2023 Texas Statutes › Tax Code › Title 3 - Local Taxation › Subtitle B - Special Property Tax Provisions › Chapter 312 - Property Redevelopment and Tax Abatement Act › Subchapter B. Tax Abatement in Municipal Reinvestment Zone › Section 312.204. Municipal Tax Abatement Agreement

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, on the condition that the owner of the property make specific improvements or repairs to the property.  The governing body of an eligible municipality may agree in writing with the owner of a leasehold interest in tax-exempt real property that is located in a reinvestment zone, but that is not in an improvement project financed by tax increment bonds, to exempt a portion of the value of property subject to ad valorem taxation, including the leasehold interest, improvements, or tangible personal property located on the real property, for a period not to exceed 10 years, on the condition that the owner of the leasehold interest make specific improvements or repairs to the real property.  A tax abatement agreement under this section is subject to the rights of holders of outstanding bonds of the municipality.  An agreement exempting taxable real property or leasehold interests or improvements on tax-exempt real property may provide for the exemption of such taxable interests 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 exempting tangible personal property located on taxable or tax-exempt real property 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, including inventory and 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)  Except as otherwise provided by this subsection, property that is in a reinvestment zone and that is owned or leased by a person who is a member of the governing body of the municipality or a member of a zoning or planning board or commission of the municipality is excluded from property tax abatement or tax increment financing.  Property that is subject to a tax abatement agreement in effect when the person becomes a member of the governing body or of the zoning or planning board or commission does not cease to be eligible for property tax abatement under that agreement because of the person's membership on the governing body, board, or commission.  Property that is subject to tax increment financing when the person becomes a member of the governing body or of the zoning or planning board or commission does not become ineligible for tax increment financing in the same reinvestment zone because of the person's membership on the governing body, board, or commission.
(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.
(g)  Notwithstanding the other provisions of this chapter, 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 real property that is located in a reinvestment zone to exempt from taxation for a period not to exceed five years a portion of the value of the real property or of tangible personal property located on the real property, or both, that is used to provide housing for military personnel employed at a military facility located in or near the municipality.  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.  The governing body of the municipality may adopt guidelines and criteria for tax abatement agreements entered into under this subsection that are different from the guidelines and criteria that apply to tax abatement agreements entered into under another provision of this section.  Tax abatement agreements entered into under this subsection are not required to contain identical terms for the portion of the value of the property that is to be exempt or for the duration of the exemption as tax abatement agreements entered into with the owners of property in the reinvestment zone under another provision of this section.
(h)  The Texas Department of Economic Development or its successor may recommend that a taxing unit enter into a tax abatement agreement with a person under this chapter.  In determining whether to enter into a tax abatement agreement under this section, the governing body of a municipality shall consider any recommendation made by the Texas Department of Economic Development or its successor.
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987.  Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.10(a), eff. Aug. 28, 1989;  Acts 1989, 71st Leg., ch. 486, Sec. 1, eff. June 14, 1989;  Acts 1989, 71st Leg., ch. 1137, Sec. 6, 7, eff. Sept. 1, 1989;  Acts 1995, 74th Leg., ch. 985, Sec. 13, eff. Sept. 1, 1995;  Acts 2001, 77th Leg., ch. 560, Sec. 1, eff. Sept. 1, 2001;  Acts 2001, 77th Leg., ch. 640, Sec. 1, eff. June 13, 2001;  Acts 2001, 77th Leg., ch. 765, Sec. 2, eff. Sept. 1, 2001;  Acts 2001, 77th Leg., ch. 1016, Sec. 1, eff. Sept. 1, 2001;  Acts 2001, 77th Leg., ch. 1258, Sec. 1, eff. June 15, 2001;  Acts 2003, 78th Leg., ch. 149, Sec. 18, eff. May 27, 2003;  Acts 2003, 78th Leg., ch. 978, Sec. 5, eff. Sept. 1, 2003.
Amended by:
Acts 2005, 79th Leg., Ch. 412 (S.B. 1652), Sec. 16, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch. 728 (H.B. 2018), Sec. 23.001(82), eff. September 1, 2005.