Chapter 313 Abatement

What is a Chapter 313 school value limitation?

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 (M&O) purposes.

The minimum limitation value varies by school district. from $10 million to $100 million in property value. (see table below)

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.

What are the requirements for a Chapter 313 agreement?

To qualify, the property must be in a Texas reinvestment zone and must enter into an agreement with the school district to create a specific number of jobs at 110 percent of the county average manufacturing wage and build or install specified types of real and personal property worth a certain amount.

The project must be devoted to manufacturing, research and development, a clean coal project, an advanced clean energy project, renewable energy electric generation, electric power generation, nuclear electric power generation or a computer center used in connection to one of these categories.

How Does KE Andrews Help?

With more experience in navigating these cumbersome applications and over 30 years of meeting with County Commissioners, Judges, and Superintendents, we can manage the entire Chapter 313 application process from start to finish. This includes creating the economic budgets and modeling, meeting with the above parties, and securing your exemption or abatement. Not only that, we can manage the property tax valuation of your project and get a tremendous value in year 1 to help you lower your taxable value, or make it more valuable when selling before COD.

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%

The Chapter 313 limitation will limit your project’s taxable value on the ISD portion of the property tax. Both have their benefits and are important in new projects in development.

Categorization of Non-Rural School Districts

Minimum Amounts of Qualified Investments

Categorization of Rural School Districts

Minimum Amounts of Qualified Investments

REAL RESULTS

% of ALL active agreements that KEA has negotiated or managed for our clients

25%

Chapter 313 Strategic Investment Areas active Jan. 1, 2018- Dec. 31, 2018

IDENTIFY - STRATEGIZE - NEGOTIATE

  • Chapter 312 Consulting
  • Chapter 313 Consulting
  • Property Tax Valuation
  • Purchase Price Allocation and Business Valuation
  • Due Diligence