SUMMARY OF STATE INCENTIVES CITY OF CUERO
Source: Trista Fugate, Office of the Governor Economic Development and Tourism
- Texas Enterprise Fund
- Emerging Technology Program
- Texas Enterprise Zone Program
- Texas Capital Fund Infrastructure Program
- Texas Capital Fund Real Estate Development Program
- Rural Municipal Finance Program
- Sales and Use Tax Exemptions
- Chapter 380
- Texas Industry Development Program
- Texas Leverage Fund
- Bonds
- Texas Economic Development Act
- Ad Valorem/Property Tax Exemption
- Property Tax Rule 9.105
- Franchise Tax Credits for Economic Development
- Permit Assistance
DISCLAIMER: The material contained in this Summary of State Incentives is
provided for informational purposes only and cannot be construed as a commitment.
Assumptions are based on creating jobs and providing a capital investment. Total jobs
and capital investment have been included as eligible costs for the various incentive
programs available. However, actual jobs and capital investment may vary from the
assumptions made due to final determination of program eligibility and site
location.
Texas Enterprise Fund
The 78th Texas Legislature established the Texas Enterprise Fund to provide financial resources to help strengthen the state’s economy. The Governor, Lieutenant Governor, and the Speaker of the House must unanimously agree to support the use of the Texas Enterprise Fund for each specific project.
Projects that are considered for Enterprise Fund support must demonstrate a project’s worthiness, maximize the benefit to the State of Texas and realize a significant rate of return of the public dollars being used for economic development in Texas. Capital investment, job creation, wages generated, financial strength of the applicant, applicant’s business history, analysis of the relevant business sector, and federal and local government and private sector financial support of a project will all be significant factors in approving the use of the Enterprise Fund.
Emerging Technology Program
The $200 million Texas Emerging Technology Program is designed to help
Texas create jobs and grow the economy over the long-term by expediting the development
and commercialization of new technologies and attracting and creating jobs in
technology fields that will form the backbone of our economy. The program will work
through partnerships between the state, institutions of higher education and private
industry to focus greater attention on the research, development and commercialization
of emerging technology. The Emerging Technology Program is dedicated to three areas:
- Regional Centers of Innovation and Commercialization (RCICs). These centers will
become concentrated with applied R&D activities, be incubators (including
specialized workforce training) for startup firms and encourage expansion of
existing companies resulting from commercializing their developments.
- Matching grant funds. Applied technology research and development projects that
accelerate commercialization into production and have a demonstrated ability
to receive or have received federal grants or non-state grants may apply for
matching dollars from the Emerging Technology Fund. Grants such as Small
Business Innovation Research grants, Small Business Technology Transfer
grants, etc
- Attracting research talent. The state will help Texas public universities
attract highly renowned research teams from universities and institutions in
other states.
For more information regarding the application process or funding,
please contact Mark Ellison with the Office of the Governor at 512/463-1472.
Texas Enterprise Zone Program
A community with less than 250,000 in population may have up to four
enterprise projects. A community with 250,000 in population or greater may have up to
six enterprise projects.
Upon a community designating a business as an enterprise project, and upon that
project’s designation being approved by the state, the business would be eligible
for the following incentives:
State Sales and Use Tax refunds
Beginning September 1, 2003 an enterprise project is eligible for a refund for state
sales and use taxes paid for building materials, machinery and equipment, electricity
and natural gas purchased and consumed in the normal course of business and depending
on investment amount and number of jobs created/retained.
The refund can be an amount ranging from a minimum of $2,500 per job to a maximum of
$7,500 per job as follows:
- If project investment amount is greater than $40,000 and less than $400,000,
then refund amount is $2,500 per job up to a maximum of 10 jobs
created/retained;
- If project investment amount is equal to or greater than $400,000 and less than
$1,000,000, then refund amount is $2,500 per job up to a maximum of 25 jobs
created/retained;
- If project investment amount is equal to or greater than $1,000,000 and less
than $5,000,000, then refund amount is $2,500 per job up to a maximum of 125
jobs created/retained;
- If project investment amount is equal to or greater than $5,000,000 and less
than $150,000,000, then refund amount is $2,500 per job up to a maximum of 500
jobs created/retained;
- If project investment amount is equal to or greater than $150,000,000 and less
$250,000,000, then refund amount is $5,000 per job up to a maximum of 500 jobs
created/retained;
- If project investment amount is equal to or greater than $250,000,000, then
refund amount is $7,500 per job up to a maximum of 500 jobs
created/retained;
Further eligible items include tangible personal property purchased and consumed in
the normal course of business and taxable services. Receipts for purchases of building
materials and machinery and equipment and payroll information are required to be
retained as part of the audit process. (Note: All contracts should separate the costs
for building materials and/or equipment from the costs of labor and services in order
to be eligible.)
The refund for sales and use tax must be for all eligible items for use at the
qualified business site.
Texas Capital Fund Infrastructure Program
The Texas Capital Fund Infrastructure Program is an economic development tool designed
to provide financial resources to non-entitlement communities. Funds from this program
can be utilized for public infrastructure (water, sewer, roads, 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 (50%) of the total project cost.
The Texas Department of Agriculture administers the Texas Capital Fund Program. For
further details on the program, please contact Robert Wood at 512/463-7577.
Texas Capital Fund Real Estate Development Program
The Texas Capital Fund Real Estate Development Program is designed to
provide financial resources to non-entitlement communities. Funds must be used for
real estate development (acquisitions, construction and/or rehabilitation) to assist a
business, which commits to create and/or retain permanent jobs, primarily for low and
moderate-income persons. This program encourages business development and expansions
located in non-entitlement communities. The minimum award is $50,000 and the maximum
is $750,000. The award may not exceed fifty percent (50%) of the total project cost.
Funds are provided with no interest accruing and with payments based on a 20-year
amortization schedule.
The Texas Department of Agriculture administers the Texas Capital Fund Program.
For further details on the program, please contact Robert Wood at 512/463-7577.
** Total Texas Capital Fund participation from both Infrastructure
program and Real Estate Development program may not exceed $750,000.
Rural Municipal Finance Program
The Rural Municipal Finance Program was created by the Texas Agricultural Finance
Authority (TAFA) to stimulate economic activity in rural Texas. TAFA was created in
1987 as a Public Authority within the Texas Department of Agriculture.
This loan program is designed for eligible applicants located within rural areas of
the state that provide significant benefits for the rural area, and provide evidence
of ability to repay the commitments. Applicants can include: city and county
governments; economic development corporations; hospital districts; rail districts;
utility districts; special districts; agricultural districts; and private water and
wastewater corporations.
An applicant must certify to TAFA that:
- The project is located in a non-metropolitan statistical area (county);
or
- If in a metropolitan statistical area, the project is in an unincorporated area;
or
- Located in a city with a population of under 20,000, that is not adjoining a
city or group of cities with an aggregate population of 50,000 or
greater.
Loan amounts range from $50,000 to an amount approved by TAFA’s board of directors,
but target projects for less than $1,000,000. Loans may be used for real estate
purchase, building construction, site improvements, equipment, water and wastewater
systems, municipal infrastructure projects and any other use that can be identified to
improve or assist in the economic development of the rural area.
The Texas Department of Agriculture administers the Rural Municipal Finance Program.
For further details on the program, please contact Robert Wood at 512/463-7577.
State Sales & Use Tax Exemptions
Manufacturing Machinery & Equipment
Leased or purchased machinery, equipment, replacement parts, and accessories that have
a useful life of more than six months, and that are used or consumed in the
manufacturing, processing, fabricating, or repairing of tangible personal property for
ultimate sale, are exempt from state and local sales and use tax. Texas businesses are
exempt from paying state sales and use tax on labor for constructing new facilities.
Texas businesses are exempt from paying state sales and use tax on the purchase of
machinery exclusively used in processing, packing, or marketing agricultural products
by the original producer at a location operated by the original producer.
Natural Gas & Electricity
Texas companies are exempt from paying state sales and use tax on electricity and
natural gas used in manufacturing, processing, or fabricating tangible personal
property. The company must complete a "predominant use study" that shows that at
least 50% of the electricity or natural gas consumed by the business directly causes a
physical change to a product.
Chapter 380
Section 380.001 of the Local Government Code authorizes home-rule municipalities to
offer a range of incentives designed to promote state or local economic development.
To determine the latitude of whether a particular incentive or combination of
incentives constitutes a "program...to promote state or local economic development",
local communities should consult their city attorney.
Texas Industry Development
The Office of the Governor Economic Development and Tourism Division hereby gives
notice that The Texas Small Business Industrial Corporation is accepting applications
for loans to be funded through the Texas Industry Development Revolving Loan program.
The Texas Industry Development Revolving Loan Program, provides capital to Texas
communities and eligible 501(c) 3 corporations at favorable market rates. The program
supports eligible tax exempt public purpose projects that stimulate economic
development within the community. The loans are available with low cost, variable rate
long term financing with the term of the loan not extending beyond the useful life of
the assets and up to bond maturity in 2025.
Eligible projects must meet the project definition as described in the Development
Corporation Act of 1979, the Texas Industry Development Program Guidelines and all
appropriate state and federal regulations as applicable to the program. Examples of
public projects include: public facilities; community infrastructure (i.e. water,
wastewater, drainage, streets); remediation on public land/facilities, and public
transportation. Loan terms are available for participants with a credit rating of an A
or above with a term not to exceed December 2025.
A project must be found to be required or suitable for the promotion of economic
development as deemed by the Corporation’s board of directors in the performance of
its public purposes, functions and duties.
A project will not be eligible for funding under the program for moving existing jobs
from one municipality or county in Texas to another municipality or county within the
state.
Applications will be accepted at any time during a quarterly round. The initial
quarterly round will close at 5:00 p.m. June 1, 2006. Application may be found at:
http://www.governor.state.tx.us/divisions/ecodev/ed_bank/
TID_loan_program
For additional information please contact Donna Weinberger-Rourke with The Office of
the Governor Economic Development and Tourism Division at 512/936-6443.
Texas Leverage Fund
The Texas Leverage Fund (TLF) is an "economic development bank" offering an added
source of financing to communities that have passed the economic development sales
tax. Approximately 500 communities in Texas have adopted the local economic development
sales tax. EDT may loan funds directly to a local Industrial Development Corporation
(IDC) to finance eligible projects. Sales tax revenues pledged by the IDC need only be
sufficient to cover projected annual debt service as specified in the Texas Leverage
Fund Program Guidelines. This allows cities to leverage their economic development
sales tax and to pursue additional projects.
Bonds
Sales Tax Bonds
Sales Tax Bonds do not fall under the volume cap and are eligible to communities that
have passed the economic development sales tax. Ineligible projects include for-profit
hospitals, multi-family projects and municipal services.
Exempt-Facility Bonds
Bonds can be issued to finance certain facilities such as airports, dock and wharf
facilities, mass commuting facilities, high-speed inter-rail facilities, or certain
qualified hazardous waste facilities (including certain training and storage
facilities). There is no limit on the amount of the issue and these issues do not
require a reservation under the volume cap. Although the facility must be
governmentally owned, it may be leased or subject to management contracts with the
business.
Other types of exempt bonds include projects for water, sewage and solid waste
facilities, facilities for the local furnishing of electricity or gas, local district
heating or cooling facilities. These types of exempt-facility issues must reserve a
portion of the volume cap. Exempt-facility bonds that are not governmentally owned may
reserve up to $25 million in tax-exempt volume cap allocation each year, however,
there is no restriction to project size.
Tax-Exempt Industrial Revenue Bonds
Tax-Exempt Industrial Revenue Bonds are designed to provide tax-exempt financing to
finance land and depreciable property for eligible industrial or manufacturing projects.
The maximum bond amount is $10 million (which can include certain capital and
administrative costs). (On January 1, 2007, the maximum bond amount will increase to
$20 million.) These issues must receive a reservation under the State's volume
limitation ("volume cap") managed by the Texas Bond Review Board.
The Tax Reform Act of 1986 imposes a volume ceiling on the aggregate principal amount
of "private activity bonds" that may be issued with the State during any calendar
year. Generally, the reservation of state ceiling issues is allocated by lottery in
October each program year.
For more information on the "volume cap" or the lottery dates, contact the Texas Bond
Review Board at 512/463-1741.
Texas Economic Development Act
In 2001, the 77th Texas Legislature enacted House Bill 1200 creating Tax Code Chapter
313, Texas Economic Development Act, to encourage large-scale manufacturing, research
and development, and renewable energy capital investment projects to the State of
Texas. It requires companies to invest a specified amount of money to qualify for a
tax credit and an eight-year limitation on the appraised value of a property for the
maintenance and operations portion of the school district property tax. The local
school district must elect to participate in order for the Company to recognize this
benefit.
The minimum qualifying investment amount for a project located in Cuero Independent
School District is $10 million.
For detailed information regarding this incentive, please contact Tim Wooten with the
Comptroller of Public Accounts at 512/305-9838.
Ad Valorem/ Property Tax Exemption
A Texas constitutional amendment providing an exemption from property taxation for
pollution control was approved in 1993. The intent was to ensure that compliance with
environmental mandates, through capital investments, did not result in an increase in
a facility’s property taxes. A facility must first receive a determination from the
Texas Commission on Environment Quality (TCEQ) that property is for pollution control
purposes. That positive use determination is then provided to the local appraisal
district, which must accept the TCEQ’s decision and grant the property an exemption
from property taxes.
To be eligible for a positive use determination, the property must have been purchased,
acquired, constructed, installed, replaced, or reconstructed after January 1, 1994 to
meet or exceed federal, state, or local environmental laws, rules, or regulations.
For detailed information regarding this incentive, please contact Ken Zarker with the
Texas Commission on Environmental Quality at 512/239-3145.
Property Tax Rule 9.105
The Texas Comptroller of Public Accounts offers a refund of State franchise and
sales/use taxes paid by companies owning certain abated property. A company who meets
the following three conditions may apply for a refund:
- Paid property taxes to a school district on property that is located in a
reinvestment zone established under Chapter 312.
- Is exempt in whole or in part from property tax imposed by a city or county
under a tax abatement agreement established under Chapter 312.
- Is not in a tax abatement agreement with a school district.
The refund is equal to the amount of property taxes that would have been paid had the
company entered into a school district abatement agreement with terms identical to the
city or county abatement agreement, not to exceed the net state sales and use taxes
and state franchise taxes paid or collected and remitted during that calendar year.
The refund amount may also be limited by a statewide appropriation per year for this
refund program.
For more information and assistance on this incentive, contact the Comptroller of
Public Accounts at 800/252-9121 or 512/305-9999.
Franchise Tax Credits
for Economic Development
The 76th Texas Legislature passed Senate Bill 441, which created new franchise tax
credits for economic development. Eligible corporations may take advantage of certain
research and development, jobs-creation, and capital investment credits. Businesses
located in designated county strategic investment areas (SIA) qualify for these tax
credits.
Research and Development ( R & D )
A corporation may claim a credit for certain incremental qualified research expenses
incurred and basic research payments made for research conducted in Texas during the
period upon which the tax is based.
The R&D tax credit is available statewide, but the refund percentage differs depending
upon whether or not a corporation is located inside or outside an SIA.
Amount of Credit
For reports originally due on or after January 1, 2002, the credit equals 5 percent of
qualifying expenses and payments. In computing the credit, a corporation will receive
a bonus for any qualified R & D expenditures made in a SIA. For reports due on or
after January 1, 2002, a corporation may double the amount of such expenditures made
in an SIA.
Although corporations primarily engaged in agricultural processing in DeWitt County
may qualify for the jobs-creation and capital investment credit, they cannot qualify
for the research credit bonus—unless the qualified R & D expenditures are
made in an SIA.
Limitations on Credit
For reports originally due on or after January 1, 2002, the total R & D credit for
a report (including any credit carryforward) is limited to 50 percent. Any unused
credit may be carried forward until the credit is used for up to 20 consecutive
reports. A corporation that establishes an R & D credit cannot establish a
jobs-creation credit in the same period. However, a corporation with an R & D
credit carryforward may establish a jobs-creation credit in a period to which an
R & D credit is carried forward.
Jobs-Creation
DeWitt County is a limited-purpose SIA; therefore, agricultural processing industries
qualify for the jobs-creation tax credits.
To be eligible for a jobs-creation credit, a corporation must be a qualified business
and must create at least 10 qualifying jobs. In addition, the corporation must pay an average weekly wage for each year in which credits are claimed of at least 110 percent of the county-average weekly wage for the counties where the jobs are located.
Qualifying Job
A "qualifying job" is a new permanent full-time job that is located in a strategic
investment area, or, if the job is created by a business primarily engaged in
agricultural processing, a Texas county with a population of less than 50,000. A
"qualifying job" requires at least 1,600 hours of work a year, and pays at least 110
percent of the county average weekly wage for the county where the job is located.
The job must be covered by a group health benefit plan for which the corporation pays
at least 80 percent of the premiums or other charges assessed under the plan for the
employee. The job must not be transferred from one area in Texas to another, and must
not be created to replace a previous employee. A "qualifying job" must meet all of
these requirements.
Amount of Credit
The credit equals 25 percent of total wages and salaries paid for qualifying jobs for
the applicable year. The credit must be taken in five equal installments over the five
consecutive reports beginning with the report based upon the period during which the
qualifying jobs were created.
Limitations on Credit
The total credit for a report (including any credit carryforward) is limited to 50
percent of the tax due on the report before any other applicable credits. A
corporation eligible for a credit from an installment that exceeds the 50 percent
limitation amount may carry forward the unused portion of the installment until used
for up to 5 consecutive reports.
A corporation that establishes the jobs-creation credit cannot establish the R & D
credit in the same period. However, a corporation with a jobs-creation credit
carryforward may establish an R & D credit in a period to which a jobs-creation
credit installment is taken or carried forward.
Capital Investment
DeWitt County is a limited-purpose SIA; therefore, agricultural processing industries
qualify for capital investment tax credits.
A corporation may use a capital investment credit to reduce its franchise tax
liability. To take advantage of this credit a corporation must be a qualified
business; pay an average-weekly wage that is at least 110 percent of the
county-average weekly wage in the county where the job is located; offer a specified
group health benefit plan to all full-time employees, for which the corporation pays
at least 80 percent of the costs; and make a minimum $500,000 qualified capital
investment (QCI).
Qualified Capital Investment (QCI)
A qualified capital investment is tangible personal property first placed in service
in an SIA, or, if the QCI is made by a corporation primarily engaged in agriculture
processing, first placed in service in a Texas county with a population under 50,000.
Amount of Credit
The credit equals 7.5 percent of the qualified capital investment during the period
upon which the tax is based. The credit must be taken in five equal installments over
the five consecutive reports beginning with the report based upon the period during
which the QCI was made.
Limitations on Credit
The total credit for a report (including any credit carryforward) is limited to 50
percent of the tax due for the report before other applicable tax credits. A
corporation eligible for a credit from an installment that exceeds the 50 percent
limitation amount may carry forward the unused portion of the installment until used
for up to 5 consecutive reports.
A corporation that establishes a capital investment credit cannot claim the
enterprise zone deduction authorized under Section 171.1015. (A corporation designated
as an enterprise project may reduce its apportioned taxable capital or apportioned
taxable earned surplus by qualifying capital investments made in the enterprise zone
in which the enterprise project is located. For more information about the enterprise
zone deduction, see Franchise Tax Rule 3.561.)
For questions and further information, please contact Jerry Oxford with the Comptroller of Public Accounts at 512/463-4662.
http://www.window.state.tx.us/taxinfo/taxpubs/tx98_673.html
Please Note: In its third special session, the 79th Texas Legislature passed House
Bill 3, which created a new business franchise tax and revised the base of the
entities subject to the tax. This new business tax takes effect January 1, 2008.
However, franchise tax credits for economic development related to investment and job
creation made in 2006, may be claimed in 2007.
Permit Assistance
TCEQ and the Office of the Governor Economic Development & Tourism division have
established a relationship to assist companies, which may experience unwarranted
delays in their environmental permitting process for projects that could affect job
creation or have a high economic impact.
Economic Development & Diversification
In-State Tuition for Employees
The Economic Development and Diversification In-state Tuition incentive may be offered
to qualified businesses that are in the decision-making process to relocate or expand
their operations into Texas. The incentive allows employees and family members of the
qualified businesses to pay in-state tuition fees if the individual files with a Texas
institution of higher education. Without this incentive designation, a student must
reside in Texas for a 12-month period to be entitled to pay the tuition fees of a
Texas resident.
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