(a) To qualify for a tax-exempt industrial revenue bond (IRB), a company must meet the following eligibility criteria:

1. (1) The firm must be engaged in manufacturing, processing, or other activities directly supporting or related to manufacturing or processing;
2. (2) The total capital expenditures in a project must not exceed ten million dollars ($10,000,000) for a six-year period; and
3. (3) The capital expansion should create new jobs.

(b) In order for the Arkansas Economic Development Commission to guarantee the debt service (principal and interest) of bonds issued under Acts 1960 (Ex. Sess.), No. 9, certain circumstances, including but not limited to the following shall be addressed:

1. (1) There shall be documentary evidence produced from investment bankers that the bonds are not saleable without this guaranty;
2. (2) The lessee must have a proven financial history and must have been in a similar or related business at least three (3) years prior to the bond guaranty application;
3. (3) There is documentary evidence that by the addition or expansion of plant facilities, substantial employment is involved;
4. (4) There is a legal opinion to the effect that the industrial project involves manufacturing, processing, or other activities directly related to or supporting a manufacturing or processing industry;
5. (5) The lessee will not purchase or own at any time any of such bonds;

6. (6) The lessee is found to be financially responsible for, and sufficient rental income may be reasonably expected to amortize in an orderly manner, the interest on a principal amount of the bonds as evidenced by:

   1. (A) An analysis of the business history of the lessee and/or principals thereof;
   2. (B)

(i) An evaluation of the most recent three (3) years audited annual financial statements as prepared by an independent certified public accounting firm.

1. (ii) If the most recent annual statement is more than ninety (90) days old, then an unaudited interim statement must be provided; and

   1. (C) A pro forma projection for the ensuing three (3) years in substantially the same form as attached;
2. (7) There is a commitment to pay a one-time premium in the amount of five percent (5%) of the principal amount to be guaranteed or three percent (3%) of the debt service, whichever is greater; and

3. (8) Collateral for the issue will be substantiated by a perfected first mortgage on capital expenditures that are obtained in whole or in part by proceeds of the bond issue along with corporate and/or personal guarantees.

   1. (c) The company shall develop a project overview which addresses the following eligibility considerations:
4. (1) Total project costs;
5. (2) Specific uses of the funds;
6. (3) Company’s financial strength;
7. (4) Type of operation (manufacturing, etc.);
8. (5) Expected new employment at location of project; and

9. (6) Relevant information about profitability of project.

   1. (d) If the commission’s staff determines that the project is feasible, it is recommended that the company simultaneously contact the following:

10. (1) Bond counsel to:

    1. (A) Assist in completing the process; and
    2. (B) Ensure its legality;
11. (2) City/county officials which must submit the issue on behalf of the local government involved; and
12. (3) Bond underwriters to submit bids on underwriting the bond issue.

(e)

1. (1) A business plan and legal documentation must be submitted to the commission in order for the commission’s staff to prepare an application for Arkansas Economic Development Council’s Bond Guaranty Committee, which will approve or reject the bond guaranty application.
2. (2) If the project is approved, it will go before the full commission for final approval.
3. (3) Regardless of whether the application is approved or rejected, the company will be notified of the final decision by the commission’s staff.