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Incentives

The Greater San Marcos region fosters a pro-business environment, offering an array of benefits and incentive vehicles at the local and state level: 

  • No Personal State or Local Income Taxes
  • No Corporate State or Local Income Taxes
  • Chapter 380
  • Chapter 381
  • Triple Freeport Exemption
  • Expedited Permiting
  • Texas State Sales Tax Credit for Electricity Used for Manufacturing
  • Texas State Sales Tax Credit for Gas Used for Manufacturing
  • Texas State Sales Tax Credit for Machinery Used for Manufacturing
  • Texas Enterprise Fund
  • Skills Development Fund
  • In-State Tuition Waivers
  • Texas Enterprise Zone
  • Foreign Trade Zone
  • New Market Tax Credit - Eligible Census Tracts.
  • Qualified Opportunity Zones 

The State and local communities offer a variety of tax incentives and innovative solutions for businesses expanding or relocating in Texas.  State and local incentive calculations in Texas are based on job creation, industry sector, expected capital investment and average wages. 

State Incentives

Texas Enterprise Fund

The Texas Enterprise Fund is an incentive that is used to ensure the growth of businesses in the state by attracting new companies and providing assistance to existing businesses with their substantial expansion efforts. The fund can be used for various economic development projects such as infrastructure and community development, job training programs and business incentives. The Governor, Lieutenant Governor and the Speaker of the House must unanimously support fund awards for each project.

Texas Enterprise Zone Program

The Texas Enterprise Zone Program is an economic development tool that allows local communities to partner with the State of Texas to promote job creation and capital investment in economically distressed areas of the state. Designated projects are eligible to apply for refunds of state sales and use tax on qualified expenditures. The level and amount of the refund is related to the amount of capital investment and jobs created or retained at the qualified business site.

Texas Sales Tax Credit for Electricity & Gas Used in Manufacturing

Texas companies are exempt from paying state and local sales and use tax on electricity and gas used in manufacturing, processing, or fabricating tangible personal property. 

Texas Sales Tax Credit for Machiner Used in Manufacturing 

Texas grants sales and use tax emptions 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 use 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. 

Local Incentives

Chapter 380 Agreements 

Under Texas Tax Code Chapter 380, municipalities may provide a grant or loan of city funds or services to promote economic development. A city may provide a Chapter 380 grant in the form of a municipal sales or property tax rebate. 

Chapter 381 Agreements

Under Texas Tax Code Chapter 381, counties may provide a grant or loan of county funds or services to promote economic development. A county may provide a Chapter 381 grant in the form of a county sales or property tax rebate. 

Triple Freeport Exemption 

Local governments and school districts have the option to exempt "goods in transit" or "freeport goods" from ad valorem taxation. Freeport property includes goods, ware, merchandise, ores, and certain aircraft and aircraft parts. The exemption applies to inventory that leaves the state within 175 days. "Triple freeport designation is conferred to jurisdictions for which the city, county, and school district have all approved freeport exemption. All Greater San Marcos jurisdictions are triple freport exempt. 

Expedited Permitting 

Expedited permitting is available from city and county jurisdiction in Greater San Marcos to provide for company needs. 

City of San Marcos Economic Development Fund

The City of San Marcos has established an Economic Development Supplemental Fund to compliment exisiting economic development tools for projects to be located within the City. 

Other Incentives

EB-5 and TEA

EB-5 is a federal Immigrant Investor Program that provides developers with an additional financing option and allows foreign investors to obtain citizenship through U.S. Citizen and Immigration Services by investing in new commercial enterprises within a Targeted Employment Area (TEA). The San Marcos TEA covers approximately 80 percent of the two-county region.

HUB Zones

The statewide Historically Underutilized Business (HUB) Zone Empowerment Contracting Program facilitates the use of HUBs in federal, state, and local procurement to minority and woman- owned businesses.

The program aims to increase employment opportunities, stimulate capital investment in HUB areas, increase employment opportunities, and offer economic leveraging in the community.

Eligible businesses must be registered as a small business by U.S. Small Business Administration (SBA) standards, be owned and controlled by a U.S. citizen, and be located in a HUB zone with at least 35% of its employees also residing in the zone. The Texas State University SBDC can help assist eligible companies register with the SBA.

New Market Tax Credits

A large portion of the Greater San Marcos region qualifies for New Market Tax Credits (NMTC). NMTC investments allow businesses to access more favorable lending terms and conditions than the market typically offers. Terms can include lower interest rates, flexible provisions such as subordinated debt, lower origination fees, higher loan-to-values, lower debt coverage ratios and longer maturities.

To the end borrower, NMTC’s are almost indistinguishable from a conventional loan. Depending on the lender you use they may be able to work the entire loan for you. If your lender doesn’t deal in NMTC’s, GSMP can put you in contact with consultants who work in this field to guide you through the entire process. Your lender or a consultant can put an actual dollar amount to the savings value of using NMTC.

For more information click here.

All incentives, whether at the local or state level, are subject to final approval by the appropriate City leadership (City Manager and City Council) or by the appropriate state entities.

If the City and State deem incentives appropriate for a project, a performance-based agreement outlining the company’s commitment will be required and must be approved by the governing entities.

The City and County will work closely with you to provide the necessary permitting and regulatory support for your operation.

From the Blog:

An Innovative and Transparent Approach to Incentives

The Challenges, Approach, and Results of how Greater San Marcos addresses incentives.