Property tax abatements under Chapters 312 and 313 of the Texas Tax Code allow counties, cities, school districts, and special purpose districts to reduce the amount of taxes paid by favored businesses that locate or expand within their geographic boundaries. They are used by renewable energy developers in concert with state and federal subsidies to turn a profit on what would otherwise be an unprofitable investment in highly inefficient renewable energy.
Exemptions from Texas’ Open Meetings and Public Information Acts means that negotiations between the taxing entities and private businesses usually take place behind closed doors.
These exemptions mean that most public input into the process will take place after the governing bodies have negotiated with the business seeking the abatement for months and essentially decided to move forward with the abatement. That doesn’t mean, though, that citizens can’t try to stop and reverse an abatement once they have belatedly learned of it.
However, stopping the Chapter 312 process in cities, counties, and special purpose districts is very difficult. Citizens usually receive only 72-hour notice for the city council, commissioners court, or governing board meeting where the tax abatement agreement and the related tax reinvestment zone creation are presented. Public hearings are required, but the short notice makes it difficult for citizens to have meaningful input. The governing board can approve the abatement and, if needed, the reinvestment zone, at this initial—and only—public meeting.
The Chapter 313 process provides more promise for public input. Even though only 72-hour notice is required for the public hearing where a school board “considers” a 313 application, the review requirement by Texas Comptroller’s office provides an additional 150 days (it can be a bit less or much longer) for the public engage and convince the school board to rescind its “consideration” of the 313 application or to not approve the final 313 abatement agreement.
Once a school board has affirmatively voted to consider a 313 application, the school district submits the application (usually through an outside consultant) to the Texas Comptroller. Shortly after being received, the Comptroller posts the application in its online database containing all relevant information on 313 applications it has received. When the Comptroller deems the application to be complete, this triggers 90-day maximum period of review for state administrators to ensure it meets certain statutory requirements.
After the agreement has been certified by the Comptroller, the school district works with the developer to prepare a final agreement. When completed, this agreement is sent to the Comptroller for review and approval. If the district has not created a tax reinvestment zone, they must do so before the agreement can be approved.
Upon approval of the agreement (with adjustments required by the Comptroller to ensure statutory compliance), the school board can vote to execute the agreement and provide the tax abatement at a public meeting.