1. (a) An applicant may make written application to the department for designation of an area within the applicant's jurisdiction as an enterprise zone if such area meets the following eligibility criteria:

   1. (1) the area has a continuous boundary;

   2. (2) the area is at least one square mile in size but does not exceed the larger of the following:

      1. (A) 10 square miles exclusive of lakes, waterways and transportation arteries; or
      2. (B) 5.0% of the area of the municipality, county or combination of municipalities or counties nominating the area, but not more than 20 square miles, exclusive of lakes, waterways and transportation arteries; and
   3. (3) the area is a depressed area as defined under §176.1(c)(9) of this title.
2. (b) The department may not designate an area as an enterprise zone if in the jurisdiction of the municipality or county nominating the area as an enterprise zone there are three enterprise zones in existence that were nominated as enterprise zones by the governing body of that municipality or county.
3. (c) Areas receiving designation from the federal government as federal empowerment zones, enterprise communities or renewal communities are automatically state enterprise zones without further qualification and are valid for the term permitted by federal law, as authorized by the Act, §2303.109(b). Designation of these areas as state enterprise zones does not affect the number of state enterprise zones a governing body may have as authorized by the Act, §2303.112.
4. (d) The governing body of a county may not nominate area in a municipality or a municipality's extraterritorial jurisdiction to be included in a zone unless the municipality is a joint applicant with the county. However, a county with a population of 750,000 or more, according to the most recent federal census, may nominate area in a municipality's extraterritorial jurisdiction to be included in a zone without the consent of municipality, as authorized by the Act, §2303.103(e).

5. (e) Documentation. For the purpose of showing that an area is qualified to be designated as an enterprise zone, the applicant must submit documentation, including the source, methodology and certification of the data. The authorized data source for population estimates is the State Data Center. The authorized data source for labor force data is the Texas Workforce Commission. Data will be considered current from the State Data Center and the Texas Workforce Commission if they are the most recently published estimates or if the enterprise zone application containing the data is received by the department before the 61st day after the date revised estimates of that data are published. An industrial park may be included as part of the enterprise zone without averaging in the unemployment and poverty data. However, data will be required if part of the zone includes an area which is outside the industrial park but within the same census area. The industrial park may not exceed 25% of the proposed zone area. To show an area has been designated as an industrial park the applicant must include documentation of official action taken by the governing body.

   1. (1) Unemployment data. The average rate of unemployment for the area nominated during the most recent 12-month period for which data is available from the Texas Workforce Commission must be at least one and one-half times the state average for that period. Computation of the average unemployment rate for the proposed enterprise zone area will require choosing the smallest area that contains the zone for which unemployment data is available from the Texas Workforce Commission.
   2. (2) Loss of Population. Loss of population may be calculated using population estimates for the applicant's jurisdiction produced by the Texas State Data Center. The 12% loss of population is the accumulated population loss experienced during the most recent six-year period for which data is available. The alternative 4.0% population loss is the loss of population experienced during the most recent three-year period for which data is available.
   3. (3) Income data. If a proposed zone includes portions of more than one city or county, the median income should be calculated using figures for each city or county which includes part of the zone. In order to meet the low-income criteria, the smallest number of census areas that entirely contain the zone must reflect that at least 70% of the residents or households in that zone have below 80% of the median residents or household income for the locality or state, whichever is lower. To determine a low-income poverty area, at least 20% of the residents of the zone must have an income below the national poverty level as determined by the most recent available census data that contains the zone area. Census tracts, block groups, or other official census areas may be used to show poverty rates.

   4. (4) Chronic abandonment or demolition. To qualify, the applicant must demonstrate to the department that 25% or more of the structures in such area are found by the governing body to constitute substandard, slum, deteriorated, or deteriorating structures as defined by local law. If local law does not define what constitutes a substandard, slum, deteriorated, or deteriorating structure, the governing body of the applicant may consider as substandard a structure which:

      1. (A) is abandoned;
      2. (B) does not have plumbing;
      3. (C) has been condemned or cited for building or fire code violations by the appropriate city authority;
      4. (D) is in an inadequate state of repair under applicable public health, safety, fire, or building codes;
      5. (E) is the subject of a tax or special assessment delinquency stated as a percentage of total taxes assessed, which exceeds the fair market value of the land involved and the improvements thereon; or
      6. (F) is functionally or economically obsolete as determined by a qualified appraiser.
   5. (5) Substantial tax arrearages. The applicant must certify and submit evidence that within the proposed zone area, at least 25% of the commercial or residential taxes have gone unpaid and have been delinquent for at least one year. For purposes of determining substantial tax arrearages, the tax rolls of the applicable city or county nominating an area as an enterprise zone must be used.
   6. (6) Substantial loss of businesses or jobs. A substantial loss of businesses or jobs is defined as a loss of at least 20% over the most recent one-year period or a loss of 30% over the most recent three-year period in the proposed zone area. The applicant must seek advance approval of documentation to be provided to the department.
   7. (7) Declaration of an area as a state or federal disaster area. The applicant must provide documentation by the applicable state or federal government that the area has been declared a state or federal disaster area within the most recent 18-month period.
   8. (8) Substantial increase in individuals under the age of 18 arrested for criminal activity. The applicant must provide data from the appropriate law enforcement authority or authorities that the proposed zone area has had a substantial increase in the number of individuals younger than 18 years of age arrested due to criminal activity. A substantial increase in arrests is defined as at least a 20% increase over the most recent three-year period.

6. (f) Citizen participation. The department will not approve the designation of an area as an enterprise zone unless:

   1. (1) the governing body of the applicant shall first notify the department of the date it will hold a public hearing as required under the Act, §2303.103, and these rules for the purpose of nominating an area as an enterprise zone or to amend the boundaries of a designated enterprise zone by encompassing additional land area into the zone. The notice to the department shall be given in writing not less than seven days prior to the date of the public hearing; and
   2. (2) notice of such hearing is given to the public by publishing once in a newspaper of general circulation in the municipality or county or combination of municipalities or counties and posting a copy of the same at the city hall or county courthouse not later than seven days prior to the date of the hearing. Such notice shall contain a description of the area proposed by the municipality or county or combination of municipalities or counties to be designated as an enterprise zone, and the date, time, and location of such hearing. The description of the area should be worded so that residents of the area and other interested parties may reasonably identify the area to be discussed at the public hearing. The notice shall also encourage all interested parties, including residents of the proposed zone to present their views at the hearing. The hearing must include a presentation on the proposed location of the zone and the provisions for any tax or other incentives applicable to business enterprises in the zone. A municipality or county or combination of municipalities or counties must adopt the enterprise zone nominating ordinance or order within 180 calendar days of the date the last public hearing was held. Further, the application for zone designation must be received by the department within 90 calendar days of the date of final approval of the nominating ordinance or order, or a new public hearing must occur and a new nominating ordinance or order must be enacted.

Source Note:The provisions of this §176.3 adopted to be effective August 29, 2002, 27 TexReg 7788; amended to be effective March 27, 2003, 28 TexReg 2484.