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TEXAS
CAPITAL ACCESS PROGRAM
The Texas Capital Access
Fund Program was established by the 75th Legislature in
September of 1997. The program is designed to increase the
availability of financing for businesses and non-profit
organizations that face barriers in accessing capital. It
encourages financial institutions to support businesses that
do not meet the requirements of conventional loans, lack
sufficient collateral to qualify for conventional financing,
or do not meet other business requirements. Eligible
borrowers can be any small business with less than 100
employees, a medium-size business with employment of more
than 100 but fewer than 500, or a non-profit corporation.
The proceeds may be used for working capital or the
purchase, construction, or lease of capital assets, which
include land, buildings, and equipment. See
ìDepartments and Agenciesî Finance for contact
information.
LINKED
DEPOSIT PROGRAM
The Linked Deposit
Program was established to encourage lending to qualified
businesses, which are historically underutilized businesses,
child care providers, nonprofit corporations and small
businesses located in an enterprise zone. This program
offers lenders and borrowers a lower cost of
capital.
Loan amounts range from
$10,000 to $250,000. Eligible businesses may use the
proceeds of a Linked Deposit loan for a variety of needs,
including working capital, and the purchase, construction or
lease of capital assets, which include land, buildings and
equipment. Loans to start-up businesses are permissible,
subject to the lenderís normal credit evaluation. See
ìDepartments and Agenciesî Finance for contact
information.
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 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. See
ìDepartments and Agenciesî Workforce for
contact information.
SECTION
108
Entitlement communities
may access the Section 108 program through HUD. The program
allows entitlement communities the ability to borrow funds
guaranteed by Section 108 through pledging their current and
future Community Development Block Grant (CDBG) allocations
(up to the loan amount) as security for the loan. HUD
provides additional security for the loan (as a loan-loss
reserve or debt-service) to reduce the exposure of a
communityís CDBG funds. Economic Development
Initiative (EDI) provides grants to local governments that
can be used to enhance both the security of loans guaranteed
through Economic Development Loan Fund and the feasibility
of the large economic development and revitalization
projects they finance. The guaranteed amount may be extended
up to five time a communityís most recent CDBG
allocation. Eligible activities include property
acquisition, rehabilitation of publicly owned property,
economic development activities, installation of public
facilities, and other site improvements. See
ìDepartments and Agenciesî HUD for contact
information.
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
1) Paid property taxes to a school district on property that
is located in a reinvestment zone established under Chapter
312. 2) 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. 3) 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. See ìDepartments and Agenciesî
Comptroller for contact information.
SENATE BILL
411
The 76th Legislature
passed Senate Bill 441 establishing franchise tax credits
for certain research and development expenditures, jobs
creation, and capital investment. These credits will become
available to many taxpayers beginning with their franchise
tax reports due on or after January 1, 2000. The research
credit is available to corporations making research and
development expenditures for research conducted anywhere in
the state. Corporations make research and development
expenditures in a strategic investment area of the stare
will get a bonus credit. Jobs creation and investment tax
credits are limited to corporations creating the jobs or
making the investment in a strategic investment area of the
state. Based on their relative unemployment rate and
per-capita income, 115 counties qualify as full-purpose
Strategic Investment Areas. Another four areas of the state
qualify as full-purpose Strategic Investment Areas based on
their selection as a federal urban enterprise community. In
addition, corporations engaged in agricultural processing in
counties with a population of less than 50,000 can apply for
the jobs creation and investment credits. These counties are
referred to as limited-0urpose Strategic Investment Areas.
See ìDepartment and Agenciesî Comptroller for
contact information.
REINVESTMENT
ZONES
The designation of
specified areas as ìreinvestment zonesî is a
local economic development tool used by municipalities and
counties throughout the state of Texas. Reinvestment zones
have been used to stimulate local economies by attracting
new companies and encouraging the growth of existing
businesses. These zones can be created for the purpose of
granting local businesses ad valorem property tax abatements
on a portion of the value of real and/or tangible personal
property located in the zone, for a period of up to 10
years.
Special taxation entities
having jurisdiction over a reinvestment zone (i.e., school
districts, utility districts, and community college
districts) may participate in executed abatement agreements;
however, the special taxing districts may not designate
reinvestment zones or initiate tax abatement agreements.
Reinvestment zones are designated by local ordinance or
resolution. See ìDepartment and Agenciesî
Comptroller for contact information.
FREEPORT
EXEMPTION
A community may choose
to offer the Freeport exemption for various types of good
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. See ìDepartment and Agenciesî
Comptroller for contact information.
ECONOMIC
DEVELOPMENT SALES TAX
Since 1989, voters in
many Texas cities have had the option of imposing a local
sales and use tax to help finance their communitiesí
economic development efforts. Cities may adopt an economic
development sales tax under Section 4A or Section 4B of the
Development Corporation Act of 1979. Section 4A sales tax is
eligible to cities in a county with a population of less
than 500,000 if the new combined local sales tax rate would
not exceed 2 percent and the city is not part of a rapid
transit authority. A city that is eligible to adopt a sales
tax under Section 4A may hold an election to adopt the tax
under Section 4B if the new combined local sales tax rate
would not exceed 2 percent. A city located in a county with
a population of 750,000 or more is also eligible, but there
is an additional eligibility requirement: the current
combined sales tax rate cannot exceed 7.25 percent at the
time of the election. A city with a population of 400,000 or
more that is located in more than one county and has a
combined sales tax rate that does not exceed 8.25 percent
may also enact the Section 4B sales tax.
Section 4A tax proceeds may
be used to fund any of thirteen types of expenditures under
the Development Corporation Act. Two of the categories are
pursuant to authorization under Section 4A of the Act. Under
Section 4A, the Act specifically allows industrial
development corporations to undertake projects, the primary
purpose of which is to provide business airports and
port-related facilities. The remaining eleven categories for
expenditure of Section 4A tax proceeds are: manufacturing
and industrial facilities, recycling facilities,
distribution centers, small warehouse facilities, closed or
realigned military bases, related facilities, facilities to
promote new and expanded business development, facilities to
promote job creation and retention, job training facilities,
educational facilities, and targeted
infrastructure.
The Development Corporation
Act provides a wide variety of purposes for which Section 4B
tax proceeds may be expended. Section 4B tax proceeds may be
spent on land, buildings, equipment, facilities and
improvements for items that fit under the definition of
ìprojectî under Section 2(11)(A) of the Act.
The Attorney General has concluded that the term
ìprojectî encompasses the land buildings,
equipment, facilities, and improvements that are suitable
for any of the following: promotion of manufacturing and
industrial facilities, recycling facilities, distribution
centers, small warehouse and storage facilities, air or
water pollution control facilities, development or
redevelopment of closed military bases and facilities
related to these projects, facilities to promote new and
expanded business development, facilities to promote job
creation and retention, job training facilities, education
facilities and facilities for use by institutions of higher
education, targeted infrastructure, athletic facilities
parks and related public space improvements, tourism and
entertainment facilities, commercial facilities, certain
public facility improvements, transportation improvements,
infrastructure improvements, other business-related
improvements.
There are 431 cities that
have passed the 4A and/or 4B Economic Development Tax that
have generated an estimated total of $235,952,837 available
for economic development purposes. See ìDepartment
and Agenciesî Comptroller for contact
information.
JOHNSON COUNTY ECONOMIC DEVELOPMENT COMMISSION
10 N. Caddo PMB 215, Cleburne, Texas 76031
Phone: 817-556-6985 - Fax: 817-556-6160 - E-mail: jcedc@digitex.net
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