Texas Economic Development Act and School Districts
School districts can influence economic development projects in their district via the Texas Economic Development Act or Chapter 313 of the Texas Tax Code (“Chapter 313”). Texas provides a competitive environment for recruiting renewable energy projects by allowing agreements for limitation on appraised value of property for school district maintenance and operations taxes (“Limitation Agreement”). The Limitation Agreement requires than an applicant construct improvements on real property and create jobs in exchange for limiting the taxable value for school district maintenance and operations taxes for a period of 10 years. In exchange for granting the applicant an annual limitation on taxes, the benefits to the school district include:
- All fees and expenses are paid by the applicant;
- School districts can negotiate an annual supplemental payment of the greater of $50,000.00 or up to $100 per average daily attendance;
- Any extraordinary education expenses as a result of the project are paid by the applicant; and
- Fully taxing the value of the improvements for interest and sinking taxes because the limitation only applies to maintenance and operations taxes.
Chapter 313 can be applicable to a variety of projects, including manufacturing, research and development, advanced clean energy, nuclear power generation, or computer centers.
Please contact Underwood with any Chapter 313 inquiries or questions.