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Economic Development Incentives Policy Revision 2004 Page 5 Standard utility incentive: The City partners with developers on infrastructure improvements. The City's development policy commits city funds to provide for the cost of over-sizing infrastructure when deemed necessary for future development. This policy eliminates the need for developers to absorb the total cost of over-sizing "up front" and then waiting to recover a portion of the costs when future development ties into the improvements. Special utility incentive: The City has the capacity and flexibility to offer qualified companies infrastructure improvements and extensions at reduced cost. Such incentives may include improvements to curbs and gutters, street paving, water and sewer, electrical supply, and public lighting. Tax Abatement Incentives The City of San Marcos offers tax abatement for new or expanded commercial or industrial construction, as well as business personal property taxes associated with real property. City abatements are granted through a contract approved by the San Marcos City Council. After city qualification, the City will assist applicants in seeking abatement agreements with the other taxing authorities. Location Incentives Special Downtown Reinvestment Zone: Provides for tax abatement, on a case-by-case basis, within the Central Business Area downtown. The City has been designated as a Texas Main Street City. The Main Street program has a small fa(~ade improvement grant that can be used for such things as signage or new canopies. Foreign Trade Zone: Foreign trade zones (FTZs) are sites in or near a U.S. Customs port of entry where foreign and domestic merchandise is generally considered to be in international trade. Goods can be brought into a zone without formal Customs entry or without incurring Customs duties or excise taxes unless and until they are imported into the United States. The purpose of the Zone is the creation of jobs realized from the cost savings from delayed or forgiven tariffs. The City of San Marcos currently has a FTZ located at the San Marcos Municipal Airport. Financinq Incentives Revolving Loan Funds: The City of San Marcos has available a limited amount of funds to commit to businesses. Check with the Community Development Block Grant staff for funding availability. Tax Increment Financing (TIF): Tax increment financing is a tax reinvestment tool that allows local governments to publicly fund needed structural improvements and enhanced., infrastructure within a defined area. TIFs work by allowing taxing entities to repay the costs of improvements to a designated area with the future tax revenues generated by increasing property values. TIFs can be created on a case-by-case basis by the San Marcos City Council. Freeport Exemption: Businesses involved in the export of tangible property such as goods, wares, and merchandise may be eligible for the Freeport Exemption. This incentive is designed to exempt some or a company's entire inventory from property taxes. To be eligible, property must be assembled, stored, manufactured or fabricated locally and then exported out of the state within 175 days after the property was acquired or imported into the state. (Standard perpetual exemption available to any company that conforms to qualifications set out by state law.) Again, the San Marcos City Council will consider granting a Freeport Exemption on a case-by-case basis. Incentives Requirin.q State Approval The City of San Marcos can assist businesses with the application process for the following programs: Enterprise Projects: The City of San Marcos will facilitate the designation of an Enterprise Zone and work with prospects on their State application to be recognized as an Enterprise Project. In order to qualify for an Enterprise Zone, a project must locate in a Census Tract that has a Iow and moderate