Texas Enterprise Fund
The Texas Enterprise Fund (TEF) is the largest "deal-closing" fund of its kind in the nation. The fund is a cash grant used as a financial incentive tool for projects that offer significant projected job creation and capital investment and where a single Texas site is competing with another viable out-of-state option.
Award dollar amounts are determined using an analytical model applied uniformly to each TEF applicant. This model assures that the State of Texas will see a full return on its investment within the period of a project contract due to the resulting increase in estimated sales tax revenues. Variations in award amounts are influenced by the number of jobs to be created, the expected timeframe for hiring, and the average wages to be paid. In the past, awards have ranged from $194,000 to $50 million.
- Competition with another state for the project must exist and the business must not have already made a location decision.
- Projected new job creation must be significant – past recipients have typically created more than 75 jobs in urban areas or more than 25 in rural areas.
- The new positions must be high-paying jobs – above the average wage of the county where the project would be located.
- Capital investment by the company must be significant.
- A significant rate of return on the public dollars being invested in the project must be demonstrated.
- The project must have community involvement from the city, county, and/or school district, primarily in the form of local economic incentive offers.
- The applicant must be a well-established, financially sound business.
- The applicant's business sector must be an advanced industry that could potentially locate in another state or country.
- The Governor, Lieutenant Governor, and the Speaker of the House must unanimously agree to support the use of TEF for each specific project.
TEF grant recipients are contractually obligated to fulfill the terms of their job creation agreements with the State of Texas. Once a company has accepted an offer from the Texas Enterprise Fund, a signed contract is required prior to the distribution of an award. The contract obligates the grantee, among other terms and conditions, to the job creation targets and commits the grantee to maintain these employment positions at or above the county average wage for the term of the agreement. Additionally, all TEF contracts contain provisions for grant repayment through clawbacks in the event that a grantee does not meet the obligations of the agreement.
Each applicant undergoes a thorough 11-step due diligence process. Corporate activity, financial standing, tax status, legal issues, credit ratings, and estimated economic impacts, as well as the business climates of competition locations are assessed for each project and taken into consideration for all award decisions.
The Texas Enterprise Fund is administered through the Economic Development and Tourism division of the Office of the Governor.