Subtitle B. Special Property Tax Provisions
Chapter 312. Property Development
(continued)
Subchapter B. Tax Abatement in Municipal Reinvestment Zone
Sec. 312.201. Designation of Reinvestment Zone.
Sec. 312.2011. Enterprise Zone.
Sec. 312.202. Criteria for Reinvestment Zone.
Sec. 312.203. Expiration of Reinvestment Zone.
Sec. 312.204. Municipal Tax Abatement Agreement.
Sec. 312.2041. Notice of Tax Abatement Agreement to Other Taxing Units.
Sec. 312.205. Specific Terms of Tax Abatement Agreement.
Sec. 312.206. Tax Abatement by Other Taxing Units.
Sec. 312.207. Approval by Governing Body.
Sec. 312.208. Modification or Termination of Agreement.
Sec. 312.209. Application of Nonseverability Provision.
Sec. 312.210. Agreement by Taxing Units Relating to Property in Certain School Districts.
Sec. 312.211. Agreement by Municipality Relating to Property Subject to Voluntary Cleanup Agreement.
[Sections 312.212 to 312.400 reserved for expansion]
Subchapter B. Tax Abatement in Municipal Reinvestment Zone
Sec. 312.201. Designation of Reinvestment Zone.(a) The governing body of a municipality by ordinance may designate as a reinvestment zone an area, or real or personal property the use of which is directly related to outdoor advertising, in the taxing jurisdiction or extraterritorial jurisdiction of the municipality that the governing body finds satisfies the requirements of Section 312.202.
(b) The ordinance must describe the boundaries of the zone and the eligibility of the zone for residential tax abatement or commercial-industrial tax abatement or tax increment financing as provided for in Chapter 311.
(c) Area of a reinvestment zone designated for residential tax abatement or commercial-industrial tax abatement may be included in an overlapping or coincidental residential or commercial-industrial zone. In that event, the zone in which the property is considered to be located for purposes of executing an agreement under Section 312.204 or 312.211 is determined by the comprehensive zoning ordinance, if any, of the municipality.
(d) The governing body may not adopt an ordinance designating an area as a reinvestment zone until the governing body has held a public hearing on the designation and has found that the improvements sought are feasible and practical and would be a benefit to the land to be included in the zone and to the municipality after the expiration of an agreement entered into under Section 312.204 or 312.211, as applicable. At the hearing, interested persons are entitled to speak and present evidence for or against the designation. Not later than the seventh day before the date of the hearing, notice of the hearing must be:
(1) published in a newspaper having general circulation in the municipality; and
(2) delivered in writing to the presiding officer of the governing body of each taxing unit that includes in its boundaries real property that is to be included in the proposed reinvestment zone.
(e) A notice made under Subsection (d) (2) 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.
Amended by 1989 Tex. Laws, p. 183, ch. 2, Sec. 14.08; amended by 1997 Tex. Laws, p. 2730, ch. 855, Sec. 10, and p. 5045, ch. 1333, Sec. 2.
Sec. 312.2011. Enterprise Zone.
Designation of an area as an enterprise zone under the Texas Enterprise Zone Act (Chapter 2303, Government Code) constitutes designation of the area as a reinvestment zone under this subchapter without further hearing or other procedural requirements than those provided by the Texas Enterprise Zone Act (Chapter 2303, Government Code).
Added by 1989 Tex. Laws, p. 4692, ch. 1106, Sec. 28; amended by 1995 Tex. Laws, p. 545, ch. 76, Sec. 5.95(22)
Sec. 312.202. Criteria for Reinvestment Zone.
(a) To be designated as a reinvestment zone under this subchapter, an area must:
(1) substantially arrest or impair the sound growth of the municipality creating the zone, retard the provision of housing accommodations, or constitute an economic or social liability and be a menace to the public health, safety, morals, or welfare in its present condition and use because of the presence of:
(A) a substantial number of substandard, slum, deteriorated, or deteriorating structures;
(B) the predominance of defective or inadequate sidewalks or streets;
(C) faulty size, adequacy, accessibility, or usefulness of lots;
(D) unsanitary or unsafe conditions;
(E) the deterioration of site or other improvements;
(F) tax or special assessment delinquency exceeding the fair value of the land;
(G) defective or unusual conditions of title;
(H) conditions that endanger life or property by fire or other cause; or
(I) any combination of these factors;
(2) be predominantly open and, because of obsolete platting, deterioration of structures or site improvements, or other factors, substantially impair or arrest the sound growth of the municipality;
(3) be in a federally assisted new community located in a home-rule municipality or in an area immediately adjacent to a federally assisted new community located in a home-rule municipality;
(4) be located entirely in an area that meets the requirements for federal assistance under Section 119 of the Housing and Community Development Act of 1974 (42 U.S.C. Section 5318);
(5) encompass signs, billboards, or other outdoor advertising structures designated by the governing body of the municipality for relocation, reconstruction, or removal for the purpose of enhancing the physical environment of the municipality, which the legislature declares to be a public purpose; or
(6) be reasonably likely as a result of the designation to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the municipality.
(b) For purposes of this section, a federally assisted new community is a federally assisted area:
(1) that has received or will receive assistance in the form of loan guarantees under the Title X of the National Housing Act (12 U.S.C. Section 1749aa et seq.); and
(2) a portion of which has received grants under Section 107 of the Housing and Community Development Act of 1974 (42 U.S.C. Section 5307) made pursuant to the authority created by that section for grants in behalf of new communities assisted under Title VII of the Housing and Urban Development Act of 1970 or Title IV of the Housing and Urban Development Act of 1968 or in behalf of new community projects assisted under Title X of the National Housing Act (12 U.S.C. Section 1749aa et seq.).
Amended by 1989 Tex. Laws, p. 183, ch. 2, Sec. 14.09.
Sec. 312.203. Expiration of Reinvestment Zone
The designation of a reinvestment zone for residential or commercial-industrial tax abatement expires five years after the date of the designation and may be renewed for periods not to exceed five years, except that a reinvestment zone that is a state enterprise zone is designated for the same period as a state enterprise zone as provided by Chapter 2303, Government Code. The expiration of the designation does not affect an existing tax abatement agreement made under this subchapter.
Amended by 1995 Tex. Laws, p. 4954, ch. 985, Sec. 12.
Sec. 312.204. Municipal Tax Abatement Agreement.
(a) The governing body of a municipality eligible to enter into tax abatement agreements under Section 312.002 may agree in writing with the owner of taxable real property that is located in a reinvestment zone, but that is not in an improvement project financed by tax increment bonds, to exempt from taxation a portion of the value of the real property or of tangible personal property located on the real property, or both, for a period not to exceed 10 years, subject to the rights of holders of outstanding bonds of the municipality, on the condition that the owner of the property make specific improvements or repairs to the property. An agreement may provide for the exemption of the real property in each year covered by the agreement only to the extent its value for that year exceeds its value for the year in which the agreement is executed. An agreement may provide for the exemption of tangible personal property located on the real property in each year covered by the agreement other than tangible personal property that was located on the real property at any time before the period covered by the agreement with the municipality, and other than inventory or supplies. In a municipality that has a comprehensive zoning ordinance, an improvement, repair, development, or redevelopment taking place under an agreement under this section must conform to the comprehensive zoning ordinance.
(b) The agreements made with the owners of property in a reinvestment zone must contain identical terms for the portion of the value of the property that is to be exempt and the duration of the exemption. For purposes of this subsection, if agreements made with the owners of property in a reinvestment zone before September 1, 1989, exceed 10 years in duration, agreements made with owners of property in the zone on or after that date must have a duration of 10 years.
(c) The property subject to an agreement made under this section may be located in the extraterritorial jurisdiction of the municipality. In that event, the agreement applies to taxes of the municipality if the municipality annexes the property during the period specified in the agreement.
(d) Property that is in a reinvestment zone and that is owned or leased by a member of the governing body of the municipality or by a member of a zoning or planning board or commission of the municipality is excluded from property tax abatement or tax increment financing.
(e) The governing body of a municipality eligible to enter into tax abatement agreements under Section 312.002 may agree in writing with the owner or lessee of real property that is located in a reinvestment zone to exempt from taxation for a period not to exceed 10 years a portion of the value of the real property or of personal property, or both, located within the zone and owned or leased by a certificated air carrier, on the condition that the certificated air carrier make specific real property improvements or lease for a term of 10 years or more real property improvements located within the reinvestment zone. An agreement may provide for the exemption of the real property in each year covered by the agreement to the extent its value for that year exceeds its value for the year in which the agreement is executed. An agreement may provide for the exemption of the personal property owned or leased by a certificated air carrier located within the reinvestment zone in each year covered by the agreement other than specific personal property that was located within the reinvestment zone at any time before the period covered by the agreement with the municipality.
(f) The agreements made with owners of property in an enterprise zone that is also designated as a reinvestment zone are not required to contain identical terms for the portion of the value of property that is to be exempt and the duration of the agreement.
Amended by 1989 Tex. Laws, p. 184, ch. 2, Sec. 14.10 and p. 1659, ch. 486, Sec. 1 and p. 4685, ch. 1137, Secs. 6 and 7; amended by 1995 Tex. Laws, p. 4954, ch. 985, Sec. 13.
Notes:
A tax abatement agreement under Tax Code Chapter 312 may not exceed 10 years. A taxing entity may not grant a tax abatement for property that previously received a 10-year tax abatement. To receive more than 10 years of tax abatement, an agreement must have been made prior to September 1, 1989. Op. Tex. Att’y Gen. No. JC-0133 (1999).Neither Local Government Code Section 380.001 nor Property Tax Code Section 312.204 authorizes a municipality to abate delinquent taxes owed by a taxpayer who participates in the municipality’s enterprise zone. Article III, Section 55, Texas Constitution, expressly forbids the abatement of delinquent taxes. Tex. Att’y Gen. LO-95-090 (1995).
Sec. 312.2041. Notice of Tax Abatement Agreement to Other Taxing Units.
(a) Not later than the seventh day before the date on which the municipality enters into an agreement under Section 312.204 or 312.211, the governing body of the municipality or a designated officer or employee of the municipality shall deliver to the presiding officer of the governing body of each other taxing unit in which the property to be subject to the agreement is located a written notice that the municipality intends to enter into the agreement. The notice must include a copy of the proposed agreement.
(b) A notice 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.
(c) Failure to deliver the notice does not affect the validity of the agreement.
Added by 1989 Tex. Laws, p. 185, ch. 2, Sec. 14.11; amended by 1989 Tex. Laws, p. 4685, ch. 1137, Sec. 8; amended by 1997 Tex. Laws, p. 2730, ch. 855, Sec. 11, and p. 5045, ch. 1333, Sec. 3.
Sec. 312.205. Specific Terms of Tax Abatement Agreement.
(a) An agreement made under Section 312.204 or 312.211 must:
(1) list the kind, number, and location of all proposed improvements of the property;
(2) provide access to and authorize inspection of the property by municipal employees to ensure that the improvements or repairs are made according to the specifications and conditions of the agreement;
(3) limit the uses of the property consistent with the general purpose of encouraging development or redevelopment of the zone during the period that property tax exemptions are in effect;
(4) provide for recapturing property tax revenue lost as a result of the agreement if the owner of the property fails to make the improvements or repairs as provided by the agreement;
(5) contain each term agreed to by the owner of the property;
(6) require the owner of the property to certify annually to the governing body of each taxing unit that the owner is in compliance with each applicable term of the agreement; and
(7) provide that the governing body of the municipality may cancel or modify the agreement if the property owner fails to comply with the agreement.
(b) An agreement made under Section 312.204 or 312.211 may include, at the option of the governing body of the municipality, provisions for:
(1) improvements or repairs by the municipality to streets, sidewalks, and utility services or facilities associated with the property, except that the agreement may not provide for lower charges or rates than are made for other services or properties of a similar character;
(2) an economic feasibility study, including a detailed list of estimated improvement costs, a description of the methods of financing all estimated costs, and the time when related costs or monetary obligations are to be incurred;
(3) a map showing existing uses and conditions of real property in the reinvestment zone;
(4) a map showing proposed improvements and uses in the reinvestment zone; and
(5) proposed changes of zoning ordinances, the master plan, the map, building codes, and city ordinances.
Amended by 1995 Tex. Laws, p. 4992, ch. 995, Sec. 3; amended by 1997 Tex. Laws, p. 2730, ch. 855, Sec. 12, and p. 5045, ch. 1333, Sec. 4.
Notes:
A taxpayer entered into tax abatement agreements in 1988 for a period not to exceed five years. Construction on the subject property was delayed until 1990. In 1994, the taxpayer received no abatement. The fact that construction was delayed did not alter the specific agreement. Quantum Chemical Corp. v. Harris County Appraisal District, 962 S.W.2d 50 (Tex. App. -- Houston [1st District] 1997).Sec. 312.206. Tax Abatement by Other Taxing Units.
(a) If property taxes on property located in the taxing jurisdiction of a municipality are abated under an agreement made under Section 312.204 or 312.211, the governing body of each other taxing unit eligible to enter into tax abatement agreements under Section 312.002 in which the property is located may execute a written tax abatement agreement with the owner of the property not later than the 90th day after the date the municipal agreement is executed. The agreement is not required to contain terms identical to those contained in the agreement with the municipality. Section 312.205 applies to an agreement made by a taxing unit under this section in the same manner as it applies to an agreement made by a municipality under Section 312.204 or 312.211. If the governing body of the taxing unit by official action at any time before the execution of the municipal agreement expresses an intent to be bound by the terms of the municipal agreement if the municipality enters into an agreement under Section 312.204 or 312.211 with the owner relating to the property, the terms of the municipal agreement regarding the share of the property to be exempt in each year of the municipal agreement apply to the taxation of the property by the taxing unit.
(b) If property taxes on property located in the taxing jurisdiction of a municipality are abated under an agreement made by the municipality before September 1, 1989, the terms of the agreement with the municipality regarding the share of the property that is to be exempt in each year of the agreement apply to the taxation of the property by every other taxing unit, other than a county or school district, in which the property is located. If the agreement was made before September 1, 1987, the terms regarding the share of the property to be exempt in each year of the agreement also apply to the taxation of the property by a county or school district.
(c) If the governing body of a municipality designates a reinvestment zone that includes property in the extraterritorial jurisdiction of the municipality, the governing body of a taxing unit eligible to enter into tax abatement agreements under Section 312.002 in which the property is located may execute a written agreement with the owner of the property to exempt from its property taxes all or part of the value of the property in the same manner and subject to the same restrictions as provided by Section 312.204 or 312.211 for a municipality. The taxing unit may execute an agreement even if the municipality does not execute an agreement for the property, and the terms of the agreement are not required to be identical to the terms of a municipal agreement. However, if the governing body of another eligible taxing unit has previously executed an agreement to exempt all or part of the value of the property and that agreement is still in effect, the terms of the subsequent agreement relating to the share of the property that is to be exempt in each year that the existing agreement remains in effect must be identical to those of the existing agreement.
(d) If property taxes are abated on property in the extraterritorial jurisdiction of a municipality due to an agreement with a county or school district made before September 1, 1989, the terms of the agreement with the county or school district relating to the share of the property that is to be exempt in each year of the agreement apply to the taxation of the property by every other taxing unit, other than a municipality, school district, or county, in which the property is located.
(e) If property taxes on property located in an enterprise zone are abated under this chapter, the governing body of each taxing jurisdiction may execute a written agreement with the owner of the property not later than the 90th day after the date the municipal or county agreement is executed, whichever is later. The agreement may, but is not required to, contain terms that are identical to those contained in the agreement with the municipality, county, or both, whichever applies, and the only terms of the agreement that may vary are the portion of the property that is to be exempt from taxation under the agreement and the duration of the agreement.
Amended by 1989 Tex. Laws, p. 184, ch. 2, Sec. 14.10, and p. 4686, ch. 1137, Sec. 9; amended by 1995 Tex. Laws, p. 4954, ch. 985, Sec. 14; amended by 1997 Tex. Laws, p. 2731, ch. 855, Sec. 13, and p. 5046, ch. 1333. Sec. 5; amended by HB 3034, 76th Tex. Leg., 1999, eff. September 1, 1999.
Cross References:
Consolidation of school districts or school territory, see Sec. 36.008, Education Code.Notes:
HB 3034, 76th Tex. Leg., 1999, eff. September 1, 1999, applies only to a tax abatement agreement entered into on or after this effective date. A tax abatement agreement entered into before this effective date is governed by the law as it existed on the date the tax abatement agreement was entered into, and that law is continued in effect for that purpose. HB 3034 applies only to ad valorem taxes imposed on or after January 1, 2000.The question of whether a navigation district may enter into a tax abatement agreement where a navigation district board member owns an interest in the property receiving the abatement is governed by general conflict of interest laws in Chapter 171 of the Local Government Code. Tex. Att’y Gen. LO-93-35 (1993).
A navigation district did not have the authority to enter into an abatement agreement on its own initiation. Only counties and municipalities can enter into a tax abatement agreement on their own initiation – other taxing units must wait for either a county or a municipality to enter into an agreement. Under Sec. 312.206, Tax Code, the terms of another taxing units’ agreement are dictated by the pre-existing county or municipal abatement agreement. Op. Tex. Att’y Gen. No. DM-90 (1992).
Sec. 312.207. Approval by Governing Body.
(a) To be effective, an agreement made under this subchapter must be approved by the affirmative vote of a majority of the members of the governing body of the municipality or other taxing unit at a regularly scheduled meeting of the governing body.
(b) On approval by the governing body, an agreement may be executed in the same manner as other contracts made by the municipality or other taxing unit.
Sec. 312.208. Modification or Termination of Agreement.
(a) At any time before the expiration of an agreement made under this subchapter, the agreement may be modified by the parties to the agreement to include other provisions that could have been included in the original agreement or to delete provisions that were not necessary to the original agreement. The modification must be made by the same procedure by which the original agreement was approved and executed. The original agreement may not be modified to extend beyond 10 years from the date of the original agreement.
(b) An agreement made under this subchapter may be terminated by the mutual consent of the parties in the same manner that the agreement was approved and executed.
Amended by 1989 Tex. Laws, p. 4686, ch. 1137, Sec. 10.
Note:
A county is not authorized to amend a Property Tax Code Chapter 312 tax abatement agreement by deleting land from an existing reinvestment zone. A county reinvestment zone under Chapter 312 must be contiguous and may not consist of only a portion of a building. The Legislature intended to leave the substance of criteria for tax abatement agreements to the county commissioners court’s discretion, subject to general constraints and certain specific limitations imposed by Chapter 312. Op. Tex. Att’y Gen. No. DM-456 (1997).Sec. 312.209. Application of Nonseverability Provision.
Section 2, Article 5, Chapter 221, Acts of the 69th Legislature, Regular Session, 1985, applies to the provisions of this subchapter that are derived from amendments to the Property Redevelopment and Tax Abatement Act made by Chapter 221, Acts of the 69th Legislature, Regular Session, 1985.
Sec. 312.210. Agreement by Taxing Units Relating to Property in Certain School Districts.
(a) This section applies only to a tax abatement agreement applicable to property located in a reinvestment zone with respect to which a municipality, county, and junior college district have entered into a joint agreement to offer tax abatements exempting from taxation a specified portion of the value of the property in the reinvestment zone.
(b) A tax abatement agreement with the owner of real property that is located in the reinvestment zone described by Subsection (a) and in a school district that has a wealth per student that does not exceed the equalized wealth level must exempt from taxation:
(1) the portion of the value of the property in the amount specified in the joint agreement among the municipality, county, and junior college district; and
(2) an amount equal to 10 percent of the maximum portion of the value of the property that may under Section 312.204(a) be otherwise exempted from taxation.
(c) In this section, "wealth per student" and "equalized wealth level" have the meanings assigned those terms by Section 41.001, Education Code.
Added by 1995 Tex. Laws, p. 5206, ch. 1053, Sec. 1; amended by 1997 Tex. Laws, p. 375, ch. 165, Sec. 6.84.
Cross References:
Sec. 36.001, Education Code, now see Sec. 41.001, Education Code.Sec. 312.211. Agreement by Municipality Relating to Property Subject to Voluntary Cleanup Agreement.
(a) This section applies only to:
(1) real property:
(A) that is located in a reinvestment zone;
(B) that is not in an improvement project financed by tax increment bonds;
(C) that is the subject of a voluntary cleanup agreement under Section 361.606, Health and Safety Code; and
(D) the value of which is adversely affected by the release of a hazardous substance or contaminant according to the two preceding appraisals by the appraisal office; and
(2) tangible personal property located on the real property.
(b) The governing body of a municipality eligible to enter into a tax abatement agreement under Section 312.002 may agree in writing with the owner of property described by Subsection (a) to exempt from taxation a portion of the value of the property for a period not to exceed four years. The agreement takes effect on January 1 of the next tax year after the date the owner receives a certificate of completion for the property under Section 361.609, Health and Safety Code. The agreement may exempt from taxation:
(1) not more than 100 percent of the value of the property in the first year covered by the agreement;
(2) not more than 75 percent of the value of the property in the second year covered by the agreement;
(3) not more than 50 percent of the value of the property in the third year covered by the agreement; and
(4) not more than 25 percent of the value of the property in the fourth year covered by the agreement.
(c) A property owner may not receive a tax abatement under this section for the first tax year covered by the agreement unless the property owner includes with the application for an exemption under Section 11.28 filed with the chief appraiser of the appraisal district in which the property has situs a copy of the certificate of completion for the property.
(d) A property owner who files a copy of the certificate of completion for property for the first tax year covered by the agreement is not required to refile the certificate in a subsequent tax year to receive a tax abatement under this section for the property for that tax year.
(e) The chief appraiser shall accept a certificate of completion filed under Subsection (c) as conclusive evidence of the facts stated in the certificate.
(f) The governing body of the municipality may cancel or modify the agreement if:
(1) the use of the land is changed from the use specified in the certificate of completion; and
(2) the governing body determines that the new use may result in an increased risk to human health or the environment.
(g) A municipality may enter into a tax abatement agreement covering property described by Subsection (a) under this section or under Section 312.204, but not under both sections. Section 312.204 applies to an agreement entered into under this section except as otherwise provided by this section.
(h) A school district may not enter into a tax abatement agreement under this section.
Added by 1997 Tex. Laws, p. 2729, ch. 855, Sec. 8, and p. 5046, ch. 1333, Sec. 6.
[Sections 312.212 to 312.400 reserved for expansion]
| Subchapter A | Subchapter B | Subchapter C | Subchapter D |