Tax Increment Financing Act, Tax Code Chapter 311 Overview

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1 Texas Development Incentives Used by Local Governments Source: Texas Ahead, Texas Comptroller of Public Accounts Detailed Information about Texas Incentives: Economic Development Handbook 2013 PDF 250 pages Texas Attorney General Chapter 380/381 Economic Development Agreements Municipality Agreements Chapter 380 of the Local Government Code authorizes municipalities to offer incentives designed to promote economic development such as commercial and retail projects. Specifically, it provides for offering loans and grants of city funds or services at little or no cost to promote state and local economic development and to stimulate business and commercial activity. In order to provide a grant or loan, a city must establish a program to implement the incentives. Before proceeding, cities must review their city charters or local policies that may restrict a city's ability provide a load or grant. County Agreements Chapter 381 of the Local Government Code allows counties to provide incentives encouraging developers to build in their jurisdictions. A county may administer and develop a program to make loans and grants of public money to promote state or local economic development and to stimulate, encourage, and develop business location and commercial activity in the county. Tax Increment Financing Act, Tax Code Chapter 311 Overview Tax increment financing is a tool that local governments can use to publicly finance needed improvements to infrastructure and buildings within a designated area known as a reinvestment zone. The cost of improvements to the reinvestment zone is repaid by the future tax revenues of each taxing unit that levies taxes against the property. Each taxing unit can choose to dedicate all, a portion of, or none of the tax revenue gained as a result of improvements within the reinvestment zone.

2 Property Tax Abatement Act, Tax Code Chapter 312 Overview A tax abatement is a local agreement between a taxpayer and a taxing unit that exempts all or part of the increase in the value of the real property and/or tangible personal property from taxation for a period not to exceed 10 years. Tax abatements are an economic development tool available to cities, counties and special districts to attract new industries and to encourage the retention and development of existing businesses through property tax exemptions or reductions. School districts may not enter into abatement agreements.

3 When the Rio Grande Valley Premium Outlets opened in Mercedes in November 2006, it was the culmination of 10 years of discussions and plans between city economic development officials and retail developers. Ultimately, New Jersey based Chelsea Property Group, a division of Simon Property Group and owner of the Premium Outlet Centers, built a $60 million, 400,000 square foot property along U.S. Highway 83. This has been a much awaited project for our community, the Rio Grande Valley and northern Mexico, Mercedes Mayor Joel Quintanilla told dignitaries and shoppers at the ribbon cutting. Three months after the opening, Mercedes saw sales tax receipts of $350,000 from the center, says Albert Gonzalez, executive director of the Mercedes Economic Development Corp. The outlets, which boast stores such as Calvin Klein and Tommy Hilfiger, in part sparked a tourism boost that will bring an estimated 7 million tourists to the town of 13,000 this year, Gonzalez says. The shops have had a ripple effect on other parts of town. All of our existing facilities that we had in the downtown area have filled up much faster, Gonzalez says. We ve seen more business activity down there. Obviously it s a complement to what s going on in the expressway, where the outlets are located.

4 Mercedes Drives Sales Merc Mercedes officials recognized that outlet centers can mean more than new jobs and shopping they can put a city on the map, says Michele Rothstein, senior vice president of marketing for Chelsea Property Group. Most convention and visitors bureaus today recognize the importance of shopping as being a bona fide destination and an enhancement to their offerings, she says. Visitors from all over the world love to shop. Up I 35, Hillsboro draws tourists to its Outlets at Hillsboro. Everyone associates Hillsboro with the outlet mall, says Robert Watts, director of the Hillsboro Chamber of Commerce. The shops have spurred growth along I 35, Watts says. Several restaurants and a Hampton Inn have opened. With 230 outlet stores that bring in an estimated 7 million visitors a year, San Marcos knows the power of outlets. The outlets have definitely put us on the map tourism wise, says Rebecca Ramirez, director of the San Marcos Convention and Visitor Bureau. The city s Tanger and Prime outlet centers are one of the state s most visited tourist destinations, according to the Governor s Office. The outlets generate between 35 and 40 percent of San Marcos sales tax revenue, Ramirez says. Upscale Shopping Ten miles from the Mexican border, Mercedes Rio Grande Valley Premium Outlets offer an upscale shopping destination for Mexican nationals, area visitors and local residents. It s bringing really nice tax dollars into Texas, says Linda Humphers, editor in chief of Value Retail News. Everybody in the outlet world is excited about Texas. You ve got the right weather for shopping year round, and it s got great demographics for people who like outlet shopping. For in depth information on retail sales in Texas, visit the Texas Comptroller of Public Accounts Economic Indicators.

5 Local Government Tools that Made the Difference for Mercedes When it comes to landing an outlet center, it s all about services, says Albert Gonzalez, executive director of the Mercedes Economic Development Corp. (EDC). The city tripled the personnel in its planning, zoning and police departments since the outlets opened in Mercedes leaders offered the following incentives as part of their package to land the Rio Grande Valley Premium Outlets: $1.5 million in infrastructure, including running water and sewer to the site and building a lift station; and a 50 percent sales tax rebate to developers for 10 years For more information, contact the Mercedes EDC at (956) The Comptroller s office provides information on the Section 4A and Section 4B economic development sales tax, which can provide funds for infrastructure improvements. For more information, contact the Comptroller s Local Government Assistance and Economic Development Division at (800) 531-