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Property Tax Resources

Nov
30

Shrinking Retail Footprint Complicates Taxes

With other major retailers making similar announcements in 2015, this market shift will likely affect property owners and their property values for years to come.

As brick-and-mortar store operators respond to competition from online retailers, shopping center owners face a mounting risk of unfair taxation when assessors fail to account for retailers’ changing preferences for space.

In markets across the nation, select big box and junior big box retail tenants are changing their existing store concepts and shrinking the building footprints of retail shopping center and standalone locations.

Businesses that were once considered strong anchor or junior anchor tenants are even restructuring their business models, renegotiating leases for smaller spaces and closing stores that no longer meet viable internal metrics.

JC Penney, Barnes & Noble and Sears have all announced nationwide store closings in 2015, and the merger of Office Depot and Office Max has fueled additional store closings this year.

With other major retailers making similar announcements in 2015, this market shift will likely affect property owners and their property values for years to come.

Changes Threaten Values

Retailers’ new criteria for inline and freestanding stores will almost certainly present a property tax challenge for big box and junior big box space, as store closures and footprint reductions affect demand, market vacancy and lease rates in the sector.

Often, assessors will focus too much on the tenant and what the lease states, instead of remembering that the ultimate goal is to properly value the building and land as of the date of value.

When working with assessors, it is important to consider that calculations involving existing tenants constitute a leased fee analysis, which is inappropriate for calculating value for property taxes.

On a fee simple basis, which looks at the property and its market position, this type of space may have an entirely different market value.

With that in mind, it is important to know what the space would lease for if available for lease in an open market as of the date of value.

Another important factor to consider is what the property would sell for in an open market transaction on a fee simple basis. In reviewing the assessor’s calculations, consider whether any referenced sales of other properties reflect leased fee or fee simple pricing.

Blending leased fee and fee simple sales without a proper analysis can yield conflicting data points, compromising the integrity of subsequent conclusions.

These oversights often result in in-correct market value assumptions and metrics, and lead to artificially inflated property tax values.

Interest Shrinks for Big Boxes

Some tenants have reduced their store footprints by more than 20 percent over the past few years.  In part, this adjustment maximizes inventory turnover and sales per square foot.

When looking for new space, certain retailers have also set strict size limits with leasing brokers, and some stores that were once considered anchors are moving into inline retail space.

This type of size restriction can significantly impair a retail property’s overall market rent potential if an owner already has a vacant big box or junior box space. These factors are important metrics to consider when surveying rent to arrive at an appropriate market rental rate conclusion.

One way property owners are dealing with unmarketable big boxes is by subdividing the space into smaller suites that better accommodate the growing demand for small retail footprints.

This conversion can be costly, and if relevant, it is important to discuss the conversion costs with the assessor as of the date of value for the property.

It is also important to consider a proper lease up analysis if the property has substantial vacancy. With store closings triggering an increase in the available retail supply and online shopping continuing to gain market share, a lease up analysis that captures these factors is essential.

An additional issue to consider with the conversion into smaller suites is the depth of the original box and the potential for what some brokers term “bowling alley” space.

Often when the subdivision of big box or junior big box space is complete, new tenants will refuse to lease the excess depth the suite may provide.

In this instance owners are sometimes left with non-leasable space in the rear portion of the original building.

When this happens, it is important to consider excluding this space from the net rentable area of the analysis since the configuration often makes this space impossible to lease.

If subdivision is not an option, be realistic about the future lease up prospects for this type of space and use an appropriate, stabilized vacancy rate in addition to a proper lease up analysis.

Even after observing the points mentioned here, be sure to consider the particular characteristics of the local market before reaching any value conclusions.

As business models for big box and junior box retailers evolve, so must the assessor’s approach to valuation. Only after considering all of these factors can the assessor determine a proper market value to the fee simple estate.

 

kirk garza activeKirk Garza is part of the Member Appraisal Institute and a licensed Texas Property Tax Consultant with the Texas law firm of Popp Hutcheson PLLC, which focuses its practice on property tax disputes and is the Texas member of the American Property Tax Counsel, the national affiliation of property tax attorneys. Reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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Sep
01

Texas Legislature Retains Equal and Uniform Property Tax Remedy

Tax relief was a hot topic from the very beginning of the session, with lawmakers submitting bills in both the House and the Senate proposing property tax, sales tax and franchise tax relief.

The 84th Texas legislative session followed a pre-session spectacle that seemed to promise heated debates over property tax issues, but ended with no casualties or otherwise drastic changes to the state’s property tax remedies and system.

Legislators submitted some 332 property tax bills. Among those were several bills addressing grumblings raised in the news media as to the equal-and-uniform remedy, unique to Texas and instrumental in granting its taxpayers property tax relief. The remedy holds that a property’s appraised value must be equal to or less than the median appraised value of a reasonable number of comparable properties appropriately adjusted.

In the end, the legislature passed about 65 bills, granting tax relief to property owners, making tweaks to the property tax system and leaving the equal-and-uniform remedy intact.

Tax relief was a hot topic from the very beginning of the session, with lawmakers submitting bills in both the House and the Senate proposing property tax, sales tax and franchise tax relief. Eventually, the legislature increased the homestead exemption for school district property taxes from $15,000 to $25,000, effective for the 2015 tax year. In addition, the legislature reduced franchise taxes by 25 percent.

In another effort to grant property tax relief, the law will now require a taxing entity to achieve a 60 percent majority vote, rather than a simple majority, to adopt a property tax rate that exceeds the effective tax rate. The effective rate is the tax rate that would achieve the same amount of revenue as the previous year’s taxes. Additionally, the interest rate taxing entities must pay on refunds resulting from the final determination of a taxpayer’s property value increased to 9.5 percent until the refund is made.

As expected, the equal-and-uniform tax relief provision garnered considerable discussion. In recent years, countless articles and interviews criticizing commercial property owner’s “abuse” of the equal-and-uniform remedy circulated in the industry. Although the Constitution guarantees equal and uniform taxation, opponents alleged the remedy had shifted the property tax burden from commercial property owners to homeowners.

On the reverse side, commercial property owners advocated fair and equitable treatment in a district’s valuation of their property, and wanted a right to pursue their equal and uniform remedy through litigation, just like homeowners do.

The equal-and-uniform remedy for commercial property owners was at risk going into the session, and a few lawmakers introduced a handful of bills that would have substantially limited or completely eliminated the remedy for commercial property owners. Those bills failed to gain momentum, however, and none passed out of committee.

Instead, to address both appraisal district and taxpayer concerns over the perceived misuse and the general preservation of the equal and uniform remedy, lawmakers eventually passed a compromise bill. House Bill 2083 amending the tax code provides that any equal-and-uniform analysis must be based on the application of generally accepted appraisal methods and techniques.

At the same time, it recognizes a property owner’s right to give an opinion as to the value of his own property. While increasing the standard under which an equity analysis must be prepared and reviewed, the new law leaves the equal-and-uniform remedy in place for all taxpayers.

Several other measures adopted during the legislative session seek to secure taxpayer access to relief. The legislature expanded the availability of arbitration as an alternate means to appeal property values, for example.

Now, commercial property owners with a property appraised at $3 million or less may appeal directly through binding arbitration instead of having to file an appeal in district court. This replaces the previous $1 million threshold, making the remedy available to more commercial property owners.

Another new law aims to facilitate the process for lawsuit settlement by requiring parties to attend settlement conferences before incurring unnecessary expenses. And lawmakers passed other laws directed at addressing taxpayer concerns over exemptions, applications and other procedures.

A legislative session is sometimes more notable for the measures that failed to pass. At least one failed bill proposed to allow appraisal districts to recover their attorneys’ fees should they prevail in district court, as taxpayers are currently allowed. Another would have provided for a 5 percent appraisal cap on all property, disregarding studies suggesting that caps are ineffective tax relief measures that run contrary to equal-and-uniform taxation. Neither these nor some of the more curious bills received much attention.

Ultimately, despite warnings of the looming collapse of the equal-and-uniform remedy, the bills that passed were uncontroversial. The equal-and-uniform remedy for commercial property owners remains secure, and other passed amendments will generally benefit property owners.

MelissaRamirez150Melissa Ramirez is a principal with the Austin law firm of Popp Hutcheson P.L.L.C., which focuses its practice on property tax disputes and is the Texas member of American Property Tax Counsel (APTC), the national affiliation of property tax attorneys. Ms. Ramierz can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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May
21

Texas Extends Lucrative Tax Incentive

Program is designed to help entice companies and developers to the state.

Economists anticipate unprecedented capital investment in Texas over the next few decades, and tax jurisdictions in Texas are no doubt eager to take advantage of this influx of capital. Increasing property tax rates and limited manufacturing and construction resources have hampered Texas' economic development efforts on the ever-competitive national stage, however.

So, in the spirit of the Texas Economic Development Corp.'s "Texas Wide Open for Business" marketing program, lawmakers have extended two of the state's most popular and lucrative tax incentives programs in order to entice companies and developers here. Those incentives are property tax abatements and a program to temporarily limit increases on the appraised value of capital investments at properties taxed by school districts. Many companies have already discovered that the best way to reduce the property tax burden during early project investment years is through local property tax incentives. But what do these programs offer, and who should  use them?

The recently renewed Chapter 312 of the Texas Property Tax Code, also known as the Property Redevelopment and Tax Abatement Act, allows the taxpayer and local taxing unit to create agreements exempting all or part of an appraised property value increase from taxation for up to 10 years.

This incentive promotes economic development in the state through major capital investment, job creation, job retention and the utilization of existing local vendors. Property owners often seek abatement incentives for projects ranging from retail shopping centers and distribution warehouses to natural gas processing plants and wind farms. Local taxing units that wish to provide property tax abatements must state their intent to provide the incentive, and then adopt abatement guidelines and criteria. Typically, abatement guidelines and criteria reflect the specific needs of the taxing unit. Therefore, abatement guidelines and criteria, such as minimum investment amounts and/or the number of jobs to be created, often vary from county to county. A company considering investment in Texas should research proposed sites in advance to confirm that the potential project meets local abatement guidelines and criteria.

The Texas Legislature reauthorized the use of property tax abatements until Sept. 1, 2019. In 2001, the 77th Texas Legislature  enacted House Bill 1200 Creating Texas Tax Code Chapter 313, the Texas Economic Development Act. Under Chapter 313, a qualified applicant may apply to a school district for a limitation on the appraised value of their new capital investment project for 10 years. The limitation on the appraised value applies specifically to the school district's maintenance-and-operations tax rate, while its interest and sinking tax rate; or bond rate, applies to the full taxable value of the property. This program allows Texas school districts to increase their ad valorem tax bases by attracting large-scale capital investments, and creates desirable, well-paying jobs in the process. Recently, the 83rd Legislature extended the Chapter 313 Act through 2022 and added various rule changes, including the extension of the value limitation from eight to 10 years, and the inclusion of contractor jobs as counting toward job creation requirements for a project.

The Texas Comptroller's Economic Development & Analysis Division, however, is now required to verify that an eligible project will generate sufficient tax revenues over a 25-year period to offset the school district's maintenance-and-operations tax revenues lost as a result of entering into the value limitation agreement. Additionally, the Comptroller must also find that the value limitation incentive is a determining factor in the applicant's decision to invest capital and construct the project in Texas. Reviewing any potential incentive project with an experienced tax professional; offers the best opportunity to create an effective property tax strategy.

Blas Ortiz jpgBlas Ortiz is a tax consultant with Texas law firm of Popp Hutcheson PLLC. The firm devotes its practice to the representation of taxpayers in property tax disputes and is the Texas member of the American Property Tax Counsel (APTC), the national affiliation of property tax attorneys. Mr. Ortiz can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

 

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Dec
31

Case Study: If The Build-To-Suit Fits.....

"Once vacated by the original user, build-to-suit properties require a different valuation process."

Build-to-suit properties, like custom suits, are wonderful for the original purchaser. A made-to-order suit matches the specific user's size and build and looks just right on him. But try giving that suit to a friend, and the suit that looked great on you may not look as good or fit as well on him.

Similarly, build-to-suit properties may offer limited or no functionality to the next user. The following case study of a freestanding restaurant illustrates the challenges of determining the taxable value of a build-to-suit property.

The property was built in Austin in 2006 for a dine-in hamburger chain with restaurants in the U.S. and Canada. Located at a high-traffic intersection in front of a large shopping center, the restaurant measured 6,780 square feet, according to Travis Central Appraisal District records.

When the restaurant closed its doors in 2011, the restaurant appeared to the casual viewer to be in excellent condition, but the property owner demolished the building. From there, one might have assumed that a different property type would replace it.

As such, it was surprising to see another restaurant replace the demolished property in 2012. When completed, the new structure measured 6,350 square feet, tax records showed — nearly the same size as the previous building's 6,780 square feet. And the new building, like the old, was home to a national chain, in this case a steakhouse.

In this example, the value to the original user was an investment value and most likely equated to the original cost less physical depreciation. The investment value to the new owner was land value less the cost of demolition.

So how did a relatively new building suffer 100 percent depreciation after only a few years of physical depreciation? In this case, the custom suit was given to a friend, and it just didn't fit. The exterior of the first building matched the branded design of a specific chain restaurant, and on the inside, the builder had tailored the kitchen and dining areas to this particular chain. But the new user also wanted a specific exterior design, kitchen and dining area layout to match a different restaurant chain.

So, how then can an appraiser or assessor value a build-to-suit property without putting a nominal or "zero" value on the improvements?

In Texas, the property tax code requires assessors to value properties at market value, not the investment value to any one specific user. "The Appraisal of Real Estate, 14th Edition" states that, "it is generally agreed that market value results from the collective value judgments of market participants...In contrast to market value, investment value is value to an individual, not necessarily value in the marketplace."

In the case of a build-to-suit restaurant, it can be assumed that the pool of potential second-generation users who find functional utility in the property is limited to local restaurateurs or small local chains that do not require a specific look or layout for brand recognition. The market value to these users is likely somewhere in between the physically depreciated cost and the
land-less-demolition cost.

This implies that functional obsolescence is inherently built into a build-to-suit property. While measuring the amount of obsolescence is beyond the scope of this article, one strategy is to inventory the number of comparably sized restaurants in the subject's market area and determine the percent of those restaurants that are regional or national chains.

A larger percentage of such chains in the market area indicates a greater degree of functional obsolescence. Using the income approach to value, a larger percentage of regional or national chains implies fewer potential users of the property and, therefore, a greater risk, which can be reflected in the cap rate.

An assessor must consider these factors when determining the market value of a build-to-suit property for property tax purposes. Significant value swings can occur when looking at the investment value for one specific user rather than the market value for a collective of market participants.

Once the market participants who find utility with the property have been determined and weighed against the market participants for which the" suit just doesn't fit," the assessor can determine a proper market value.

Kevin Sullivan is an Appraiser and Tax Consultant with the Austin, Texas, law firm Popp, Gray & Hutcheson. The firm devotes its practice to the representation of taxpayers in property tax disputes and is the Texas member of the American Property Tax Counsel (APTC), the national affiliation of property tax attorneys. Mr. Sullivan can be reached atThis email address is being protected from spambots. You need JavaScript enabled to view it.

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Nov
30

Eagle Ford Shale Ignites Boom

"Natural gas reserves a boom for not just energy industry, but for all of South Texas."

South Texas is humming with activity, much of it attributable to the Eagle Ford Shale and the rapid growth it has brought to the region. The opportunities available and the boom resulting from the Eagle Ford resources have generated significant wealth and economic activity in these modest communities. As the population expands with workers and South Texas hastens to keep up with the surging demand for housing, roads and other infrastructure, property values are on the rise.

The boom has fueled significant tax assessment increases over the past few years. South Texas counties are reaping the benefits of the new prosperity by increasing property values and adding more property to their tax base. The trend serves as a poignant example of how externalities affect value.

What is the Shale?
The Eagle Ford Shale is a geological formation from the Cretaceous period spanning the Mexican border in South Texas into East Texas. It is roughly 50 miles wide, 400 miles long, and pans 30 Texas counties between the Buda Lime and Austin Chalk formations. The shale produces dry gas, wet gas, natural gas liquids and oil.

Some experts believe the Eagle Ford discovery could become the sixth largest oil discovery in the history of the United States. Combine this with the fact that it is as large as or larger than the Barnett Shale play in terms of natural gas reserves, and you have a recipe for a legendary oil and natural gas boom.

Since 2008, the exponential growth in the Eagle Ford Shale has been staggering. In 2008, there were roughly 350 barrels of oil produced in the region per day; today, almost 10 times more barrels of oil are produced per day. And, as of the end of September, an estimated 5,200 drilling permits have been issued.

Benefits to South Texas
In South Texas, housing supply has increased as numbers of transient workers migrate to work in the oil fields, on pipeline projects and in new gas processing plants. From 2000 to 2010, the population in just a six-county region (Dimmit, Frio, La Salle, Maverick, Webb and Zavala) grew by roughly 66,000 people, and housing grew by about 22,000 units.

The results from the new prosperity are evident in the increase in property tax assessment values. For La Salle County's Cotulla Independent School District (15D), total taxable value was over $2.3 billion in 2012, compared to $408 million in 2008. Nearby, the Dilley ISD total taxable value more than doubled to $235 million in 2012, from $103 million in 2008. While the majority of the increase in tax base is due to the value of oil, gas and minerals and the industrial personal property needed for these projects, the ripple effects can also be observed in commercial and residential properties.

For example, lodging room revenues in the oil and gas areas grew by almost 16 percent in 2012, which is more than the state average, according to a report prepared by Source Strategies Inc. for the Office of the Governor, Economic Development & Tourism. Also, room revenues in the city of Alice (Jim Wells County) were $12 million in 2012 compared to $5 million in 2008.
As room revenues increase, appraisal districts have captured the new income streams and raised hotel values.

This is just one example of how the activity from the Eagle Ford boom has filtered down to property values. But while room revenues have been consistently increasing over the last
couple of years, Source Strategies suggests that the growth seems likely to moderate, as revenues during the second quarter 2013 declined slightly in Victoria and Laredo.

Similarly, as the market begins to even out and supply catches up with demand, there may be more stabilization of property values. In any event, property owners should be watchful of market trends in reviewing their property values.

Continued Growth Ahead
Anticipated future production in the Eagle Ford Shale indicates continued expansion in South Texas. By 2021, the Eagle Ford Shale could produce as much as $62.2 billion in output and $34 billion in gross regional products, according to projections by the University of Texas at San Antonio's Institute for Economic Development. More permits continue to be

approved for drilling.

As communities in South Texas catch up with the increased activity, property owners should be on guard against unfair and inflated property tax assessments.

MelissaRamirez150Melissa Ramirez is a principal with the Austin law firm of Popp Hutcheson P.L.L.C., which focuses its practice on property tax disputes and is the Texas member of American Property Tax Counsel (APTC), the national affiliation of property tax attorneys. Ms. Ramierz can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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Sep
22

Texas Property Tax Change Explained

Property owners to benefit from adjustments in appraisal review boards, appeals and hearings.

"Texas House Bill 585, which passed in June of this year, was written to provide for a fairer and more efficient tax appeal process, and its passage into law may help taxpayers appeal their assessments..."

As the economy recovers and property values rise, real estate taxes are a growing concern for Texas property owners. Each dollar of additional tax is a dollar removed from an income-producing property's bottom line, and some taxpayers will find that the increases in tax appraisals are overreaching and require a formal protest. That being said, taxpayers who protest their property values will likely be pleased with the Texas Legislature's recent revision to the property tax code. Texas House Bill 585, which passed in June of this year, was written to provide for a fairer and more efficient tax appeal process, and its passage into law may help taxpayers appeal their assessments.

Complaints about the state's property tax system often involve a perception of bias on the part of appraisal review boards (ARBs), the citizen panels that hear and decide property tax appeals at the administrative level. A second concern is a perceived lack of responsiveness on the part of appraisal districts with regard to taxpayer concerns. To address this, HB 585 provides for increased oversight of these entities. The new law requires the comptroller to provide model hearing procedures with clear expectations for all Texas ARBs.

In large counties, it also establishes a taxpayer complaint system through a taxpayer Liaison, an intermediary housed at the district and tasked with hearing taxpayer concerns regarding procedures and personnel. The liaison's go-between responsibilities will now increase to include accepting taxpayer complaints and providing clerical support in the ARB selection process.

On top of re-emphasizing oversight and improving accountability, HB 585 tackles another perceived flaw in the property tax appeal system. Appraisal district boards of directors have historically selected ARB members. In Houston, however, a district judge selects Harris County ARB members. ARB member selection in counties with more than 120,000 residents will now take on this same model used in Harris County. Only district judges will possess the power to appoint members.
It's a move that could also have disciplinary implications, as ARB members who do not follow procedures may be removed by a judge as well. And in large counties, the appraisal district will be removed from the panel selection process completely. Aside from the new panel requirements, the new law seeks to make protesting property values easier and more effective. Appeal hearings must now be set for a certain date and time.

If a hearing does not occur within two hours of its scheduled time, a taxpayer may request a postponement. Also, if before a scheduled hearing
a change in value is made with an informal agreement between taxpayers and appraisers, the law strengthens the standards of evidence appraisal districts must provide in order to raise the property value the next year. This could mean less volatility for values. These changes are not the only changes set forth by HB 585, as the new law also provides new procedures for district court appeals. While shifts in accountability and scheduling may seem small, they could indicate a broader trend toward a more fair and equitable Texas property tax system.

As more guidelines favor taxpayers, it improves their likelihood of achieving fair results. What's more, keeping tax values fair will ensure that Texas' ability to attract developers and investors remains strong.


Shalley Michael Shalley is a principal and Patrick McGill a tax consultant at the Austin law firm of Popp Hutcheson PLLC. which focuses its practice on property tax disputes and is the Texas member of the American Property Tax Counsel. Michael Shalley can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. an Patrick McGill can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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Apr
10

Texas' Pro-Business Environment Doesn't Extend To Property Taxes

"While Texas remains one of the best places in the nation to do business, the property tax burden here is substantial. Careful planning of new investment in the state can considerably mitigate property taxes for a significant period of time..."

By Sebastian Rodrigano, as published by Texas Real Estate Business, April 2012

The idea that Texas offers a favorable business climate is deeply rooted in the business community, but a business must monitor its property tax burden or risk paying unnecessarily high tax bills.

It's understandable that many Texas businesses downplay the impact of property taxes on their bottom line. Late last summer, a survey by Development Counselors International rated Texas as having the best business climate in the nation for the 12th consecutive year. Survey respondents cited the tax climate, pro-business environment and economic development incentives as the top reasons for favoring the state.

As a 20-year Texas resident, I considered Texas' business climate supremacy to be indisputable. When a client requested a quick check of property tax projections to evaluate locations for a new facility, however, I had trouble reconciling the data with my beliefs about the competitiveness of Texas in attracting new business.

TaxChart2 BIG TAXES IN TEXAS: Across a 20-year period, property taxes on four hypothetical commercial buildings, all valued at $200,000 in the first year, would be nearly four times higher in Texas than in many other states.

The client was trying to decide where to build a $200 million facility, assuming that every available property tax exemption would be granted in each of the states considered. Over a 20-year period, the estimated property taxes in Texas were close to four times those of the nearest competitor.

This result seemed incongruous, to say the least, with Texas' top national ranking in the "tax climate" category. A number of business representatives have assured me that in spite of a disproportionate property tax load carried by businesses, the overall tax picture is more beneficial in Texas than in most other states. Yet the magnitude of a business' property tax burden in this state demands significant attention and prudent management.

For existing infrastructure, much can be done to minimize taxes by ensuring that properties are properly and equitably valued. When dealing with new construction, a number of incentives and exemptions are available to help alleviate the property tax burden. Here are a few options for properties old and new.

Tax Abatement Agreements. Chapter 312 of the Texas Property Tax Code allows taxing entities to enter into agreements with taxpayers to exempt all or some of the value of real and/or tangible personal property from taxation for a period not to exceed 10 years. School districts may not enter into tax abatements. Generally, the agreement must be approved before construction begins.

Value Limitation and Tax Credit Agreements. A school district may agree to limit the taxable value of new property for up to 8 years under Chapter 313 of the Texas Property Tax Code. The limitation applies only to school district maintenance and operations taxes applicable to the property. These exemptions are commonly referred to as House Bill 1200 limitations and can be used in conjunction with a tax abatement agreement.

Economic Development Refund. Chapter 111 of the Property Tax Code provides for state tax refunds to qualified property owners that entered into chapter 312 tax abatement agreements after Jan. 1, 1996, without the benefit of a Chapter 313 value limitation.

Freeport Exemption. The Freeport exemption includes a total tax exemption for personal property (excluding petroleum products) that is detained in the state for less than 175 days for assembling, storing, manufacturing, processing or fabrication purposes. Each taxing jurisdiction must elect to participate. In some instances taxing jurisdictions that previously had not granted an exemption for a Freeport zone have opted into the exemption to incentivize business development. This exemption is described in Section 11.251 of the Property Tax Code.

While Texas remains one of the best places in the nation to do business, the property tax burden here is substantial. Careful planning of new investment in the state can considerably mitigate property taxes for a significant period of time, and a watchful eye over assessments will allow for a less costly experience while doing business in Texas.

Rodrigano Sebastian Rodrigano is a principal at the Texas law firm of Popp, Gray and Hutcheson, PLLC. The firm devotes its practice to the representation of taxpayers in property tax disputes and is the Texas member of the American Property Tax Counsel (APTC), the national affiliation of property tax attorneys. Mr. Rodrigano can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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