The Texas Economic Development Act, or Chapter 313 of the Texas Tax Code, was enacted in 2001 to encourage renewable energy, manufacturing, and other large-scale investment projects in Texas (1). By way of simplification, participating school districts agree to limit the appraised value of improvements that applicants place within their boundaries in exchange for development and investment in that district. The benefits of Chapter 313 have been utilized by developers in multiple industries, including wind developers.
Since the time it was passed, the Texas Economic Development Act has sustained attacks by those that feel it is a misguided or unnecessary development incentive. It has also been championed by those that believe it helps make Texas an inviting place for business and investment. Many that work in the field of renewable energy assert that Chapter 313 has played an important role in making Texas a leader in wind-energy development.
With the 82nd Texas Legislature in session, those on both sides of the argument are waiting to see whether Chapter 313 will survive the session in its current form, or at all. It’s no secret that there are a number of important unrelated matters that need legislative attention, therefore Chapter 313 could survive unscathed. At the same time, it could fall victim to budgetary and revenue concerns, especially in light of the Comptrollers recent critical review of the program (2).
Regardless of what the 82nd Legislature does, Chapter 313, and Texas, is at a crossroads. Is this state committed to being a leader in renewable-energy for the foreseeable future, or is that a catchy and politically-popular mantra that is susceptible to political pressures? We’ll learn a lot about the answer to that question before the end of this legislative session.
(1) Tex. Tax Code Ann. § 313.001 et seq. (Vernon 2001).
(2) See Texas Comptroller’s Office, “An Analysis of Texas Economic Development Incentives – 2010” (Dec. 22, 2010)
This column is published for informational purposes only. It should not be construed as legal advice and is not intended to create an attorney client relationship. The views expressed are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.