economyEconomic Development

Step-by-Step Abatement Process

A city or county designates a reinvestment zone, approves of a tax abatement agreements and reports on the value of a property post-abatement in the following steps.

  1. Adopt Guidelines and Criteria: Each city or county that wants to consider tax abatement proposals or the creation of a reinvestment zone must establish guidelines and criteria governing tax abatement agreements. To adopt guidelines and criteria, the governing body of a city or county must follow the steps below.
    1. Provide Public Notice: Notice of the hearing must be published at least seven days before the hearing in a newspaper of general circulation in the city. Further, notice of the public hearing must be given to the presiding officer of each of the other taxing units that have taxing jurisdiction over real property within the zone. Notice to other taxing units is presumed delivered when placed in the mail postage paid and properly addressed to the appropriate presiding officer. A notice properly addressed and sent by registered or certified mail for which a return receipt is received by the sender is considered to have been delivered to the addressee.
    2. Hold Public Hearing Regarding the Designation of a Reinvestment Zone: To designate an area as a reinvestment zone, the governing body of a city or county must hold a public hearing on the reinvestment zone at which members of the public are given the opportunity to be heard. The governing body must find that the improvements sought are feasible and would benefit the zone after the expiration of the agreement, and the zone meets one of the applicable criteria for reinvestment zones.
    3. Adopt or Reauthorize Guidelines: Following a public hearing, the governing body of a city or county may adopt, amend, repeal or reauthorize guidelines and criteria. The city or county must adopt a resolution stating that the city or county elects to become eligible to participate in tax abatements. The guidelines and criteria are effective two years from the adoption date and must be posted on the city or county’s website, if applicable.
  2. Designate a Reinvestment Zone: After guidelines and criteria have been adopted, the taxing unit must hold a public hearing and designate a reinvestment zone by official action.
    1. Public Hearing and Adoption of Ordinance: Following a public hearing, a city or county must adopt an ordinance to designate a reinvestment zone if it finds that the proposed zone meets certain statutory requirements under Section 312.202, Tax Code. The ordinance must describe the boundaries of the zone and eligibility of the zone for residential or commercial-industrial tax abatement, or tax increment financing.
    2. Treatment of Enterprise Zones: Designation of an area as an enterprise zone under Chapter 2303 of the Government Code constitutes designation of an area as a reinvestment zone without further hearing or other procedural requirements by the city or county.
  3. Enter Tax Abatement Agreement: A tax abatement proposal must be approved during a regularly scheduled meeting of the city or county’s governing body by a majority of the members of the governing body.
    1. Provide 30 Day’s Public Notice: Each city and county must provide public notice (as required under Chapter 551, Government Code) at least 30 days before the scheduled time of a meeting regarding the approval of a tax abatement agreement. The public notice MUST contain: 1) the name of the property owner that would be party to the agreement; 2) the name and location of the reinvestment zone in which the property is located; and 3) a general description of the nature and estimated costs of the improvements in the agreement.
    2. Public Hearing: The city or county’s governing body may approve the abatement if it finds that the terms of the agreement and the property subject to the agreement meet the applicable guidelines and criteria that have been adopted by the governing body.
    3. Written Notice to Other Taxing Units about Consideration of an Abatement: A city or county’s intent to enter into a tax abatement agreement must be delivered to the presiding officer of each of the other taxing units in which the property is located at least seven days before the abatement is granted. The other taxing units may enter into an abatement agreement or choose not to provide an abatement. There is no penalty for choosing not to provide an abatement.
  4. Requirement to Deliver a Report on Appraised Value of Property for an Expired Abatement: For each of the first three years following the expiration of a tax abatement agreement, the chief appraiser of each appraisal district delivers a report to the Comptroller’s office containing the appraised value of the property that was subject to the agreement. To meet this requirement and to make sure that all property values are finalized, fill out form 50-278, and submit it to the Comptroller’s office by Sept. 1 or the first business date thereafter if Sept. 1 falls on a weekend or a federal holiday. This report applies to all tax abatement agreements that expire on or after Sept. 1, 2019.

All submissions can be mailed to:

Attention: Data Analysis and Transparency Division
Texas Comptroller of Public Accounts
P.O. Box 13528
Austin, TX 78711

Or you can email submissions to frank.alvarez@cpa.texas.gov.

If you have questions, call the Economic Development general line at 844-519-5672, ext. 3-4679, or contact Frank Alvarez at 512-936-9231.