1. (a) QCDEs seeking to have equity investments or long-term debt securities designated as qualified equity investments eligible for new market tax credits shall submit a completed Arkansas Economic Development Commission-approved application containing all required documentation, signed affidavits, and certifications, containing the following documentation:

   1. (1) Evidence of the applicant’s certification as a QCDE, including evidence that the service area of the applicant includes Arkansas;
   2. (2) A copy of the allocation agreement executed by the applicant or its controlling entity and the Community Development Financial Institutions Fund;
   3. (3) A certificate executed by an executive officer of the applicant attesting that the allocation agreement remains in effect and stating the cumulative amount of allocations awarded to the applicant by the Community Development Financial Institutions Fund;
   4. (4) A description of the proposed amount, structure, and purchaser of the qualified equity investment;
   5. (5) If known at the time of application, identifying information for each entity that will use the tax credits earned from the issuance of the qualified equity investment;
   6. (6) Examples, if any, of types of investments made by the applicant, its controlling entity, or affiliates under the federal New Market Tax Credit Program with qualified active low-income businesses;

   7. (7)

      1. (A) A nonrefundable application fee of five thousand dollars ($5,000) and a refundable performance fee in the amount of five-tenths of one percent (0.5%) of the amount of the equity investment or long-term debt security requested to be designated by the commission as a qualified equity investment.
      2. (B) Once the QCDE’s allocation amount has been certified, the difference between the five-tenths of one percent (0.5%) of the application amount and five-tenths of one percent (0.5%) of the actual allocation amount will be refunded to the QCDE;

   8. (8) A description of the QCDE’s intended typical structure for investment in a qualified active low-income community business in Arkansas, to include:

      1. (A) Targeted types of business;
      2. (B) Industry sector;
      3. (C) Amount and type of investment;
      4. (D) Fee structure;
      5. (E) Expected rate of return; and
      6. (F) Benefits to the qualified low-income business and community;
   9. (9) An affidavit executed by the chief executive officer of the QCDE (the applicant) acknowledging a complete and full understanding that the commission, at this time, has no appropriation, and therefore no authority or mechanism to refund any of the refundable application fee required to accompany the application;
   10. (10) The current balance sheet and last full-year annual report of the QCDE or its controlling entity if the QCDE has no historical operations; and
   11. (11) Completed and executed declarations for all of the principals of the QCDE (applicant), or the principals of the parent company, if a subsidiary.

2. (b)

   1. (1) If the QCDE seeks to have a long-term debt security designated as a qualified equity investment under Arkansas Code § 15-4-3605, the QCDE shall not make cash interest payments on the long-term debt security during the period beginning on the date of issuance and ending on the final credit allowance date in an amount that exceeds the cumulative operating income, as determined under 26 C.F.R. § 1.45D-1, as it existed on January 1, 2013, of the QCDE for that period before giving effect to interest expense on the long-term debt security.
   2. (2) However, the holder’s ability to accelerate payments on the long-term debt security instrument in situations which the issuer has defaulted on covenants designed to ensure compliance with the New Markets Jobs Act of 2013, Arkansas Code § 15-4-3601 et seq., or 26 U.S.C. § 45D, as it existed on January 1, 2013, shall not be affected by the New Markets Jobs Act of 2013, Arkansas Code § 15-4-3601 et seq.

Codification Notes: "QCDE" means qualified community development entity.