Chapter 313 Value Limitation and Tax Credit

Chapter 313 School Value Limitation Incentive

The Texas Chapter 313 limitation was created to bring in jobs to a county and to give an economic benefit to companies bringing in revenue to the area. In Texas, typically the ISD portion of property tax is the largest, thus creating the importance of reducing the value of that portion. An appraised value limitation is an agreement in which a taxpayer agrees to build or install property and create jobs in exchange for a 10-year limitation on the taxable property value for school district maintenance and operations tax (maintenance and operations, M&O) purposes. The minimum limitation value varies by school district. from $10 million to $100 million in property value. The application for a limitation on the appraised value for M&O purposes is submitted directly to the school district and requires an application fee that is established by each school district.

A Chapter 313 Limitation limits a portion of your property tax


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Chapter 313 Property Requirements

In exchange for the appraised value limitation and tax credit, the property owner or developer must come to an agreement with the school district within a Texas county to create a specific number of jobs and build or install specified types of real and personal property worth a certain amount. This agreement must specify what is expected of each party, including the terms and conditions required by the state of Texas, and provisions to protect the school district from possible revenue losses.

For a property to qualify, it must be in a reinvestment zone (as shown below) and must be devoted to manufacturing, R&D, a clean coal project (defined by the state), Water Code, an advanced clean energy project, (defined by the state), Health and Safety Code, renewable energy electric generation (this includes wind and solar), electric power generation using integrated gasification combined cycle technology, nuclear electric power generation, a computer center used primarily in connection to one of the other categories, or a Texas Priority Project.

Reinvestment Zones

A school ISD board may only approve for a value limitation qualified property that is located in an area designated as a reinvestment zone under Texas’ Tax Code Chapter 311 or 312, or one that is deemed an enterprise zone under Government Code Chapter 2303, by the county commissioners court and the governing body of each municipality, provided that all the qualified property is located on land falling within this designated zone. This means that a 313 is not available in every jurisdiction.

Qualified Investment Amount

The required minimum qualified investment and the minimum amount of the value limitation vary across the entire state of Texas. This is based on whether a school district is considered a so-called “rural district”, or a “non-rural district” (subject to Subchapter B), and according to the amount of taxable property value in the school district.

Property Classes

The state law defines two overlapping classes of property — “qualified investment” and “qualified property” — that are used for different purposes in the value limitation process. During the qualifying time period, the applicant must build or install qualified investment that exceeds a specified amount in order to receive an appraised value limitation to remain eligible and in compliance with the agreement.

Qualifying Time Period

Most applicants have a qualifying time period starting the date that the school district approves the application, and ending at the end of the second complete tax year following that date. The applicant or developer must make the required minimum investment or capital spend during the qualifying time period to remain in compliance with the agreement. Nuclear power plants and advanced clean energy projects have longer qualifying time periods.

What is the difference between a Chapter 313 agreement and Chapter 312 abatement?

A 313 school value limitation is a limitation on a portion of your property tax. A 312 abatement is an abatement on a portion of your property tax. In Texas, your property tax payment is segmented and paid out to different jurisdictions. For example, you may pay $1,000,000 in property tax, but that number may be broken into:

County – .55%

Hospital – .37%

ISD – 1.6%

Road – .06%

Water – .02%

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2019 Active Strategic Investment Areas

Not every jurisdiction in the state of Texas is eligible for the 313 value limitation. This is the map view of the active counties for 2019 in the state of Texas.