economic development

FUTURO will intensify its efforts in the arena of Economic Development. With our Empowerment Zone designation from the USDA, we stand a better chance of affecting real change toward job creation in our region for the first time. For many years the economies of our five-county region have suffered from the affects of high unemployment and high poverty rates. FUTURO, while an Enterprise Community, offered set-aside funds for each county to do local projects on a small scale, and most were used to improve public facilities and to provide technical assistance to our partners.

FUTURO plans to execute the EC/EZ strategic plan in the next two years, by providing services related to our Housing and Economic Development goals. We have three Economic Developers for our five county region. Our Developers provide the following services:

Grant Writing:

Technical Assistance- reviewing grant applications, provide demographics data, and grant research
“Grant Writing” training classes (service fee)
Writing grant proposals (service fee)

Coordination/Planning/Facilitation of regional meetings, projects and programs
Update and distribution of the “Middle Rio Grande Regional Profile”
Consulting:

Tax assistance with the State and Federal Empowerment Zone tax credits and deductions (service fee)
Business Prospecting (Job Fairs, Manufacturing Expos & Meetings)
Deal Structuring
Revolving Loan Fund

Economic Developers:

All Counties
Tammye Treviño
(830) 278-6817

Johnny Martinez
(830) 278-6817

Marisela Lugo
(830) 278-6817

The following list of Empowerment Zone Federal and State Tax Benefits are available to FUTURO as an Empowerment Zone. We welcome the opportunity to work with you.

A more printable version of these incentives is also available.

LOCAL INCENTIVES

Communities generally offer a combination of financial and non-financial local incentives to businesses. Such incentives may include tax abatements, tax increment financing, streamlined permitting, and development fee exceptions. Either way, it is the responsibility of the municipality or county to decide what incentives will work best in their community.

To this regard, FUTURO has partnered with a group of business people who are willing to assist business owners and managers expand or relocate their business operations to this area. To contact them in Uvalde, look for more information at www.uvaldeadf.com, and central information for economic development in Eagle Pass and surrounding Maverick County can be found at portofeaglepass.com.

STATE INCENTIVES

TEXAS STATE ENTERPRISE ZONE

This program was created to induce capital investment and job creation in economically distressed areas of Texas by allowing communities to nominate new or expanding businesses for state and local incentives. A key function of this program is to create public/private partnerships for the promotion of business expansion and revitalization of these areas. Enterprise zones are seen as an economic development tool that municipalities and counties, in partnership with the State, can use when packaging local and state tax and regulatory benefits to offer new or expanding businesses in their area.

ENTERPRISE ZONE PROJECTS

An Enterprise Zone project is one nominated by the enterprise zone governing body and approved by the Texas Department of Economic Development (TDED) given a five-year designation in which they may capture jobs created or retained and the capital investment made in the enterprise zone. The business must commit to create or retain jobs, make capital investments in the Enterprise Zone, fill at least 25% of its new jobs with individuals who are either economically disadvantaged or residents of an Enterprise Community within the governing body’s jurisdiction, and maintain a level of employment from the date jobs are certified by the Department for at least three years.

STATE ENTERPRISE ZONE INCENTIVES

State Sales and Use Taxes paid on machinery and equipment, building materials, and electricity and natural gas purchased for use in the Enterprise Community are eligible for refund. The refund is based on $2,000 for each permanent job created or retained during the five-year designation period. The number of jobs for which a refund may be received is based upon commitments made in the project application. Each project is limited to a maximum refund of $1.25 million or $250,000 per year over the five-year period. The process involves:

Certification by TDED of jobs created and/or retained.
Certification by the Comptroller of Public Accounts of sales & use tax paid on qualifying items.

The Franchise Tax Reduction is taken on its annual report filing for each year of the five-year designation. The reduction is based on the amount of capital investment made by the project in the enterprise zone. The project’s apportioned taxable capital may be reduced by 50% of the capital investment or the apportioned earned surplus income may be reduced by 5% of the capital investment made in the Enterprise Community. The business must pay the highest liability.

FEDERAL INCENTIVES

EMPOWERMENT ZONE EMPLOYMENT CREDIT (EZ WAGE CREDIT)

Credit against Federal taxes up to $3,000 for businesses for each year of EZ designation for every existing employee and new hire who lives and works in the EZ. Caveat: Available currently for Round I EZs; available for all EZs beginning January 1, 2002 through December 31, 2009. A business cannot count wages for both the WOTC and WtW credits, and the EZ Wage Credit.

WORK OPPORTUNITY TAX CREDIT (WOTC)

Credit up to $2,400 against Federal taxes for businesses for each new hire from groups that have high unemployment rates or other special employment needs, including youth ages 18 to 24 who live in an EZ, EC, or RC, and summer hires ages 16 to 17 who live in an EZ, EC or RC. Caveat: Expires for individuals who begin work after December 31, 2001. Business does not have to be in an EZ to qualify. Cannot be combined with WtW Credit. State Employment Services Agency must certify employee is in targeted group.

WELFARE TO WORK (WtW) CREDIT

Two-year credit against Federal taxes for businesses that hire long-term family assistance recipients. Credits up to $3,500 for the first year, and $5,000 for the second year for each new hire. Caveat: Expires for individuals who begin work after December 31, 2001. Business does not have to be in an EZ to qualify. Cannot be combined with WOTC. State Employment Services Agency must certify employee is in targeted group.

INDIAN EMPLOYMENT TAX CREDIT

Credit against Federal taxes calculated on wages (including employee health insurance costs) up to $20,000 for each qualified employee who is an enrolled member of an Indian tribe (or spouse) who lives on or near an Indian reservation. Available for existing employees and new hires. Caveat: A business does not have to be located in an EZ to qualify for this credit. The majority of the services performed by the employee must be on an Indian reservation. The credit does not apply for taxable years beginning after December 31, 2003.

INCREASED SECTION 179 DEDUCTION

Allows businesses to claim increased Section 179 deduction (up to $20,000 in additional expensing increasing to $35,000 for property acquired after December 31, 2001) if the businesses qualify as an Enterprise Zone Business. Can be claimed on certain depreciable property such as equipment and machinery. Caveat: Can only be used in EZs, but not in developable sites until after December 31, 2001.

ENVIRONMENTAL CLEANUP COST DEDUCTION (BROWFIELDS)

Businesses can elect to deduct qualified cleanup costs of hazardous substances in certain areas (brownfields) in the tax year the business pays or incurs the costs. Caveat: Property is not required to be located in an EZ. Requires certification from the State environmental agency. Includes costs paid or incurred prior to January 1, 2004.

DEPRECIATION OF PROPERTY USED ON INDIAN RESERVATIONS

Special accelerated depreciation rules apply to qualified property placed in service on an Indian reservation after 1993 and before 2004. Certain public infrastructure used or located off the Indian reservation also qualifies. Caveat: A business does not have to use the property in an EZ to use these special rules, but generally the property must be used on an Indian reservation. The property must be placed into service after 1993 and before 2004.

ENTERPRISE ZONE FACILITY BONDS

State and local governments can issue Enterprise Zone Facility Bonds (a type of tax-exempt bond) to make loans at lower interest rates to Enterprise Zone Businesses to finance Qualified Zone Property. Caveat: No limitations or conditions yet determined for Round III EZs.

QUALIFIED ZONE ACADEMY BONDS (QZABs)

State or local governments can issue bonds at 0 percent interest cost to them to finance public school programs with private business partnerships. Private businesses must contribute money, equipment, or services equal to 10 percent of bond proceeds (that may qualify as a charitable contribution). The Federal Government pays interest in the form of tax credits to banks, insurance companies, and certain lending corporations that hold QZABs. Caveat: Federal allocation to States annually from 1998-2001. State education agency allocates credit to a Qualified Zone Academy to finance materials, teacher training, building renovation, or equipment for programs that prepare students for jobs or college. Schools must be located in an EZ or have 35 percent of students eligible for free or reduced-cost lunch program.

NON-RECOGNITION OF GAIN ON SALE OF EMPOWERMENT ZONE ASSETS

Capital gain on EZAs (stock, partnership interests, and business property) of an Enterprise Zone Business held for more than 1 year is not recognized (and is rolled over) if replacement EZA is acquired within 60 days. Caveat: Election by taxpayer for EZA acquired after December 21, 2000 and before January 1, 2010 for all EZs.

PARTIAL EXCLUSION OF GAIN ON SALE OF EMPOWERMENT ZONE STOCK

Exclusion of 60 percent of the gain on the sale of small business stock of a C Corporation that is an Enterprise Zone Business located in an EZ if the stock is held for at least 5 years. Caveat: Stock must be acquired after December 21, 2000 and before January 1, 2010, at original issuance in exchange for cash. Sixty-percent exclusion does not apply to gain after December 31, 2014. Business must be an Enterprise Zone Business in an EZ.

NEW MARKETS TAX CREDIT

Equity investors in qualified Community Development Entities (CDEs) can obtain a tax credit against Federal taxes of 5 to 6 percent of the amount invested for each of the years the investment is held, for up to 7 years of the credit period. Caveat: Allocations of the credit will be made annually from 2001 to 2007 to qualified CDEs. Investors must purchase stock or partnership interest in a CDE for cash at original issuance. Credit available at time of purchase (1 year) and on 6 anniversary dates of acquisition of investment.

LOW-INCOME HOUSING TAX CREDIT (LIHTC)

Ten-year credit against Federal taxes for owners of newly constructed or renovated rental housing who set aside a specified percentage of units for low-income persons for a minimum of 15 years. The credit varies for new construction and renovation. Caveat: Project must receive allocation of State's annual credit ceiling or use multifamily housing tax-exempt bonds that receive allocation of State's bond volume cap. Allocations are mode on the basis of the State plan. The project does not have to be located in an EZ to qualify.

WORK OPPORTUNITY TAX CREDIT (WOTC)

Work Opportunity Tax Credits (WOTC) apply to up to $2,400 per new hire against Federal taxes for every employee who is from an area of high unemployment or has other special employment needs, including youth ages 18 to 24 and summer hires ages 16 to 17 who live in an Enterprise Community. Expires for individuals who begin work after December 31, 2001. Business does not have to be in an EC to qualify. Cannot be combined with WtW Credit. State Employment Services Agency must certify employee is in targeted group.

WELFARE TO WORK (WtW) CREDIT

A program that benefits a business with a two-year credit against Federal taxes for every long-term family assistance recipient who is a new hire. Credit available is up to $3,500 in the first year and $5,000 in the second year for each new hire. Expires for individuals who begin work after December 31, 2001. Business does not have to be in an EC to qualify. Cannot be combined with WOTC. State Employment Services Agency must certify employee is in targeted group.

DOWNLOADABLE REFERENCES FOR FEDERAL TAX INCENTIVES IN PDF FORMAT:

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