There is such a diverse economy in Texas—from aerospace to oil, IT to manufacturing—so many industries are set up to grow and thrive in the Lone Star State. A large talent pool and strong talent pipeline help to ensure the future success of businesses in Texas. One of the best things for companies based in Texas is the lower cost of doing business. There are a range of special incentives to help businesses operate at an optimal level, including things like grants, funding, and corporate tax credits. There’s also The Texas Enterprise Zone Program (EZP), a state sales and use tax refund program that aims to promote private investment and job creation in economically distressed areas of Texas. Read on for the ultimate guide to Texas Enterprise Zones:
What exactly is an enterprise zone? In Texas, any distressed county with a poverty rate higher than 15.4% is an enterprise zone. Another qualifying factor centers on education status; an area in which at least 25.4% of the adult population does not hold a high school diploma or equivalency certificate can be an enterprise zone. Another qualification for enterprise zones is an area with an unemployment rate that has consistently been above 4.9% in the preceding 5 years. In addition, any federally designated empowerment zone, enterprise community, or renewal community is considered a state enterprise zone.
Who can apply for this incentive? In order for companies to receive an enterprise zone designation as well as the accompanying state sales and use tax refunds, local communities must nominate them by submitting an application on the company’s behalf. Companies must add required information to the application.
When can companies apply? Applications occur quarterly for EZP, and applications are due by 5:00pm on the first business day of March, June, September, or December. An EZP designation is effective starting 90 days before the deadline of the application round, and they last through a period not less than one year and not more than 5 years from the designation date.
How long does it take for an enterprise project to receive a designation? Projects are usually designated about eight to ten weeks after the project application deadline.
How many enterprise projects can be funded? The state of Texas can designate up to 105 enterprise projects in a period of two years. Each community has a limited number of designations available, depending on population size.
How are refunds administered? Companies are eligible to apply for refunds of the state sales and use taxes they have paid on qualified expenditures, up to a maximum allowable refund amount. A graph at Texas.gov’s business page lays out these amounts. All refunds are given through the Texas Comptroller’s Office.
What size companies can apply for EZP? There are different designations for EZP companies: half enterprise, enterprise, double jumbo, and triple jumbo projects. The level of capital investment determines the designation, and maximum potential refunds range from $625,000 to $3,750,000.
What other requirements must be met for participating companies? Companies are required to meet minimum capital investment thresholds. Also, they must create or retain jobs that employ a certain percentage of economically disadvantaged individuals, enterprise zone residents, or veterans.
Can projects be outside of an enterprise zone? Yes. Economic development is supported by allowing these projects to be designated outside of an enterprise zone; a higher requirement for hiring economically disadvantaged or enterprise zone residents applies.
What are some of the incentives available in enterprise zones? The EZP is more than just a tax refund. Other EZP benefits vary; they include but are not limited to: tax abatement, tax refunds, waivers for permit fees, transfer of publicly owned buildings, and low interest loans.
What resources can help someone starting a business in a Texas Enterprise Zone? From government officials to specialized organizations, there are many resources available to gain a better understanding of Texas Enterprise Zones and doing business in Texas. A lot of information is available at the website of the Texas Secretary of State. In addition, the TexasEDConnection is available to help business owners connect with economic developers throughout the state of Texas.
With its extensive network and experience in helping local businesses, the Texas Economic Development Connection aims to assist with expanding or relocating businesses to Texas. Learn more about getting started with the TexasEDConnection, or reach out at 214-775-0617.