10 TAC §§176.1 - 176.10
The Texas Department of Economic Development (agency) proposes
new Chapter 176. Enterprise Zone Program Rules, §§176.1-176.10,
relating to identifying severely distressed areas of the state and providing
incentives by state and local government to induce investment in those areas,
as authorized by Government Code, Chapter 2303, as amended, Enterprise Zones.
The proposed new rules are necessary to accurately reflect current law,
as amended by House Bill 820 and House Bill 2686, and to reflect current program
practices of the agency. In addition:
Proposed new §176.1 updates the rules to eliminate references to recycling
market development zones, and to clarify the definition of qualified business.
Proposed new §176.2 updates the rules to eliminate references to recycling
market development zones and to accurately reflect current program practices
regarding filing of applications and to accurately reflect current law regarding
job certification, and allow for an increase in the application fees.
Proposed new §176.3 updates the rules to eliminate references to recycling
market development zones and clarify the statute regarding automatic designation
as a state enterprise zone for areas designated under federal empowerment
zone initiatives.
Proposed new §176.4 updates the rules by eliminating references to
recycling market development zones.
Proposed new §176.5 replaces repealed rule §176.7 due to the
renumbering of the chapter and clarifies that retained jobs that are vacated
and refilled must meet the original hiring requirement standard.
Proposed new §176.6 replaces repealed rule §176.8 due to the
renumbering of the chapter and clarifies when a purchaser or lessee of a qualified
business must apply to assume the enterprise project designation and when
a designated project may apply for an adjustment of its job allocation.
Proposed new §176.7 replaces repealed rule §176.9 due to the
renumbering of the chapter.
Proposed new §176.8 replaces repealed rule §176.10 due to the
renumbering of the chapter and updates the rules to eliminate references to
recycling market development zones and accurately reflect the current law
regarding conditions under which the agency will designate a qualified business
as an enterprise zone, and clarify the length of time of enterprise zone designations
and to accurately reflect present program procedures regarding assumption
of a project designation or name change by a qualified business.
Proposed new §176.9 replaces repealed rule §176.11 due to the
renumbering of the chapter.
Proposed new §176.10 replaces repealed rule §176.12 due to the
renumbering of the chapter.
Dan Martin, Director of Finance, has determined for each year of the first
five years that the new rules are in effect there will be no fiscal implications
to the state or to local governments as a result of the new rules other than
the increase in fees to government entities who choose to participate in the
program. No cost to either government, except for the increase in fees as
noted above, or to the public will result from the new rules. There will be
no impact on small businesses or micro-businesses.
Mr. Martin has also determined that for each year of the first five years
the new rules are in effect the public benefit anticipated as a result of
the new rules is a clearer understanding of the rules and processes for participation
in the program. There will be economic costs in the form of increased fees
to persons who choose to participate in the program and thus are required
to comply with the new rules.
Written comments on the proposed new sections may be hand delivered to
Texas Department of Economic Development, 1700 North Congress, Suite 130,
Austin, Texas 78701, mailed to P.O. Box 12728, Austin, Texas 78711-2728, or
faxed to (512)936-0415 and should be addressed to the attention of Mary Herrick,
Legal Assistant. Comments must received within 30 days of publication of the
proposed new rules.
The new rules are proposed pursuant to Government Code 481.0044(a),
which directs the Governing Board of the agency to adopt rules for administration
of agency programs, and Government Code, Chapter 2001, Subchapter B which
prescribes the standards for rulemaking by state agencies.
Texas Government Code, Chapter 2303, as amended, is affected by this proposal.
Texas Administrative Code.
§176.1. General Provisions.
(a)
Introduction. Pursuant to the authority granted by the
Texas Enterprise Zone Act, Texas Government Code, Chapter 2303, as amended,
and the Administrative Procedure Act, Chapter 2001, Subchapter B, Rulemaking,
Texas Government Code, as amended, the Texas Department of Economic Development
prescribes the following sections regarding practice and procedure before
the department in the administration and implementation of the Enterprise
Zone Program.
(b)
Purpose. It is the purpose of the Texas Enterprise Zone
Act to establish a process that clearly identifies those distressed areas
and provides incentives by both state and local government to induce private
investment in those areas by means of the removal of unnecessary governmental
regulatory barriers to economic growth and the provision of tax incentives
and economic development program benefits. The purpose of these sections is
to provide standards of eligibility and procedures for applications for designation
of qualified areas as enterprise zones and for designation of qualified businesses
as enterprise projects.
(c)
Definition of terms. The following words and terms, when
used in this chapter, shall have the following meanings, unless the context
clearly indicates otherwise.
(1)
Act--The Texas Enterprise Zone Act, Texas Government Code,
Chapter 2303, as amended.
(2)
Administrative authority--A board, commission, or committee
appointed by the governing body to administer the Act within an enterprise
zone.
(3)
Affected entity--The applicant, qualified business, qualified
employee, or any other person that is a party to a transaction involving the
designation of an enterprise zone or project.
(4)
Applicant--The municipality, county, or combination of
municipalities or counties filing an application with the department for designation
of an enterprise zone or enterprise project or affected entity filing with
the department for certification under the Act, §2303.105 or §2303.405,
and this chapter.
(5)
Application--An application, including supporting and supplemental
instruments and documentation, for designation of an enterprise zone or for
designation of an enterprise project or for certification by the department
or local governing body as a qualified business or neighborhood enterprise
association under the Act and this chapter.
(6)
Board--The Governing Board of the Texas Department of Economic
Development.
(7)
Day--The period of time between 8:00 a.m. and 5:00 p.m.
on any day other than a Saturday, Sunday, or state or federal holiday.
(8)
Department--The Texas Department of Economic Development.
(9)
Depressed area--An area within the jurisdiction of a county
or municipality designated by ordinance or order that is an area with pervasive
poverty, unemployment, and economic distress. An area is an area of pervasive
poverty, unemployment, and economic distress if:
(A)
the average rate of unemployment in the area during the
most recent 12-month period for which data is available was at least one and
one-half times the state average for that period or if the area has had at
least a 12% population loss during the most recent six-year period or a population
loss of at least 4.0% for the most recent three-year period; and
(B)
the area meets one or more of the following criteria:
(i)
the area was a low-income poverty area;
(ii)
at least 70% of the residents or households of the area
have an income below 80% of the median income of the residents or households
of the locality or state, whichever is lower;
(iii)
chronic abandonment or demolition of commercial or residential
structures exists in the area;
(iv)
substantial tax arrearages for commercial or residential
structures exist in the area;
(v)
substantial losses of businesses or jobs have occurred
in the area;
(vi)
the area is part of a disaster area declared by the state
or federal government during the most recent 18-month period; or
(vii)
the area has had a substantial increase in the number
of individuals younger than 18 years of age arrested due to criminal activity.
(10)
Economically disadvantaged individual--An individual who:
(A)
for at least three months before obtaining employment with
a qualified business was unemployed;
(B)
receives public assistance benefits, such as welfare payments
and food stamp payments, based on need and intended to alleviate poverty;
(C)
is economically disadvantaged as defined by the Job Training
Partnership Act, §4 (8) (29 United States Code, §1503 (8));
(D)
is an individual with a disability, as defined by 29 United
States Code §706 (8);
(E)
is an inmate as defined by the Government Code, §498.001;
or
(F)
is entering the workplace after being confined in a facility
operated by the institutional division of the Texas Department of Criminal
Justice or under contract with the Texas Department of Criminal Justice; or
(G)
has been released by the Texas Youth Commission and is
on parole, if state law provides for such a person to be on parole; or
(H)
meets the current low income or moderate income limits
developed under the United States Housing Act of 1937, §8 (42 United
States Code §1437f et seq.).
(11)
Eligible taxable proceeds--Taxable proceeds generated,
paid, or collected by a qualified hotel project or a business at a qualified
hotel project including hotel occupancy taxes, ad valorem taxes, sales and
use taxes, and mixed beverage taxes.
(12)
Enterprise project--A qualified business designated by
the department as an enterprise project under the Act, §303.405 and §176.8
of this title (relating to Requirements for Designation of Enterprise Projects)
that is eligible for the state tax incentives provided by law for an enterprise
project.
(13)
Enterprise zone--An area of the state designated by the
department as an enterprise zone under the Act, Subchapter C and §176.3
of this title (relating to Eligibility Requirements for Designation of an
Enterprise Zone).
(14)
Enterprise project eligible enterprise zone--A state-designated
enterprise zone that meets economic distress levels set forth in the Act, §2303.102.
(15)
Executive director--The executive director of the department
or his or her authorized designee.
(16)
Extraterritorial jurisdiction--Territory in the extraterritorial
jurisdiction of a municipality that is considered to be in the jurisdiction
of the municipality, as defined by Chapter 42, Local Government Code.
(17)
Governing body--The governing body of a municipality or
county that has applied to have an area within its jurisdiction designated
as an enterprise zone.
(18)
Local Government--A municipality or county.
(19)
Neighborhood enterprise association--A private sector
neighborhood organization within an enterprise zone that meets the criteria
set forth in the Act, §2303.301 and §176.7 of this title (relating
to Certification of Neighborhood Enterprise Associations).
(20)
New permanent job--A new employment position created by
a qualified business that has provided employment to a qualified employee
of at least 1,820 hours annually and intended to be an employment position
that exists during the period the business is designated as an enterprise
project.
(21)
Qualified business--A person, including a corporation
or other entity that the department, for purposes of state benefits under
the Act, and a governing body, for purposes of local benefits, certifies to
have met the following criteria:
(A)
the person is engaged in or has provided substantial commitment
to initiate the active conduct of a trade or business in the zone; and
(B)
at least 25% of the qualified business's new permanent
jobs in the zone are residents of any zone within the governing body's or
bodies' jurisdiction or economically disadvantaged individuals; and
(C)
a franchise or subsidiary of a new or existing business
may be certified by the governing body of an enterprise zone as a qualified
business if the franchise or subsidiary is located entirely in the zone and
maintains separate books and records of the business activity conducted in
the zone; or
(D)
as a builder that has demonstrated proficiency in residential
construction, financial stability, and participation in a 10-year insured
warranty program in accordance with the Act and §176.8 (f) of this title
(relating to Approval Standards for Certification of a Builder as a Qualified
Business); or
(E)
is a qualified hotel project that is owned by a municipality
with a population of 1.5 million or more or a nonprofit municipality sponsored
local government corporation created pursuant to the Texas Transportation
Corporation Act, Chapter 431, Transportation Code proposed to be constructed
within 1,000 feet of a convention center owned by a municipality having a
population of 1.5 million or more, including all facilities ancillary thereto
such as shops and parking facilities.
(22)
Qualified employee--An employee who works for a qualified
business and who performs at least 50% of his service for the business within
the enterprise zone.
(23)
Qualified property--Any one or more of the following:
(A)
tangible personal property located in the zone that was
acquired by a taxpayer not earlier than the 90th day before the date of designation
of the area as an enterprise zone or enterprise project, as applicable, and
was or will be used predominantly by the taxpayer in the active conduct of
a trade or business;
(B)
real property located in a zone that:
(i)
was acquired by the taxpayer not earlier than the 90th
day before the date of designation of the zone or enterprise project, as applicable,
and used predominantly by the taxpayer in the active conduct of a trade or
business; or
(ii)
was the principal residence of the taxpayer on the date
of the sale or exchange; or
(C)
interest in a corporation, partnership, or other entity
if, for the most recent taxable year of the entity ending before the date
of sale or exchange, the entity was a qualified business.
(24)
Retained job--A job that existed with a business prior
to designation as an enterprise project or certification as a qualified business
that has provided employment to a qualified employee of at least 1,820 hours
annually and that is intended to be an employment position retained during
the period the business is designated as an enterprise project or certified
as a qualified business in accordance with Texas Tax Code, Chapter 151.
(25)
Staff--The staff of the department.
(d)
Amendment and suspension of rules. These sections may be
amended by the executive director at any time in accordance with the Administrative
Procedure Act, Texas Government Code, Subchapter B, as amended. The executive
director may suspend or waive a section, not statutorily imposed, in whole
or in part, upon the showing of good cause or when, at the discretion of the
executive director, the particular facts or circumstances render such waiver
of the section appropriate in a given instance.
(e)
Application of sections. All sections shall be applied
collectively, to the extent relevant, in connection with specific determinations
made by the department in the course of its administrative functions. The
department will make its determination on the basis of specific characteristics
and circumstances of the individual application, and in light of the basic
statutory purposes in the particular area.
(f)
Examination of records. Any party requesting the examination
of records pursuant to the Texas Public Information Act, Texas Government
Code, Chapter 552, shall indicate in writing the specific nature of the documents
to be viewed, and if photocopying is desired, the prevailing standard fee
of the department will be charged to cover the cost of the request.
(g)
Written communication with the department. Applications
and other written communications to the department should be addressed to
the attention of the Texas Enterprise Zone Program, Business Development Division,
Texas Department of Economic Development, P. O. Box 12728, Austin, Texas 78711-2728.
§176.2.Filing Requirements for Applications and Claims.
(a)
Form.
(1)
Enterprise zones and enterprise projects. An application
must be filed on letter-sized paper and must contain all information and documentation
required under the Act and this chapter, as applicable. The application must
be submitted in a three-ring loose-leaf binder. Each application for designation
as an enterprise zone, for enterprise zone boundary amendments, and for enterprise
project designation must be typed directly on the form provided by the department
and must include all applicable attachments as specified in the application.
(2)
Certifications or refunds. An application to request refunds,
tax reductions, or certification of new permanent jobs created or jobs that
have been retained, or certification as a qualified business to qualify for
refunds or deductions of state sales, use, franchise taxes, or other state
benefits encouraged under the Act, as appropriate, or an application to request
certification by the department of a neighborhood enterprise association,
must be made to the department in writing on the appropriate forms and include
applicable attachments as specified in the application as provided by the
department or the Comptroller of Public Accounts.
(b)
Filing.
(1)
Enterprise zones. Applications for enterprise zone designation,
or enterprise zone boundary amendments, may be filed with the department on
any day. The applicant shall file with the department an original of an application
for designation of an enterprise zone, or enterprise zone boundary amendment,
if by separate application from an enterprise zone or zone boundary amendment
application. A separate application must be submitted to the department for
each area nominated for designation as an enterprise zone or to amend the
boundaries of a designated enterprise zone.
(2)
Enterprise projects. Applications for enterprise project
designation may be filed on or before, but no later than, quarterly deadlines
published by the department in §176.8 (b)(1) of this title (relating
to Approval Standards) for consideration. Applications received after a published
deadline will not be reviewed and considered for designation until after the
next published deadline. The applicant shall file with the department an original
of an application for designation as an enterprise project.
(3)
Qualified hotel project. Applications for a qualified hotel
project designation may be filed on any day. The applicant must file with
the department a certified copy of a resolution nominating the hotel project
and a description or summary of the project detailing the nature of the business,
estimated number of new jobs to be created, and the projected capital investment.
To permit the department to designate the applicant as a qualified hotel project,
the project shall be deemed to have met all qualifications under the Act, §2303.003
and §2303.5055. Furthermore, the qualified hotel project designation
shall not be considered in determining the number of enterprise projects that
the department may approve pursuant to the other provisions of this Act.
(4)
Certifications.
(A)
Enterprise projects.
(i)
Requests for job certifications may be filed with the department
on any day. A job certification request may be made annually or semiannually.
No job certification application will be accepted if it is submitted outside
the job certification window following the 5-year designation. An applicant
must correct all certification deficiencies within 60 days following notification
from the department. All job certifications will be subject to Subchapter
G, Chapter 2303, Section 2303.516 of the Act as detailed at §176.8 (d)
of this title.
(I)
The job certification application must reflect the minimum
hiring commitment of 25% economically disadvantaged or enterprise zone residency
(ED/EZR) or the commitment as outlined and scored in the original project
application, whichever is higher; and
(II)
claim for ED status must be accompanied by post employment
form for each of the positions claiming ED status whereas EZR status must
be documented with written confirmation on governing body letterhead confirming
eligible zone residency; and
(III)
applicant must provide documentation of commitment to
community as outlined and scored in the original application.
(ii)
An enterprise project must be annually certified by the
department as a qualified business to receive its state sales and use tax
refunds and franchise tax reductions.
(iii)
Requests for refunds for designated enterprise projects
should be filed directly with the Comptroller in accordance with the applicable
Comptroller rules.
(B)
Qualified business.
(i)
Requests for job certifications for qualified businesses,
other than designated enterprise projects, may be filed with the department
on any day within 12 months after the last day of the nomination period as
a qualified business in the applicable governing body or bodies nominating
resolution.
(ii)
Requests for refunds of state sales and use taxes and
franchise taxes available to businesses nominated for one-time incentives
for designated qualified businesses should be filed directly with the Comptroller
in accordance with the applicable Comptroller rules.
(iii)
Through the applicable governing body or bodies to the
department, a residential builder may request certification as a qualified
business to construct single or multifamily housing in the governing body's
or bodies' enterprise zone even though the builder's principle office or headquarters
is located in the state of Texas outside the zone. The governing body or bodies
shall adopt criteria and guidelines to advance the Act and zone objectives
including establishing a minimum commitment of the number of housing units
that are to be constructed in an enterprise zone within its jurisdiction(s)
within a specific period of time by a builder or group of builders before
requesting state qualified business status. A builder or group of builders
that form a consortium for the purpose of constructing housing in an enterprise
zone that has met requirements established by the local governing body or
bodies may be nominated for enterprise project designation by the local governing
body or bodies. In considering such nominations the governing body or bodies
shall give preference to projects that address affordable housing as set forth
in the criteria established by the governing body or bodies. The application
for certification as a qualified business for state benefits may be submitted
to the department on any day in a form prescribed by the department. The applicable
governing body or bodies may certify a residential builder as a qualified
business to receive local benefits in connection with housing construction
activity in an enterprise zone within its or their jurisdiction without making
an application to the department to assure compliance with the Act, §2303.402.
(C)
Forms. One original form must be submitted to the department
to request certification as a qualified business, to request certification
of new permanent jobs created or to request certification of retained jobs.
One original form as provided by the Comptroller should be submitted to the
Comptroller to request refunds of state sales and use taxes. The rules promulgated
by the comptroller must also be followed to file a claim for tax refunds or
reductions.
(D)
Neighborhood enterprise associations. Applications to the
department for certification of a neighborhood enterprise association may
be filed with the department on any day.
(c)
Completeness. Each application or claim must be as complete
as practicable, and must include the fee set forth in subsection (d) of this
section. The department will stamp or otherwise designate the date on which
it receives each application. The date stamped or otherwise designated for
any application received after the close of business on any day will be the
next day. A day is as defined in the Act and §176.1 of this title (relating
to General Provisions).
(d)
Fees. A nonrefundable fee must be submitted in the form
of a cashiers check made payable to the Texas Department of Economic Development/Texas
Enterprise Zone Program, to recover the department's cost of providing direct
technical assistance relating to the enterprise zone program. The check must
accompany an application to the department in the amount of:
(1)
$500 for an enterprise zone designation;
(2)
$500 to amend the boundaries of a state designated enterprise
zone;
(3)
$500 for an enterprise project designation;
(4)
$500 for application to change name or assume enterprise
project designation as defined in §176.6(b) and §176.6(c) of this
title (relating to Application Contents for an Enterprise Project);
(5)
$500 to adjust the total number of new jobs as specified
in the original application as defined in Texas Government Code, §2303.405
(Application Contents for an Enterprise Project);
(6)
$500 for residential builder certification as a qualified
business for a three-year period;
(7)
$500 for certification as a neighborhood enterprise association;.
(8)
$500 for each job certification application that is reviewed
following the initial claim. The initial claim will be processed at no charge
to the project.
(e)
Staff consideration of applications. Staff shall review
the application to determine if the application meets the eligibility criteria
under the Act and this title. A job certification application may cover any
consecutive twelve-month period. Businesses applying for designation and job
certifications are subject to on-site inspection subject to the monitoring
provisions of Section 2303.516 of the Act. Following staff review, the application
will be submitted to the executive director for consideration. Written notification
will be given to applicants of the final status of an application or job certification.
(1)
Not later than 15 days after the receipt of the application
for enterprise zone designation or for zone boundary amendment, the department
shall notify the applicant that it has received the application and note any
omissions or clerical errors that exist in the application. The applicant
has at least ten days after the date it receives notice of application omissions
or clerical errors or 45 days from the date the application is received by
the department to correct any deficiencies and to submit corrections to the
application to the department.
(2)
Not later than five days after the deadline for accepting
applications for enterprise project designation, the department shall notify
the applicant that it has received the application.
(f)
Consideration of enterprise zone and enterprise project
applications.
(1)
Complete or corrected applications for enterprise zone
designation that staff determines meet the eligibility criteria set forth
in the Act and this chapter will be considered by the executive director.
The executive director may approve the application or remand it to the applicant
for further action. If the executive director approves the application for
enterprise zone designation, a negotiated agreement to designate the enterprise
zone will be initiated by the department and must be fully executed no later
than the 90th day after the day of receipt of the application. If the agreement
is not executed before the 90th day after the day of the receipt of the application
by the department, the application is considered to be denied. The department
shall inform the governing body or bodies of the specific reasons for the
denial.
(2)
The department shall review the enterprise project applications
that have qualified for consideration following staff review. The department
will either approve the application, disapprove it, remand it to the applicant
for further action, or make such other disposition of the application as may
be appropriate. Enterprise project designation becomes effective immediately
upon department approval of an enterprise project application and action to
grant the designation. Written notice of the designation will simultaneously
be given to the applicant governing body's or bodies' designated liaison or
liaisons and the enterprise project applicant. The notice will include an
effective date and an expiration date of the project designation, which shall
include the 90-day period immediately preceding the designation during which
benefits under the designation may be allowed.
§176.3.Eligibility Requirements for Designation of an Enterprise Zone.
(a)
An applicant may make written application to the department
for designation of an area within the applicant's jurisdiction as an enterprise
zone if such area meets the following eligibility criteria:
(1)
the area has a continuous boundary;
(2)
the area is at least one square mile in size but does not
exceed the larger of the following:
(A)
10 square miles exclusive of lakes, waterways and transportation
arteries; or
(B)
5.0% of the area of the municipality, county or combination
of municipalities or counties nominating the area, but not more than 20 square
miles, exclusive of lakes, waterways and transportation arteries; and
(3)
the area is a depressed area as defined under §176.1(c)(9)
of this title.
(b)
The department may not designate an area as an enterprise
zone if in the jurisdiction of the municipality or county nominating the area
as an enterprise zone there are three enterprise zones in existence that were
nominated as enterprise zones by the governing body of that municipality or
county.
(c)
Areas receiving designation from the federal government
under the federal empowerment zones initiatives are automatically state enterprise
zones without further qualification and are valid for the term permitted by
federal law, as authorized by the Act, §2303.109(b). Designation of these
areas as state enterprise zones does not affect the number of state enterprise
zones a governing body may have as authorized by the Act, §2303.112.
(d)
The governing body of a county may not nominate area in
a municipality or a municipality's extraterritorial jurisdiction to be included
in a zone unless the municipality is a joint applicant with the county. However,
a county with a population of 750,000 or more, according to the most recent
federal census, may nominate area in a municipality's extraterritorial jurisdiction
to be included in a zone without the consent of municipality, as authorized
by the Act, §2303.103(e).
(e)
Documentation. For the purpose of showing that an area
is qualified to be designated as an enterprise zone, the applicant must submit
documentation, including the source, methodology and certification of the
data. The authorized data source for population estimates is the State Data
Center. The authorized data source for labor force data is the Texas Workforce
Commission. Data will be considered current from the State Data Center and
the Texas Workforce Commission if they are the most recently published estimates
or if the enterprise zone application containing the data is received by the
department before the 61st day after the date revised estimates of that data
are published. An industrial park may be included as part of the enterprise
zone without averaging in the unemployment and poverty data. However, data
will be required if part of the zone includes an area which is outside the
industrial park but within the same census area. The industrial park may not
exceed 25% of the proposed zone area. To show an area has been designated
as an industrial park the applicant must include documentation of official
action taken by the governing body.
(1)
Unemployment data. The average rate of unemployment for
the area nominated during the most recent 12-month period for which data is
available from the Texas Workforce Commission must be at least one and one-half
times the state average for that period. Computation of the average unemployment
rate for the proposed enterprise zone area will require choosing the smallest
area that contains the zone for which unemployment data is available from
the Texas Workforce Commission.
(2)
Loss of Population. Loss of population may be calculated
using population estimates for the applicant's jurisdiction produced by the
Texas State Data Center. The 12% loss of population is the accumulated population
loss experienced during the most recent six-year period for which data is
available. The alternative 4.0% population loss is the loss of population
experienced during the most recent three-year period for which data is available.
(3)
Income data. If a proposed zone includes portions of more
than one city or county, the median income should be calculated using figures
for each city or county which includes part of the zone. In order to meet
the low-income criteria, the smallest number of census areas that entirely
contain the zone must reflect that at least 70% of the residents or households
in that zone have below 80% of the median residents or household income for
the locality or state, whichever is lower. To determine a low-income poverty
area, at least 20% of the residents of the zone must have an income below
the national poverty level as determined by the most recent available census
data that contains the zone area. Census tracts, block groups, or other official
census areas may be used to show poverty rates.
(4)
Chronic abandonment or demolition. To qualify, the applicant
must demonstrate to the department that 25% or more of the structures in such
area are found by the governing body to constitute substandard, slum, deteriorated,
or deteriorating structures as defined by local law. If local law does not
define what constitutes a substandard, slum, deteriorated, or deteriorating
structure, the governing body of the applicant may consider as substandard
a structure which:
(A)
is abandoned;
(B)
does not have plumbing;
(C)
has been condemned or cited for building or fire code violations
by the appropriate city authority;
(D)
is in an inadequate state of repair under applicable public
health, safety, fire, or building codes;
(E)
is the subject of a tax or special assessment delinquency
stated as a percentage of total taxes assessed, which exceeds the fair market
value of the land involved and the improvements thereon; or
(F)
is functionally or economically obsolete as determined
by a qualified appraiser.
(5)
Substantial tax arrearages. The applicant must certify
and submit evidence that within the proposed zone area, at least 25% of the
commercial or residential taxes have gone unpaid and have been delinquent
for at least one year. For purposes of determining substantial tax arrearages,
the tax rolls of the applicable city or county nominating an area as an enterprise
zone must be used.
(6)
Substantial loss of businesses or jobs. A substantial loss
of businesses or jobs is defined as a loss of at least 20% over the most recent
one-year period or a loss of 30% over the most recent three-year period in
the proposed zone area. The applicant must seek advance approval of documentation
to be provided to the department.
(7)
Declaration of an area as a state or federal disaster area.
The applicant must provide documentation by the applicable state or federal
government that the area has been declared a state or federal disaster area
within the most recent 18-month period.
(8)
Substantial increase in individuals under the age of 18
arrested for criminal activity. The applicant must provide data from the appropriate
law enforcement authority or authorities that the proposed zone area has had
a substantial increase in the number of individuals younger than 18 years
of age arrested due to criminal activity. A substantial increase in arrests
is defined as at least a 20% increase over the most recent three-year period.
(f)
Citizen participation. The department will not approve
the designation of an area as an enterprise zone unless:
(1)
the governing body of the applicant shall first notify
the department of the date it will hold a public hearing as required under
the Act, §2303.103, and these rules for the purpose of nominating an
area as an enterprise zone or to amend the boundaries of a designated enterprise
zone by encompassing additional land area into the zone. The notice to the
department shall be given in writing not less than seven days prior to the
date of the public hearing; and
(2)
notice of such hearing is given to the public by publishing
once in a newspaper of general circulation in the municipality or county or
combination of municipalities or counties and posting a copy of the same at
the city hall or county courthouse not later than seven days prior to the
date of the hearing. Such notice shall contain a description of the area proposed
by the municipality or county or combination of municipalities or counties
to be designated as an enterprise zone, and the date, time, and location of
such hearing. The description of the area should be worded so that residents
of the area and other interested parties may reasonably identify the area
to be discussed at the public hearing. The notice shall also encourage all
interested parties, including residents of the proposed zone to present their
views at the hearing. The hearing must include a presentation on the proposed
location of the zone and the provisions for any tax or other incentives applicable
to business enterprises in the zone. A municipality or county or combination
of municipalities or counties must adopt the enterprise zone nominating ordinance
or order within 180 calendar days of the date the last public hearing was
held. Further, the application for zone designation must be received by the
department within 90 calendar days of the date of final approval of the nominating
ordinance or order, or a new public hearing must occur and a new nominating
ordinance or order must be enacted.
§176.4.Application Contents for Designation of Enterprise Zones.
(a)
Each application for designation of an enterprise zone,
application to amend the boundaries of a designated enterprise zone, must
be typed directly on the form provided by the department and must include
all applicable attachments as specified in the application.
(1)
The participants. The application must provide information
about the applicant governing body or bodies, their designated representative
and their liaison to communicate and negotiate with the department, the administrative
authority and its representative, if applicable, and the neighborhood enterprise
association and its representative, if applicable.
(2)
The applicant. If a joint application is being submitted
by a municipality and county, or a combination of municipalities and/or counties,
the information must be provided for each entity. The application must contain
the following information and documentation concerning the applicant:
(A)
a statement signed by the applicant certifying that the
contents of the application are true and correct to the best information and
belief of the applicant and that the applicant has read the Act and this chapter
and is familiar with the provisions of the enterprise zone program;
(B)
a certified copy of the ordinance or order as appropriate
of the governing body of the applicant nominating the area within its jurisdiction
as an enterprise zone under the Act, containing the information set forth
in the Act, §2303.104, and identifying by job title the liaison or liaisons
and representative or representatives in accordance with paragraph (1) of
this subsection. The ordinance or order must specify any incentives to be
provided by the municipality or county to business enterprises in the zone,
including the conditions and circumstances governing the sale of surplus public
buildings or vacant public lands at less than fair market value and the public
purpose that will be achieved by the sale. At least three incentives must
be offered in the zone which are not offered elsewhere throughout the jurisdiction.
At least one incentive must be financial in nature. The ordinance or order
may nominate more than one zone, but separate applications must be submitted
for each zone;
(C)
if a joint application, a description and certified copy
of the agreements between joint applicants providing for the joint administration
of the zone. An agreement must include a statement that each applicant is
committing one of its three allowed enterprise zone designations to the joint
application.
(3)
Zone Administration. The application must contain the following
information and documentation concerning administration of the zone:
(A)
a brief description of how the zone will be managed, including
the unit or department within the municipality or county responsible for oversight
of zone activities and person or persons responsible for zone administration
within the municipality or county;
(B)
the procedures for negotiating with residents, community
groups, and other entities affected by the zone and qualified businesses within
the zone;
(C)
a description of the administrative authority, if any,
including a list of members with representation as set forth in the Act, §2303.202;
and
(D)
a description of the functions and duties of the administrator
or administrative authority, if any, including decision-making authority and
the authority to negotiate with affected entities.
(4)
The neighborhood enterprise association, if any. The application
must contain the following information and documentation concerning the neighborhood
enterprise association, if any:
(A)
a description of the neighborhood enterprise association,
including a list of officers, with the street address, mailing address, and
telephone number of each;
(B)
a statement describing the functions, programs, and services
to be performed by designating neighborhood associations in the zone at the
time of application; and
(C)
a copy of the proposed agreement between the neighborhood
enterprise association and the applicant to include, if applicable, a statement
on the amount of dedicated revenue from a tax increment fund to pay the neighborhood
enterprise association for providing services or carrying out authorized projects.
The term of an agreement with a neighborhood enterprise association may not
exceed 10 years.
(5)
The zone. The application must contain the following information
and documentation concerning the proposed zone:
(A)
a map of the proposed enterprise zone location which clearly
shows zone boundaries, including existing streets and highways, rail, air
facilities, and industrial parks;
(B)
an official census map of the proposed enterprise zone
area that clearly identifies and reflects the most recent census data areas
within the proposed zone boundaries applicable to the eligibility criteria
referenced in the application;
(C)
certification of the geographic makeup of the proposed
zone including the total square miles in the proposed enterprise zone, the
total square miles of each applicant's jurisdiction, and the percentage of
the jurisdiction in the zone;
(D)
a summary, in tabular form, of the data qualifying the
area for an enterprise zone and supporting data as required by the Act and
this chapter;
(E)
a statement setting forth the economic objectives, the
current business and labor conditions, and the marketing strategy for the
zone;
(F)
an annualized seven-year estimate of the economic impact
of the zone that reflects at least the number of jobs and capital investment
expected as a result of the designation of the zone, considering all of the
tax incentives, financial benefits, and programs contemplated, on the revenues
of the municipality or county. The estimate must be provided in tabular form
and must describe the basis and assumptions used.
(6)
The local business incentives.
(A)
The application must contain additional information about
the incentives specified in the ordinance or order.
(B)
For the purposes of tax abatement under the Property Redevelopment
and Tax Abatement Act (Tax Code, Chapter 312), an enterprise zone designated
after August 28, 1989, is considered to be a reinvestment zone without further
designation and effective September 1, 1995, the reinvestment zone is effective
for the term of the enterprise zone. In accordance with Chapter 312.204 and
312.206 of the Tax Code, property tax abatement agreements between the governing
body of each taxing unit and property owners in an enterprise zone, may, but
are not required to, contain terms that are identical to those contained in
the agreement with the municipality, county or both. The terms of the agreement
that may vary are the portion of the property that is to be exempt from taxation
under the agreement and the duration of the agreement.
(C)
Land sold at less than fair market value. A municipality
or county may sell a surplus building or vacant land in the zone at less than
fair market value if the governing body of the municipality by ordinance or
the governing body of the county by order adopts criteria specifying the conditions
and circumstances under which the sale may occur and the public purpose that
will be achieved. The surplus building or vacant land may be sold to a buyer
who is not the highest bidder if the criteria and public purpose specified
in the ordinance or order are satisfied. A copy of the ordinance or order
must be filed with the department not later than the day the sale occurs.
Factors to be considered in evaluating the local effort on the part of public
entity include provisions of publicly owned land for development purposes
including residential, commercial or industrial development.
(7)
Public hearings. The application must contain a transcript
or tape recording of all public hearings on the zone, including copies of
the published notices and copies of the publisher's affidavits.
(b)
An application nominating an area or portions of an area
for enterprise zone designation that is approaching a designation expiration
date or for which designation has previously expired must follow the application
process required of a first-time application for designation and will further
be required to meet filing requirements under §176.2(b)(1)(B) of this
title (relating to Filing Requirements for Applications and Claims).
(c)
The department may require additional information at any
time for evaluation purposes.
§176.5.Requirements for Designation of Enterprise Projects.
(a)
The department may not designate a nominated qualified
business as an enterprise project unless it determines that:
(1)
the business meets the requirements set forth in the Act, §2303.402,
and this chapter;
(2)
the qualified business is located in or has made substantial
commitment to locate in an enterprise project eligible enterprise zone;
(3)
the project demonstrates viability as determined by the
department;
(4)
the applicant's governing body or bodies have demonstrated
that a high level of cooperation between public, private, and neighborhood
entities exists in the zone; and
(5)
the designation of the qualified business as an enterprise
project will contribute significantly to the achievement of the plans of the
applicant for development and revitalization of the zone.
(b)
The department may approve the assumption of a state-designated
enterprise project that leases or transfers ownership to another entity that
will continue operations in the enterprise zone in the same way that was originally
committed to in the initial enterprise project application or which otherwise
demonstrates to the satisfaction of the department that the designation assumption
is warranted to avoid disruption of operations and loss of jobs.
(c)
For job creation a business must be seeking to create new
jobs, or for an existing business seeking to expand and increase their current
level of employment in Texas. The program, however, does not allow benefit
for moving existing jobs from one Texas city to another within the state.
(d)
For job retention a business must submit documentation
and receive prior approval of documentation in order to qualify for using
one of the following criteria:
(1)
that permanent employees will be permanently laid off;
or
(2)
the business will permanently close down; or
(3)
the business will relocate out of state; or
(4)
a 10% increase in production capacity will occur; or
(5)
a 10% decrease in overall cost per unit produced will occur;
(6)
the business facility has been legitimately destroyed or
impaired due to fire, flood, tornado, hurricane, or any other natural disaster.
(e)
In any case, for job retention, the business must maintain
the same level of employment that existed 90 days prior to the date of application.
Any of the retained jobs that are subsequently vacated and refilled must meet
the 25% ED/EZR hiring requirement.
§176.6.Application Contents for Designation of an Enterprise Project.
(a)
The application for designation of an enterprise project
must contain the following information and documentation, as applicable. If
an enterprise project application is being filed on behalf of a business to
be located in an enterprise zone that was nominated by more than one governing
body, the information must be included for each applicant governing body.
(1)
The participants. The application must contain the name,
street address, mailing address, and telephone number for each of the following
involved in the designation of qualified businesses as enterprise projects:
(A)
the applicant governing body, applicant governing body's
representative, and its designated enterprise zone liaison;
(B)
the qualified business, qualified business's representative;
(C)
if any, the administrative authority, the administrative
authority's representative; and
(D)
if any, the neighborhood enterprise association, and neighborhood
enterprise association's representative.
(2)
The applicant. The application must contain the following
information and documentation concerning the applicant:
(A)
a statement signed by the qualified business and a statement
signed by the applicant governing body or bodies certifying that the contents
of the application are true and correct to the best information and belief
of the qualified business and that the qualified business has read the Act
and this chapter and is familiar with the provisions thereof;
(B)
a certified copy of a resolution from the applicant governing
body or bodies nominating the qualified business for designation as an enterprise
project and containing the findings required by the Act, §2303.404;
(C)
a complete description of the conditions in the zone that
constitute pervasive poverty, unemployment, and economic distress for purposes
of the Act, §2303.102, including:
(i)
the tabular summary from the appropriate enterprise zone
application, or most recent enterprise zone amendment application, that demonstrates
the project is located in an enterprise project eligible enterprise zone.
Enterprise zones that were not enterprise project eligible enterprise zones
at the time of designation must provide appropriate supporting data showing
they are now an enterprise project eligible enterprise zone; and
(ii)
a city street map which clearly identifies the enterprise
zone area and the location of the proposed project; and
(iii)
a copy, or an excerpt from a copy of the census map from
the enterprise zone application submitted to nominate the area for zone designation,
which clearly identifies the location of the proposed project and the census
area where it is located;
(D)
a description of each municipality's or county's procedures
and efforts to facilitate and encourage participation by and negotiation between
all affected entities in the zone in which the qualified business is located
including:
(i)
any agreements made since the designation of the zone between
affected entities;
(ii)
minutes of meetings or other written documents that outline
the means of establishing cooperation and communication between any affected
entities in the zone where the project will be located; if regular meetings
are scheduled, state when the meeting will occur;
(iii)
a description of the business activity that has occurred
within the last year of designation of the zone or within the last year prior
to designation of the zone, if the zone has been designated for less than
one year. This description must demonstrate the cooperation among the public
and private sectors and information on the number of jobs created and retained
and capital investment made as a result of the business activity;
(E)
a description of the local effort made by the municipality
or county, the administrative authority, if any, and other affected entities
to achieve development and revitalization of the zone as described in the
Act, §2303.405(c). This includes a brief historical description of the
trade and business conducted in the zone and a brief historical description
of the qualified business' activities in other locations with respect to its
location in the zone.
(3)
The project. The application must contain the following
information and documentation concerning the proposed project:
(A)
a description and introduction of the business applying
for the project designation, which includes:
(i)
a copy of the articles of incorporation filed with the
Secretary of State of the State of Texas or the dba statement under which
the business operates. The name under which the business is applying for designation
must be the same as the business paying state taxes and creating and/or retaining
jobs to obtain program benefits;
(ii)
the principal owners and history of the business;
(iii)
a corporate resolution that provides signatory authority
to a person or persons to sign any contracts or forms on behalf of the business
for the enterprise project application;
(iv)
the number of business locations, total sales, and number
of employees in the State of Texas, the United States, and outside the United
States; and
(v)
a description of the business' products and services;
(B)
the plans of the business for expansion, revitalization,
and other activity in the zone for the five-year designation period of the
project including:
(i)
a description of the project location and intended use;
(ii)
a summary of short and long-term plans for expansion in
the zone;
(iii)
the amount of capital investment to be made in the zone
and the source of funding for the investment;
(iv)
the status of any required local, state, or federal permits
or licenses that must be obtained to enable the project to be initiated and
completed as represented in the enterprise project application;
(v)
a tabular summary of the classification titles and salary
ranges of full-time, part-time, and seasonal jobs to be maintained, new jobs
to be created, and jobs to be retained, if applying for retained job benefits;
and
(vi)
the total projected annual payroll for the jobs that are
being considered for benefit;
(C)
commitments from the business that include:
(i)
a completed form, to be provided by the department, certifying
the business as a qualified business;
(ii)
a statement that the business is located entirely in the
enterprise zone and that it will maintain separate payroll and tax records
of the business activity conducted in the zone;
(iii)
the percentage of new or additional employees hired to
occupy the jobs being claimed for benefit that are residents of any zone within
the governing body's or bodies' jurisdiction or that are economically disadvantaged;
and
(iv)
a description of the efforts of the business to develop
and revitalize the enterprise zone as described in the Act, §2303.405(e).
(b)
A designated enterprise project may apply to the department
for a name change. To receive department approval for a name change, the project
must submit through the applicant governing body or bodies:
(1)
a written explanation by the designee of the reasons for
the name change, the date the name change occurred, and any changes to the
commitments made by the business in the original enterprise project application,
if applicable; and
(2)
if applicable, a copy of the certificate of amendment to
the articles of incorporation and the amended articles of incorporation filed
with the secretary of state of the State of Texas or the dba statement under
which the business operates; and
(3)
written acknowledgment from the applicant governing body
or bodies that it is aware of the name change for the project as a qualified
business operating in an enterprise zone within its jurisdiction.
(c)
Only during the time of its active designation may a lessee
or purchaser of a qualified business, which has been designated as an enterprise
project, apply to the department to assume the enterprise project designation
of the qualified business leased or purchased. The request must be made through
the appropriate enterprise zone governing body or bodies, which must take
official action, in the form of a resolution, approving of the assumption
of the enterprise project designation by the lessee or purchaser. The resolution
should be submitted along with the following information to the department:
(1)
a written commitment from the qualified business that is
the designated project to the governing body or bodies of the enterprise zone
where the project is located and to the department to release all claim to
the project designation and any benefits represented thereunder and agreeing
to the assumption of the designation as of a specific date by the lessee or
purchaser seeking to assume the designation; and
(2)
a written certification from the lessee or purchaser on
a form to be provided by the department that the lessee or purchaser will
be a qualified business under the Act, §2303.402; and
(3)
a letter of commitment from the lessee or purchaser addressed
to the enterprise zone governing body or bodies and to the department like
the letter of commitment filed in the original application for project designation
by the initial qualified business. The letter should outline any modifications
proposed by the lessee or purchaser to the original commitments made by the
qualified business holding the project designation, including capital investment
and jobs to be created, or retained, as applicable, and a statement as to
why the assumption is essential to their operations in the enterprise zone;
and
(4)
a copy of the lessee's or purchasers' articles of incorporation
filed with the Secretary of State of the State of Texas or the dba statement
under which the business operates and financial statements to satisfy concerns
about the ability of the lessee or purchaser to fulfill its commitments.
(d)
Only during the time of its active designation may a designated
enterprise project apply to the department for an adjustment to the total
number of jobs allocated in their original application, in accordance with
the Act, §2303.407 (regarding Allocation of Jobs Eligible for Tax Refund).
The enterprise project may not make more than one adjustment to the job allocation
during the five year designation of the project. The adjustment of a project
designation does not extend the original designation period. To receive department
approval for an adjustment to the job allocation, the project must submit
through the applicant governing body or bodies:
(1)
a written request from the applicant governing body or
bodies to adjust the total number of jobs originally allocated to the enterprise
project operating in an enterprise zone within its jurisdiction;
(2)
a written explanation by the designee of the reasons for
the adjustment and any changes to the commitments made by the business in
the original enterprise project application, if applicable;
(3)
on a form provided by the Department, the designee must
provide a breakdown of the types of new jobs by classification or title and
the salary range or hourly-rate for each position for which benefit is sought
(Note: State sales and use tax paid on qualifying items and adjusted jobs
created within 90 working days prior to the date of application may be considered
for refund); and
(4)
designee must submit documentation that original commitments,
i.e., the projected number of jobs and investment have been met or will be
met as specified in their original application.
§176.7.Certification of Neighborhood Enterprise Associations.
(a)
Individuals residing in an enterprise zone may establish,
under the Act, §2303.301, a neighborhood enterprise association. Following
organization of the association, its board of directors must apply to the
governing body or the department for certification as a neighborhood enterprise
association.
(b)
The application for certification of a neighborhood enterprise
association must include the following:
(1)
a certified statement signed by the chief executive officer
of the association which contains the following:
(A)
that the proposed association is the only one for the geographic
neighborhood area being represented;
(B)
that the association membership is composed of residents
of the enterprise zone;
(C)
that the association is a nonprofit corporation organized
under the Texas Non-Profit Corporation Act;
(D)
that the association is eligible for federal tax exemption
status under the Internal Revenue Code of 1986, §501(c);
(E)
that the incorporators have published in a newspaper of
general circulation in the municipality or county an explanation of the proposed
new association and their rights in it and that a copy of the association's
articles of incorporation and bylaws are available for public inspection at
the office of the city manager or comparable municipal officer or at the county
judge's office, as applicable;
(2)
a map showing that the geographic neighborhood area has
a continuous boundary, exclusive of lakes and waterways;
(3)
a listing of the officers, including the chief executive
officer, the board of directors, including the street address, mailing address,
and telephone number of each;
(4)
a certified copy of the articles of incorporation and the
bylaws of the association;
(5)
a certified copy of the governing body's resolution granting
certification as a neighborhood enterprise association; and
(6)
in the event that the application is to the department
for certification of an association, documentation that shows how an association
has made diligent effort, before applying to the department, to obtain certification
from the applicable governing body or bodies and why certification was not
obtained from the applicable governing body or bodies.
§176.8.Approval Standards.
(a)
Final approval standards for designation of enterprise
zones. Within 10 business days of final approval of the designation of a zone
by the executive director, the staff shall present the form of the negotiated
agreements to the governing body or bodies of the applicant. Such agreements
must include designation of the zone and the administrative authority, if
any, and its function and duties and any other information required under
the Act and this chapter. The department shall complete the negotiations and
sign the agreements in accordance with the Act, §2303.107.
(b)
Approval standards for designation of enterprise projects.
The department shall designate qualified businesses as enterprise projects
on a competitive basis. Applications for designation of enterprise projects
will be accepted on a quarterly basis on or before the following application
deadlines:
(1)
The application deadline for receipt of enterprise project
applications by the department is 5:00 p.m., Austin, Texas time, on the first
business day of every third month beginning with September 1995. The department
may designate no more than 85 enterprise projects during any fiscal biennium,
as specified by the Act, §2303.403.
(2)
The department will designate qualified businesses as enterprise
projects under the following conditions:
(A)
The maximum number of qualified businesses that may be
nominated by a governing entity(s) and designated as enterprise projects located
in qualified enterprise zones during any state fiscal biennium is:
(i)
Four, plus two additional bonus projects the department
may award in a municipality or a county or any nominating combination thereof
with a population of less than 250,000.
(ii)
Six, if the governing body of the enterprise zone is the
governing body of a municipality or a county with a population of 250,000
or more.
(iii)
The enterprise project designations will be granted by
the department on a first-come, first-served basis, subject to the limitations
in this section and based upon the availability of enterprise project designations.
Although enterprise project designations will be awarded on a first-come,
first-served basis, applications will be scored for the purpose of determining
if the project meets the minimum threshold score of 30 points, as well as
for awarding bonus enterprise project designations as defined in section (B)
following.
(B)
Each eligible enterprise project application will be scored
against other eligible enterprise project applications approved during a quarterly
deadline, as specified in §176.8 (b) (1) of this chapter. If an enterprise
project application scores within the top quartile (25%) of the other eligible
applications approved in a quarterly deadline, the nominating enterprise zone
authority with a population of less than 250,000 may nominate a qualified
business for a bonus enterprise project designation on any subsequent quarterly
deadline within the state fiscal biennium. Designations will be awarded only
if enterprise project designations are available. The bonus enterprise project
applications will be scored in the same manner as all other enterprise project
applications received on each quarterly deadline. If a bonus project application
scores within the top quartile (25%) of all the bonus and regular applications
received on a quarterly deadline, the nominating enterprise zone authority
with a population of less than 250,000 may nominate an additional bonus enterprise
project for designation on any subsequent quarterly deadline within the same
fiscal biennium. The bonus enterprise project designations may only be located
in an enterprise zone within the governing body's jurisdiction from which
the bonus enterprise project designation was earned, subject to enterprise
project availability. Each application submitted to the department will be
evaluated on the commitments made by the community and qualified business
as specified under the Act, §2303.405. In no case may an enterprise zone
governing body have a combined total of more than six enterprise project designations,
including regular and bonus designations, during the state fiscal biennium.
(C)
In the event the number of enterprise project applications
submitted during a quarterly round exceeds the number of remaining designations
that may be made during the state fiscal biennium, as specified under §176.8
(b) (1) of this chapter, the applications that score the highest based upon
the evaluation system specified in this chapter will be awarded designations.
(3)
The criteria for evaluating enterprise project applications
will be based on weighting as specified by the Act, §2303.406 (b). The
department will make its decision on a weighted scale in which:
(A)
50% of the evaluation weight will be evenly divided between
the economic distress of:
(i)
the enterprise zone in which a proposed enterprise project
is or will be located; and
(ii)
the area within the enterprise zone where the project
is or will be located. In the event the zone was designated using primary
or secondary distress criteria that are not available on a sub-community or
sub-enterprise zone level, the economic distress of the zone will be evaluated
using the data at the most discrete level available.
(B)
25% of the evaluation depends on the local effort to achieve
development and revitalization of the enterprise zone. This evaluation criteria
is designed to measure the level of local support on the part of the community
or communities nominating the qualified business and the qualified business
applying for enterprise project designation. This includes, but is not limited
to, such factors as set forth in the Act, §2303.405 (c), §2303.405
(d), and §2303.405 (e),§2303.516 (a) (b) ; and
(C)
25% of the evaluation depends on the evaluation criteria
as determined by the department, which will be evenly divided between:
(i)
the amount of capital investment and the number of jobs
to be created or retained by the qualified business, as applicable; and
(ii)
the type and wage level of the jobs to be created and
retained by the qualified business. The wage level of the jobs will be evaluated
on how they compare to the regional average salary of a high wage/high skill
job.
(c)
Period for which designation is in effect.
(1)
An area may be designated as an enterprise zone for a maximum
period of seven years. However, if an area is designated as a federal empowerment
zone or a sub-designation of that iniatitive, the area may be designated for
a longer period not to exceed that permitted by federal law. Any designation
of an area as an enterprise zone, shall remain in effect during the designation
period beginning on the date of the designation and ending on the earliest
of:
(A)
September 1 of the seventh calendar year following the
calendar year in which such date ending the enterprise zone designation occurs,
or in the case of federal enterprise zone designation, the date federal designation
period ends, or
(B)
following a public hearing, the date the department removes
the designation of zone for the following reason:
(i)
the area no longer qualifies for designation as an enterprise
zone as forth in the Act, §2303.102 or this chapter; or
(ii)
the department determines that the governing body has
not complied with commitments made in the ordinance or order nominating the
area as an enterprise zone.
(2)
A qualified business may be designated as an enterprise
project for a maximum period of five years. The designation of a qualified
business as an enterprise project shall remain in effect during the period
beginning on the date of the designation and ending on the earliest of:
(A)
five years after the date the designation is made; or
(B)
the last day that completes the original project designation
period of a qualified business that has assumed the designation of the enterprise
project through a lease or purchase of a designated qualified business for
the purpose of continuing its operations in the applicable enterprise zone
under a name or legal structure other than that of the qualified business
originally receiving the designation and that has met the requirements of
the department to qualify for the assumption, as specified under §176.6
(c) of this title. The assumption of a project designation or a name change
by a qualified business which must be made during the 5-year period, does
not extend the original designation period, which is applicable to the original
and subsequent designee, and which will end on the earliest of the last day
of the original five-year designation; or
(C)
following a public hearing by the governing body or bodies
that nominated the qualified business for enterprise project designation,
the date the department determines that the qualified business is not in compliance
with any requirement for designation as an enterprise project. The governing
body or bodies will be deemed to have held a public hearing if the removal
of the designation of an enterprise project is included as an agenda item
of a regular session in which the governing body or bodies meet to take official
action. The department will act to dedesignate an enterprise project upon
the written request of a governing body or bodies after:
(i)
the governing body or bodies has provided written notice
to the qualified business that has been designated an enterprise project,
30 calendar days in advance of the proposed action, that the governing body
or bodies is initiating proceedings to remove the project designation. The
notice must specify the reason why the governing body or bodies believes the
project is in noncompliance and specify the time, date and location where
the enterprise zone governing body or bodies plans to take official action
to request the department to remove the designation. A copy of the notice
and copies of any written responses to the notice by the qualified business
must be provided to the department;
(ii)
a public hearing is held and a resolution adopted that
requests the department to remove the project designation as of a specific
date. The resolution must specify the conditions that caused the dedesignation
process to be initiated and include a finding that written notice as specified
under this title has been given;
(iii)
following the governing body's or bodies' written request
to the department to dedesignate an enterprise project, the qualified business
may appeal the governing body's or bodies' action to the department's executive
director. Such appeal must be made in writing within thirty days of the governing
body's or bodies' written request to the department for dedesignation. Upon
receipt of such appeal, the executive director shall act upon the appeal within
30 days from the date the appeal is received.
(d)
Approval standards for certification of a qualified business.
Qualified business certification and the certification of new or retained
jobs may be granted by the local governing body or bodies for purposes of
local benefits, if applicable, or the department, for purposes of state benefits,
as applicable, in accordance with the Act. The department shall provide the
assistance the Comptroller requires in administering this section.
(1)
Once certified by the local governing body, a qualified
business must apply to the local governing body for local tax benefits.
(2)
The governing body or bodies must provide written notification
to the department of each commitment made to a qualified business for a one-time
state sales tax refund, authorized under the Tax Code, §151.431, or state
franchise tax refund, under the Tax Code, §171.501. Once certified a
qualified business by the department, the business must apply to the Comptroller
for state sales tax refunds, under the Tax Code, §151.431, or state franchise
tax refunds, under the Tax Code, §171.501, as applicable. The written
notification to the department must include:
(A)
a copy of the request for the incentive sent to the governing
body or bodies by the business;
(B)
an original or a certified copy of the resolution adopted
to nominate the qualified business and setting the nomination period during
which the qualified business will create or retain the required jobs to receive
the intended benefit; and
(C)
a letter to the department from the governing body or bodies
to the department forwarding the resolution and officially nominating the
business.
(3)
A business that is an enterprise project that is certified
a qualified business must also apply to the Comptroller for state sales tax
refunds, under §151.429, Tax Code or state franchise tax reductions,
under §171.1015, Tax Code, as applicable.
(4)
Refunds of state sales or use taxes provided to an enterprise
project under the Tax Code, §151.429, are conditioned on the enterprise
project maintaining at least the same level of employment of qualified employees
as existed on the date it was certified as eligible for a refund for a period
of three years from that date. The department shall annually certify to the
Comptroller and the Legislative Budget Board whether that level of employment
of qualified employees has been maintained. In the event that the department
certifies that such a level has not been maintained, the Comptroller shall
assess that portion of the refund attributable to any such decrease in employment,
including penalty and interest from the date of refund.
(5)
A state-designated project may request certification of
its jobs created or retained, as specified in §176.2 (b) (6) of this
title, by the department on an annual or semi annual basis during the applicable
five year designation period within the limits of the number of jobs allocated
at the time of its project designation in accordance with the Act, §2303.407.
An enterprise project designated after August 31, 1995 may not receive a tax
refund under the Tax Code, §151.429, or a tax reduction under the Tax
Code, §171.1015, before September 1, 1997.
(6)
Only qualified businesses that have been certified by the
department to the Comptroller and the Legislative Budget Board are eligible
for a franchise tax reduction under the Tax Code, §171.1015.
(f)
Approval standards for certification of a builder as a
qualified business.
(1)
A builder must complete the enterprise project application
form and other information as stipulated in this subsection to be eligible
to be designated an enterprise project. A builder that meets the criteria
in this chapter is eligible for the benefits allowed a qualified business
under the Act. To be eligible to apply for enterprise project designation,
the builder or consortium of builders that is certified as a qualified business
must have permanent offices located in Texas. In addition to the information
required of a business applying for enterprise project designation under §176.6
of this chapter, the applicant must provide:
(A)
the name of the builder, name of company under which building
occurs, principle business location, address of office serving the enterprise
zone construction activity, telephone numbers, including the telecommunication
devices for the deaf (TDD) number, if available, and facsimile numbers if
applicable;
(B)
five written references from satisfied homeowners for whom
properties were constructed by the builder in the three years preceding the
date of the application;
(C)
current bank references and bank references for the past
three years;
(D)
financial evidence including two years of tax returns or
other satisfactory evidence to substantiate financial viability as a builder;
and
(E)
documentation that supports participation in a 10-year
insured warranty program.
(2)
A builder proposing a housing project in an enterprise
zone, must provide a complete description of the new residential housing to
be constructed, including a statement concerning whether the housing constitutes
affordable housing under the governing body's or bodies' criteria, preliminary
building plans, the location(s) of planned construction, number of units to
be constructed, estimated sales price of homes, statement of affirmative action
participation in employment practices, a statement regarding the coordinated
use of other federal, state, or local funds, and other enhancements to the
project. The applicant builder(s) must meet all requirements other than physical
headquarters location in the zone and hiring requirements required of other
enterprise projects.
(g)
Approval standards for certification of neighborhood enterprise
associations.
(1)
Such standards will be determined and final certification
may be granted by local governing body or bodies or the department as applicable
in accordance with the Act, §2303.302.
(A)
The governing body or bodies or the department may not
grant its approval unless the association has hired or appointed a chief executive
officer.
(B)
The department may not grant state certification to a neighborhood
enterprise association, unless that association has first made a diligent
effort to obtain certification from the applicable enterprise zone governing
body or bodies and the association provides documentation to the department
of that effort to obtain local certification and the reasons the association
was unable to obtain certification from the applicable governing body or bodies.
(2)
The neighborhood enterprise association may implement projects,
other than those enumerated in the Act, by submitting an application to the
governing body or the state for approval of the specific project or activity.
Applications submitted for approval to the governing body or the state must
describe the nature and benefit of the project, including:
(A)
how it will contribute to the self-help efforts of the
residents of the area involved;
(B)
how it will involve the residents of the area in project
planning and implementation;
(C)
whether there are sufficient resources to complete the
project and whether the association will be fiscally responsible for the project;
and
(D)
how it will enhance the enterprise zone in one of the following
ways:
(i)
by creating permanent jobs;
(ii)
by physically improving the housing stock;
(iii)
by stimulating neighborhood business activity; or
(iv)
by preventing crime.
(3)
An existing responsible unit of government may contract
with a neighborhood enterprise association to provide services in an amount
corresponding to the amount of money saved by the unit of government through
this method of providing a service.
(h)
If the governing body or bodies does not specifically disapprove
of a project proposed by the association before the 45th day after the day
of the receipt of the application, it shall be considered approved. If the
governing body or bodies disapproves of the application, it shall specify
its reasons for this decision and allow 60 days for the applicant to make
amendments.
(i)
The association may enter into contracts and participate
in joint ventures with the state or a state agency or institution. The association
may receive money without approval of the governing body or bodies.
§176.9.Reporting Requirements.
(a)
Annual reports.
(1)
Each municipality, county, or combination of municipalities
and/or counties that authorized the creation of an enterprise zone shall submit
an annual report to the department on or before October 1 of each year. The
report must be in a form prescribed by the department and contain the information
listed in the Act, §2303.205 (c). The information in the report will
be used by the department to compile an annual report to the governor, legislature,
and the Legislative Budget Board by December 15 as required by the Act. If
such report is not received by the deadline, the department may, following
a public hearing, consider termination of the designation of the enterprise
zone.
(2)
Each state agency shall annually review the rules it administers
that may negatively impact the rehabilitation, renovation, restoration, improvement,
or new construction of housing or the economic viability and profitability
of business and commerce in enterprise zones, or that may otherwise affect
the implementation of the Act, and shall report the results of each review
to the department no later than October 1 of each year. The department shall
disseminate the results to enterprise zone governing bodies and others as
necessary to advance the purposes of the Act.
(b)
Other reports or documents.
(1)
The applicant shall furnish additional information, reports,
or statements as the department may from time to time request in connection
with the Act and this chapter.
(2)
No later than September 1 of each year, a neighborhood
enterprise association shall furnish an annual statement to the applicable
governing body or bodies on the programmatic and financial status of any approved
project and an audited financial statement of the project. The governing body
or bodies shall include information about all reports filed by the neighborhood
enterprise association in its annual report on the applicable enterprise zone
due the department by each October 1 during the zone designation period.
§176.10.Boundary Amendments.
(a)
If an enterprise zone has been lawfully designated, the
original nominating governing body or bodies, by ordinance or order adopted
following a public hearing, may apply to the department to amend the original
boundaries subject to the following limitations.
(1)
The boundaries as amended must not exceed the size limitations
and boundary requirements set by the Act and may not exclude any part of the
zone within the boundaries as originally designated.
(2)
The enterprise zone, including any added land area, must
continue to meet all unemployment or other economic distress criteria for
enterprise zone designation throughout the zone as required by the Act and
this chapter.
(3)
The governing body or bodies may not make more than one
boundary amendment during each calendar year of the enterprise zone designation
agreement.
(b)
The governing body or bodies must provide certifications
and evidence of public hearing and notices with respect to the boundary changes
in the same form as required to make application for enterprise zone designation.
As a result of a public hearing or other reasonable considerations necessary
to meeting zone qualifications, zone boundaries proposed in the public hearing
may be amended to delete land area before zone designation is approved. If
the hearing is for a zone boundary amendment, no land previously designated
as part of the enterprise zone may be deleted. Area may not be added to a
proposed enterprise zone unless a public notice is posted and a public hearing
is held pursuant to §176.3(f) of this title (relating to Eligibility
Requirements for Designation of an Enterprise Zone).
This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of
the Secretary of State on April 22, 2002.
TRD-200202465
Tracye McDaniel
Deputy Executive Director
Texas Department of Economic Development
Earliest possible date of adoption: June 2, 2002
For further information, please call: (512) 936-0177