Vernon, Texas

LOCAL INCENTIVES

Local Incentives for Qualified Businesses

On a case by case basis, give consideration to providing abatement of Ad Valorem taxes up to 100% on real

property and eligible personal property improvements

to qualified businesses for a period of up to 10 years

as authorized under Section 11.24 and Chapter 312

of the Tax Code.

On a case by case basis, give consideration to an accelerated permit process to qualified businesses

and/or accelerated service extension and analysis.

Technical assistance in the preparation and the submission of grant and loan applications to qualified businesses.

Assistance in the application for job training for new, permanent jobs through the Texas Workforce

Commission, Skills Development Fund and/or other available

programs to qualified businesses.

On a case by case basis, give consideration of additional benefits to qualified businesses.

STATE INCENTIVES

The State of Texas, Office of the Governor Economic Development and Tourism (EDT) maintains a pro-business attitude with limited state controls and taxes on business

activities. EDT's mission is to market Texas and to assist communities maximize economic development opportunities in a global economy. EDT partners with

communities to further their economic development efforts. It is EDT's role to

market Texas to compete both nationally and internationally, includes marketing

the state's business climate, strategic location, workforce and natural cultural

resources, offering economic development incentives and information to enhance

community's ability to compete, diversify and prosper.

Primary duties include:

Marketing the state as a tourist and business travel destination

Marketing the business climate in the state

Facilitating the location, expansion and retention of business investment in the state

Providing business and communities with research and data services

Providing information and referrals for business and community economic development

Marketing and administering economic development programs and services

TEXAS BUSINESS INCENTIVES

Program

Benefits

Texas Enterprise Zone Program

The purpose of the Texas Enterprise Zone Program is to encourage job creation and capital investment in

areas of economic distress. The program provides

communities with an economic development tool to offer

state and local incentives and program priority to new or

expanding business in these designated areas.

The Office of the Governor Economic Development and Tourism (EDT) administers and coordinates local, state

and federal efforts.

EDT provides community and business assistance, approves

applications and evaluates and reports the program's effectiveness to the Legislature.

Encouraging job creation and capital investment by providing tax incentives to businesses in economically distressed areas

http://www.txed.state.tx.us/TexasEnterpriseZone/

Texas Capital Funds

Texas Capital Funds are administered by the Texas Department of Agriculture with funding from the U.S.

Department of Housing and Urban Development.

Capital Funds are used to encourage business

development, retention and expansion by providing funds to

communities to work with specific businesses.Funds are also

awarded to assist in the creation of new permanent jobs or

retention of existing permanent jobs, primarily for low- and

moderate-income persons. Funds are available ranging from

$50,000 to $750,000. These funds may not exceed 50% of

total project cost.

http://www.txed.state.tx.us

Infrastructure Development

The Texas Capital Fund Infrastructure Development Program is an economic development tool designed to provide

Program

financial resources to non-entitlement communities.

Funds from this program can be utilized for public

infrastructure needed to assist a business which commits to

create and/or retain permanent jobs, primarily for low and

moderate income persons. This program encourages new

business development and expansions.

Real Estate Development

The Texas Capital Fund Real Estate Development Program is an economic development tool designed to provide

Program

financial resources to non-entitlement communities.

Funds must be used for real estate development to

assist a business that commits to create and/or retain

permanent jobs, primarily for low and moderate-income

persons. This program encourages new business

development and expansions.

Main Street Improvements

The Texas Capital Fund Main Street Improvements Program is designed to foster and stimulate the development of

Program

small businesses by providing financial assistance to

non-entitlement cities (designated by the Texas Historical

Commission as a Main Street City) for public improvements.

This program encourages the elimination of slum or blighted areas.

Texas Linked Deposit Program

The State of Texas Linked Deposit Program was established to encourage lending to historically underutilized businesses,

non-profit corporations, and/or small businesses located in

an Enterprise Zone by providing lenders and borrowers a

lower cost of Capital.

http://www.txed.state.tx.us/TexasLinkedDeposit/

Texas Leverage Fund (TLF)

The Texas Leverage Fund is an "economic development bank"

offering an added source of financing to communities that have

passed the economic development sales tax.

EDT's Role: Office of the Governor Economic Development and

Tourism may loan funds directly to a local Industrial Development

Corporation (IDC) to finance eligible projects. Sales tax revenues pledged by the Industrial Development Corporation

need only be specified in the Texas Leverage Fund Program

Guidelines. This allows cities to leverage their economic development sales tax and to pursue additional projects.

Loans to cities that have the economic development sales tax

http://www.txed.state.tx.us/TexasLeverageFund/

Texas Industrial Revenue

The State of Texas Industrial Revenue Bond Program is designed

Bond Program

to provide tax-exempt financing to finance land and depreciable

property for eligible industrial or manufacturing projects. The

Development Corporation Act allows cities, counties,

conservation and reclamation districts to form non-profit industrial

development corporations or authorities on their behalf. The

purpose is to issue taxable and tax-exempt bonds for eligible

projects in their jurisdictions.

The industrial development corporation acts as a conduit through

which all monies are channeled. Generally, all debt services on

the bonds are paid by the business under the terms of a lease,

sale, or loan agreement. As such, it does not constitute a debt

or obligation of the governmental unit, the industrial development

corporation, or the State of Texas. Tax-exempt financing to

businesses for land and depreciable property.

http://www.txed.state.tx.us/TexasIRBProgram/

Texas Capital Access Fund

The Texas Capital Access Fund was established to increase the

availability of financing for business and nonprofit organizations

that face barriers in accessing capital. Through the use of the

Capital Access Fund, businesses that might otherwise fall

outside the guidelines of conventional lending may still have the

opportunity to receive financing. The essential element of the

program is a reserve account established at the lending institution

to act as a credit enhancement, inducing the financial institution

to make a loan.

Loan program for businesses with fewer that 500 employees

http://www.txed.state.tx.us/TexasCapitalAccess/

Skills Development Fund

Funding for customized job training through community and

technical colleges (Texas Workforce Commission)

http://www.twc.state.tx.us/

Defense Economic

State sales tax refunds of up to $2,500 for each job created up

Readjustment Zone Program

to 500 jobs per year. And franchise tax reductions for businesses

in designated defense readjustment zones.

Tax incentives for businesses located in adversely impacted

defense-depended communities

http://www.txed.state.us/defense/

State Sales and Use Tax

The state levies a sales and use tax of 6.25% on sales of

Exemption

tangible personal property and certain services. Cities, counties,

and transit authorities any add to the sales tax rate up to a

maximum combined state and local rate of 8.25%.

Texas grants sales and use tax exemptions on machinery and

equipment utilized in the manufacturing process. Purchases

of machinery and 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. Natural gas

and electricity are exempt from sales taxes when sold to

commercial businesses that are "predominantly" manufacturing.

Ad Valorem/Property

Texas has no state property tax. Local governments and

Tax Exemption

special taxing district levy taxes on real and tangible personal

property. All property is appraised at full market value, and

taxes are assessed by local county assessors on 100% of

appraised value. The total tax rate is the sum of the rates of all

applicable taxing units including cities, counties, schools, and

special district. Local governments can enter into agreements

with businesses to abate local ad Valorem taxes on real and

personal property for up to 5 years.

Freeport Exemption

A community may choose to offer Freeport exemption for

various types of goods that are detained in the state for 175

days or less for the purpose of assembly, storage, manufacturing,

processing or fabricating.

Texas Strategic Military

The 75th Legislature directed Texas Economic Development to

Planning Commission (TSMPC)

establish and maintain an Office of Defense Affairs. During that

session, the Legislature also established the Texas Strategic

Military Planning Commission (TSMPC). Governor George W.

Bush appointed nine citizens of Texas to serve as Commissioners.

In March 2002, Governor Rick Perry appointed eight people to fill

expiring terms on the nine-person TSMPC. The ninth member

carried over from the previous TSMPC. The Commission serves

as an advisory group to the Office of Defense Affairs. The

common themes in the charters of both the TSMPC and the

Office of Defense Affairs are to develop a pro-active statewide

strategy to prevent future defense closures and realignments and

assist defense-dependent communities to prepare for future

base realignments or closures.

Other Tax Credits

Research and development tax credits, investment tax credits in

strategic investment areas, and job creation tax credited in

strategic investment areas benefiting businesses are available

starting January 1, 2000.

Other Funding Opportunities

Information about other opportunities for funding from the State of Texas http://www.txed.state.tx.us

For more information on the State's Economic Development Bank contact (512) 936-0100.