Texas Economic Development Directory

Texas State Incentives

THE TEXAS EMERGING TECHNOLOGY FUND (ETF) provides Texas with an unparalleled advantage in the research, development, and commercialization of emerging technologies. ETF grants are awarded in the following three areas:

• Commercialization Awards: funds to help companies take ideas from concept to development to ready for the marketplace.
• Matching Awards: funds create public-private partnerships which leverage the unique strengths of universities, federal government grant programs, and industry.
• Research Superiority Acquisition: funds for Texas higher education institutions to recruit the best research talent in the world.

The ETF was created by the Texas Legislature in 2005 at the urging of Gov. Perry to provide Texas with an unparalleled advantage in the research, development, and commercialization of emerging technologies. ETF grants are awarded in the following three areas:

• Commercialization Awards: funds to help companies take ideas from concept to development to ready for the marketplace.
• Matching Awards: funds create public-private partnerships which leverage the unique strengths of universities, federal government grant programs, and industry.
• Research Superiority Acquisition: funds for Texas higher education institutions to recruit the best research talent in the world.

THE TEXAS ENTERPRISE ZONE PROGRAM is an economic development tool for local communities to partner with the State of Texas to promote job creation and capital investment in economically distressed areas of the state. Designated projects are eligible to apply for state sales and use tax refunds on qualified expenditures. The level and amount of refund is related to the capital investment and jobs created at the qualified business site. For more information, visit www.governor.state.tx.us/ecodev/financial_resources/tax_incentives/

TEXAS ENTERPRISE FUND (TEF): Established in 2003 to help attract new jobs and investment to the state. The fund is used only as a final incentive tool where a single Texas site is competing with another viable out-of-state option. Additionally, the TEF will only be considered to help close a deal that already has significant local support behind it from a prospective Texas community.

Projects considered for the TEF must demonstrate a significant rate of return on the public dollars being invested in the project. Additionally there are several primary measures that every TEF project must meet in order to be considered for an award. Those include but are not limited to the following:

• Competition with another state for the project must exist and the business must not have already announced a location decision
• Projected new job creation must be significant–typically more than 100 jobs in urban areas or more than 50 in rural areas
• New positions must be high-paying– above average wage of the county where the project would be located
• Capital investment by the company must be significant
• The project must have community involvement from the city, county and/or school district, primarily in the form of local economic incentive offers
• The applicant must be financially sound
• The applicant’s business sector must be an advanced industry that could potentially locate in another state or country

The DEFENSE ECONOMIC READJUSTMENT ZONE PROGRAM (DERZ) was established as a tool for business recruitment and job creation in adversely impacted defense dependent communities. It is designed to provide assistance to Texas communities, businesses and workers impacted by, or vulnerable to, the closure or realignment of military installations and the reduction of federal defense contracting expenditures. Local communities may also offer benefits to participants under the defense economic readjustment zone program as well. These may include tax abatement, tax increment financing, one-stop permitting and others. For more information, visit: www.governor.state.tx.us/ecodev/financial_resources/tax_incentives/

The FEDERAL ENTERPRISE ZONE/RENEWAL COMMUNITY PROGRAMS are Federal interagency efforts focused on the creation of self-sustaining, long-term development in distressed urban and rural areas throughout the Nation. The program uses a combination of Federal tax incentives to assist participating communities in development, reinvigoration, and growth. These Federal Designations are recognized through December 31, 2009. For more information, visit: www.governor.state.tx.us/ecodev/financial_resources/tax_incentives/

TEXAS PRODUCT/BUSINESS FUND: Provides financing to existing technology-focused companies that create products or do business within the state. Financing is done in the form of direct asset-based loans with a competitive variable interest rate tied to LIBOR. Loans can be amortized up to the life of the asset. Texas companies or out-of-state/international companies doing business in the state are eligible to apply. Funding preferences will be given to emerging technologies including semiconductors, nanotechnology, biotechnology and biomedicine, renewable energy, agriculture and aerospace.

Attributes of the Texas Product/Business Fund:

• Asset-Based Loans
• Competitive Loan-To-Value (LTV)
• Positive EBITDA not required
• Secure Loans with Property Plant & Equipment (PP&E)
• Secure Loans with Accounts Receivable
• Competitive variable interest rates
• Communities or individuals can assist as Guarantors

SKILLS DEVELOPMENT FUND: Assists businesses and trade unions by financing the design and implementation of customized job training projects. This fund merges business needs and local customized training opportunities into a winning formula to increase the skills level and wages of the Texas workforce. Grants for a single business may be limited to $500,000.

TEXAS INDUSTRY DEVELOPMENT LOAN PROGRAM (TID): Provides capital to Texas communities at favorable market rates. The main objective is to support projects that will stimulate the creation of jobs and corporate expansion and relocation. TID loans can be used for a variety of purposes, including the purchase of land, buildings, construction, machinery and equipment. TID financing is available for loans above $5,000,000.

DEFENSE ECONOMIC READJUSTMENT ZONE PROGRAM (DERZ): Established as a tool for business recruitment and job creation in adversely impacted defense dependent communities. It is designed to provide assistance to Texas communities, businesses and workers impacted by, or vulnerable to, the closure or realignment of military installations and the reduction of federal defense contracting expenditures.

Benefits to participation:

• Designated readjustment projects are eligible to apply for a state sales and use tax refund on qualified expenditures.
• The number of jobs eligible for a refund will not exceed 500 or a number equal to 110 percent of the anticipated new permanent/retained jobs.
• The maximum refund per allocated job is $2,500.
• Local communities may also offer benefits to participants under the defense economic readjustment zone program as well. These may include tax abatement, tax increment financing, one-stop permitting and others.