Tax abatements are available to any city, county and eligible taxing unit with a resolution to participate pursuant to Section 312.002, Tax Code. The general process for a city or county to execute a tax abatement agreement in a designated reinvestment zone along with the mandatory reports to the Comptroller are described below.
- Adopt Guidelines and Criteria: Before the designation of a reinvestment zone, a city or county must first establish guidelines and criteria governing tax abatement agreements, which must be available for both new and existing facilities/structures as described in Section 312.002(a). The governing body of a taxing unit must hold a public hearing regarding the proposed guidelines at which the public is given the opportunity to be heard. The guidelines and criteria are effective two years from adoption and can be changed with a three-fourths vote of the governing body. A taxing unit with a website must post the adopted guidelines and criteria online.
- Designate a Reinvestment Zone: Once guidelines and criteria have been adopted, the governing body of a city or county may designate an area as a reinvestment zone after a public hearing.
- Provide Notice of Public Hearing: A seven-day newspaper notice of the public hearing is required, in addition to a seven-day written notice to other taxing units in the proposed area before a public hearing may be conducted. The newspaper must be in general circulation in the city or county. Notice to the other taxing units is presumed delivered when properly addressed to the appropriate presiding officer for each taxing unit and placed in the mail or sent via registered or certified mail with a return receipt received.
- Hold A Public Hearing: The governing body of a city or county conducts the public hearing to determine whether the area for designation qualifies as a reinvestment zone under Section 312.201 or Section 312.401, Tax Code. At the hearing, interested persons are entitled to speak and present evidence for or against the designation of the reinvestment zone.
- Adoption of an Ordinance or Order: Once findings in favor of a designation have been made, an ordinance by a city’s governing body or an order by a county’s governing body may be adopted to designate the area as a reinvestment zone. The ordinance must describe the zone’s boundaries and designate whether the zone is eligible for residential tax abatement, commercial-industrial tax abatement, or tax increment financing. A reinvestment zone designation created under the Tax Abatement Act (i.e. Chapter 312 of the Tax Code) expires after five years and may be renewed for periods not to exceed five years.
- Treatment of Enterprise Zones: A designated enterprise zone created under Chapter 2303, Government Code, constitutes designation for a reinvestment zone pursuant to Sections 312.2011 and 312.4011, Tax Code.
- Enter into a Tax Abatement Agreement: Once a reinvestment zone is designated, the governing body of a city or county may enter into a tax abatement agreement with the property owners for a period not to exceed 10 years as set forth in Sections 312.204 and 312.402, Tax Code. Once the agreement is approved by the governing body at a regularly scheduled meeting, it may be executed after notice to other taxing units.
- Provide 30 Days Public Notice of Meeting: Tax Code, Section 312.207(d) provides, at least 30 days public notice of the meeting on the approval of a tax abatement agreement is required. The notice should be given in the manner prescribed by the Open Meetings Act. Among other requirements, the notice must contain: 1) the property owner's name and the applicant's name in the agreement; 2) the name and location of the reinvestment zone subject to the agreement; 3) a general description of the nature of the improvements or repairs in the agreement and 4) the estimated cost of the improvements or repairs.
- Approval of Agreement at Public Hearing: By an affirmative majority vote, the governing body may approve a tax abatement agreement upon finding that the agreement terms and property meet the applicable guidelines and criteria governing tax abatement agreements.
- Notice to Other Taxing Units and Agreement Execution: Before the agreement is executed, a minimum of seven days' written notice to other taxing units along with a copy of the proposed agreement is required. Notice is presumed delivered when properly addressed to the appropriate presiding officer for each taxing unit and placed in the mail. Failure to deliver the notice does not affect the validity of the agreement. Other taxing units eligible under Section 312.002, Tax Code, may enter into a tax abatement agreement as described in Section 312.206 and Section 312.402, Tax Code.
Mandatory Reports to the Comptroller: The Comptroller is statutorily the central registry of designated reinvestment zones and executed ad valorem tax abatement agreements under the Tax Abatement Act. Reinvestment zone designations and ad valorem tax abatement agreements that are executed are reported via forms 50-275, 50-276 or 50-277 to the Comptroller before July 1 of the year following the zone designation or the agreement's execution. After the expiration of a tax abatement agreement, the appraised value of the property subject to the agreement is reported via form 50-278 to the Comptroller for three years. The first annual report on form 50-278 is due by September 1st after the year in which the tax abatement agreement expires. Forms 50-275, 50-276, and 50-277 can be downloaded from here and form 50-278 can have data entered manually (the new system will be activated Aug. 3) into the new Comptroller system by the reporting entity here.
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 email@example.com.
If you have questions, call the Economic Development general line at 844-519-5672, Option 5, or contact Frank Alvarez at 512-936-9231.