Incentives

What is the process businesses can expect when entering into an SEDC agreement?

• The first thing to know is that the SEDC serves as the primary point of contact for incentives, regardless of whether they come from the state, county, or local level. Providing a single point of contact streamlines the incentive process and makes it easier for companies to interact with multiple government entities.
• As for the process:
  • We first meet with the company/developer to create minimum Key Performance Criteria. These include number of jobs, annual payroll, and taxable value and capital investment of the project.
  • Using this information, the staff runs an economic model to determine a proposed incentive offer based on community benefit and shares this proposed offer with the company.
  • Negotiation usually occurs at this point, with the company reviewing the offer and the SEDC determining if any changes are advisable.
  • The proposed offer is taken to the SEDC board, the Schertz City Council, and the County (as applicable). The City's legal team is involved throughout this process.
  • After the negotiation period ends, the proposed offer is formalized through what's known as a Performance Agreement and taken to the SEDC board, City Council, and County (when applicable) for final approval.

What else is helpful to know?

• Regardless of whether an incentive is offered or not, the Schertz development team wants to help your project move forward quickly and efficiently. The SEDC is part of a citywide development team, which includes members of the City's Planning, Permitting, Engineering, Public Works, and Fire departments. Let us help you get the data you need, from infrastructure capacity to fee estimates, so you fully understand the impact of your development. Reach out to the SEDC for more information.
• We also work with many companies that operate in Schertz that aren't using SEDC incentives. We offer a variety of assistance from free reports helping businesses understand the region to working on their behalf to solve local community challenges through our business retention program.

Texas Enterprise Fund

Texas is known for going big, a characteristic that carries over into the Texas Enterprise Fund, the original 'deal closing' fund. The Texas Enterprise Fund is a cash grant used as a financial incentive tool for projects that (a) offer significant projected job creation and capital investment and (b) are actively considering another state.

Eligibility

Several check boxes must be checked before a business is eligible to receive a Texas Enterprise Fund grant.

• Local Involvement - Companies must first qualify for a local incentive.
• Application - Companies must submit an application; the SEDC can assist with the application process.
• Competition - grants are reserved for those projects where a single Texas site is in competition with a site in another state.
• Job Creation and Capital Investment - significant job creation and capital investment matters (75+ jobs and $33.8M are good benchmarks based on past recipients)
• High-Paying Jobs - jobs by themselves are not enough. The company's wages must surpass the average wage of the county where the project is located - in Schertz this means in either Comal, Guadalupe, or Bexar counties.
• Rate of Return - projects must demonstrate a significant rate of return on public dollars.

Texas Jobs, Energy, Technology and Innovation (JETI)

House Bill 5 of the 88th Legislature, Regular Session created the Texas Jobs, Energy, Technology and Innovation (JETI) Act. The JETI Act is a new competitive economic incentive program used to attract large, capital-intensive economic development projects, bringing new capital investment and creating new, high-paying jobs in Texas communities.

Who Can Apply?

Companies planning a new project within the following categories are eligible to apply for the program: manufacturing facilities; dispatchable electric generation facilities; natural resource development facilities; research, development or manufacturing facilities for high-tech infrastructure equipment or technology; and the construction or expansion of critical infrastructure. Renewable energy projects or energy storage facilities are not eligible.

Type of Incentive

The JETI Act allows a company, school district and Governor’s Office to enter into an agreement for a 10-year school district maintenance and operations (M&O) tax appraised value limitation of 50%, based on qualifying job and capital investment minimums. Projects located in qualified Opportunity Zones are eligible for an additional 25% limitation on taxable value.

Skills Development Fund

A well-trained workforce is key for all companies, but keeping up with evolving on-the-job skills can be challenging. The Skills Development Fund, overseen by the Texas Workforce Commission (TWC), aims to address this concern. The Skills Development Fund provides state-funded skills grants focused on customized employee training.

The Skills Development Fund works thanks to a collaboration between several partners: the employer, a college partner, who provides the training; the TWC, who provides the funding, and the SEDC, who assists with filling out the application.

Freeport Tax Exemption

A Freeport Tax Exemption allows schools, cities, and counties to exempt business inventory from taxes if goods are shipped out of state within 175 days. In Schertz, all three of these entities have enacted the exemption, which grants it a Triple Freeport designation. This allows complete Freeport Tax Exemption on all eligible inventories.

Qualifications

According to the Texas Comptroller, a freeport exemption applies to goods, wares, ores, and merchandise and to aircraft or repair parts used by a certificated air carrier. The goods must be in Texas for assembly, storage, manufacturing, repair, maintenance, processing, or fabrication. Eligible goods must be transported out of Texas within 175 days of when they were acquired, manufactured, or brought into Texas.

Example:

• Day 1 your inventory is acquired or arrives in Texas
• Days 2 through 174 - Inventory is manufactured, stored, assembled, or serviced
• 175th Day - All the inventory is moved out of Texas
• Goodbye, Inventory Tax!

Application Process

An annual application must be submitted with the appropriate appraisal district (Guadalupe or Comal) between January 1 and April 30. Other documents that will need to be submitted include sales reports, inventory reports, and financial statements. Each appraisal district has its own form and may require other financial information or have different methods of calculating the exemption percentage.

Benefit

When benefiting from a Freeport Exemption, your savings will be based on the % of tangible property goods that your business moved out of Texas within the 175-day window during the previous year. For example, a company that has an inventory value of $6,000,000 and shipped 70% of its inventory outside of Texas in the previous year would receive an exemption of $4,200,000 from each jurisdiction that grants the Freeport Exemption, leaving taxable inventory at $1,800,000.

View more information on Freeport Exemptions and application forms.

If you are interested in having a more in-depth conversation about which incentives are available for your business, contact our office at (210) 619-1070.