City sets business incentive criteria

SPRINGDALE — The city has a new tool in its toolbox for economic development, as the City Council recently approved guidelines on when incentives will be offered to businesses looking to move to Springdale.

“We set the bar high,” said Perry Webb, president of the Springdale Chamber of Commerce. “And we might not ever use them.”

Webb worked closely with Mayor Doug Sprouse and Ernest Cate, the city attorney, “to develop what we believed were good criteria,” Sprouse said. The chamber has a contract with the city to provide economic development services.

Sprouse said companies will have to make major investments in the city in order to meet the criteria.

Webb said Springdale’s guidelines are just the starting point of discussions.

The guidelines include benchmarks for eight areas of development, including industrial manufacturing and call centers.

For example, research, technology and development facilities must include a total capital investment of $ 15 million, a building larger than 20,000 square feet at a value of $ 10 million, and must provide at least 100 jobs with average hourly wages of $ 29 per hour and a total annual payroll of at least $ 6 million.

The company also must

city about an incentive, Webb said.

Sprouse said that if the company’s proposal meets the criteria, it’s probably a safe investment for the city — but that doesn’t ensure it will get public money.

Mike Harvey, chief operating officer of the Northwest Arkansas Council, said proposals that use taxpayer money need to be evaluated conservatively. The council is an economic development nonprofit that serves the region, helping area chambers and governments recruit businesses to Northwest Arkansas. The council doesn’t offer incentives to businesses.

A 2015 voter- approved constitutional amendment allows municipalities to provide incentives to businesses. Before that, only the state and its economic development arm could offer a company any incentive to move to the state.

Working to develop an incentive package shows a potential business that it’s got a partner if city leaders are willing to help, said Bryan Scoggins, director of business finance for the Arkansas Economic Development

Commission.

The state offers a variety of incentives, including tax refunds and tax credits based on a company’s plan. The commission looks at several things, such as wages and how many jobs a proposal will create.

For example, American Tubing in Springdale qualified for a sales and use tax refund when it expanded its operations in 2013. The manufacturer had made copper assemblies and components for 43 years and added an aluminum division. The $ 3.2 million expansion added 20,000 square feet of production space and 50 jobs.

The state also has a Quick Action Closing Fund that allows the governor to finalize an agreement with an employer to move to or expand in Arkansas.

In August, Aerojet Rocketdyne announced a $ 50 million expansion of its plant in East Camden, which produces solid rocket motors for missiles for defense purposes. The company received a variety of tax incentives from the state and local governments, including $ 1.3 million from the governor’s fund.

State Rep. Lance Eads, R- Springdale, said an increasing number of businesses are

looking for cities to “put some skin in the game.”

“They’re saying: ‘ We can do this. What can you do?’” he said.

Springdale is Northwest Arkansas’ first city to develop an incentive plan.

Fayetteville’s Chamber of Commerce may develop such a document. Chamber President Steve Clark said he’s sure it’ll look different from Springdale’s.

Fayetteville’s guidelines might address entrepreneurs who are ready for the next step in investment, he said. Most of the chamber’s 3,900 business members employ 25 or fewer people, he said.

“So if we start using what Springdale has, we’ll never help anybody,” Clark said. “This is just the kind of business we want. We’ll never get an automotive manufacturing plant in Fayetteville, and that’s OK with us.”

Fayetteville is asking voters to approve a $ 3 million bond issue to support the city’s economic development. The city intends to use the money for land acquisition, site development and infrastructure improvements to recruit businesses and enhance the city’s incentive program.