SECTION 176.1. General Provisions

(a) Purpose. It is the purpose of the Texas Enterprise Zone Act to establish a process that clearly identifies distressed areas and provides incentives by both local and state government to induce private investment in those areas by the provision of tax incentives and economic development program benefits for the creation and retention of high quality jobs. Under this program economic development is encouraged by allowing enterprise projects to be designated outside of an enterprise zone, with a higher threshold of hiring economically disadvantaged or enterprise zone residents. The purpose of these sections is to provide standards of eligibility and procedures for designation of applications for qualified businesses as enterprise projects.

(b) 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, Chapter 2303, Texas Government Code, as amended.

(2) Active designation--The period of time from the designation date to the ending date of the project or activity as provided in the nominating ordinance, order or resolution.

(3) Applicant--The municipality or county filing an application with the Bank on behalf of a qualified business for designation of an enterprise project under the Act, §2303.405, and this chapter.

(4) Application date--The first business day of the months of September, December, March and June, if there are designations available.

(5) Approval date--The application date of an enterprise project as approved by the Bank.

(6) Capital investment--Money paid to purchase capital assets to be used in the regular conduct of the business or activity at the qualified business site, or fixed assets including but not limited to land, buildings, labor used to construct or renovate a capital asset, furniture, manufacturing machinery, computers and software, or other machinery and equipment. Expenditures for routine and planned maintenance required to maintain regular business operations are only considered qualified capital investment if there will be a measurable increase in production capacity or if the expenditures will result in increased productivity which may be expressed as a decrease in the overall cost per unit produced, and are limited to 40 percent of the total capital investment spent at the qualified business site. Property that is leased under a capitalized lease is considered a qualified capital investment but property that is leased under an operating lease is not considered a qualified capital investment.

(7) Claim period--A twelve-month period, during the active designation period, for which hours are accumulated by qualified employees to be claimed for benefit.

(8) Concurrent designation--Two or more enterprise project designations for the same qualified business at the same qualified business site for separate projects or activities, with overlapping designation periods.

(9) Controlled group--A group of businesses as defined in Title 26, Subtitle A, Subchapter B, Part II, Section 1563(a), Internal Revenue Code, or business entities with the same ownership.

(10) Director--The Director of the Texas Economic Development Bank.

(11) Distressed county--A county that has a poverty rate above 15.4 percent based on the most recent decennial census; in which at least 25.4 percent of the adult population does not hold a high school diploma or high school equivalency certificate based on the most recent decennial census; and that has an unemployment rate that has remained above 4.9 percent during the preceding five years, based on Texas Workforce Commission data.

(12) Economic Development and Tourism--Economic Development and Tourism Office in the Governor's Office (Office) as established under Chapter 481, Texas Government Code.

(13) 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 used taxes, and mixed beverage taxes.

(14) Enterprise project--A designation given to a qualified business by the Bank under the Act, §2303.406, and §176.3 of this title (relating to Qualification for Designation of Enterprise Projects) making the qualified business eligible for the state tax incentives provided by law for an enterprise project.

(15) Executive Director--The Executive Director of the Office.

(16) Extraterritorial jurisdiction--Territory in the extraterritorial jurisdiction (ETJ) 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 participating in the program.

(18) Governing body liaison--The person who holds the position set out in the ordinance or order indicating participation in the program, for the municipality or county to communicate and negotiate with the Bank or Office, qualified businesses nominated to be enterprise projects and any other entities affected by the enterprise zone.

(19) Local government--A municipality or county.

(20) Local incentive--Each tax incentive, grant, other financial incentive or benefit, or program to be provided by the governing body to business enterprises through the program.

(21) Ninety-day window--The period 90 days prior to the quarterly application deadline date for which an enterprise project is approved. The period of time in which the project may begin making investment and creating jobs for purposes related to the enterprise project designation.

(22) Nominating body--The governing body of a municipality or county that nominated a project or activity of a qualified business for designation as an enterprise project which is located within the jurisdiction of that governing body.

(23) Primary job--A job to be created or retained for benefit by a designated enterprise project, as defined by the Development Corporation Act of 1979.

(24) Qualified property--Any one or more of the following:

(A) tangible personal property located at the qualified business site that was acquired by a taxpayer not earlier than the 90th day before the date of designation as an enterprise project and was or will be used predominantly by the taxpayer in the active conduct of a trade or business;

(B) real property located at a qualified business site that:

(i) was acquired by the taxpayer not earlier than the 90th day before the date of designation of the enterprise project, 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.

(25) Staff--The staff of the Texas Economic Development Bank.

(26) Undocumented worker--An individual who, at the time of employment, is not:

(A) lawfully admitted for permanent residence to the United States; or

(B) authorized under law to be employed in that manner in the United States.

(c) Amendment and suspension of the 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.

(d) Written communication with the office. Application and other written communication to the office should be addressed to the attention of the Office of the Governor, Economic Development and Tourism, Texas Economic Development Bank, Attn: Texas Enterprise Zone Program, Post Office Box 12428, Austin, Texas 78711-2428, or by overnight mail to Office of the Governor, Economic Development and Tourism, Texas Economic Development Bank, Attn: Texas Enterprise Zone Program, 1100 San Jacinto Street, Austin, Texas 78701, [phone].

(e) Fees. On a regular basis, the bank will review all application fees with regard to the program and make adjustments as needed to further the purposes of the program.

Source Note: The provisions of this §176.1 adopted to be effective May 28, 2006, 31 TexReg 4420; amended to be effective November 10, 2011, 36 TexReg 7545