Enterprise Zones
The purpose of the Texas Enterprise Zone Program (EZ) is to encourage job creation and capital investment in areas of economic distress by removing governmental regulatory barriers to economic growth and to provide tax incentives and economic development benefits.
An EZ is any census block group in which the poverty level is 20% or higher as identified by the most recent census, which is 2000 census. Effective date of changes was September 1, 2003. The State’s Office of Economic Development is in the process of producing a map that identifies the census block groups that meet the 20% poverty criteria.
Enterprise Project Incentives
A business must apply for and receive a nomination by the City for an Enterprise Project designation. The nomination is then forwarded to the State Office of Economic Development which designates Enterprise Projects.
Projects are competitively scored and a total of 87 projects statewide can be designated at any given time. Scoring is based on capital investment and job creation.
The incentives are briefly described below:
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Refund of State Sales or Use Taxes.
A refund of state sales or use taxes paid on machinery and equipment, building materials, labor for the rehabilitation of existing buildings and electricity and natural gas purchased for use by the business. The refund is tied to job creation and is capped at $5,000 (will reduce to $2,000 effective Sept. 1, 2005) for each permanent job created or retained during the five-year designation period. Each project is limited to a maximum refund of $1.25 million, or $250,000 for each of the five years. The jobs must be kept a minimum of three years after the refund is made. The program provides for recapture, penalty, and interest, if jobs are not maintained.
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 either 50% of the capital investment made, or the apportioned earned surplus income may be reduced by 5% of the capital investment made in the zone.
Enterprise Projects receive priority for Smart Job Funds.
As an Enterprise Project, a business is eligible for both state and local incentives for a five year period. Local incentives include a property tax abatement and a small business revolving loan fund.
What are the requirements?
- Businesses that are located within an EZ must commit 25% of the new jobs created and/or retained to residents of the EZ.
- Businesses not located within the EZ must commit 35% of the new jobs created and/or retained to residents of the EZ.
Qualified Business Designation:
Businesses that meet the Qualified Business definition are those that are active in the zone, with at least 25% of their new employees either residing within the zone or meeting the definition of being economically disadvantaged. Such businesses may qualify for incentives. For state incentives, the local governing body must forward a resolution to the Texas Department of Commerce recommending designation. The following is a summary of the incentives:
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One-time state sales tax refund up to $5,000 paid on machinery and equipment for retaining at least 10 jobs in the zone
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One-time franchise tax refund up to $5,000 for creating at least 10 jobs in the zone
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Priority preference for all programs administered by the state
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Local Incentives (Designation made by City Council or the Zone Board)
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5% utility rate reduction of the lowest rate available in the zone. Tax abatements (when approved by City Council).
How do you find out if your address is in a designated Enterprise Zone?
To find out if your address is located within a Designated EZ, please go to the Enterprise Zone maps link on the Texas Office of Economic Development Web site found at www.bidc.state.tx.us/BIDC_Maps/TXED_Maps/EZone_maps.html.
How to use the web site:
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Click on “click here to locate a census block group by entering an address”. This will link you to U.S. Census Bureau web site. Follow the directions by inputting your address.
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Click on the “Enterprise Zones 2003 EXCEL File”. This excel file lists all census tract block groups that have a poverty level of 20% or higher. The list is sorted by County, then look at the TRACT column for census tract and the GROUP for Block group.
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Scroll down to “Harris” and look for your census tract and block group. If it is not listed, then the block group does not have a poverty level greater than 20%.
Proposals
Proposals for State Enterprise Projects must be submitted to the City of Houston Planning & Development Department. Proposals require a public hearing and recommendation by the Houston City Council to the Texas Office of Economic Development.
You can obtain additional information on this program by visiting the Texas Office of Economic Development web page at www.tded.state.tx.us/TexasEnterpriseZone
For more information about our economic programs, see the links below:
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