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Incentives
**Area cities, in conjunction with the state of Texas, offer a broad range of
business incentives including enterprise zones, foreign trade zones, tax
abatement zones, employee training programs and financing assistance.
Texas Enterprise Fund
Half-Cent Sales Tax
Funds
Freeport Exemption
Foreign
Trade Zones
Tax
Enterprise Zones and
Projects
Skills Development Fund
Texas
Capital Infrastructure Fund
Texas Capital Fund Real
Estate Development Program
Financing
SBA 504 Loan Program
SBA 7(a) Loan Program
SBA
Low Doc Program
USDA Business and Industry Direct Loan
USDA
Guaranteed Loan Program
Linked Deposit Program
TAFA
Loan Guarantee Program
TAFA Linked Deposit
Texas
Farm Service Agency
Texas Small Business Industrial
Revenue Bond Program
Texas Rural Loan Fund
Texas
Rural Economic Development Program
Texas Capital Access
Fund
Texas Enterprise Fund
This fund is intended to attract high-impact facilities that have the
opportunity to provide high returns for taxpayer investment. The Governor,
Lieutenant Governor, and Speaker of the House must unanimously agree on the
use of this fund for a project based on benefit to the State of Texas. Capital
investment, job creation, wages generated, financial strength of applicant,
business history, analysis of business sector, and federal and local
government and private sector financial support of the projects are taken into
consideration.
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Half-Cent Sales Tax Funds
Several communities we serve administer funds generated by a half-cent sales
tax. A portion of these funds is earmarked for performance-based incentives
for companies expanding or locating in the community. The amount of the
incentive is determined by a qualifying company's capital investment in the
community and the number of jobs being created. Each community has their own
set of guidelines for distribution of funds.
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Free Port Exemeption
For businesses that serve national or international markets, the Freeport
Exemption allows exemption from ad valorem taxation on property that has been
detained in the state for 175 days or less for the purpose of assembly,
storage, manufacturing, processing, or fabricating. Individual taxing entities
determine whether Freeport Exemption is allowed.
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Foreign Trade Zones
A foreign trade zone is a designated area in the United States considered
outside of the U. S. customs territory. This designation allows imported
merchandise to be processed in several ways without payment of U.S. customs
duty. The customs fee is due only if the imported merchandise is formally
entered into the United States. Warehousing facilities as well as industrial
property and port sites are designated as foreign trade zones.
Foreign trade zone sites in Jefferson, Orange, and Liberty counties offer the
advantages of duty-free storage, assembly or manufacture of foreign goods.
These zones in southeast Texas contain warehouse space and open storage sites
as well as industrial property for sale or lease. Companies requiring zone
advantages at their own plant site may be able to receive U.S. government
approval to operate as a foreign trade subzone with the same privileges.
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Zones in Entergy-Texas Service Area
Zone No. 115, Beaumont, Texas Zone No. 116, Port Arthur, Texas Zone
No. 117, Orange, Texas Grantee: Foreign-Trade Zone of Southeast Texas,
Inc., 2748 Viterbo Road, Box 9, Beaumont, TX 77705 Zone No. 171, Liberty
County, Texas Grantee: Liberty County Economic Development Corporation Foreign-Trade
Zone 171, P.O. Box 857, Liberty, TX 77575 John Hebert (409) 336-7311
Tax Abatement
Tax abatement can be used by a community to encourage private property owners
in a deteriorated area to make physical improvements to their property. The
city can enter into a written agreement with the property owners within a tax
abatement zone to grant total or partial exemption from ad valorem taxation by
one or more taxing units. The amount of taxes which can be exempted, and the
time period in which taxes will be abated, vary from community to community
and depend upon the nature of the project (capital invested and number of jobs
created). The maximum period for tax abatement is 10 years according to state
law. Abatements apply to only build-to-suit projects. By state law, existing
taxes on property cannot be abated.
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Enterprise
Zones and Projects
Enterprise zones and enterprise projects are designed to encourage job
creation and capital investment in economically distressed areas of a
community. Enterprise designations may qualify companies for local sales tax
refunds, regulatory relief, property tax abatements, streamlined permitting,
increased fire and police protection, and priority status on local or state
grants. Enterprise projects, under certain conditions, may be eligible for
state sales tax refunds.
Enterprise projects are eligible for a refund of state sales or use taxes paid
on machinery and equipment, building materials, labor for the rehabilitation
of existing buildings, and electricity and natural gas purchased for use in
the enterprise zone. The refund is based on $2,000 for each permanent job the
project creates or retains during the five-year designation period. The
maximum number of jobs for which a refund may be received is based upon
commitments made in the project application. Each project is limited to a
maximum refund of $l.25 million or $250,000 per year over the five year period.
Enterprise projects are eligible for a franchise tax deduction on its annual
report filing for each year of their five-year designation. State franchise
tax liability is based upon the project's taxable capital or earned surplus
income. The deduction is based on the amount of capital investment made by the
project in the enterprise zone. The project's apportioned taxable capital may
be reduced by 50 percent of the capital investment made in the enterprise zone
or the apportioned earned surplus income may be reduced by 5 percent of the
capital investment made in the enterprise zone.
Enterprise projects have priority or preference for all programs administered
by the state. Enterprise projects and qualified businesses not designated as
enterprise projects but located in a zone may be eligible for regulatory
relief and other incentives not otherwise available throughout the community.
Examples include property tax abatement, refund of certain local sales and use
taxes, and removal of regulatory barriers.
Beaumont/ Nederland / Jefferson County Enterprise Zone EZ239-010998-BNJC County
Judge Jefferson County Post Office Box 4025 Beaumont, TX 77704 (409)
835-8466
Incentives Available: Industrial Parks Industrial Buildings Tax
Abatement Tax Increment Financing Local Sales Tax Refunds Bonds Low-Interest
Loans/Packaging Infrastructure Improvements Increased Police/Fire
Protection Transit Provisions Job Training Foreign Trade Zone Enterprise
Project Eligible Zone
Jasper County Enterprise Zone EZ125-043093-JC Jasper Economic
Development Corp. Post Office Box 610 Jasper, TX 75951 (409)
383-6120
Incentives Available: Industrial Parks Industrial Buildings Tax
Abatement Local Sales Tax Refunds Economic Development Sales Tax Low-Interest
Loans/Packaging Development Fee Exceptions Streamlined Permitting Infrastructure
Improvements Job Training Area Specific Unique Incentives Enterprise
Project Eligible Zone
Jasper/Jasper County Enterprise Zone 2 EZ164-022395-JJC2 Jasper
Economic Development Corp. Post Office Box 610 Jasper, TX 75951 (409)
383-6120
Incentives Available: Industrial Parks Tax Abatement Local Sales
Tax Refunds Economic Development Sales Tax Low-Interest Loans/Packaging Development
Fee Exceptions Infrastructure Improvements Job Training Area
Specific Unique Incentives Enterprise Project Eligible Zone
Orange Enterprise Zone EZ255-072898-O City Manager City of Orange Post
Office Box 520 Orange, TX 77630 (409) 883-1055
Incentives Available: Industrial Buildings Tax Abatement Tax
Increment Financing Local Sales Tax Refunds Bonds Low-Interest
Loans/Packaging Development Fee Exceptions Infrastructure Improvements Job
Training Foreign Trade Zone Area Specific Unique Incentives Enterprise
Project Eligible Zone
Port Arthur / Jefferson County Enterprise Zone EZ257-072898-PAJC County
Judge Jefferson County Post Office Box 4025 Beaumont, TX 77704 (409)
835-8466
Benefits Available: Industrial Buildings Tax Abatement Tax
Increment Financing Economic Development Sales Tax Development Fee
Exceptions Streamlined Permitting Infrastructure Improvements Job
Training Foreign Trade Zone Area Specific Unique Incentives Enterprise
Project Eligible Zone
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Skills
Development Fund
The Skills Development Fund is designed to finance customized job training for
business and industry. Grants are awarded to public junior, community and
technical Colleges for local job training needs. The Fund will underwrite
training for specific skills for workers who will be hired by the
participating businesses. The Fund will provide training for new jobs created
through business expansion or relocation. Funds are not available to provide
training for an employer who relocates from one place in Texas to another.
Funds may be combined as part of a work force development package to
facilitate business relocation or expansion.
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Texas
Capital Fund Infrastructure Program
This program provides grants for the construction of first-time public
infrastructure projects incidental to an incoming business or a business
expansion. Eligible projects include water, sewer, streets, gas lines,
drainage, treatment facilities, landfills, railroad spurs, traffic signals,
dredging of harbors or channels, telecommunications and electric lines, and
acquisition of real estate for infrastructure.
The Texas Capital Fund Infrastructure Program is designed to provide financial
resources to non-entitlement communities. Funds from this program can be
utilized for public infrastructure (water, sewer, road, etc.) needed to assist
a business which commits to create and/or retain permanent jobs, primarily for
low and moderate income persons. The minimum award is $50,000 and the maximum
is $750,000. The award may not exceed fifty percent of the total project cost.
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Texas
Capital Fund Real Estate Development Program
This program provides financial resources to non-entitlement communities for
public infrastructure needed to assist a business which commits to create
and/or retain permanent jobs, primarily for low and moderate income persons.
This program encourages new business development and expansions.
The minimum award is $50,000 and the maximum is $750,000 inclusive of
administration costs. The award may not exceed fifty percent (50%) of the
total project cost. The required minimum equity injection of the total project
cost by the business is 10% if operating for 3+ years or 33% if operating less
that 3 years. Applicant must not sell/transfer ownership for a minimum of five
years. The business must remit to the applicant a monthly lease payment equal
to the award amount divided over a maximum 240 month period.
This program provides funding to non-entitlement communities to construct,
acquire, or rehabilitate real estate so that it may be leased to a company.
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Financing
SBA 504 Loan
Program
The Small Business Administration (SBA) 504 Loan Program is a fixed asset
financing program which offers small businesses long-term loans at a fixed
rate of interest which is generally lower than current market rates. The
Program is designed to provide expansion capital to small businesses and
stimulate investment in local economies resulting in job creation. The loan
may be used to acquire land, construct buildings, purchase land, buildings,
machinery and equipment. The 504 loan is coordinated between the SBA and a
private lender with the lender covering 50 percent of the project, the SBA 40
percent, and the borrower 10 percent. The maximum participation by the SBA is
$1 million.
SBA 7(a) Loan Program
The Small Business Administration (SBA) 7(a) Loan Guaranty Program can provide
assistance to small businesses to obtain financing to finance working capital
and fixed asset purchases. The 7(a) Program guarantees commercial lending
Institutions up to 80 percent for loans under $100,000 and up to 75 percent
for loans over this amount and up to $750,000. Funds can be used to finance
working capital, fixed asset acquisition, including land, buildings and
equipment.
SBA Low Doc
Program
The Low Doc program was designed to simplify the Small Business Administration
application process and shorten the processing time for smaller loans. To be
eligible, a business must have 100 or fewer employees, and annual sales for
the past three years must be less than $5 million. This program allows for an
SBA guarantee of up to 80 percent for loans up to $100,000, and up to 75
percent for loans between $100,000 and $150,000.
USDA Business and
Industry Direct Loans
The Business and Industry Loan program provides loans from $1 million to $10
million for improving, developing, or financing business and industry,
creating jobs, and improving the economic and environmental climate in rural
communities (including pollution abatement). The project must be located in a
city with less than 50,000 in population and priority is given to projects in
cities of less than 25,000. It is not a requirement that the business be
related to agriculture. Manufacturing, retail, wholesale and services are
eligible.
USDA Business
and Industry Guaranteed Loans
This program provides guarantees up to 90 percent of a loan made by a
commercial lender to a rural business in a town of less than 50,000 people.
Loan proceeds may be used for working capital, machinery and equipment,
buildings and real estate, and certain types of debt refinancing.
The maximum aggregate B&I Guaranteed Loan(s) amount that can be offered to any
one borrower under this program is $25 million.
Linked
Deposit Program
The State of Texas Historically Underutilized Business and Small Business
Linked Deposit Program ("Linked Deposit Program") provides loans $10,000 to
$250,000 to historically underutilized businesses and/or small businesses
located in distressed communities. Use of proceeds may include working
capital, the purchase, construction, or lease of capital assets, which include
land, buildings, and equipment.
TAFA
Loan Guarantee Program
The Texas Agricultural Finance Authority (TAFA) provides financial assistance
through loan guarantees for businesses that are engaged in innovative,
diversified or value-added production, processing, marketing or exporting of
an agricultural product. The program provides a guaranty of up to 90 percent
of the loan amount to an eligible lender. Funds may be used for working
capital, equipment, real estate and/or improvements and inventory. Guaranties
range from $30,000 to $5 million.
TAFA
Linked Deposit
The TAFA Linked Deposit provides low interest rate loans through approved
lenders for individuals or businesses in Texas that process and market
agricultural crops or livestock, produce alternative crops; or produce
alternative crops using water conservation equipment for ag production
purposes. The funds may be used to purchase land, machinery, equipment, seed,
fertilizer, plants, inventory or professional services. The low interest rates
for production loans may be applied up to $250,000 and up to $500,000 for
processing and marketing loans.
Farmers
Home Administration
The Farmers Home Administration guarantees up to 90 percent of loss of
principal and interest on quality loans to businesses and industries in rural
areas. Funds may be used for construction, modernization, purchase of land,
machinery, equipment, and working capital. Preference is given to areas with
less than 25,000 population.
Texas Small Business
Industrial Revenue Bond Program
This program is designed to provide tax-exempt financing to finance land and
depreciable property for eligible industrial or manufacturing projects. The
Development Corporation Act allows cities, counties, conservation and
reclamation districts to form non-profit industrial development corporations
or authorities on their behalf. The purpose is to issue taxable and tax-exempt
bonds for eligible projects in their jurisdictions.
The industrial development corporation acts as a conduit through which all
moneys are channeled. Generally, all debt services on the bonds are paid by
the business under the terms of a lease, sale, or loan agreement. As such, it
does not constitute a debt or obligation of the governmental unit, the
industrial development corporation, or the State of Texas.
Texas Rural Loan Fund
This fund loans money only to a local non-profit industrial foundation. It
then buys land and constructs a building and leases or sells it. The funds may
only be used for fixed assets and cannot pay for over 40 percent. The local
foundation must contribute 15 percent of the total project.
Texas Rural Economic Development Program
The Texas Department of Commerce uses money in the fund to guarantee loans
made to projects located in cities of less than 15,000 in population. In
addition, loans made by a private lender between $25,000 and $50,000 shall be
guaranteed for no more than 90 percent. Loans made by a private lender above
$50,000 shall be guaranteed for no more than 75 percent. In administering this
Act, the department will give first preference to assistance to historically
underutilized businesses, the food and fiber processing industries, and to a
project located in a State of Texas enterprise zone.
Texas
Capital Access Fund
The Capital Access Fund may be accessed by participating financial
institutions that provide loans to businesses that face barriers in accessing
capital. The essential element of the program is a reserve account established
at the lending institution to act as a credit enhancement, inducing the
financial institution to make a loan.
Small or medium-sized businesses (less than 500 employees) and domiciled in
the state (51% of its employees located in this state) may apply to a lending
institution for a loan for working capital or the purchase, construction, or
lease of capital assets, including buildings and equipment used by the
business.
The state contribution may not exceed 8% or $35,000 of the loan to businesses
located in enterprise zones. The limits are 6% or $35,000 for any other
applicant.
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