Municipal Grants and/or Loans (380 Agreement)
Hitchcock may provide loans and/or grants of city funds as well as city employees and equipment to promote economic development projects within the city. Eligible projects involving significant investment may contract with the HEDC to receive sales tax grants, franchise fee grants, water or sewer line extensions, building permit fee waivers and grants for capital recovery fees.
A project may be eligible for tax abatement if it is a business or manufacturing facility, research facility, distribution center, regional service facility, basic industry, or other facility “deemed essential to the City’s growth.” A project may be eligible for abatement of taxes, depending upon the amount of expenditure and/or the number of employees. Reinvestment in an existing project or expansion of existing facilities may also be eligible for tax abatement.
4A Sales Tax Revenue Sharing
The 4A Sales Tax is an economic development sales tax that has been approved by voters in more than 450 communities across Texas. The tax revenues in two forms, the original ‘ 4A’ tax and the more flexible ‘ 4B’ tax, are used to finance economic development programs that create primary jobs.
Enterprise Zone Program
Local communities partner with Texas to promote job creation and capital investment in economically distressed areas.
- Employers who commit to creating or retaining permanent jobs, make capital investment, and fill at least 25% of its new jobs with individuals who are either economically disadvantaged or residents of an enterprise zone can receive State Sales & Use Tax refunds on items purchased for the project site.
- The benefits are based on job creation or retention and capital investment for a period of five years. The TEZ program offers $2,500 per qualifying employee up to 500 employees for companies over $5 million in capital investment.
Taxing authorities in Texas are allowed to exempt from ad valorem property taxes on all business inventories acquired in or brought into Texas for fabrication, assembling, manufacture, storage or processing and then exported outside the state within 175 days.
A small number of taxing entities in Texas have adopted the Goods-In-Transit Exemption for Inventory that is temporarily stored at a third-party location that has no direct or indirect ownership interest in the inventory. To be eligible, the inventory must be transported to another location,
inside or outside the state, within 175 days after the items were acquired or imported into the state.
Public Improvement Districts
A Public Improvement District (“PID”) enables a commercial area to make improvements benefiting the area and spread the cost equally among all properties. The City can levy and collect special assessments on property owners within the PID. These assessments may be used to pay the debt service on bonds or they may be used to pay for services directly if no bonds are issued. PID funds may be used to purchase real property in connection with improvements. Improvements include a wide variety of enhancements such as water and wastewater, streets, drainage, parking, landscaping, etc.
Tax Increment Reinvestment Zone
The City of Hitchcock will work with developers to create a Tax Reinvestment Zone for the purpose of Tax Increment Financing on projects that would provide lasting value for the City and would meet the goals of the City in housing needs, regional retail/commercial/office, or job creation. Tax increment financing is a tool that local governments can use to finance needed infrastructure improvements using property taxes generated within a defined area. These improvements usually are undertaken to promote the viability of an area and to attract new development, renovation, or restoration. The statues governing tax increment financing are located in Chapter 311 of the Texas Tax Code. Chapter 311 of the Texas Tax Code
The cost of improvements to the area is repaid by the contribution of future tax revenues by each taxing unit that levies taxes against the property. Specifically, each taxing unit can choose to dedicate all, a portion of, or none of the tax revenue that is attributable to the increase in property values due to the improvements within the reinvestment zone. The property is appraised at its current value prior to any public or private improvements made within the zone. This is the baseline. As public or private improvements are made within the zone the increase value or increment above the baseline value has that added tax value or portion of added tax value provided to the zone to pay for agreed upon public improvements. The additional tax revenue that is received from the affected properties is referred to as the tax increment. Each taxing unit determines what percentage of its tax increment, if any, it will commit to repayment of the cost of financing the public improvements.
Tax increment financing may be initiated only by a city. If a property is located outside of the city limits (within the city’s extraterritorial jurisdiction or beyond), it is not eligible for tax increment financing unless annexed into the city. Once a city has begun the process of establishing a tax increment financing reinvestment zone, counties, school districts, and special districts are allowed to consider participating in the tax increment financing agreement. Each zone will have its own distinct agreement negotiated primarily by the City and developer, but with input from the other taxing entities interested in participating.
Foreign Trade Zone
Foreign Trade Zones allow companies dealing in foreign trade to delay payment of U.S. Custom’ s import duties until their goods and merchandise actually enter U.S. Commerce. Goods can be brought into a zone without formal Customs entry or without
incurring Customs duties and excise taxes unless and until they are imported into the United States.
Municipal Management Districts
Municipal Management Districts allow commercial property owners to enhance a defined business area by financing facilities, infrastructure and services beyond those already provided by the municipality. The improvements may be paid for by a combination of self-imposed property taxes, special assessments and impact fees, or by other charges against property owners within the district.
Qualified businesses locating in the zone are eligible for municipal grants to assist in extending public utilities. The business must invest $250,000 in improvements to be eligible for municipal grants.
Industrial Revenue Bonds
Tax Exempt Industrial Revenue Bonds are designed to provide tax-exempt financing for land and depreciable property on eligible industrial or manufacturing projects. The maximum bond amount is $20 million (which can include certain capital and administrative costs). These bonds must receive a reservation under the state’s volume limitation (“volume cap”) managed by the Texas Bond Review Board. The Hitchcock EDC may elect to assist qualifying projects through this process, which saves expense to the company through lower interest rates.
Industrial Revenue Bonds (IRB’s)
IRB’s, are tax-exempt or taxable revenue bonds issued by or on behalf of a state, city, county or other political subdivision for the purpose of promoting industrial development within its boundaries.
Some manufacturing businesses may qualify for low-interest bond financing up to $10 million.
City Financed Infrastructure Improvements
The City may opt to assist or finance all or a portion of the infrastructure that may assist a development project when the City leadership team and City Commission determine it to be in the long term interest of the city, particularly in a manner that exceeds the needs of the applicant. The Hitchcock EDC will also assist businesses with infrastructure needs thru application of the Texas Capital Fund.