1 / 29

Tax Abatements and Reinvestment Zones

Learn about tax abatements and how to create reinvestment zones. Explore the benefits, guidelines, criteria, and steps involved in the tax abatement process.

beverlyadams
Download Presentation

Tax Abatements and Reinvestment Zones

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Tax Abatements and Reinvestment Zones

  2. WhoMay Create Reinvestment Zones? May Approve Abatements? • Reinvestment Zones • Cities/Counties • School Districts • Abatements • Cities and Counties • Special Purpose Districts • Hospital Districts • Water Districts • Road & Bridge Districts • Drainage Districts • Junior Colleges

  3. Potential Tax Abatement Benefits • Increase Employment • Strengthen Other Businesses • Increase Long-Term Tax Revenue • Tax Receipts Continue to Grow Long Term After the Abatement Expires • Flexible Economic Development Opportunities

  4. What Abatements Are Tax Code, Chapter 312 - Tax Abatements

  5. What Abatements Are Not • Local Government Code, Chapter 380/381 • Local Government Code, Chapter 378 - Neighborhood Empowerment Zones (NEZ) • Transportation Code, Chapter 222 - Transportation Reinvestment Zones (TRZ)

  6. Tax Abatement Process Outline: 1-3 • Guidelines and Criteria • Resolution • Public Hearing

  7. Tax Abatement Process Outline: 4-6 • Reinvestment Zone Designation • Tax Abatement Agreement • Providing Written Notice

  8. STEP 1: Guidelines & Criteria • Guidelines and criteria effective for two years from date they are adopted; • Ensure a business makes the improvements to the real property once located there; • Agree to exempt all or a portion of the value of property subject to property taxes; • Adoption of such guidelines does not preclude a commissioners court from requiring an application fee not to exceed $1,000. Tax Code Section 312.022(d)

  9. Criteria to Create a Reinvestment Zone • Substantial number of substandard or deteriorated structures; • Tax delinquency exceeding the fair value of the land; • Defective/inadequate sidewalks or streets; • Poor platting; • Unsanitary or unsafe conditions; • Deterioration of site improvements; • Defective or unusual conditions of improvement; or Tax Code Section 312.202

  10. Continued - Criteria to Create a Reinvestment Zone • Any combination of these factors: • In a federally assisted new community; • Located in a home-rule city; • Primarily due to obsolete platting; and • d) Encompass signage.

  11. STEP 2: Adoption of a Resolution • Resolution must be adopted in public hearing; • Other taxing unit can provide an abatement when: • A reinvestment zone is created; • Criteria are established; and • The primary taxing unit that created and approved the abatement agreement with a business on abatement terms.

  12. STEP 3: Public Hearings • When Held? • Abatements? • Where to Post? Tax Code Section 312.201, 312.202 and 312.401

  13. STEP 4: How to Designate a Reinvestment Zone • Must approve by ordinance or order; • Must be adopted during a public hearing; • Ordinance/Order must contain: • Identification of the area; • Indicate whether personal or real property; • Boundaries of the zone must be described in the ordinance; • Eligibility of the zone must be described in the ordinance; • Determine whether the improvements sought are practical and feasible and would be an asset to the land in the zone. Tax Code Section 312.201

  14. Proper Formatting and Naming of a Reinvestment Zone/Enterprise Zone • What Community is it in • Is it a Reinvestment Zone/Enterprise Zone • Numbering the Reinvestment Zone • Enterprise Zone Tract & Block Numbers EXAMPLES: Dallas Reinvestment Zone #1 Waco Enterprise Zone Tract #222, Bl 1 Governor’s Site: https://businessintexas.com/services/tax-incentives?view=texas%20enterprise%20zone%20program

  15. STEP 5: Entering into a Tax Abatement Agreement • Governing body may adopt the terms of the tax abatement agreement, after designating a reinvestment zone; • An abatement cannot last more than 10 years; • The agreement must be approved by a majority vote at a regularly scheduled meeting. Tax Code Sections 312.007 and 312.204

  16. STEP 6: Providing Written Notice Notes • Intent to enter into a tax abatement agreement must be delivered to the presiding officer of all other taxing units in which the property is located, at least 7 days prior to the abatement being granted. • Other taxing units may enter into an abatement agreement or not. • No penalty for choosing not to offer an abatement.

  17. Dates of the Abatement Agreement • Executed/Signed • Effective: CANNOT take effect before execution date! • Expiration Date

  18. Modifying Guidelines & Reinvestment Zones • GUIDELINES • Guidelines & criteria may be amended. • They may be adopted or repealed by ¾ vote of the governing body. • REINVESTMENT ZONE • Zone boundaries can be enlarged or reduced. Tax Code Section 312.002

  19. Modifying an Abatement Agreement • ABATEMENTS • An abatement may modify/cancel any time. • Either party can modify or cancel an abatement agreement. • The process to modify or cancel an agreement is the same as the approved and executed stages. Examples: • New business takes over; • New abatement terms; • Property owner fails to comply with the agreement; or • Use of the land is changed from the use specified in the certificate of completion. Tax Code Section 312.208

  20. Comptroller Role • Maintain a central registry for reinvestment zones and abatements. • Submit a report to the Legislature and the Governor no later than December 31 of each even-numbered year. • Provide technical assistance. Tax Code, Section 312.005

  21. Reporting Requirements • New RZ • Form 50-275 • Ordinance • Guidelines • Criteria • Must be submitted before July 1 of the year following the year in which the zone • was designated. • Abatement Agreement • Form 50-276 • Copy of abatement agreement • Modified/Cancelled Agreement • Form 50-277 • Copy of the modification • Recommended - Submit the forms ASAP • Tax Code Section 312.005

  22. Comptroller Publications & Materials • Biennial Report • Semi-Annual Tax Abatement Log • Tax Abatement Brochure • Webinars and OnDemand presentation of abatements • FAQs

  23. How to…Fill Out Form 50-275

  24. How to…Fill Out Form 50-276

  25. How to…Fill Out Form 50-277

  26. Contact Information Data Analysis & Transparency Division Call: 1-800-531-5441, ext. 3-4679 Email: econ.dev@cpa.texas.gov Frank Alvarez – ext. 6-9231 frank.alvarez@cpa.texas.gov

More Related