A Turning Point for Large Scale Texas Development

Property tax abatements have helped bring big projects like refineries, infrastructure, and renewable energy to Texas. Two main programs have made these incentives possible: Chapter 312 and Chapter 380/381 of the Texas Property Tax Code.

  • Chapter 312 lets counties, cities, and special districts offer property tax breaks to qualifying projects. This program has been key in attracting industries that invest a lot of money and create jobs in Texas.
  • Chapter 380 & Chapter 381 allows cities and counties to give financial incentives, including tax breaks, to boost local economic development. It’s popular because it’s more flexible and has fewer rules compared to Chapter 312.

But now, two new bills in the Texas Legislature could change—or even end—these programs. This could have a big impact on future projects in Texas, especially in the industries we work with.

Breaking Down the Bills: SB 819 and SB 878

Senate Bill 819: Focus on Renewable Energy

SB 819 Full Text

Senate Bill 819 is labeled as a bill to improve grid energy reliability and infrastructure. But hidden toward the end of the bill is a part that would remove solar and wind projects from Chapter 312.

Chapter 312 has been the main way to negotiate tax breaks with counties, hospitals, colleges, and cities in Texas. Without these incentives, it might be harder to attract new solar and wind farms since they often depend on tax breaks to make the numbers work.

However, there’s a bit of a silver lining: Chapter 380 and Chapter 381 (the latter applies to county-level incentives) still offer ways to get property tax relief. These programs have different rules but could still help renewable energy developers. That said, the second bill could make things even tougher.

Senate Bill 878: Bigger Changes Ahead

SB 878 Full Text

If SB 819 was a big hit to renewables, SB 878 could be a knockout. This bill would eliminate property tax relief under both Chapter 380 and Chapter 381, shutting down almost all existing ways to get tax breaks.

Chapters 380 and 381 have been criticized for needing fewer public hearings and being less transparent than Chapter 312. For example, Chapter 312 usually requires three to four public hearings before a deal is approved, while Chapters 380 and 381 allow for quicker negotiations. Lawmakers seem to be using this lack of oversight as a reason to end these programs.

But the effects go beyond just transparency. Without these tax breaks, many big projects—not just renewables, but also commercial real estate and infrastructure—might not be financially possible. This could slow down Texas’s economic growth and push new investments elsewhere.

What Does This Mean for Our Clients?

For our clients in renewable energy, oil and gas, and manufacturing, these bills will create serious obstacles. Getting large tax breaks has been essential for making many projects possible, especially in industries like refineries and large renewable energy projects.

  • Renewable Energy Projects: Removing Chapter 312 incentives for solar and wind projects under SB 819 could slow down new renewable projects. While Chapters 380 and 381 might still help for now, SB 878 could eliminate those options too, leaving very few ways to get tax relief.
  • Wider Impact on Development: SB 878 could affect many industries beyond renewables, making it harder for commercial real estate projects, infrastructure, and other big investments to move forward.

In short, if both bills pass, many projects might no longer be financially possible, and new developments could struggle to get started.

Key Takeaways

  1. Track These Bills: Both SB 819 and SB 878 are still early in the legislative process. Contact our team if you have questions.
  2. Legal Advocacy: Now is the time for industry leaders, developers, and others affected to talk to lawmakers about how these bills could hurt the economy.
  3. Look for Other Incentives: If these tax breaks disappear, finding other financial incentives at the state or federal level will be crucial. Our team can help through our site selection services and looking at other opportunities for your project.