Brownfield Industrial Development Corporation Statement of Purpose
BIDCorp has given top priority to attracting and supporting enterprises which will result in job creation and retention of primary jobs. and which will result in “new dollars” being brought into the Brownfield area economy.
There are four types of projects that BIDCorp is UNABLE to fund: Commercial projects (except in blighted or development areas), park projects, retail projects, and professional services. One other exclusion is a project which has the primary purpose of furnishing facilities to the general public.
BIDCorp’s has given top priority to attracting and supporting the following enterprises:
- Oil & Gas
- Manufacturing & Processing
- Regional Wholesale
- Service (relating to manufacturing, industrial, distribution and wholesaling)
- Technology Firms
Rules Governing The Use of Type 4A Sales Tax Funds
The Section 4A tax can be used to fund the provision of land, buildings, equipment, facilities, expenditures, targeted infrastructure and improvements that are for the creation or retention of primary jobs for projects such as manufacturing and industrial facilities, research and development facilities, military facilities, including closed or realigned military bases, recycling facilities, distribution centers, small warehouse facilities, primary job training facilities for use by institutions of higher education, and regional or national corporate headquarters facilities. The Section 4A sales tax may also fund business-related airports, port- related facilities, and certain airport-related facilities 25 miles from an international border, as well as eligible job training classes, certain career centers and certain infrastructural improvements which promote or develop new or expanded business enterprises.
Section 4A tax proceeds may be used to fund any of 15 types of projects under the Development Corporation Act. Some of these projects require the creation or retention of primary jobs. Others require that the Section 4A corporation meet the requisite revenue amounts, population, and other requirements specified by the Act without having to create or retain primary jobs. A few projects do not require either the creation or retention of primary jobs or to meet certain
“Primary job” is defined to mean a job that is “available at a company for which a majority of the products or services of that company are ultimately exported to regional, statewide, national, or international markets infusing new dollars into the local economy;” and meet any one of a certain enumerated sector numbers of the North American Industry Classification System (NAICS).
The enumerated sector numbers are:
- 111 Crop Production
- 112 Animal Production
- 113 Forestry and Logging
- 11411 Commercial Fishing
- 115 Support Activities for Agriculture and Forestry
- 211 to 213 Mining
- 221 Utilities
- 311 to 339 Manufacturing
- 42 Wholesale Trade
- 48 and 49 Transportation and Warehousing
- 51(excluding 51213 and 512132) Information (excluding movie theaters and drive-in theaters)
- 523-525 Securities, Commodity Contracts, and Other Financial Investments and Related Activities; Insurance Carriers and Related Activities; Funds, Trusts, and Other Financial Vehicles
- 5413, 5415, 5416, 5417, and 5419 Scientific Research and Development Services
- 551 Management of Companies and Enterprises
- 56142 Telephone Call Centers
- 922140 Correctional Institutions; or a job that is included in North American Industry Classification System (NAICS) sector number 928110, National Security, for corresponding index entries for Armed Forces, Army, navy, Air Force, Marine Corps, and Military Bases.
Section 2(11) of the Act specifically allows funding for the land, buildings, equipment, facilities, expenditures, targeted infrastructure, and improvements that are for the creation or retention of primary jobs and that are found by the board of directors of the Section 4A corporation to be required or suitable for the development, retention, or expansion of the following 8 types of projects:
Manufacturing and industrial facilities. A primary purpose of the Section 4A sales tax for economic development is to promote the expansion and development of manufacturing and industrial facilities which create or retain primary jobs.
Research and development facilities. Economic development corporations can help provide research and development facilities which create or retain primary jobs.
Military facilities. Economic development corporations can help promote or support an active military base, attract new military missions to a military base in active use; or redevelop a military base that has been closed or realigned.
Recycling facilities. With the recent federal and state statutory encouragement of recycling enterprises, a growing number of businesses are emerging to meet these needs, and cities will be competing to attract these businesses. Recycling facilities which create or retain primary jobs are permissible projects.
Distribution centers. In cities with access to major airports or ports, and in areas that have passed the Freeport exemption, the environment is often favorable for the location of distribution centers. Funding distribution centers which create or retain primary jobs is allowable under the Act.
Small warehouse facilities. Again, in cities with access to major airports or ports, and in areas that have passed the Freeport exemption, the environment is often favorable for the location of warehouse facilities capable of serving as decentralized storage and distribution centers. Small warehouse facilities projects which create or retain primary
jobs are permissible Section 4A projects.
Primary job training facilities for use by institutions of higher education. The term “institution of higher education” is defined under Section 61.003 of the Texas Education Code to include any public technical institute, public junior college, public senior college or university, medical or dental unit, or other agency of higher education as defined under Section 61.003. The Development Corporation Act of 1979 allows the funding for “primary job training facilities for use by institutions of higher education.”
Regional or national corporate headquarters facilities. House Bill 2912 added certain corporate headquarter facilities to the definition of “project.” “Corporate headquarters facilities” is defined to mean “buildings proposed for construction or occupancy as the principal office for a business enterprise’s administrative and management services.”
Accordingly, Section 4A corporations may fund corporate headquarter facilities, provided the facilities create or retain primary jobs.
Section 4A Projects Which Are Not Required to Create Primary Jobs
Additionally, the following three categories are also authorized Section 4A projects pursuant to Section 2(11) of the Act. Job training classes, certain infrastructure improvements and career centers need not be conditioned upon the creation or retention of primary jobs. development and expansion of business enterprises can be a permissible project. Section 4A corporations may spend tax revenue for job training classes offered through a business enterprise only if the business enterprise agrees in writing to certain conditions. The business enterprise must agree to create new jobs that pay wages that are at least equal to the prevailing wage for the applicable occupation in the local labor market area; or it must agree to increase its payroll to pay wages that are at least equal to the prevailing wage for the applicable occupation in the local labor market area. 28 The creation or retention of primary jobs is not a mandatory requirement for funding permissible job training classes.
Certain infrastructural improvements which promote or develop new or expanded business enterprises. “Project” also includes expenditures found by the board of directors to be required or suitable for infrastructure necessary to promote or develop new or expanded business enterprises. Yet the infrastructure improvements are limited to streets and roads, rail spurs, water and sewer utilities, electric utilities, gas utilities,
drainage, site improvement, and related improvements, telecommunications and Internet improvements, and beach remediation along the Gulf of Mexico.
29 Accordingly, Section 4A corporations may assist with limited infrastructural improvements that the board finds will promote or develop new or expanded business development. The funding of these infrastructural improvements do not have to be conditioned upon the creation or retention
of primary jobs.
Career Centers. Certain career centers can also be provided land, buildings, equipment, facilities, improvements and expenditures found by the board of directors to be required or suitable for use if the area to be benefited by the career center is not located in the taxing jurisdiction of a junior college district.
Commuter Rail, Light Rail or Motor Buses. A Section 4A corporation, as authorized by the corporation’s board of directors, may spend tax revenue received under the Act for the development, improvement, expansion or maintenance of facilities relating to the operation of commuter rail, light rail, or motor buses. 31 Section 4A(i) specifically allow industrial development corporations to undertake two categories of projects without the requirement of creating or retaining primary jobs. The primary purpose of these projects is to provide:
Business airports (general aviation business service airports that are an integral part of an industrial park); and Port-related facilities (port-related facilities to support water-borne commerce). In addition, there are three categories that are not required to create or retain primary jobs, but for which there are revenue amount, population and other requirements specified in the Act:
Airport Facilities. Section 4A corporations located within twenty-five (25) miles of an international border, in a city with population of less than 50,000 or an average rate of unemployment that is greater than the state average rate of unemployment during the preceding twelve (12) month period, may assist with land, buildings, facilities, infrastructure and improvements required or suitable for the development or expansion of airport facilities.
Airport and Port Facilities. Section 4A corporations located in a city wholly or partly in a county that is bordered by the Rio Grande, with a population of at least 500,000, and having wholly or partly within its boundaries at least four cities that each have a population of at least 25,000 (Hidalgo County), may provide certain assistance with infrastructure necessary to promote or develop new or expanded business enterprises, including airports and ports facilities, provided section 4A sales tax revenues do not support the project.
Undertaking Projects Located Outside of the City
Section 23(a) (1) of the Development Corporation Act provides that an economic development corporation may undertake projects outside of the city limits with permission of the governing body that has jurisdiction over the property. In other words, if the corporation wants to undertake a project that is located completely in the city’s extraterritorial jurisdiction or beyond, it should get approval from the governing body of the county, the county commissioner’s court. The language of the Act, however, does not seem to require this approval if the project is located at least partially within the boundaries of the city. If the project is located completely within the jurisdiction of another municipality, the corporation would need approval of the city council for that municipality.