1. (a) Introduction. Pursuant to the authority granted by the Texas Enterprise Zone Act, Texas Government Code, Chapter 2303, as amended, and the Administrative Procedure Act, Chapter 2001, Subchapter B, Rulemaking, Texas Government Code, as amended, the Texas Department of Economic Development prescribes the following sections regarding practice and procedure before the department in the administration and implementation of the Enterprise Zone Program.
2. (b) Purpose. It is the purpose of the Texas Enterprise Zone Act to establish a process that clearly identifies those distressed areas and provides incentives by both state and local government to induce private investment in those areas by means of the removal of unnecessary governmental regulatory barriers to economic growth and the provision of tax incentives and economic development program benefits. The purpose of these sections is to provide standards of eligibility and procedures for applications for designation of qualified areas as enterprise zones and recycling market development zones and for designation of qualified businesses as enterprise projects.

3. (c) 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. (1) Act--The Texas Enterprise Zone Act, Texas Government Code, Chapter 2303, as amended.
   2. (2) Administrative authority--A board, commission, or committee appointed by the governing body to administer the Act within an enterprise zone.
   3. (3) Affected entity--The applicant, qualified business, qualified employee, or any other person that is a party to a transaction involving the designation of an enterprise zone or project.
   4. (4) Applicant--The municipality, county, or combination of municipalities or counties filing an application with the department for designation of an enterprise zone or enterprise project or affected entity filing with the department for certification under the Act, §2303.105 or §2303.405, and this chapter.
   5. (5) Application--An application, including supporting and supplemental instruments and documentation, for designation of an enterprise zone or for designation of an enterprise project or for certification by the department or local governing body as a qualified business or neighborhood enterprise association under the Act and this chapter.
   6. (6) Board--The Governing Board of the Texas Department of Economic Development.
   7. (7) Day--The period of time between 8:00 a.m. and 5:00 p.m. on any day other than a Saturday, Sunday, or state or federal holiday.
   8. (8) Department--The Texas Department of Economic Development.

   9. (9) Depressed area--An area within the jurisdiction of a county or municipality designated by ordinance or order that is an area with pervasive poverty, unemployment, and economic distress. An area is an area of pervasive poverty, unemployment, and economic distress if:

      1. (A) the average rate of unemployment in the area during the most recent 12-month period for which data is available was at least one and one-half times the state average for that period or if the area has had at least a 12% population loss during the most recent six-year period or a population loss of at least 4.0% for the most recent three-year period; and

      2. (B) the area meets one or more of the following criteria:

         1. (i) the area was a low-income poverty area;
         2. (ii) at least 70% of the residents or households of the area have an income below 80% of the median income of the residents or households of the locality or state, whichever is lower;
         3. (iii) chronic abandonment or demolition of commercial or residential structures exists in the area;
         4. (iv) substantial tax arrearages for commercial or residential structures exist in the area;
         5. (v) substantial losses of businesses or jobs have occurred in the area;
         6. (vi) the area is part of a disaster area declared by the state or federal government during the most recent 18-month period; or
         7. (vii) the area has had a substantial increase in the number of individuals younger than 18 years of age arrested due to criminal activity.

   10. (10) Economically disadvantaged individual--An individual who:

       1. (A) for at least three months before obtaining employment with a qualified business was unemployed;
       2. (B) receives public assistance benefits, such as welfare payments and food stamp payments, based on need and intended to alleviate poverty;
       3. (C) is economically disadvantaged as defined by the Job Training Partnership Act, §4 (8) (29 United States Code, §1503 (8));
       4. (D) is an individual with a disability, as defined by 29 United States Code §706 (8);
       5. (E) is an inmate as defined by the Government Code, §498.001; or
       6. (F) is entering the workplace after being confined in a facility operated by the institutional division of the Texas Department of Criminal Justice or under contract with the Texas Department of Criminal Justice; or
       7. (G) has been released by the Texas Youth Commission and is on parole, if state law provides for such a person to be on parole; or
       8. (H) meets the current low income or moderate income limits developed under the United States Housing Act of 1937, §8 (42 United States Code §1437f et seq.).
   11. (11) 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 use taxes, and mixed beverage taxes.
   12. (12) Enterprise project--A qualified business designated by the department as an enterprise project under the Act, §2303.405 and §176.8 of this title (relating to Requirements for Designation of Enterprise Projects) that is eligible for the state tax incentives provided by law for an enterprise project.
   13. (13) Enterprise zone--An area of the state designated by the department as an enterprise zone under the Act, Subchapter C and §176.3 of this title (relating to Eligibility Requirements for Designation of an Enterprise Zone).
   14. (14) Enterprise project eligible enterprise zone--A state-designated enterprise zone that meets economic distress levels set forth in the Act, §2303.102.
   15. (15) Executive director--The executive director of the department or his or her authorized designee.
   16. (16) Extraterritorial jurisdiction--Territory in the extraterritorial jurisdiction of a municipality that is considered to be in the jurisdiction of the municipality, as defined by Chapter 42, Local Government Code.
   17. (17) Governing body--The governing body of a municipality or county that has applied to have an area within its jurisdiction designated as an enterprise zone.
   18. (18) Local Government--A municipality or county.
   19. (19) Neighborhood enterprise association--A private sector neighborhood organization within an enterprise zone that meets the criteria set forth in the Act, §2303.301 and §176.9 of this title (relating to Certification of Neighborhood Enterprise Associations).
   20. (20) New permanent job--A new employment position created by a qualified business that has provided employment to a qualified employee of at least 1,820 hours annually and intended to be an employment position that exists during the period the business is designated as an enterprise project.

   21. (21) Qualified business--A person, including a corporation or other entity that the department, for purposes of state benefits under the Act, and a governing body, for purposes of local benefits, certifies to have met the following criteria:

       1. (A) the person is engaged in or has provided substantial commitment to initiate the active conduct of a trade or business in the zone; and
       2. (B) at least 25% of the business's new employees in the zone are residents of any zone within the governing body's or bodies' jurisdiction or economically disadvantaged individuals; and
       3. (C) a franchise or subsidiary of a new or existing business may be certified by the governing body of an enterprise zone as a qualified business if the franchise or subsidiary is located entirely in the zone and maintains separate books and records of the business activity conducted in the zone; or
       4. (D) as a builder that has demonstrated proficiency in residential construction, financial stability, and participation in a 10-year insured warranty program in accordance with the Act and §176.10 (f) of this title (relating to Approval Standards for Certification of a Builder as a Qualified Business); or
       5. (E) is a qualified hotel project that is owned by a municipality with a population of 1.5 million or more or a nonprofit municipality sponsored local government corporation created pursuant to the Texas Transportation Corporation Act, Chapter 431, Transportation Code proposed to be constructed within 1,000 feet of a convention center owned by a municipality having a population of 1.5 million or more, including all facilities ancillary thereto such as shops and parking facilities.
   22. (22) Qualified employee--An employee who works for a qualified business and who performs at least 50% of his service for the business within the enterprise zone.

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

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

       2. (B) real property located in a zone that:

          1. (i) was acquired by the taxpayer not earlier than the 90th day before the date of designation of the zone or enterprise project, as applicable, and used predominantly by the taxpayer in the active conduct of a trade or business; or
          2. (ii) was the principal residence of the taxpayer on the date of the sale or exchange; or
       3. (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.
   24. (24) Recycling market development loan or grant--A loan or grant that may be made by the department to the governing body of an enterprise zone designated as a recycling market development zone to fund an activity that sustains or increases recycling efforts.
   25. (25) Recycling market development zone--An enterprise zone that the department may designate for the development of local business and industry in the zone to recycle materials that have served their intended use or that are scrapped, discarded, used, surplus, or obsolete by collecting, separating or processing the materials for use in the production of new products.
   26. (26) Retained job--A job that existed with a business prior to designation as an enterprise project or certification as a qualified business that has provided employment to a qualified employee of at least 1,820 hours annually and that is intended to be an employment position retained during the period the business is designated as an enterprise project or certified as a qualified business in accordance with Texas Tax Code, Chapter 151.
   27. (27) Staff--The staff of the department.
4. (d) Amendment and suspension of 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.
5. (e) Application of sections. All sections shall be applied collectively, to the extent relevant, in connection with specific determinations made by the department in the course of its administrative functions. The department will make its determination on the basis of specific characteristics and circumstances of the individual application, and in light of the basic statutory purposes in the particular area.
6. (f) Examination of records. Any party requesting the examination of records pursuant to the Texas Public Information Act, Texas Government Code, Chapter 552, shall indicate in writing the specific nature of the documents to be viewed, and if photocopying is desired, the prevailing standard fee of the department will be charged to cover the cost of the request.
7. (g) Written communication with the department. Applications and other written communications to the department should be addressed to the attention of the Texas Enterprise Zone Program, Business Development Division, Texas Department of Economic Development, P. O. Box 12728, Austin, Texas 78711-2728.

Source Note:The provisions of this §176.1 adopted to be effective February 24, 1988, 13 TexReg 706; amended to be effective July 24, 1989, 14 TexReg 3350; amended to be effective December 29, 1989, 14 TexReg 6643; amended to be effective January 8, 1992, 16 TexReg 7641; amended to be effective January 13, 1994, 19 TexReg 68; amended to be effective September 11, 1995, 20 TexReg 6621; amended to be effective April 23, 1998, 23 TexReg 3825; amended to be effective December 29, 1999, 24 TexReg 11706.