City of Conway, Arkansas

In midst of the of the Great Recession, the State of Arkansas, the City of Conway and its Conway Development Corporation strived to attract new companies and high paying jobs. Under immense national competition, they collaborated to provide incentives to attract a new Hewlett-Packard Company (“HP”) facility employing up to 1,200 workers. HP’s desire was to lease a building for 10 years, but in order for the economics to work, the financing needed to amortize for 25 years.

The Solution

As Financial Advisor, Crews structured and placed this significant economic development financing to its affiliate First Security Bank and four other Arkansas-based banks. This financing occurred at the end of 2008 during one of the worst economic meltdowns in history, a time when many other financings across the country were falling apart.

The financing was structured as taxable industrial development bonds in order to take advantage of a state property tax abatement incentive. Financing terms were established that helped to mitigate the event of non-renewal of the lease after 10 years. The City owns and leases the facilities to the Conway Development Corporation (“CDC”) who further subleases the facilities to HP. The sublease payments are utilized to service the debt.  HP’s initial lease term is only for 10 years, but the financing is amortized over 25 years. The bonds were sold without a credit rating or credit enhancement. The $20,500,000 Series A bonds were placed to banking institutions and the $10,000,000 Series B bonds were funded from incentive moneys provided by the State.

As a result, the City of Conway was able to build a new 150,000 square feet facility for use by the world’s largest technology vendor.

The Difference

Crews worked hard to serve our client in extraordinary ways by:

  1. Providing an innovative and workable financing structure for both local banks and HP in order to facilitate a major economic development project for Conway, AR;
  2. Assisting with developing a financing plan that allowed for a both a 10-year lease with HP and a 25-year financing amortization;
  3. Utilizing a state financing technique that reduced property taxes as an incentive to HP.