In May 1990, the citizens of Brownfield approved the creation of a Type A Sales Tax Corporation to fund industrial development projects. Incentives are based on project investment, number of primary jobs and employees’ salaries. The Board will consider assistance for leasehold improvements, construction, real estate purchase, training, personal property or equipment, and infrastructure needs.
The Corporation is governed by a Board of Directors who is responsible for reinvesting the Corporation’s funds to create primary jobs, increase the City’s tax base and other activities allowed by the state law. Primary jobs are jobs that infuse new dollars into the local economy by creating or selling a product or service that is ultimately exported to regional, statewide, national, or international markets.
Property Tax Rebate
The Brownfield Industrial Development Corporation can provide an ad valorem property tax rebate for companies adding at least $500,000 in new value for personal and real property on City and County taxes placed on the tax rolls. The rebate period is based over a five (5) year period, with a sliding scale starting at fifty (50) percent to ten (10) percent at year five (5).
Property Tax Abatement
On projects over $5 million, BIDCorp. can assist in applying to the county and the city for property tax abatement. The amount of abatement and the length vary depending upon the companies’ investment.
Job Creation Incentive
The Brownfield Industrial Development Corporation can provide a job creation incentive up to $3,000 per full time employee based on the employee’s salary and hours paid by employer. The total amount of job creation incentive is based on employee’s earnings from $25,000 to $50,000. A full time position is calculated at 2,080 hours per year.
Tax Increment Financing
Tax Increment Reinvestment Zone (TIRZ) is an economic development tool available to Texas cities to promote both new development and redevelopment within a specific geographic area inside the corporate city limits. The costs of improvements to an area are repaid by the contribution of future tax revenues.
Chapter 380 Funds
The City of Brownfield under Chapter 380.001 of the Texas Local Government Code has the authority to offer a range of incentives, including loans and grants, to promote economic development. Section 380 provides a mechanism for the city to refund or rebate their 1.00% portion of the sales and use tax.
Source: Brownfield Industrial Development Corporation
Besides not having a State corporate and individual income tax, Texas offers a variety of tax incentives for businesses expanding in or relocating to Texas. Following is a brief description of some of those incentives.
Texas Enterprise Fund
The TEF is managed by the Governor of Texas and is considered to be the state’s deal-closing fund. The Fund is used primarily to attract new business to the state or retain an existing business that is undertaking a substantial expansion. The Fund may also be appropriated for a variety of economic development projects, including infrastructure development, community development, job training programs and business incentives. The project must demonstrate a significant return on the state’s investment, strong local support, and the unanimous support of the Governor, Lieutenant Governor and Speaker.
Texas Enterprise Zone
This program is an economic development sales tax incentive. Projects nominated by the City and approved by the State may receive state sales and use tax refunds on qualified expenditures. Companies can receive a refund of State sales and use tax paid (6.25%) for building materials, machinery and equipment, electricity and natural gas purchased and consumed in the normal course of business.
Texas Capital Fund Infrastructure Program
The Texas Capital Fund Infrastructure Program is an economic development tool designed to provide financial resources to rural 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 $1,500,000. The award may not exceed fifty percent (50%) of the total project cost. The Texas Department of Agriculture administers the Texas Capital Fund Program. Applications due on the 20th of each month.
Texas Capital Real Estate Development Program
Provides a zero-interest loan amortized over 20 years to fund real estate acquisition or improvements to create or retain permanent jobs in primarily rural communities and counties. Funds from this program can be utilized for acquisition, new construction or rehabilitation 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 $1,500,000. The award may not exceed fifty percent (50%) of the total project cost. The Texas Department of Agriculture administers the Texas Capital Fund Program. Applications due on the 20th of each month.
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.
Clean rooms used in the production of semi-conductor components are exempt from State Sales and Use Taxes as manufacturing equipment. That includes property affixed to or incorporated into realty, including integrated systems, fixtures, lighting, moveable partitions, piping and all property necessary or adapted to reduce contamination or to control airflow, temperature and humidity.
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). These issues must receive a reservation under the State’s volume limitation (“volume cap”) managed by the Texas Bond Review Board.
Property Value Limitation and Tax Credit
Chapter 313, Texas Economic Development Act, was designed 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 qualifying investment amount is determined on a sliding scale that begins at $100 million for large urban areas and $30 million for rural areas.
Ad Valorem / Property Tax Exemption For Pollution Control
This program was designed to offer companies an exemption from property taxation for pollution control. 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.
Property Tax Rule 9.105
The Texas Comptroller of Public Accounts offers a refund of state 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.
- Is exempt in whole or in part from property tax imposed by a city of county under a tax abatement agreement.
- Is not 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 during that calendar year.
Capital Investment – Franchise Tax Credits for Economic Development
The Legislature created three franchise tax credits for economic development. Eligible corporations may take advantage of these credits for:
- certain research and development expenses and payments incurred,
- for qualified capital investments or expenditures made,
- or for certain new jobs created in Texas on or after January 1, 2000.
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 a strategic investment area (SIAs). An SIA is a Texas county with above state-average unemployment and below state-average per-capita income. In addition, corporations primarily engaged in agricultural processing in a Texas county with a population of less than 50,000 may qualify for the jobs creation and capital investment credits. Terry county is in a qualifying SIA.
- 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 carry forward) 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.
The sum of the three credits cannot exceed 100 percent of a corporation’s franchise tax liability, after any other applicable tax credits.
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.
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.
Job Training Incentives
Skills Development Fund
The Skills Development Fund is an innovative program created to assist Texas public community and technical colleges finance customized job training for their local businesses. The Fund was established by the Legislature 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 $1,000 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. For detailed information regarding the application process and funding, please contact Travis Weaver with the Texas Workforce Commission at 512/936-3120.