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Tax Abatement Agreement Registry

After a taxing unit has established a reinvestment zone, there are three more steps to execute a tax abatement agreement. The three steps are as follows:

Step 1. At least seven days before the lead taxing unit grants a tax abatement, it must deliver written notice of its intent to enter into the agreement to the presiding officer of each of the other taxing units in which the property is located. The notice must include a copy of the proposed tax abatement agreement. A tax abatement agreement may exempt from taxation all or part of the increase in the value of the real property for each year covered by the agreement. The agreement may be for a period not to exceed 10 years.

The tax abatement must be conditioned on the property owner making specific improvements or repairs to the property, and only the increase in the value of the property may be exempted. The real property's current value may not be exempted. The current value of real property is the taxable value of the real property and of any fixed improvements as of January 1 of the year in which the tax abatement agreement is executed. For example, consider a business that has a property site valued at $500,000 as of January 1 of the year of the tax abatement agreement. If the business agrees to significantly enlarge the facility, resulting in its valuation increasing to $800,000, the taxing units may abate from taxation up to $300,000 of the property value (the portion of the value that exceeds the base value of $500,000).

The tax abatement agreement may also abate all or part of the value of tangible personal property (other than inventory or supplies) that is brought onto the site after the execution of the tax abatement agreement. A taxing unit may not abate the value of personal property that was already located on the real property at any time before the period covered by the tax abatement agreement. The abatement for personal property cannot be for a term that exceeds 10 years. The amount (percentage) of the tax abatement for either real or personal property cannot exceed 100 percent abatement of the increase in property value. Tax abatement agreements have generally been aimed at industrial projects that generate at least $2.5 million in capital investments. There is also some limited usage of tax abatements for purposes other than industrial or commercial projects, such as for residential area improvements and/or development.

Step 2. To adopt the tax abatement agreement, the taxing unit must approve the agreement by a majority vote of its governing body at its regularly scheduled meeting. It is important to note that the approval of the agreement by the taxing unit must occur at a "regularly scheduled meeting." The statute does not define the term "regularly scheduled meeting." It may be advisable to schedule the adoption of an agreement only at the regular meetings of the governmental body (not specially called or emergency meetings). At the meeting to consider approval of the tax abatement agreement, the governing body of the taxing unit must make a finding that the terms of the agreement and the property subject to the agreement meet the applicable guidelines and criteria. Upon approval of the agreement by the governing body, the agreement is executed in the same manner as other contracts entered into by the applicable taxing unit.

Section 312.205(a) of the Tax Code sets out certain mandatory provisions for a tax abatement agreement. A tax abatement agreement must:

  • include a list of the kind, number, and location of all proposed improvements to the property;
  • provide access to and authorize inspection of the property by the taxing unit to ensure compliance with the agreement;
  • limit the use of the property consistent with the taxing unit's development goals;
  • provide for recapturing property tax revenues that are lost if the owner fails to make the improvements as provided by the agreement;
  • include each term that was agreed upon with the property owner and require the owner to annually certify compliance with the terms of the agreement to each taxing unit; and
  • allow the taxing unit to cancel or modify the agreement at any time if the property owner fails to comply with the terms of the agreement.

Step 3. The other taxing units (except school districts) may enter into an abatement agreement or choose not to provide an abatement. School districts are prohibited from entering into tax abatement agreements on or after September 1, 2001. There is no penalty for choosing not to abate. On September 1, 2001, the 90-day deadline period for the other taxing units to execute an agreement was removed. Further, the other taxing units have the option of granting a tax abatement with terms that differ from the abatement granted by the county. Nonetheless, each taxing entity’s tax abatement agreement will still have to meet the requirements under Tax Code Sections 312.204, 312.205 and 312.211 that relate to the execution, duration, and other terms which must be contained in a tax abatement agreement. In 2001, Sections 312.204(a) and 312.402 (a) of the Tax Code were amended to allow taxing units to enter into tax abatement agreement with the owner and “the owner of a leasehold interest” in real property.

Texas law requires the Comptroller to maintain a central registry of ad valorem tax abatement agreements executed and enterprise or reinvestment zones created under Chapter 312 of the Tax Code. The Chief Appraiser for a taxing unit that executes a tax abatement agreement or creates a reinvestment or enterprise zone is required to send the Comptroller a report providing any information required by the Comptroller and including a copy of each tax abatement agreement to which the taxing unit is a party. The report must be filed before July 1 of the year following the year in which the agreement is executed.

This registry contains a summary of the newly established tax abatement agreement data reported to the Comptroller since 1997 by year reported. The following describes the data elements of the New Tax Abatement Agreement Registry:

County Number - the 3-digit unique number for each county in the state.

County - the county where the property to be abated is located.

Taxing Unit Name - the name of all taxing units participating in the abatement agreement. If a city is listed first, it is the lead taxing unit. If the first tax unit listed is not a city, the lead taxing unit is the county.

Property Owner - the names of the parties participating in the abatement agreement.

Agreement Effective Date - the first date that property subject to the abatement agreement is to be abated.

Abatement Duration - the number of years that property is subject to the abatement agreement will be abated.

Percent Abated Each Year - the percentage of the value of the property that is subject to abatement.

Property Type - whether the property is for a business (commercial/industrial) or a residence.

Nature of Project - a business in an abatement agreement is:

  • expanding/modernizing a business current in the community
  • a new business
  • relocating from out of state
  • relocating from another city/county in Texas

Business Type - a business in an abatement agreement is:

  • Industrial
  • Retail
  • Wholesale
  • Other

Business Size Based on Number of Employees

  • Micro   0-19 employees
  • Small   20-99 employees
  • Medium   100- 499 employees
  • Large   500 + employees

Type of Improvement - a business is:

  • New Construction
  • Current Facility Renovation/Remodeling
  • Current Facility Retooling /Upgrading
  • Furniture/Fixture Purchase
  • New Machinery/Equipment Purchase

Type of Property Abated - property abated is either real, personal or both types.

Appraised Value of Property Before Execution of Agreement - the appraised value of the property the year in which the abatement agreement is executed.

Enterprise Zone - whether or not the tax abatement is located in a state designated enterprise zone.

Detailed information by year is available in electronic format; please contact Patricia Bailey, Property Tax Division, by e-mail at patricia.bailey@cpa.state.tx.us, or by phone toll free at 1-800-252-9121, extension 3-4416, or direct in Austin at 512/463-4416.


Summary of Reported Data

The following data is a summary by year of responses from the Comptroller’s New Tax Abatement Agreement Registry reports from 2000 through 2003. Summary data from 1997, 1998 and 1999 may be found in the Biennial Reports for the Reinvestment Zone for Tax Abatement Registry, the Tax Abatement Agreement Registry and the Tax Increment Financing Zone Registry, December 31, 2002, on the Comptroller’s Web site Window on State Government at www.window.state.tx.us and clicking on publications under Property Tax Reports. This previous issue of the report can be found under the “Archives-Historical Information” heading at the bottom.

Note: The information in the summary reflects our best interpretation of abatement agreements and report forms provided by the participating taxing units. The summary contains only the information reported to us. Some taxing units may not have reported their abatements agreements or reported all the requested information on the report form.

  2000 2001 2002 2003
Agreements Reported 262 170 157 245
  % No. % No. % No. % No.
Taxing Units
City Participating 49 53 53 52 47 26 54 32
County Participating 28 30 31 30 38 21 31 18
ISD Participating 2 2 0 0 2 1 0 0
Other Participating 21 23 16 16 13 7 15 9
Total of All Taxing Units Reporting Participating in Tax Abatements   108   98   55   59
Property Type
Business 68.20 178 69.88 116 43.92 65 26.5 63
Residence 31.80 83 30.12 50 56.08 83 73.5 175
Total of All Property Type Reported   261   166   148   238


  2000 2001 2002 2003
Percentage of Value Abated First Year
Average Percentage of Value Abated First Year 80% 80% 90% 94%
  % No. % No. % No. % No.
Highest Percentage 100 144 100 90 100 118 100 206
2nd Highest Percentage 50 41 50 24 75 14 50 13
3rd Highest Percentage 75 21 75 20 90 7 75 10
All Other Percentages           18   16
Total Number of Agreements Reporting Percentage of Value Abated First Year   261   166   157   245
Business Only
Average Percentage of Value Abated First Year 74% 73% 81% 79%
Highest Percentage 100 71 100 48 100 40 100 33
2nd Highest Percentage 50 39 50 50 75 9 50 13
3rd Highest Percentage 90 13 75 14 90 7 75 9
All Other Percentages   55   4   18   15
Total Number of Business Agreements Reporting Percentage of Value Abated First Year   178   116   74   70
Residential Only
Average Percentage of Value Abated First Year 96% 94% 98% 99%
Highest Percentage 100 72 100 39 100 78 100 174
2nd Highest Percentage 75 8 75 10 75 5 75 1
3rd Highest Percentage 50 2 50 1        
All Other Percentages   1            
Total Number of Residential Agreements Reporting Percentage of Value Abated First Year   83   50   83   175

  2000 2001 2002 2003
Years Duration of Agreements
Average Years Duration of Agreement 6.3yrs 6.4yrs 5.2 yrs 5.3 yrs
  Yrs. No. Yrs. No. Yrs. No. Yrs. No.
Most Years Duration 5 yrs 85 10 yrs 53 3 yrs 62 5 yrs 154
2nd Most Years Duration 10 yrs 79 5 yrs 41 5 yrs 49 3 yrs 40
3rd Most Years Duration 3 yrs 56 3yrs 40 10 yrs 29 7 yrs 21
All Other Years Duration   41   36   8   30
Total Number of Agreements Reporting Years Duration of Agreements   261   170   148   245
Business Only
Average Years Duration of Agreement 7.3 yrs 7.5 yrs 7.1yrs 6.9 yrs
Most Years Duration 5 yrs 64 10 yrs 49 10 yrs 25 7 yrs 21
2nd Most Years Duration 10 yrs 69 5 yrs 31 5 yrs 24 10 yrs 19
3rd Most Years Duration 3 yrs 12 7 yrs 16 7 yrs 6 5 yrs 16
All Other Years Duration   33   20   10   14
Total Number of Business Agreements Reporting Years Duration of Agreements   178   116   65   70
Residential Only
Average Years Duration of Agreement 4.3 yrs 3.8 yrs 3.6 yrs 4.6 yrs
Most Years Duration 3 yrs 51 3 yrs 37 3 yrs 60 5 yrs 138
2nd Most Years Duration 5 yrs 21 5 yrs 10 5 yrs 23 3 yrs 37
3rd Most Years Duration 10 yrs 10 10 yrs 3        
All Other Years Duration   1            
Total Number of Residential Agreements Reporting Years Duration of Agreements   83   50   83   175


  2000 2001 2002 2003
The following info applies to business agreements only:
Nature of the Project (some reported more than one)
  % No. % No. % No. % No.
Expanding/modernizing a business in current community 44.09 82 37.60 47 51.56 33 39.3 24
New business 37.63 70 41.60 52 35.94 23 41 25
Relocating from out of state 5.91 11 4.80 6 3.12 2 6.56 4
Relocating from another city/county in Texas 12.37 23 16.00 20 9.38 6 13.1 8
Total Number of Agreements Reporting Nature of the Project   186   125   64   61
Business Type
Industrial 14.04 25 18.35 20 11.86 7 13.46 7
Retail 7.87 14 10.09 11 25.42 15 9.62 5
Wholesale 7.87 14 3.67 4 8.47 5 0.00 0
Commercial/Real Estate 17.42 31 16.51 18 8.47 5 21.15 11
Hotel/Group Residence 2.81 5 1.83 2 5.09 3 5.77 3
Manufacturing 38.20 68 36.70 40 23.73 14 42.31 22
Research & Development 6.18 11 5.50 6 0.00 0 3.85 2
Medical 2.25 4 4.59 5 15.26 9 1.92 1
Energy 1.12 2 2.75 3 1.70 1 1.92 1
Banking 2.25 4 0.00 0 0.00 0   0
Total Number of Agreements Reporting Business Type   178   109   59   52
Business size (based on number of employees)
Micro (0-19) 18.02 31 12.26 13 29.09 16 18.00 9
Small (20-99) 27.91 48 30.19 32 23.64 13 42.00 21
Medium (100-499) 36.63 63 39.62 42 32.72 18 22.00 11
Large (500+) 17.44 30 17.92 19 14.55 8 18.00 9
Total Number of Agreements Reporting Business Size   172   106   55   50
Type of Improvement (some reported more than one)
New construction 41.95 125 35.71 80 44.96 49 39.33 35
Current facility renovation/remodeling 13.76 41 13.84 31 13.76 15 14.61 13
Current facility retooling/upgrading 4.70 14 5.80 13 1.83 2 1.12 1
Furniture/fixture purchase 17.11 51 20.54 46 19.27 21 22.47 20
New machinery/equipment purchase 22.48 67 24.11 54 20.18 22 22.47 20
Total Number of Agreements Reporting Type of Improvement   298   224   109   89