HALF CENT SALES TAX
Incentives from the La Vernia Municipal Development District are funded from a half cent sales tax. The LVMDD may use funds to finance any permissible project as defined in Chapter 377 of the Texas Local Government Code and which benefits, strengthens and diversifies the economic base of La Vernia.
CHAPTER 377 AGREEMENTS
377 agreements help municipalities offer loans and grants of city funds, as well as the use of city staff, city facilities, or city services at minimal or no charge. These agreements are often used to attract retail development.
FAÇADE IMPROVEMENT GRANT PROGRAM
The La Vernia Municipal Development District (LVMDD) offers a grant program in which they will use a portion of the economic development sales tax to restore the fronts of existing buildings. The LVMDD will approve a maximum of $5,000 or 50% of the actual cost of the façade improvements, whichever is less. While the grant is for all buildings utilized as a business within the city limits, buildings designated as historical by the State of Texas or located in the Central Business District will be given preference. Click Here for the application.
TAX ABATEMENT
Tax abatement is a common economic development tool that can defer property taxes on new plant and equipment expenditures for expanding companies. Tax abatements require approval from the La Vernia City Council.
TAX INCREMENT FINANCING
This economic development tool can be used to finance public improvements and enhance infrastructure in defined areas.
SKILLS DEVELOPMENT FUND
The Skills Development Fund is an innovating 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.
SELF-SUFFICIENCY FUND
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 to become independent of government financial assistance.
The Fund makes grants available to eligible public colleges or to eligible private, nonprofit 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, nonprofit organization is required to be submitted to the Local Workforce Development Board for review and comment prior to approval. http://www.twc.state.tx.us/svcs/funds/self-sufficiency-fund-employers.html.
TEXAS ENTERPRISE ZONE PROGRAM
Under the statewide cap of 105 projects per biennium a community with less than 250,000 in population may have up to six enterprise projects. A community with less 250,000 in population or greater may have up to nine enterprise projects. Upon a community designating a business as an enterprise project, and upon the project’s designation being approved by the state, the business would be eligible for incentives. For more information, contact the following link https://texaswideopenforbusiness.com/services/tax-incentives
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 person. The minimum award is $50,000 and the maximum is $750,000. The award may not exceed 50 percent of the total project cost. The Texas Department of Agriculture administers the Texas Capital Fund Program.
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 50 percent 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 more information, please review the following link: http://texasagriculture.gov/GrantsServices/RuralEconomicDevelopment/TexasCapitalFund.aspx
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. https://texaswideopenforbusiness.com/services/tax-incentives
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 percent of the electricity or natural gas consumed by the business directly causes a physical change to a product. https://texaswideopenforbusiness.com/services/tax-incentives
Data Center Exemption
Texas provides 100% exemption on sales tax for computers, equipment, cooling systems, power infrastructure, electricity and fuel for Data Centers meeting the minimum thresholds of $200 million in capital investment, 20 new jobs, and an average salary at least 120% of the county average salary. https://texaswideopenforbusiness.com/services/tax-incentives
FRANCHISE TAX EXEMPTION & DEDUCTION FOR BUSINESS RELOCATION
Effective Jan 1, 2014 House Bill 500 provides authorization for a company to deduct moving expenses from their apportioned margin while calculating their franchise liability. Companies must relocate their principle place of business from out of State into Texas to obtain the deduction. A taxable entity may deduct relocation costs incurred in relocating the taxable entity’s main office or other principal place of business to this state from another state if the business meets the criteria in Texas Tax Code Section 171.109(b). The taxable entity must take the deduction on the entity’s first annual report described by Rule 3.584(c) (1)(C)(i). The deduction may not reduce apportioned margin below zero, and no carryover of unused deduction is allowed.
http://www.window.state.tx.us/taxinfo/taxforms/05-900.pdf (see item #28)
The bill also makes permanent an exemption for businesses that gross less than $1 million in revenue while providing a $1 million deduction for businesses once they pass the gross receipts revenue threshold. The bill also amends the margin calculation accordingly for equity.
CHAPTER 380
Section 380.001 of the Local Government Code, authorizes municipalities to offer a range of incentives designed to promote state or local economic development. Specifically, it allows for the provision of loans and grants of city funds, as well as the use of city staff, city facilities or city services, at minimal or no charge.
To establish a loan or grant or to offer discounted or free city services, the city must meet the requirements contained in the Texas Constitution and in applicable Texas statutes. Additionally, cities must review their city charters and any other local provisions that may limit the city’s ability to provide such a grant or loan. To determine the latitude of whether a municipality is able to offer a particular incentive of combination of incentives, local communities should consult their city attorney.
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.
TEXAS PRODUCT/BUSINESS FUNDS
The Texas Product/Business Funds provides asset based financing to aid companies coming to the state or currently located in Texas. The Texas Bank for Economic Development administers the Texas Product/Business Funds (TP/BF), a fund readily accessible to companies doing business in Texas. Asset based loans offer companies opportunities to apply their assets towards secure funding for future projects. Any business, locating or expanding in Texas, is eligible to apply through the TP/BF fund. The TP/BF funds must be utilized in Texas and can be used towards day-to-day operating expenses or as capital for restructuring, purchasing equipment, more efficient production lines, and more. Past TP/BF loans have varied in use and amounts, which have been as low as $225,000 and as high as $40 million.
With one of the lowest tax burdens in the U.S., including no personal income tax, living and working in Texas means boundless opportunities for anyone who dreams big. Texas lawmakers have worked hard to maintain a reasonable regulatory structure, provide incentives for emerging and growing businesses, and produce an educated workforce. These efforts have strengthened Texas’ economic infrastructure, proving that no matter what the industry, the Lone Star State is committed to keeping Texas Wide Open for Business.
TEXAS RESEARCH & DEVELOPMENT TAX CREDIT
In 2013, the 83th Texas Legislature enacted House Bill 800 creating a Research & Development tax credit effective Jan. 1, 2014. Providing companies a choice between a franchise tax credit and a sales tax exemption for materials, software, and equipment used for R&D purposes. Tax Code Chapter 171, subchapter M effectively establishes the qualifications, definitions and eligibility criteria for the credit.
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, renewable energy,nuclear and integrated gasification combined cycle electric generation facilities and other large capital investment projects in the State of Texas. It requires companies to invest a specified amount of money to qualify for a ten 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 Act also requires that the limitation on appraised value be a determining factor in the applicant’s decision to invest capital and construct the project in the state and requires that the Comptroller state in writing the basis for the that determination.
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. The qualifying investment amount is reduced for areas with a lower tax
base. For more information, please visit https://texaswideopenforbusiness.com/services/tax-incentives.
AD VALOREM/ PROPERTY TAX EXEMPTION
Freeport Exemption
A community may choose to offer the Freeport exemption for various types of goods that are detained in Texas for a short period of time. Freeport property includes goods, wares, merchandise, ores, and certain aircraft and aircraft parts. Freeport property qualifies for an exemption from ad valorem taxation only if it has been detained in the state for 175 days or less for the purpose of assembly, storage, manufacturing, processing, or fabricating.
For more information, please visit the following links: Texas Constitution Article 8, Section 1-J: http://www.statutes.legis.state.tx.us/Docs/CN/htm/CN.8.htm
Application for Exemption of Goods Exported from Texas (50-113): http://www.window.state.tx.us/taxinfo/taxforms/50-113.pdf
Goods-in-Transit Incentive
House Bill 621 of the 80th Texas Legislature amends the Tax Code and the Government Code to add an exemption from ad valorem taxation for goods-in-transit.
To qualify for the exemption, personal property used for assembling, storing, manufacturing, processing, or fabricating purposes would have to be acquired in Texas or imported into Texas and store at a Texas location in which the owner of the goods does not have a direct or indirect ownership interest. The goods-in-transit would have to be transported to another location in Texas or out of state no later than 175 days after the property was acquired in or imported into the state. Oil and gas and their immediate derivatives, aircraft, and dealer’s special inventories would not qualify for the exemption.
Pollution Control Equipment Incentive
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 determination from the Texas Commission on Environment Quality (TCEQ) that property is for pollution control purposes. That positives use determination is the 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.
RENEWABLE ENERGY INCENTIVES
Wind and Solar Energy Tax Exemptions and Deductions
Tax Code Section 171.056 extends a franchise tax exemption to manufacturers, sellers, or installers of solar energy devices. The state also permits a corporate deduction from the state’s franchise tax for renewable energy devices. Business owners may deduct the cost of the system from the company’s taxable capital or deduct 10 percent from the company’s income.
Wind energy qualifies under the term “solar energy” for the exemption and deduction under Sections 171.056 and 171.107. For more information on the tax exemption contact the Comptroller of Public Accounts.
Texas property tax code permits a 100 percent exemption on the appraised value of solar, wind or biomass energy devise installed or constructed for the production and use of energy on-site.
See Texas property tax Form 50-123, “Exemption Application for Solar or Wind-Powered Energy Devices” to claim this exemption.
Texas also offers a loan program for eligible efficiency technologies. The “LoanSTAR” program is available to schools, hospitals and local governments. The low interest loans are capped at a $5 million maximum and are required to meet certain technical guidelines including a detailed energy assessment report.
Franchise tax questions: (800) 531-5441, ext. 5-9952 or (512) 305-9952
Property tax questions: (800) 531-5441, ext. 5-9806 or (512) 305-9806
ADDITIONAL INCENTIVES
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.
MOVING IMAGE INDUSTRY INCENTIVE PROGRAM
In 2007, the 81st Texas Legislature enacted House Bill 1634 establishing the Moving Image Industry Incentive Program, and in 2009, the 82nd Texas Legislature enacted House Bill 873, which amended the program in certain respects. Under the legislation, grants to promote industry growth in Texas can be made to applicant production companies.
For film and television projects, depending on whether the applicant chooses the “wage option” or the “Texas spend option” and whether certain economically distressed or historically underutilized areas of the state are used by the production, the incentive is available in the form of a cash production grant equal to between 5 and 29.25% percent of qualified in-state spending. Commercial and video game projects are eligible for 5% of eligible spending in the form of a cash production grant. Grants are available upon project completion and submission of proof of such spending to the Texas Film Commission. Both live action and animated projects are eligible. There are no maximum grant amounts.
Specific eligibility qualifications for projects including investment thresholds, employment requirements, and content are available thru the Texas Film Commission at http://governor.state.tx.us/film/incentives/miiip/
CANCER PREVENTION AND RESEARCH GENERAL OBLIGATION BONDS
On November 6, 2007, Texas votes approved Proposition 15 – HJR 90, the constitutional amendment which allows the State of Texas to establish the Cancer Prevention and Research Institute of Texas (the Institute) and allows the Institute to issue $3 billion in general obligation bonds over ten years to fund grants for cancer research and prevention. The Institute may invest the grants strategically in cancer research, clinical trials, and laboratory facility construction in Texas. The Institute will continue to implement the Texas Cancer Plan.
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.