Kilgore, Texas is a growing community located approximately 120 miles east of Dallas off I-20.With a dynamic “can-do” attitude and commitment to economic diversification through various projects, Kilgore is the place to do business now and in the future.

Detailed Texas Map (pdf)

TAXATION INCENTIVES

Tax abatement on real and personal property improvements may be granted by all taxing entities except Kilgore Independent School District.  The company must meet requirements associated with the value of capital improvements and either job creation or payroll increases maintained throughout the term of the agreement.  The City of Kilgore will create a reinvestment zone and adopt a tax abatement agreement with companies meeting the following:

Tax Abatement Schedule I - Qualifications and Sliding Scale Rate

Tax Abatement Schedule II - Qualifications and Sliding Scale Rate

For extraordinary projects with significant investment and job creation, the taxing entities will consider tax abatements up to 100% for a period of 10 years.


Texas Enterprise Zone Program:  Kilgore may designate the company as an Enterprise Project.  Upon that designation being approved by the state, the business would be eligible for the following incentives:
           
State Sales and  Use Tax refunds of taxes paid for building materials, machinery and equipment, electricity and natural gas purchased and consumed in the normal course of business and depending on investment amount and number of jobs created/retained.  The refund can be an amount ranging from a minimum of $2,500 per job to a maximum of $7,500 per job.
  
Local Zone Incentives for Enterprise Projects and Qualified Businesses:  The company can receive a negotiated one-time sales tax refund of City of Kilgore sales and use taxes paid for building materials used in building a new industrial structure, including all structural steel, lumber, bricks, flooring, electrical system, cooling and heating systems, plumbing and including concrete, asphalt and masonry.

Property Tax Rule 9.105  The Texas Comptroller of Public Accounts offers a refund of franchise and sales/use taxes paid by companies owning certain abated property.  A company who meets the following three conditions may apply for a refund:

• Paid property taxes to a school district on property located in a reinvestment zone.
• Is exempt in whole or in part from property tax imposed by a city or county under a tax abatement agreement.
• Is not in a tax abatement agreement with a school district.

Texas Economic Development Act (HB 1200)  This act provides relief from school district property taxes for companies making large capital investments of $20 million to $100 million or greater.  The appraised value of qualifying capital investments is capped based on a sliding scaled tied to the total property wealth of the school district where the investment is located.  The investment amount is determined over a 2-year period.   In general, a school district may abate 100% of the appraised value over the applicable cap of improvements and tangible personal property used in manufacturing for up to 8 years, beginning in the third year of investment.  The company will pay taxes based on the full-appraised value during the first two years but is entitled to a refund of any amounts paid during that period on the value in excess of the applicable cap.  In addition the company must create at least 25 new permanent jobs, pay at least 80% of a group health benefit plan for its employees, and pay at least 100% of the county average weekly wage.

Foreign Trade Sub-Zone   Any foreign and domestic merchandise, unless prohibited by law, may be brought into a foreign trade zone without being subject to the custom laws of the U.S. governing the entry of goods or the payment of duty.  The Gregg County Airport Foreign Trade Zone, located 8 miles from Kilgore, can process applications for a foreign trade subzone to be located at the company’s facility in Kilgore.  Additionally, inventory located in the subzone is not rendered for property taxation.

Exemption for Pollution Control Equipment   A company that invests in pollution control equipment that will meet or exceed federal, state, or local environmental laws, rules, or regulations may apply for a positive use determination from the Texas Natural Resource Conservation Commission.  This determination will exempt the property from ad valorem taxes.

Natural Gas and Electricity Sales and Use Tax Exemption  Companies are exempt from paying state sales and use tax on electricity and natural gas used in manufacturing, processing, or fabricating tangible personal property.  The company must complete a predominate use study showing that at least 50% of the electricity or natural gas consumed by the business directly causes a physical change to a product.

Manufacturing Machinery and Equipment Sales and Use Tax Exemption   Leased or purchased machinery, equipment, replacement parts, and accessories that have a useful life of more than six months, and that are used 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.  Texas businesses are exempt from paying state sales and use tax on labor for constructing new facilities.  Machinery exclusively used in processing agricultural products by the original producer is also exempt.

Clean Rooms Exemption  Clean rooms used in the production of semiconductor components are exempt as manufacturing equipment.

FINANCING INCENTIVES

Texas Enterprise Fund   The 78th Legislature created the Texas Enterprise Fund, giving the governor the ability to respond quickly to opportunities to bring companies and jobs to Texas.  The fund is intended to attract high-impact facilities that have the opportunity to provide high returns for taxpayer investment.  The Toyota assembly plant in San Antonio and a state-of-the-art Texas Instruments semiconductor wafer fab project in Richardson are both examples of projects that are eligible to benefit from the Texas Enterprise Fund.  More information on the Texas Enterprise Fund is available by visiting the website of the Office of the Governor.

Emerging Technology Program  This program is designed to help Texas create jobs and grow the economy over the long-term by expediting the development and commercialization of new technologies and attracting and creating jobs in technology fields.  For more information regarding the application process or funding, contact Mark Ellison with the Office of the Governor at 512.463.1472.

Economic Development Sales Tax Incentives  The Kilgore Economic Development Corporation (KEDC) was created by the voters in 1990 to use the revenue generated by a ½ cent sales tax for economic development to encourage the creation and retention of jobs and capital investment in Kilgore. The KEDC Board of Directors work with interested parties for the use of these funds as an incentive to locate or expand in Kilgore.  The amount and type of the incentive depends upon the economic impact of the project and the specific needs of the company.  Incentive funds can be applied to costs associated with land or facility acquisition, facility construction, remodeling, infrastructure, training programs, moving expenses, etc. according to the terms of an economic development agreement between KEDC and the company.

The Texas Capital Fund  Designed to promote growth in non-entitlement areas, the Texas Capital Fund can be used for businesses creating new full-time jobs, a majority of which benefit low to moderate-income persons.  This program requires an application and competitive rating process which sometimes delays the funding process.  If the timing of the project makes it possible, the TCF programs available to Kilgore are:

TCF Infrastructure Grant Program    Funds may be used for construction and/or improvements of water or wastewater facilities, public road construction, natural gas line services, rail spurs, and electric power services.  Minimum and maximum awards are $50,000 and $750,000 and may not exceed 50% of the total project cost.

TCF Real Estate Development Program  Funds may be used to acquire, construct, or rehabilitate real estate to support a for-profit or a non-profit entity willing to commit to creating or retaining jobs primarily for low or moderate income persons.  Minimum and maximum awards are $50,000 and $750,000 and may not exceed 50% of the total project cost.

Chapter 380 The City of Kilgore may offer a range of incentives designed to promote local economic development.  These incentives are normally negotiated between the company and the City.

Tax Increment Financing  The city can designate a reinvestment zone to provide tax increment financing of project costs for public works or public improvements in the zone.  Tax increment bonds or notes may be used to pay project costs.  The proceeds from taxes on improvements within the zone are used to pay the debt service on the bonds or notes or for the cost of the project for a designated time as determined by a TIF plan adopted by the taxing entities participating.  School districts are prohibited from participating in TIFs.  The TIF can be used to finance improvements required by a project in order to locate in the City of Kilgore.

Industrial Revenue Bonds  KEDC may issue tax-exempt bonds to finance land and depreciable property for manufacturing facilities.  The maximum bond amount is $10,000,000 for tax-exempt issues, and the maturity of the bonds may extend to the lesser of 40 years or 120 percent of the depreciable life of the assets being financed.  Eligible project costs include the acquisition by a business of an existing facility, acquisition of land, construction of new facilities, machinery, tools, equipment, and a limited amount of the bond issuance costs.  The bonds are subject to the state’s private activity bond volume cap administered by the Texas Bond Review Board.

Chapman Revolving Loan Fund  This is a loan-guarantee program for projects creating permanent full-time jobs.  The program will guarantee not less than $35,000 and not greater than $250,000 or 50% of the total project cost, whichever is less.  Generally the interest rate is calculated at CD rate plus 3% amortized for 7 to 15 years depending on the purpose of the loan.

Northeast Texas Economic Development District Revolving Loan Fund  The NETEDD RLF will finance up to 1/3 of total project costs not less than $10,000 or greater than $250,000 depending upon availability of funds.  Interest rate is fixed over the life of the loan from 4% below to 4% above New York prime rate depending on credit worthiness.  The term of the loan is determined by the useful life of the assets pledged as collateral, and NETEDD will subordinate to the local lender.  Equity injection of 25% is usually required.

Small Business Administration 504 Loan Program  The SBA 504 is a direct-lending program providing long-term financing for fixed assets at a fixed rate of interest at or below New York prime rate.  Designed to create and retain full-time jobs and to help businesses start-up or expand, the loan usually includes a senior lien from a private-sector lender covering 50% of the project cost and at least 10% equity injection.  Generally the business must create or retain one job for every $35,000 provided by the SBA.  The maximum loan is $1,000,000 for job creation.  Companies located in Kilgore have access to the program through the East Texas Regional Certified Development Company.

Small Business Administration 7(a) Loan Guaranty Program  The SBA 7(a) program provides guarantees for small businesses unable to secure financing on reasonable terms through normal lending channels.  The SBA will guarantee up to 75% of a private-sector loan up to a maximum of $750,000.  The rate and term of the loan are set by the private-sector lender.

Economic Development Administration  This program provides grants funded on a competitive basis for public water and wastewater facilities, access roads, rail spurs, or projects consistent with an overall economic development plan that serves industry and commerce.  The application and approval process requires additional time. 

Texas Capital Access Program  The program is designed to increase the availability of financing for businesses and non-profit organizations that face barriers in accessing capital.  Eligible borrowers can be any small business with less than 500 employees or a non-profit corporation.  The proceeds may be used for working capital or the purchase, construction, or lease of capital assets including land, buildings, and equipment.

Linked Deposit Program  This program encourages lending to qualified businesses which are historically underutilized, child care providers, non-profit corporations and small businesses located in an enterprise zone.  It offers lenders and borrowers a lower cost of capital.  Loan amounts range from $10,000 to $250,000.  Proceeds may be used for working capital, purchase, construction or lease of capital assets, including land, buildings and equipment.

Agricultural Business Programs  The Texas Department of Agriculture offers a variety of financing and guarantee programs to assist eligible businesses or individuals involved in agricultural-related economic development projects. These include:  Texas Agricultural Finance Authority Loan Guaranty Program, Direct Loan Program, Loan Participation Program, Young Farmer Program, Farm & Ranch Finance Program, and Linked Deposit Program.

JOB TRAINING INCENTIVES

Skills Development Fund  This fund assists community and technical colleges in financing customized job training for local businesses.  Average training costs are $750 to $1,000 per trainee.  The fund will provide training for specific skills for workers who will be hired by the business.  A business that forms partnerships with local community colleges and technical schools or the higher education extension agency may apply to the Texas Workforce Commission for funding.

Economic Development Sales Tax Incentives  The Kilgore Economic Development Corporation (KEDC) was created by the voters in 1990 to use the revenue generated by a ½ cent sales tax for economic development to encourage the creation and retention of jobs and capital investment in Kilgore. The KEDC Board of Directors works with interested parties for the use of these funds as an incentive to locate or expand in Kilgore.  Incentive funds can be applied to costs associated with training needs according to the terms of a negotiated economic development agreement between KEDC and the company if the business enterprise has committed in writing to:  (1) create new jobs that pay wages that are at least equal to the prevailing wage for the applicable occupation in the local labor market area; or (2) increase its payroll to pay wages that are at least equal to the prevailing wage for the applicable occupation in the local labor market area.

Kilgore College Workforce Development Department  The Workforce Development Department at Kilgore College works with business and industry to design customized training to match the needs of a specific company.  The college will work with business to access any training funds available for the project and can provide pre-employment testing and screening.  KC also offers certificate and degree programs in a variety of fields and technical areas.  Every program created by Kilgore College Workforce Development is a unique customized response to each company’s specific needs.  KC Workforce Development’s customer-directed, industry-driven approach provides a business with affordable solutions for skills training.  For more information, contact Martha Woodruff at 903-983-8287.

Local Workforce Development Board  Local boards overseeing training funds for specific regions have programs available for training certain populations.

Texas State Technical College   Located 35 miles from Kilgore, TSTC works with industry in a number of ways, including the following:

• Provide customized training programs, incorporating the employers’ goals and objectives
• Offer technical training through certificate and degree programs
• Handle administrative aspects of the Skills Development Fund
• Contact:  Jeanne Wesley at 903-935-1010, Ext. 2250

Property Tax Taxing Entity Tax Rate / Per $100** City of Kilgore 0.4600 Kilgore College 0.1640 Gregg County 0.2700 Kilgore ISD 1.1331 **All Property is Assessed @ 100% Valuation  Sales Tax City County State 1.50 % .50 % 6.25 %

Overview of the Texas Tax System…