ODC is a Type A Taxing Organization – What Does That Mean?

Posted on May 25, 2018

Thanks to resourceful incentive programs offered by the Odessa Development Corporation (ODC), businesses are thriving. Odessa’s medical and manufacturing facilities are among the best in the state, which makes Odessa an ideal city for investment. The ODC strives to keep businesses coming to our community and to continue helping established businesses grow.

How is the ODC able to provide these incentive programs?

In 1989, the legislature of the State of Texas passed into law an economic development sales tax. With this revenue, and with city council approval, economic development corporations across the state of Texas use incentives to support projects that enhance and grow their respective cities. This sales tax is, in turn, a huge benefit for the citizens of these communities.

This initiative is what allows the ODC to invest in the future of Odessa. It gives ODC the ability to offer competitive incentives to companies that are creating jobs and driving innovation in Odessa, in the Lone Star state, and around the world.

In addition to maintaining Odessa’s existing industry base, the ODC actively recruits and attracts expanding businesses. The ODC offers incentives to local businesses and to those outside the area based on the number of new jobs created, annual payroll, and the amount of capital investment, among other requirements.

Other possible incentives include:

  • Infrastructure improvement grants
  • Property tax incentives
  • Vocational training
  • Recruiting and screening of employees

Fortunately, the ODC’s partners in the Texas legislature protect this financial tool. They believe in local money being used for local development that benefits Odessa.

What are the stipulations for the use of this money?

There are two types of economic development sales taxes: A and B. The designation usually depends on the culture and size of each city or town, as the revenue from the different tax types can only be used on certain, varying projects. The sales tax types contain requirements that are suited for the cities they are designated for.

The Odessa Development Corporation is a Type A taxing organization.

Requirements for Type A sales tax:

  • The ODC must have a performance agreement to grant Type A proceeds to a business entity.
  • The performance agreement contains requirements such as the number of new jobs required to be created, required annual payroll, and the required amount of capital investment.
  • Job retention and creation are both acceptable outcomes that would make you eligible for Type A funding.
  • Local government (city council, etc.) can design this agreement to meet their local economic development goals.

Each situation is unique. The Texas legislature allows for each local entity to create terms that are favorable for their economic development goals. The ODC is responsible for approval of contracts and contractors.

What types of projects are permissible under the Type A sales tax?

Projects and facilities in or related to:

  • Manufacturing and industry
  • Research and development
  • Military
  • Recycling
  • Distribution
  • Small warehouse
  • Primary jobs training facility by institutions
  • Job training
  • Targeted infrastructure
  • Career center not located within taxing jurisdiction of junior college district
  • Infrastructure improvement projects

Projects related to the Type A sales tax must relate to primary jobs, or in other words, jobs available at a company that are directly related to the local economy.

Can the business or project choose a location inside as well as outside Odessa city limits?

Yes. The business must get county commissioner approval or the approval of governing body that has jurisdiction over their desired property. In this situation, there is not a right or wrong answer. The decision is left up to local entities.

The best development corporations in Texas use an annual action plan. The Odessa Development Corporation uses a similar plan of action that helps them proactively recruit businesses and projects that keep Odessa, Texas in the ranks of the best and most economically sound communities in the state of Texas. The ODC contracts with the Economic Development Department of the Odessa Chamber of Commerce to perform this function in Odessa.

Texas as a state is the best in the nation at economic development. It has the resources, the economic development professionals, the can-do spirit, and supports efforts at the local level.

By: Wesley BurnettDirector of Economic Development for the Odessa Chamber of Commerce

“I write this blog to provide businesses and site selectors from across the country with a source of current information about the benefits and resources the city of Odessa has to offer.”Wesley