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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