Texas Direct Financial Incentives
Area Development Research Desk (Feb/Mar 09)
Industrial Revenue Bonds:
The Industrial Revenue Bond Program is designed to provide tax-exempt and taxable financing to eligible projects as defined in the Development Corporation Act of 1979. The projects must be in the public interest and serve a public purpose of the state in promoting economic development by securing and retaining business enterprises resulting in a higher level of employment, economic activity and stability. Bond proceeds may be used to finance land, depreciable property, inventory, raw materials, research-and-development costs and job training. The Act gives cities, counties, conservation and reclamation districts the authority to form Industrial Development Corporations (IDC) that can issue bonds on their behalf for eligible businesses. The IDC acts as a conduit through which monies are channeled. The money from the sale of the bonds flows to the business and the debt service of the bonds are paid by the business under the terms of a lease, sale or loan agreement. The bonds do not constitute a debt or obligation of the governmental unit, the IDC or the state of Texas.
Skills Development Fund:
The Skills Development Fund is an innovative program created to assist Texas public community and technical colleges to finance customized job training for their local businesses. The fund was established in 1995 and is administered by the Texas Workforce Commission.
Grants are provided to help companies and labor unions form partnerships with local community colleges and technical schools to provide custom job training. Average training costs are $1,200 per trainee; however, the benefit may vary depending on the proposal.
The Self-Sufficiency Fund is a job-training program that is specifically designed for individuals that receive Temporary Assistance for Needy Families (TANF). The program links the business community with local educational institutions and is administered by the Texas Workforce Commission. The goal of the Fund is to assist TANF recipients become independent of government financial assistance.
The fund makes grants available to eligible public colleges or to eligible private, non-profit organizations to provide customized job training and training support services for specific employers. A joint application from the employer and the eligible public college and/or eligible private, non-profit organization is required to be submitted to the Local Workforce Development Board for review and comment prior to approval.
Local Activity Funds:
Local Activity Funds are discretionary funds allocated to each of the 28 Texas Workforce Boards to support employer needs at the regional level.
Texas Enterprise Zones:
Texas Enterprise Zones are designated by the state using poverty criteria based upon the U.S. Department of Commerce, Bureau of the Census decennial information. A census tract, block group that has a poverty level of 20 percent or greater is an enterprise zone, as is any area designated by the federal government as a renewal community, a federal empowerment zone, or a federal enterprise community, including any developable area approved by the federal agency responsible for making that decision.
State incentives include a refund of state sales and use taxes paid at the qualified business site during the designation period.
Depending upon capital investment, Texas will refund $2,500 for each allocated permanent or retained job - up to 500 jobs created and/or retained - during the five-year designation period, and up to $1.25 million in state sales tax for each enterprise project. For projects with eligible capital investment levels between $150 million and $149,999,999, qualified businesses may receive up to $2.50 million in state sales tax refunds ($5,000 per job with a maximum of 500 jobs created and/or retained). For projects with a capital investment of $250 million or more, qualified businesses may receive up to $3.75 million in state sales and use tax refunds ($7,500 per job for no less than 500 jobs created and/or retained).
Additional incentives may be offered by localities; examples include real and personal property tax abatement, certain local sales tax refunds, reduced utilities, and development participation.
Defense Economic Readjustment Zone Program:
The Defense Economic Readjustment Zone Program assists areas impacted by defense base closure, downsizing, or realignment and provides local and state regulatory and tax incentives to encourage businesses to locate or expand in these areas. Cities and counties, separately or together, can identify and nominate areas for designation as defense economic readjustment zones.
State incentives include a refund of state sales and use taxes paid on qualified expenditures, examples of which are building materials, machinery and equipment, and labor costs for rehabilitating an existing building. Texas will refund $2,500 for each allocated permanent or retained job during the five-year designation period and up to $1.25 million in state sales tax for each defense economic readjustment project.
Additional incentives may be offered by localities. Examples include real and personal property tax abatement, certain local sales tax refunds, reduced utilities, and development participation.
Texas State Contact:
Office of the Governor
Economic Development & Tourism
P.O. Box 12428
Austin, TX 78711
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.