Texas Economic Development Act (Chapter 313)
Moak Casey’s team assists school districts in navigating the complex process of adopting value limitation agreements under the Texas Economic Development Act (Chapter 313). This program, passed by the legislature in 2001, is the primary economic development tool that school districts can utilize to attract eligible, large-scale projects. Under the program, school districts can offer companies a property limitation that reduces their property tax liability for a ten-year. Districts are also allowed to receive an additional benefit of up to $100 per Average Daily Attendance (ADA) per year and are protected from any loss of revenue from granting the limitation.
Eligible projects include:
- Research & development
- Renewable electric generation
- Clean coal
- Nuclear energy
- Computer data centers
- Texas Priority Projects with an investment level exceeding $1 billion
Chapter 313 Agreements are long-term commitments, and MCA assists school districts in managing the application, reporting, auditing and financial requirements throughout the process. We work diligently to ensure our clients are protected from any adverse impact while maximizing the districts’ financial benefit. Since the program’s inception, Moak Casey has represented more than 150 school districts with over 350 separate Chapter 313 agreements.
Freeport and FTZ Exemptions
Beyond Chapter 313, MCA has worked with school districts on analyzing the impact of Freeport and FTZ exemptions on school districts’ finances. MCA conducts a study of the exemptions, including the history and statewide implementation. Our team will then work with the district on an agreement that ensures the school district is protected from any adverse impact while maximizing the district’s financial benefit.
In 1989 Texas voters approved a constitutional amendment allowing a property tax exemption for “freeport” goods—chiefly manufacturing inventory that moves in and out of state within a 175-day period. Most taxing units opted to continue to tax these goods, with about 200 school districts currently reporting exempted freeport goods. Other school districts may approve the freeport exemption by rescinding their earlier resolution to tax these goods. Much of the reduction in freeport taxes is offset through state funding formulas, although the I&S tax impact is an important consideration that may merit negotiating hold-harmless payments from local businesses benefitting from the exemption.
Foreign Trade Zones
Administered at the federal level, foreign trade zones (FTZs) are intended to improve the competitive position of companies with goods bound for export; financial benefits are realized by the elimination of local property taxes and the deferral of duties for items brought into the zone. Local taxing units are requested to file letters of “non-opposition” to the creation of the FTZ within their boundaries. Since FTZ inventory (composed of imported goods and those held for export purposes) is exempt from local property taxes, school districts must analyze the impact of the FTZ designation on their future finances.
Our Economic Development Team
For general questions about our economic development services you can email: CH313@moakcasey.com