’s authority to issue the industrial development bonds and its conformity with other legal requirements. Our tax lawyers are able to review and interpret applicable arbitrage regulations and tax law and provide advice and guidance in structuring bond issues related to tax law, confirming tax-exempt status of transactions, and drafting required tax certificates and filings.
Mitchell Williams’ Municipal and Public Finance Group is also familiar with state incentive and guaranty programs that may work in tandem with Act 9 bonds. Our team has expertise in negotiating and preparing payment in lieu of taxes (PILOT) agreements that may result in further property tax savings for the manufacturer.
Tax-exempt industrial development revenue bonds are available only to manufacturers meeting certain size requirements. However, taxable bond financings are available to most manufacturers. Our team also has experience with bond financing for 501(c)(3) organizations, schools, hospitals and governmental facilities.
Bond counsel should be consulted early to assist in determining whether a project qualifies and in assuring that the applicable legal requirements will be met.