Resources & Incentives
Businesses looking to locate or expand in the Georgetown city limits may be eligible for a variety of incentive options. The staff of the Georgetown Economic Development Department has the experience and expertise to help determine which local, state, federal, and other government entity incentives and programs best meet business’ needs. In addition, Georgetown offers one of the lowest utility and tax rates in the Central Texas area.
Texas Economic Development Sales Tax
The Texas Development Corporation Act (“Act”) authorizes Texas cities to impose sales taxes for economic development. Cities must be eligible under the Act and hold a sales tax election to adopt either a Type A or Type B (formerly 4A and 4B) sales tax. This sales tax is one of the most popular tools used by cities to promote economic development. The City of Georgetown has approved both Type A and Type B sales tax and the Georgetown Economic Development Corporation and Georgetown Transportation Enhancement Corporation to manage the funds.
Type A Sales Tax
In May 2005, the citizens of Georgetown approved the creation of a Type A Sales Tax Corporation, Georgetown Economic Development Corporation (GEDCO). GEDCO considers requests and grants funds for economic development projects under Section 2(11)(A) and Section 4A(i) of the Texas Development Corporation Act of 1979, (Tex. Rev. Civ. Stat., Ann., Art. 5190.6, 4A, as amended), and a delineated in Georgetown City Council Resolution 121404-JJ.
Type B Sales Tax
In 2000, Citizens of Georgetown approved the creation of a Type B Sales Tax Corporation, Georgetown Transportation Enhancement Corp (GTEC). GTEC awards funds to finance infrastructure improvements for qualified projects.
Property Tax Abatements
Personal and real property tax abatements are available to qualified businesses.
Utility and Transportation Infrastructure
Georgetown Utility Systems (GUS), the municipally-owned power and water supplier, has adopted electric rate policies that permit reduced rates for customer rate classifications or categories based upon load factors and the efficiency of the user. In addition, agreements may be available to reduce utility rates for economic development prospects.
GUS has the capacity and flexibility to offer qualified companies infrastructure improvements and extensions at reduced cost. Such incentives may include improvements to curbs and gutters, street paving, water and sewer, electrical supply, and public lighting.
In 1989, Texas voters approved a constitutional amendment giving local taxing jurisdictions the option to waive tax collection on specific personal property known as freeport goods. Freeport property includes goods, wares, merchandise, ores, and certain aircraft and aircraft parts. Freeport property qualifies for an exemption from ad valorem taxation only if it has been detained in the state for 175 days or less for the purpose of assembly, storage, manufacturing, processing, or fabricating. The City of Georgetown and Williamson County offer this exemption. In addition, City Staff can work with qualified projects to request the exemption from other local taxing entities.
Texas Enterprise Fund
In 2003 the Texas Legislature established the Texas Enterprise Fund to provide financial resources to help strengthen the state’s economy. The Fund is used primarily to attract new business to the state or retain an existing business that is undertaking a substantial expansion. The Fund may also be appropriated for a variety of economic development projects, including infrastructure development, community development, job training programs and business incentives, as well as to attract technology and biotechnology businesses and support university research.
To be eligible for the Enterprise Fund, a project will go through a review process that examines a variety of factors, including job creation and wages, capital investment, the financial strength of the applicant, the project’s business history, analysis of the relevant business sector, and public and private sector financial support. In addition, the project must demonstrate a significant return on the state’s investment, strong local support, and the unanimous support of the Governor, Lieutenant Governor and Speaker.
A Foreign-Trade Zone is a specially designated area, in or adjacent to a U.S. Customs Port Of Entry, which is considered to be outside the Customs Territory of the U.S.
The following is a partial list of the many benefits you can attain when using Foreign-Trade Zones or Foreign-Trade Zone Subzone:
- No Duty Is Ever Paid On Re-Exported Merchandise from a Foreign-Trade Zone
- If The Merchandise Is Sold Domestically, No Duty Is Paid Until It Leaves The Zone Or Zones
- Generally, No Duty Is Paid On Waste Or Yield Loss in a Foreign-Trade Zone or Subzone
- Duty On Scrap Is Eliminated Or Reduced in a Foreign-Trade Zone
- Generally, If Foreign Merchandise Is Manufactured within a Foreign-Trade Zone or Subzone Into A Product With A Lower Duty Rate, Then The Lower Duty Rate Applies On The Foreign Content When Duty Is Paid
- Merchandise In A Foreign-Trade Zone May Be Stored, Repackaged, Manipulated, Manufactured, Destroyed Or Otherwise Altered or Change
Skills Development Fund
The Skills Development Fund is an innovative program created to assist Texas public community and technical colleges finance customized job training for their local businesses. The Fund was established by the Legislature in 1995 and is administered by the Texas Workforce Commission. Grants are provided to help companies and labor unions form partnerships with local community colleges and technical schools to provide custom job training. Average training costs are $1,000 per trainee; however, the benefit may vary depending on the proposal.
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. For detailed information regarding the application process and funding, please contact Travis Weaver with the Texas Workforce Commission at 512/936-3120.
Texas Enterprise Zone
The Texas Enterprise Zone Program was created to help companies grow and expand their business in Texas. It is an economic development sales tax incentive partnering the state and local government to help local employment and support business investment. As a company grows, they are eligible to apply for a state sales tax refund. Projects nominated by the City and approved by the State may receive state sales and use tax refunds on qualified expenditures.
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 and 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. The Texas Department of Agriculture administers the Texas Capital Fund Program.
State Sales & Use Tax Exemptions
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.
Clean rooms used in the production of semiconductor components or in the biotechnology industry are exempt as manufacturing equipment. That includes property affixed to or incorporated into realty, including integrated systems, fixtures, lighting, moveable partitions, piping and all property necessary or adapted to reduce contamination or to control airflow, temperature and humidity. However, this exemption does not include the structural shell to which these improvements are attached.
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.
Texas Leverage Fund
The Texas Leverage Fund (TLF) is an “economic development bank” offering an added source of financing to communities that have passed the economic development sales tax. Approximately 500 communities in Texas have adopted the local economic development sales tax. EDT may loan funds directly to a local Industrial Development Corporation (IDC) to finance eligible projects. Sales tax revenues pledged by the IDC need only be sufficient to cover projected annual debt service as specified in the Texas Leverage Fund Program Guidelines. This allows cities to leverage their economic development sales tax and to pursue additional projects.
Sales Tax Bonds
Sales Tax Bonds do not fall under the volume cap and are eligible to communities that have passed the economic development sales tax. Ineligible projects include for-profit hospitals, multi-family projects and municipal services.
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 bond amount is $10 million (which can include certain capital and administrative costs). These issues must receive a reservation under the State’s volume limitation (“volume cap”) managed by the Texas Bond Review Board. The Tax Reform Act of 1986 imposes a volume ceiling on the aggregate principal amount of “private activity bonds” that may be issued with the State during any calendar year. Generally, the reservation of state ceiling issues is allocated by lottery in October each program year. For more information on the “volume cap” or the lottery dates, contact the Texas Bond Review Board at 512/463-1741.
Texas Economic Development Act
In 2001, the 77th Texas Legislature enacted House Bill 1200 creating Tax Code Chapter 313, Texas Economic Development Act, to encourage large-scale manufacturing, research and development, and renewable energy capital investment projects to the State of Texas. It requires companies to invest a specified amount of money to qualify for a tax credit and an eight-year limitation on the appraised value of a property for the maintenance and operations portion of the school district property tax. The local school district must elect to participate in order for the Company to recognize this benefit. The qualifying investment amount is determined on a sliding scale that begins at $100 million for large urban areas and $30 million for rural areas. The qualifying investment amount is reduced for areas with a lower tax base.
For detailed information regarding this incentive, please contact Tim Wooten with the Comptroller of Public Accounts at 512/305-9838.
Ad Valorem / Property Tax Exemption
A Texas constitutional amendment providing an exemption from property taxation for pollution control was approved in 1993. The intent was to ensure that compliance with environmental mandates, through capital investments, did not result in an increase in a facility’s property taxes. A facility must first receive a determination from the Texas Commission on Environment Quality (TCEQ) that property is for pollution control purposes. That positive use determination is then provided to the local appraisal district, which must accept the TCEQ’s decision and grant the property an exemption from property taxes. To be eligible for a positive use determination, the property must have been purchased, acquired, constructed, installed, replaced, or reconstructed after January 1, 1994 to meet or exceed federal, state, or local environmental laws, rules, or regulations.
Property Tax Rule 9.105
The Texas Comptroller of Public Accounts offers a refund of State franchise and sales/use taxes paid by companies owning certain abated property. A company who meets the following three conditions may apply for a refund:
Paid property taxes to a school district on property that is located in a reinvestment zone established under Chapter 312. is exempt in whole or in part from property tax imposed by a city or county under a tax abatement agreement established under Chapter 312. is not in a tax abatement agreement with a school district.
The refund is equal to the amount of property taxes that would have been paid had the company entered into a school district abatement agreement with terms identical to the city or county abatement agreement, not to exceed the net state sales and use taxes and state franchise taxes paid or collected and remitted during that calendar year. The refund amount may also be limited by a statewide appropriation per year for this refund program.
For more information and assistance on this incentive, contact the Comptroller of Public Accounts at 800/252-9121 or 512/305-9999.
A corporation may use a capital investment credit to reduce its franchise tax liability. To take advantage of this credit a corporation must be a qualified business; pay an average-weekly wage that is at least 110 percent of the county-average weekly wage in the county where the job is located; offer a specified group health benefit plan to all full-time employees, for which the corporation pays at least 80 percent of the costs; and make a minimum $500,000 qualified capital investment (QCI).
Qualified Capital Investment (QCI)
A qualified capital investment is tangible personal property first placed in service in an SIA, or, if the QCI is made by a corporation primarily engaged in agriculture processing, first placed in service in a Texas county with a population under 50,000.
Amount of Credit
The credit equals 7.5 percent of the qualified capital investment during the period upon which the tax is based. The credit must be taken in five equal installments over the five consecutive reports beginning with the report based upon the period during which the QCI was made.
Limitations on Credit
The total credit for a report (including any credit carryforward) is limited to 50 percent of the tax due for the report before other applicable tax credits. A corporation eligible for a credit from an installment that exceeds the 50 percent limitation amount may carry forward the unused portion of the installment until used for up to 5 consecutive reports. A corporation that establishes a capital investment credit cannot claim the enterprise zone deduction authorized under Section 171.1015. (A corporation designated as an enterprise project may reduce its apportioned taxable capital or apportioned taxable earned surplus by qualifying capital investments made in the enterprise zone in which the enterprise project is located. For more information about the enterprise zone deduction, see Franchise Tax Rule 3.561.) For questions and further information, please contact Jerry Oxford with the Comptroller of Public Accounts at 512/463-4662.
TCEQ and the Office of the Governor Economic Development & Tourism division have established a relationship to assist companies, which may experience unwarranted delays in their environmental permitting process for projects that could affect job creation or have a high economic impact.
Economic Development & Diversification
In-State Tuition for Employees
The Economic Development and Diversification In-state Tuition incentive may be offered to qualified businesses that are in the decision-making process to relocate or expand their operations into Texas. The incentive allows employees and family members of the qualified businesses to pay in-state tuition fees if the individual files with a Texas institution of higher education. Without this incentive designation, a student must reside in Texas for a 12-month period to be entitled to pay the tuition fees of a Texas resident.