Arkansas Development Finance Authority
423 Main Street, Suite 500
P.O. Box 8023
Mac Dodson, President
Accomplishing Our Mission –Financing State Facilities With Tax-Exempt Bonds
The General Assembly created the Arkansas Development Finance Authority in 1985 by consolidating State authorities and their bond issuing powers into one cost effective entity. Immediately, the ADFA staff and Board of Directors established new goals to provide access to financing for housing, economic development, infrastructure and capital improvement needs of the State and local governments.
Since that time, ADFA has issued over $1 billion in bonds for a variety of State government backed projects and facilities.
Tom Geis has been working on governmental facilities financing issues for ADFA since 1987 and is responsible for much of the success of ADFA’s Governmental Finance Program.
"What I do is take a composite of information and know-ledge that I have accumulated and expand upon it," said Geis "It gives me the ability to interpret how ADFA might create revenue streams that would facilitate tax-exempt bond issues and achieve economic efficiency on a particular government agency project."
It is a complicated process utilizing bond lawyers and their ability to affirmatively opine on acceptability & legality of revenue streams, which support the repayment on the revenue bond issues. The majority of the bond issues are insured bearing a "AAA" rating which produces the best rates on the bonds and thereby provides cost savings to the state.
Without the ability to issue tax exempt bonds, the State of Arkansas would pay much more for state facilities, such as prisons, etc. That is because instead of purchasing facilities, the state would have to lease existing facilities or have private developers develop property that would then be leased to the state at higher rental costs.
"Not only would development costs increase but a private developer couldn’t use tax-exempt funds and therefore the State would have to pay a higher, taxable rate," Geis said. "Also when leasing property, the lease goes on infinitum, with the State never owning the property or building equity."
In the past, ADFA has financed State facilities like: UAMS facilities, the Public Health Laboratory Project, the Justice Building, five State Correctional Facilities, the Spring Street Plaza (Workers Compensation), Main Street Mall, the Livestock and Poultry Commission Project and many others.
Justice Building Project was financed with a
$4.94 million State Facilities Bond issue in July, 1999
HOME Program funds in the amount of $2.719 were also allocated in conjunction with this tax credit funding cycle.
The credits act as a financial incentive for developers and builders to produce affordable housing. Developers are allowed to claim the credits as a dollar-for-dollar deduction on their personal or corporate income taxes for a ten-year period as long as units remain affordable to low-income families for at least 15 years. Developers are allowed to claim the credits themselves, or they can syndicate the credits to investors.
The Tax Credit Program is designed to provide financial incentives that would not otherwise exist when developing affordable rental housing. The tenant benefits from rents that are lower than what would be considered feasible without credits. Rents are set according to federal guidelines.
Applications and information on the tax credit program is available atwww.arkansas.gov/adfa or by contacting ADFA Multi-Family Housing Section, (501) 682-5900, Monday through Friday, 8:00 AM – 5:00 PM.
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