LOCAL

380/381 Municipal Grant and 381 County Grant - The City of El Paso and El Paso County provide incentives to selected private businesses that will make a measurable difference in achieving economic growth and development in the community. These programs provide cash grants (sometimes in the form of rebates) to businesses with projects that meet specific criteria. The dollar amount of grants are wholly dependent upon the economic impact that the individual project will generate for the community, but in most cases are limited to a 50% refund of the direct taxes each company pays, plus the indirect and induced taxes that are generated in the local economy as result of the project.  To qualify, companies must create a minimum of 25 “quality jobs”, at least 90% of whom will earn at or above El Paso’s Median County Wage (MCW).  El Paso’s medium county wage (MCW) currently stands at $12.23 per hour.  Most of these programs will carry a term of five (5) to ten (10) years, and all grants are subject to final approval by votes of City Council and County Commissioners.  Additionally, the granted amount will be larger if a company’s headquarters is locating into the community. 

Limited Property Tax Abatement for up to Ten (10) Years - On a case-by-case basis, local taxing jurisdictions offer property tax abatement to spur economic growth within the community. Abatements can be provided up to 100% of the total value of incremental new investment in buildings and capital equipment for a period up to ten years; however, typical abatement contracts in El Paso abate 50% of the value of incremental new investment for a period of 5 years. Qualifying criteria are capital investment, job creation, wages, and/or significant economic impact. The current incentives policy for the Municipal and County Government of El Paso gives preference to utilizing 380/381 grants over tax abatement.

Property Tax Exemptions on "Freeport" Inventory - All El Paso taxing entities offer an exemption from “ad valorem” taxes for inventories that meet the definition of “Freeport”. All inventories that remain in the facility for a period of no more than 175 days and are exported outside of the state of Texas within that timeframe will be classified as “Freeport” and are therefore exempt from ad valorem taxation. The value of this incentive can be calculated once the value of “Freeport” inventory is determined by the company.

Green Building Grant Program - This city-wide program designed to encourage development of energy efficient buildings provides grants for attainment of LEED certified for new construction or major renovations. Grant awards start at $50,000 and increase up to $200,000. For certain downtown areas, grant awards double to a maximum of $400,000.

New construction or major remodels of commercial or mixed-use properties are eligible for the program. Structures must be at least 15,000 square feet. Grant range from $50,000-$200,000, depending on level of LEED certification. Grants double to $100,000-$400,000 for buildings of at least five floors, of which at least 50% have been vacant at last five years prior to grant submission. Properties must become LEED-certified and achieve a minimum of 10 of the 17-point requirement in the “Energy and Atmosphere” section of the LEED Project Checklist.

Expedited Plan Review & Permitting - This incentive is available on a case-by-case basis. In order to ensure that projects are allowed to begin business operations on a timely basis, the City of El Paso will provide all plan reviews and permitting on an expedited basis, whether the company chooses to retrofit an existing building, or engage in new construction.

Workforce Incentives - Companies can qualify for Customized Training (CT) and/or On-the-Job Training (OJT), through a variety of workforce training programs from the Upper Rio Grande Workforce Board, also known as “Workforce Solutions”.  

Inclusion into Foreign-Trade Zone (FTZ) #68 - Should projects desire to take advantage of import duty reductions and deferrals that can be offered by locating in a Foreign Trade Zone, the City will sometimes bear costs related to designating the company’s El Paso location as a sub-zone of FTZ #68. The costs related to FTZ activation ranges from $15,000 to $50,000. 

An FTZ is a site within the United States, in or near a U.S. Customs port of entry, where foreign and domestic merchandise is generally considered to be in international commerce. Foreign or domestic merchandise may enter this enclave without a formal Customs entry or the payment of Custom duties or government excise taxes. There are two types of FTZ's:

• The General-Purpose Zone is operated as a public utility, where multiple uses conduct various activities such as storage, distribution, inspection, destruction, exhibition, and some processing.
• The Sub Zone is where a company undertakes manufacturing and processing, including oil refinery activities that cannot be accommodated in a General-Purpose Zone. Sub-zones must be located at or near a port of entry, and require the approval of a local General Purpose Zone.

Benefits of FTZ's for Manufacturing, Distribution and 3PL'S (Third Party Logistics):

• Eliminate Duties and Quota Charges: In a FTZ, Customs duties and quota charges are not paid on merchandise exported.
• Defer Customs Duties and Federal Excise Tax: On imports, Customs duties and taxes can be delayed until merchandise is transferred into US Customs territory. Importers can store goods in an FTZ indefinitely without paying duty.
• Reduction of Duties: By electing a zone status that Users apply to the lower duty rate for foreign inputs or finished goods, duties can be reduced.
• Avoid Customs Fines & Seizures: Merchandise can be admitted into an FTZ without markings, visa or quota documentation, while bringing their products or documentation into compliance with customs regulations.
• No Duty on Waste: Products that arrive damaged can be returned, stored in the FTZ or destroyed without having to pay duty or taxes.
• US Quotas: US Quota restrictions do not apply in an FTZ. When a quota opens the merchandise may subsequently be entered into the US Commerce.
• Eliminate Drawbacks: Drawback laws are complex and expensive to administer
• Improve Cash Flow and Profitability: Through special Customs procedures such as Weekly Entry and Weekly Exports, companies can save on Customs transaction fees and expedite shipments out of an FTZ, thus improving their competitiveness.
• Avoid Taxes: No state and local ad valorem taxes apply to foreign merchandise in an FTZ. IRS and government excise taxes are charged only when they are entered into the US Commerce.
• Reduced Bond & Brokerage Costs: In an FTZ the cost of buying an entry bond is eliminated, and brokerage fees are reduced because there is no post entry work.

Local FTZ Advantages:

• Strategically located on the U.S.- Mexico border
  
• Advanced telecommunications systems for clearing merchandise in and out of the zone
  
• Located on a major interstate highway system with international trucking facilities
  
• Access to rail facilities serving every major North American market
  
• Abundant air cargo handlers and facilities at a modern international airport
  
• Streamlined FTZ procedures for prompt distribution of merchandise
  
• Tax exemption of inventory held in active zone

Click here to view a map.

Local Workforce Training & Other Services - Companies can qualify for Customized Training (CT) and/or On-the-Job Training (OJT) through a variety of workforce training programs from the Upper Rio Grande Workforce Development Board (referred to as “Workforce Solutions”).

STATE

Texas Enterprise Fund (TEF) - The $190 million fund is used as a deal closing fund for companies contemplating jobs and investment in Texas. The funds are used primarily to attract new business to the state or assist with the substantial expansion of an existing business for projects that are considering Texas and at least one other state.  Factors that will be considered include:  job creation and wages at or above the average county wage (ACW) currently $16.37 per hour, capital investment, financial strength of the applicant, the applicant's business history, applicant's business sector, and incentives offered by the specific Texas community under consideration.  Companies can potentially receive grants totaling up to $10,000 per job.

Texas Emerging Technology Fund (ETF) - This $200 million fund created by the Texas Legislature in 2005 is available to companies who seek to commercialize new technologies. ETF funds can also be used to develop collaborative relationships with higher education institutions in Texas to leverage federal research grants and to achieve research superiority in certain technologies.

Sales and Use Tax Exemptions - The State of Texas provides 100% exemption from sales or use tax on equipment and material used in the direct manufacturing process, as well as certain pollution control equipment and research and development equipment.

• Manufacturing Machinery & Equipment - Leased or purchased machinery, equipment, replacement parts, and accessories that have a useful life of more than six months, and that are used or consumed in the manufacturing, processing, fabricating, or repairing of tangible personal property for ultimate sale, are exempt from state and local sales and use tax. Texas businesses are exempt from paying state sales and use tax on labor for constructing new facilities. Texas businesses are exempt from paying state sales and use tax on the purchase of machinery exclusively used in processing, packing, or marketing agricultural products by the original producer at a location operated by the original producer.

• Natural Gas & Electricity - Texas companies are exempt from paying state sales and use tax on electricity and natural gas used in manufacturing, processing, or fabricating tangible personal property. The company must complete a “predominant use study” that shows that at least 50% of the electricity or natural gas consumed by the business directly causes a physical change to a product.

 

For additional information on the potential range of exemptions log on to Texas Administrative Code for State Sales and Use Tax.

Texas Skills Development Fund - Companies can qualify for customized training grants from the Texas Workforce Commission through the Texas Skills Development Fund. The qualifying company must work with a community college or other authorized training provider.  Typical grants are around $1,200 per trainee and are limited to $500,000 per project.

Self-Sufficiency Fund - The Self-Sufficiency Fund is a job-training program that is specifically designed for individuals that receive Temporary Assistance for Needy Families (TANF). The program links the business community with local educational institutions and is administered by the Texas Workforce Commission. The goal of the Fund is to assist TANF recipients become independent of government financial assistance.

The Fund makes grants available to eligible public colleges or to eligible private, non-profit organizations to provide customized job training and training support services for specific employers. A joint application from the employer and the eligible public college and/or eligible private, non-profit organization is required to be submitted to the Local Workforce Development Board for review and comment prior to approval.

Tax Exempt Industrial Revenue Bonds - Tax-Exempt Industrial Revenue Bonds are designed to provide tax-exempt financing to finance land and depreciable property for eligible industrial or manufacturing projects.  The maximum issuance is $20 million per project. 

Texas Enterprise Zone Program - The Texas Enterprise Zone Program allows local communities to partner with the State of Texas to promote job creation and capital investment in targeted areas of the state that meet specific economic criteria. The entire county of El Paso qualifies for Enterprise Zone designation.  Designated projects are eligible to apply for state sales and use tax refunds on qualified expenditures that include building materials, taxable services, machinery and equipment, electricity, gas and tangible property purchased and consumed in the normal course of business.  Qualifying criteria are amount of capital investment, job creation, and wages.

Texas Enterprise Zone Program Criteria

Level of Capital Investment	Maximum Number of Jobs Allocated	Maximum Potential Refund	Maximum Refund Per Job Allocated
$40,000 to $399,999	10	$25,000	$2,500
$400,000 to $999,999	25	$62,500	$2,500
$1,000,000 to $4,999,999	125	$312,500	$2,500
$5,000,000 to $149,999,999	500	$1,250,000	$2,500
Double Jumbo Project $150,000,000 to $249,999,999	500	$2,500,000	$5,000
Triple Jumbo Project $250,000,000 or more	500	$3,750,000	$7,500

Texas Capital Fund Infrastructure Program* - The Texas Capital Fund Infrastructure Program is an economic development tool designed to provide financial resources to non-entitlement communities. Funds from this program can be utilized for public infrastructure (water, sewer, roads, etc.) needed to assist a business, which commits to create and/or retain permanent jobs, primarily for low to moderate-income persons. The minimum award is $50,000 and the maximum is $750,000. The award may not exceed fifty percent (50%) of the total project cost.

Texas Capital Fund Real Estate Development Program* - The Texas Capital Fund Real Estate Development Program is designed to provide financial resources to non-entitlement communities. Funds must be used for real estate developments (acquisitions, construction and/or rehabilitation) to assist a business, which commits to create and/or retain permanent jobs, primarily for low and moderate-income persons. This program encourages business development and expansions located in non-entitlement communities. The minimum award is $50,000 and the maximum is $750,000. The award may not exceed fifty percent (50%) of the total project cost. Funds are provided with no interest accruing and with payments based on a 20-year amortization schedule.

*Total Texas Capital Fund participation from both Infrastructure program and Real Estate Development Program may not exceed $750,000.

Rural Municipal Finance Program - The Rural Municipal Finance Program was created by the Texas Agricultural Finance Authority (TAFA) to stimulate economic activity in rural Texas. TAFA was created in 1987 as a Public Authority within the Texas Department of Agriculture.

This loan program is designed for eligible applicants located within rural areas of the state that provide significant benefits for the rural area, and provide evidence of ability to repay the commitments. Applicants can include city and county governments, economic development corporations, hospital districts, rail districts, utility districts, special districts, agricultural districts, and private water and wastewater corporations.

An applicant must certify to TAFA that…

• The project is located in a non-metropolitan statistical area (county); or
• If in a metropolitan statistical area, the project is in an unincorporated area; or
• Located in a city with a population of under 20,000, that is not adjoining a city or group of cities with an aggregate population of 50,000 or greater.

Loan amounts range from $50,000 to an amount approved by TAFA’s board of directors, but target projects for less than $1,000,000. Loans may be used for real estate purchase, building construction, site improvements, equipment, water and wastewater systems, municipal infrastructure projects and any other use that can be identified to improve or assist in the economic development of the rural area.

 

FEDERAL

Empowerment Zone - These are deductions on federal taxes due that are available to for-profit businesses operating in El Paso's federally designated Empowerment Zone. They come in the form of wage credits of up to $3,000 for each employee that is a resident of the EZ, increased deduction on equipment depreciation and work opportunity tax credits for hiring targeted disadvantaged groups as identified by the Texas Workforce Commission. The following items are types of credits and deductions - EZ Wage Credit, Welfare-to-Work Federal Tax Credit, Environmental Cleanup Cost Deduction (Brownfields), Empowerment Zone Facility Bonds, Qualified Zone Academy Bonds (QZABs), Nonrecognition of Gain on Sale of Empowerment Zone Assets, Partial Exclusion of Gain on Sale of Empowerment Zone Stock, Low-Income Housing Tax Credit (LIHTC).

Renewal Communities Initiatives (RCIs) - There are a variety of incentives available for businesses that work in a Renewal Community (RC).  Since El Paso was designated an RC, these incentives are available to companies looking to locate in the area.  Incentives are in the form of wage credits, deductions, and investment incentives.

• RC Employment Credit - Business can take an annual tax credit of up to $1,500 for each employee who lives and works for the business in an RC
• Work Opportunity Tax Credits – Businesses can take a tax credit of up to $2,400 for each 18- to 39-year-old new employee who lives in an RC
• Commercial Revitalization Deduction – Businesses may elect an accelerated method to recover certain costs of new and/or substantially rehabilitated commercial buildings in an RC
• Increased 179 Deduction – RC businesses can take an increase in deduction up to $35,000 of the cost of eligible equipment purchases, subject to certain limitations, in the placed-in-service year of the equipment in an RC
• Gross Income Expulsion for RC Capital Gains – Gross income does not include capital gain from the sale of eligible stock or partnership interest held in, or the sale of eligible tangible property held by, an RC business for more than 5 years.  Gains attributable to period before 2002 or after 2014 will not qualify for the exclusion.
• Qualified Zone Academy Bonds – State or local governments are able to issue bonds at no interest to finance public school programs.  Private business must contribute money, equipment or services equal to 10% of the bond proceeds.  The bond purchasers receive interest payments in the form of tax credits.

Small Business Administration’s 504 Loan Program (SBA 504) - This program is designed to help expanding small businesses get long-term financing at below market interest rates.  Most for-profit, owner-occupied small businesses within the U.S. can qualify if they have a net worth of less than $7,500,000 and a net profit after tax (a 2 year average) of no more than $2,500,000 or if they are a manufacturer with less than 500 employees.  The funds may be used for acquisition of land or an existing building, new construction, fixed assets from business acquisition, building expansion, long-term equipment, professional fees, and lender’s interim points and interest.  The program offers fixed rates that “lock-in” when the SBA funds the debenture.  They are based on treasury rates and are fully-amortized over the life of the loan (there is no balloon).  Real estate fixed-rates may have a 10 or 20-year term.  Machinery and equipment fixed-rates may also have a 10 or 20-year terms depending on if they have useful lives.  The maximum gross debenture (SBA portion) is $1,500,000 for a typical project, $2,000,000 if a Public Policy goal is met, and $4,000,000 for manufacturers, but no maximum limit is placed on participating lender’s loan portion.  The borrower’s injection is 10% in most cases, 15% for start-up businesses (less than two years in operation) or special-purpose properties, 20% if the project is both a start-up and a special-purpose property, and equipment-only loans may qualify with 10% or 15% injections.  Required job creation/retention is one job for every $50,000 of the debenture for most projects, one job for every $75,000 of the debenture for Enterprise Zones and Labor Surplus areas, one job for every $100,000 of the debenture for manufacturers, but there are no job requirements if a Public Policy goal is fulfilled.

New Markets Tax Credit (NMTC) Program - This program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (CDEs).  Substantially all of the qualified equity investment must in turn be used by the CDE to privde investments in low-income communities.  The credit provided to the investor total 39% of the cost of the investment and is claimed over a seven-year credit allowance period.  In each of the first three years, the investor receives a credit equal to 5% of the total amount paid for the stock or capital interest at the time of purchase.  For the final four years, the value of the credit is 6% annually.  Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period.  Any organization wishing to receive awards under the NMTC Program must be certified as a CDE by the Fund.  To do this, an organization must be a domestic corporation or partnership at the time of the certification application, demonstrate a primary mission of serving, or providing investment capital for, low-income communities or low-income persons, and maintain accountability to residents of low-income communities through representation on a governing board of or advisory board to the entity.