Tax Abatement Legislation

With the economic slowdown, counties are facing difficulty in the area of economic development. Tax abatement agreements can be a valuable tool in attracting new activity. Some important legislation was adopted in this area.
House Bill 773 by Rep. Oliviera/Sen. Williams extended the provisions of Chapter 312, Tax Code, the Property Redevelopment and Tax Abatement Act, until Sept.1, 2019. Without this legislation, the authority of counties and cities to approve new tax abatement agreements would have expired on Sept. 1, 2009.
Senate Bill 1458 by Sen. Seliger/Rep. Swinford clarifies the authority of a county to grant a tax abatement on leased property and tangible personal property. Attorney General Opinion GA-600 (2008) had cast doubt upon the validity of these abatement agreements, which included wind turbine projects and many other abatement agreements involving leased property and tangible personal property. Senate Bill 1458, effective June 19, 2009, clarifies this authority and contains a provision that ratifies and validates tax abatements granted prior to that date.
While tax abatement agreements provide a strong incentive for new development, commissioners courts bear a heavy responsibility to use them judiciously. One size does not fit all. The county’s guidelines and criteria must be carefully drafted for the benefit of all taxpayers. Each abatement proposal must be evaluated and structured for maximum economic development. You only get what you negotiate. Professional assistance will usually provide extra dividends for the taxpayer in these agreements.
For more information, please call me at 1-800-733-0699.
Jim Allison, General Counsel