Keppel AmFELS has received Texas Enterprise Zone designation following a successful application to the Governor’s Office of Economic Development and Tourism by the city of Brownsville on behalf of the shipbuilding company, a major employer located at the Port of Brownsville.
The TEZ program is an economic development tool offered by the state, which partners with local communities to encourage capital investment and related job creation in economically distressed areas of the state. This is done via tax abatements to TEZ-designated companies of the state’s portion of sales and use taxes for qualified purchases. A “use tax” is imposed on taxable items on which no sales tax has been paid.
Keppel AmFELS received the designation for a planned project to improve its infrastructure to the tune of $27.6 million and retain at least 500 of the more than 1,400 jobs the company currently supports, said Ramiro Aleman, director of business recruitment, retention and expansion for the Greater Brownsville Incentives Corporation, which worked with a consultant hired by Keppel AmFELS to prepare the application.
Under TEZ rules, Keppel AmFELS will be eligible for a maximum potential tax refund of $1.25 million.
“They have up to five years to invest the total amount that they said they would on the application, and as long as they can provide proof that they retained at least 500 jobs, then they’ll be eligible for the rebates,” Aleman said. “It doesn’t impact local sales tax at all. It’s only the state portion of the sales tax that it impacts.”
The city benefits because of the jobs retained and tax revenue generated by the company’s purchases that go toward improvement of its infrastructure, he said.
“It helps the company and it also helps the city’s sales and use tax revenue,” Aleman said.
A municipality Brownsville’s size is allowed six TEZ projects every two years in keeping with the state’s biennial legislative schedule. Aleman said it’s important to choose carefully which businesses to nominate to ensure maximum bang for the buck in terms of economic impact.
“As you can imagine we have to be very conservative and pick the right projects,” he said.
Another recent TEZ-designated project was DHR Health’s renovation of the former Doctors Hospital in Brownsville. In its application, which the state approved last year, DHR pledged to spend $36.6 million in capital investment and create more than 300 jobs over five years as part of the project.
Helping big projects qualify for TEZ status is part of GBIC’s efforts to diversify the city’s tax base and relieve some of the burden on individual taxpayers, Aleman said.
“GBIC is always working with different companies to try and grow the industrial tax base in Brownsville,” he said.
Keppel AmFELS President Mohamed Sahlan Bin Salleh said “we are pleased to be designated as a Texas Enterprise Zone project.”
“As one of the largest employers in Brownsville, we are proud to support job creation and retention in partnership with the state of Texas,” he said.
Brownsville Mayor Trey Mendez said the city is grateful for the company’s longstanding commitment to Brownsville and that “this project will enable Brownsville and Keppel AmFELS to continue to work together to create opportunities for our region.”