Tax breaks set for tech park loans

A map showing the location of the proposed tech park site.
A map showing the location of the proposed tech park site.

Attorneys for the Little Rock Technology Park say more than half the financing for the first phase of the $100 million tech park will be tax exempt for the banks lending the money. That, in turn, allows the banks to offer the tech park a lower interest rate.

Of the $17.5 million needed to buy buildings and parking lots in the first phase of the downtown project, about $9.6 million to $9.65 million of the loan proceeds "will be used for a purpose that qualifies for tax exemption," Michele Simmons Allgood of Mitchell, Williams, Selig, Gates & Woodyard law firm said in an email to tech park director Brent Birch, tech park authority board member Dickson Flake and others.

The email also was sent to Jeff Hildebrand and Greg McCarroll, executives with Centennial Bank, which is spearheading the first-phase financing with a consortium of other lenders, including Arvest Bank, Bear State Bank, First Arkansas Bank & Trust, First Security Bank, Relyance Bank and Simmons Bank.

The planned tech park site is in and adjacent to a downtown city block between Main and Scott streets off Capitol Avenue. Total cost for the first phase is about $24 million, with the rest going toward construction and professional services, such as architects and surveyors.

The difference will be covered with more than $6 million collected to date from the tech park's portion of Little Rock's 2011 voter-approved city sales tax. The tech park is expected to collect some $22 million from the tax through 2022.

The tech park board has approved an $11.6 million purchase agreement with financier Warren Stephens, who through two of his companies owns the majority of the property where the park will sit.

Property to be bought in the first phase includes the Stephens-owned Exchange Bank building at 423 Main St. and annex at 417 Main St. plus three parking lots in the area. The acquisition also includes the Mays, Byrd and Associates Law Firm building at 415 Main St., though the tech park does not yet have a contract to buy it, Birch said.

The Arkansas Department of Education and the Arkansas Department of Higher Education lease space in the Exchange Bank building and some parking from Stephens.

Because the state is considered a nonprofit, those properties are tax-exempt, Birch said. However, the lease agreements will have to be renegotiated before the property changes hands, and that could affect how much of the property is tax-exempt.

The properties considered to be tax-exempt are valued at nearly $9.3 million.

A Sept. 4 letter of intent between the bank group and the tech park gives the tech park an interest rate of 4.19 percent on the taxable property over the seven-year life of the loan. The tax rate on the tax-exempt property is 2.95 percent, Birch said Friday.

"It'll give the tech park a better interest rate but it also gives the banks that can afford to take the tax-exempt part of it a better yield on that particular piece of it," said Centennial Bank's Hildebrand.

"The tech park gets a lot more aggressive interest rate," he said.

The rates are subject to change, depending on when the tech park closes on the property.

Jay Chesshir, president and CEO of the Little Rock Regional Chamber of Commerce and a member of the tech park authority board, said the amount of state-leased property in the first-phase acquisition means big savings for the project.

The next step is for the Mitchell, Williams, Selig, Gates & Woodyard law firm to draft the loan documents so the tech park can lock in an interest rate and set a closing date, Birch said. Construction could start in January with the annex building, which is now vacant.

Business on 10/10/2015

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