Chapter 313 was part of the Texas Economic Development Act of 2001. It provides the means for school districts across the state of Texas to grant property tax abatements to companies within their school district who commit to developing new jobs. Its original intent was to provide an economic inducement for companies choosing between establishing a business in Texas or some other state. Initially it was to target new business entities locating to Texas, but now it has been applied to new projects by a company already established in Texas or even existing plant expansions. In fact, it seems it is only up to the imagination and discretion of the school district with little oversight from the state.
Upon granting the tax abatements the school district is eligible to have the foregone taxes reimbursed from the general funds of the Texas State Treasury.
The chapter further allows a district to negotiate PILOTS “Payment in Lieu of Taxes” with the company getting the abatement. These are additional payments, less than the property taxes they would pay on the unabated property the company negotiates with the school district.
As the appraised property value has been abated, the school district’s appraised value for that property will remain the same for the duration of the abatement. This allows the school district to under report their property values to the state for recapture purposes AKA Robin Hood Taxes.
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