15-4-3605. Certification of qualified equity investments.

15-4-3605. Certification of qualified equity investments. (a)(1)(A)(i) A qualified community development entity that seeks to have an equity investment or a long-term debt security designated as a qualified equity investment eligible for a tax credit under this subchapter shall apply to the Arkansas Economic Development Commission. (ii) The commission shall begin accepting applications on July 15, 2013. (B)(i) If the qualified community development entity seeks to have a long-term debt security designated as a qualified equity investment under this section, the qualified community development entity 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 qualified community development entity for that period before giving effect to interest expense on the long-term debt security. (ii) However, the holder's ability to accelerate payments on the long-term debt security instrument in situations in which the issuer has defaulted on covenants designed to ensure compliance with this subchapter or 26 U.S.C. § 45D, as it existed on January 1, 2013, shall not be affected by this subchapter. (2)(A) A qualified community development entity seeking certification of a qualified equity investment shall submit an application to the commission. (B) The application submitted under subdivision (a)(2)(A) of this section shall include the following: (i) Evidence of the applicant's certification as a qualified community development entity, including evidence that the service area of the applicant includes Arkansas; (ii) A copy of an allocation agreement executed by the applicant, or its controlling entity, and the Community Development Financial Institutions Fund; (iii) A certificate executed by an executive officer of the applicant: (a) Attesting that the allocation agreement remains in effect and has not been revoked or cancelled by the Community Development Financial Institutions Fund; and (b) Stating the cumulative amount of allocations awarded to the applicant by the Community Development Financial Institutions Fund; (iv) A description of the proposed amount, structure, and purchaser of the qualified equity investment; (v) If known at the time of application, identifying information for each corporation, limited liability company, association, partnership, or other business entity that will utilize the tax credits earned from the issuance of the qualified equity investment; (vi)(a) Examples of the types of qualified active low-income businesses in which the applicant, its controlling entity, or affiliates of its controlling entity have invested under the federal New Markets Tax Credit Program, if any. (b) An applicant shall not be required to identify qualified active low-income community businesses in which the applicant will invest when submitting an application; (vii) A nonrefundable application fee of five thousand dollars ($5,000); and (viii) The refundable performance fee required under § 15-4-3609. (b)(1) Within thirty (30) days after receipt of a completed application, the commission shall grant or deny the application in full or in part. (2)(A) If the commission denies any part of an application, the commission shall inform the qualified community development entity of the grounds for the denial. (B)(i) If an application is denied as incomplete and the qualified community development entity provides the additional information or documentation required by the commission or otherwise completes its application within fifteen (15) days of the notice of denial, the application shall be considered completed as of the original date of submission. (ii) If the qualified community development entity fails to provide the information or complete its application within the fifteen-day period, the application remains denied and must be resubmitted in full with a new submission date. (3)(A) If the application is complete and meets the requirements of this subchapter, the commission shall certify the proposed equity investment or long-term debt security as a qualified equity investment that is eligible for a tax credit under this subchapter, subject to the limitations contained in subsection (d) of this section. (B)(i) The commission shall provide written notice of the certification to the qualified community development entity. (ii) The written notice shall include the name, if known, of each corporation, limited liability company, association, partnership, or other business entity that will earn the tax credit and the respective tax credit amount. (iii) If the name of a corporation, limited liability company, association, partnership, or other business entity that is eligible to use the tax credit changes as the result of a transfer of a qualified equity investment or an allocation under § 15-4-3604(b), the qualified community development entity shall notify the commission of the change. (c)(1) The commission shall certify qualified equity investments in the order the applications are received by the commission. (2)(A) Applications received on the same day shall be deemed to have been received simultaneously. (B) For applications that are complete and meet the requirements of this subchapter and are received on the same day, the commission shall certify, consistent with the remaining qualified equity investment capacity, the qualified equity investments in proportionate percentages based on the ratio of the amount of qualified equity investment requested in an application to the total amount of qualified equity investments requested in all applications received on the same day. (d)(1) The commission shall certify up to one hundred sixty-six million dollars ($166,000,000) in qualified equity investments. (2) If a pending request cannot be fully certified because of the limitation stated in subdivision (d)(1) of this section, the commission shall certify the portion that may be certified unless the qualified community development entity elects to withdraw its request rather than receive partial certification. (e) An approved applicant may transfer all or part of the applicant's certified qualified equity investment authority to the applicant's controlling entity or any qualified community development entity controlled by or under common control with the applicant if the approved applicant: (1) Provides the information required in the application with respect to the transferee; and (2) Notifies the commission of the transfer by providing evidence of the receipt of the cash investment as required under subdivision (f)(2) of this section. (f)(1) Within thirty (30) days of the applicant receiving notice of certification, the qualified community development entity or any transferee under subsection (e) of this section shall issue the qualified equity investment and receive cash in the amount of the certified amount. (2) The qualified community development entity or transferee under subsection (e) of this section must provide the commission with evidence of the receipt of the cash investment within ten (10) business days after receipt. (3)(A) If the qualified community development entity or a transferee under subsection (e) of this section does not receive the cash investment and issue the qualified equity investment within thirty (30) days following receipt of the certification notice, the certification shall lapse, and the corporation, limited liability company, association, partnership, or other business entity may not issue the qualified equity investment without reapplying to the commission for certification. (B) A lapsed certification reverts back to the commission and shall be reissued: (i) First, pro rata to any other applicants whose qualified equity investment allocations were reduced under subsection (d) of this section; and (ii) Second, in accordance with the application process.