Local incentives can be discussed prior to action by a government entity but they should not be considered a commitment until the entity takes formal action on the incentive agreement. Typically this requires the approval of the EDC Board and the approval of the City Council. In all cases the company will be required to commit to specific investment levels, a specific time frame in which to make that investment, a minimum estimate of the number of employees that will work in the company on the site within specific time frames and the levels of compensation that will be paid to those employees.
Typically all incentives can be confirmed within thirty days or less of the completion of application.
Tax Abatements on Building and Equipment
This incentive includes the abatement of City and County ad Valorem taxes over a specific period of time. The term of the abatement is based on the Company’s stated cost of the building and improvements included within the project as well as the value of any new major equipment purchases. Increased investment will qualify for a longer term of abatement and a greater percentage of the tax which is abated.
Tax abatements can only be approved by the City Council and Titus County Commissioners and are based on the governing bodies Tax Abatement Policy. The minimum investment required for a tax abatement is $ 500,000. To qualify the company must be a manufacturer, a major wholesale distributor of product, or engaged in the residential health care business (Nursing home).
Tax abatements require a commitment to make the pledged investment and report the values of that investment to the Titus County Appraisal District. The company must be open and employ the stated number of employees, remain open and operational for a specific period after the abatement expires and not be in default on taxes owed. Failure to meet these requirements can cause the abatement to be canceled and abated taxes to be paid.
The Freeport Exemption
Texas does not have a State Income Tax. For that reason, a large component of taxation to support government services comes to the Cities, Counties, and School Districts from Sales Taxes and from Ad Valorem Taxes. Many communities and School Districts continue to place and Ad Valorem Tax on inventories. Titus County and the Mount Pleasant Independent School District have chosen to not tax “Freeport Goods”. By definition, Freeport Goods are:
The “Freeport Tax Exemption” can be huge to both manufacturing concerns that ship a large portion of their goods outside the State of Texas and to Distribution operations which cover territories outside the State.
Companies considering a location to Mount Pleasant, within the city limits of the community, may also qualify for “Freeport Exemption” from the city through a “380 Agreement”. In this case, the company would pay the taxes and the city would then reimburse that payment to the company. This agreement may be based on specific criteria including a specified employment number and specific initial investment in real property within the City.
The combination of the County and MPISD Freeport Exemptions along with the 380 Agreement from the City can give you a “Triple Freeport Advantage”. One more reason we say the Mount Pleasant is “One Community With All The Advantages.”
Grants for Site Preparation, Building Construction & Relocation Cost
Cash grants are pledged for a new location of a primary industry or for a major expansion of an existing industry. The amount of the grant may be used for a variety of purposes – employee training, to offset cost of construction and/or purchase or relocate equipment.
Grants are offered with a “note payable” which is forgiven when the company completes the specific pledged investment or verifies the hiring of specific number of employees.
Industrial Park Property
Land owned by the Economic Development Corporation may be gifted to a company on the company’s pledge to construct a building of specific size and value and become a primary employer in the City.
The value of the land is included in a note payable which can then be forgiven upon completion of the agreed upon improvements and the company begins its daily operations.
Pre- Employment Screening and Testing
The EDC may advertise for employment for a specific classification of jobs as a means to verify to the company that qualified employees reside in the area and are seeking employment.
Employees may be tested for specific skills defined by the employer or screened for knowledge or skills.
Training Grants for Employees
The EDC or Northeast Texas Community College may agree to provide specific training in a field of endeavor and may be able to train employees on company owned equipment. Training may be done in conjunction with a new location or expansion. Training may be supplemental to or in addition to that offered by the State or local Workforce Board.
May be coordinated for the company by the EDC at no cost. These services may include:
Generally the EDC cannot pledge a state incentive. Our policy is to make the prospective primary employer aware of those incentives which the company may qualify for and to partner with the company in seeking those incentives. When necessary, the EDC can employ professional program specialist to prepare applications.
These state incentives will in almost all cases require a specific pledge or employer commitment. These will generally be made in terms of employment, salaries or payroll total and investment in plant and equipment. In almost all cases the company must provide financial and ownership data.
The EDC Staff can assist the company in the identification of those programs which the project will qualify for. The EDC will also aggressively lobby for approval.
Texas Enterprise Project Designation
The project designation is made by the company to the city which in turn may approve the designation prior to state designation. There are a maximum number of projects which can be designated by a community within a biennium.
With this designation, the company must hire persons in a LMI bracket and may then recoup specific sales taxes paid on the construction of their facility, purchase of equipment and utilities.
Texas Enterprise Fund
This fund is commonly known as the Governor’s Enterprise Fund. Applications for this fund are considered when the company is making major expansions within the state of Texas and paying above the counties pay scale for the various job skills required.
This is a Deal Closing Fund and is used only when the project is being considered in other states. It is never used as an incentive between Texas communities. The company must be considering a minimum of one out of state community and only one Texas community.
The amount of the incentive award is based on the effort generated by the community and the net economic impact of the location/expansion to the State of Texas. Approval of the fund is made by the Governor, the Lieutenant Governor and the Speaker of the Texas House of Representatives.
Texas Workforce Skills Development Fund
The State Legislature makes funds available to industry and funnels the training dollars though the local community colleges who contract with the industry to provide the training. In most cases the project must include the components of new investment in facility and/or equipment.
Capital Fund Grants and Loans
Capital Fund Grants are made to the Community for the benefit of a locating/expanding business. Grants are for projects which will remain under the ownership of the community but are designed for the benefit of the industry. They are a three party agreement with the parties being the City, Industry and the State. Examples of these projects may be extension of a public road or public utility, construction of a rail spur to serve an industry when the spur is located on public property and will remain on the public property.
Capital Fund Loans are made directly to the company and are repaid to the Texas Department of Agriculture. These funds may be used for private construction or the purchase of major equipment.
In the case of the Loan or the Grant, the company must pledge a specific number of jobs at specific salary levels. The pledge is followed up and the Project remains open until verification of employment is complete over a period of years.
Project construction cannot begin until the application is approved and legal documents are signed. No monies can be spent prior to approval.