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By Kris Smith. Publisher and Owner of The NavCo Chronicle
Kris is the only owner and Publisher of The NavCo Chronicle, since it’s creation in September 2020.
Creating a place for the Navarro County community to have a source for local news and information, as well as providing a place for Navarro County to receive the most accurate news reporting, The NavCo Chronicle is community driven, as well as supported. #DocumentIt
This column will feature different areas of interest in the readership area of The NavCo Chronicle and now the Freestone Frontline.
To suggest an interest to be featured, please email Kris at kris@thenavcochronicle.com.
WHAT IS A TAX ABATEMENT?
A tax abatement is a formal agreement between a taxpayer and a local taxing authority whereby a portion or the entirety of the increased property value may be exempted from taxation for a period of up to ten years.
Tax abatements serve as tools for cities, counties, and special districts to:
- Draw in new industries
- Support the ongoing success and expansion of existing businesses
- Stimulate capital investment by reducing property taxes on particular projects
- Abatements serve as an economic development instrument for municipalities, counties, and special districts, enabling them to attract new businesses and assist existing enterprises by offering property tax reductions or exemptions.
It should be noted that school districts are not permitted to engage in abatement agreements.
The Process for Abated Property Valuations
Step 1: Establish Guidelines and Criteria
Local taxing entities must create and authorize policies that specify what will be included in abatement agreements. As outlined in Tax Code, Section 312.002, these policies are required to offer abatements for both newly constructed and existing facilities.
Step 2: Designate a Reinvestment Zone
Once guidelines are approved, a city or county may declare an area as a reinvestment zone after holding a public hearing.
Publish Notice of Public Hearing: At least seven days before the hearing, a notice must be printed in a widely read newspaper and mailed to all affected taxing units.
Conduct the Public Hearing: The taxing authority holds a hearing where community members can share their views on the proposed reinvestment zone.
Enterprise Zone Considerations: According to Tax Code Sections 312.2011 and 312.4011, any enterprise zone set up under Chapter 2303 of the Government Code is treated as a reinvestment zone
Adopt Ordinance or Order: Once approved, an ordinance is enacted to officially establish the zone. This ordinance must outline the boundaries and specify if the area qualifies for residential or commercial-industrial tax abatement or tax increment financing.
The designation lasts for five years and may be renewed repeatedly, but never for more than five years at a time.
Step 3: Statement of Abatement Eligibility
Prior to entering into an agreement, the taxing unit is required to formally resolve its eligibility for tax abatement, as stipulated by Section 312.002(a).
This resolution should be made sufficiently in advance of any consideration or vote on a proposed agreement, ensuring that stakeholders have ample opportunity to review the arrangement and determine whether to participate.
Step 4: Public Notice
Upon establishment of a reinvestment zone, the following procedures must be observed:
- Issuance of 30-Day Public Notice for Meeting: At least thirty days prior to the meeting to consider approval of a tax abatement agreement, a comprehensive notice detailing the property and proposed improvements must be provided to the public.
- Approval of Agreement at Public Hearing: The taxing entity may authorize the agreement by a majority vote, contingent upon compliance with established guidelines and criteria.
- Notification to Other Taxing Units and Execution of Agreement: Before execution, written notice and a copy of the proposed agreement must be delivered to all affected entities no less than seven days prior.
Only the incremental increase in property value attributable to the improvements may be exempted; the existing valuation as of January 1 in the year of the agreement remains fully taxable.
Step 5: Entering into a Tax Abatement Agreement
Once a reinvestment zone has been established, a municipality or county is permitted to enter into an abatement agreement with property owners for a period not exceeding 10 years (Sections 312.204 and 312.402). Subject to approval, the agreement becomes effective after notification is provided to other affected taxing units.
Section 312.205(a) outlines mandatory conditions for the agreement, such as:
- List of planned improvements
- Allow inspection by taxing unit
- Limit use per development goals
- Recapture lost tax revenue if terms are breached
- Include all agreed terms
- Owner certifies compliance yearly
- Allow a modification or cancellation for noncompliance of agreement.
- Real and tangible personal property can be abated, but residential abatements are rare.
Step 6: Mandatory Reports to the Comptroller’s Office
All reinvestment zones and signed agreements must be reported to the Comptroller’s office, which keeps a central record. Properties within a reinvestment zone are required to follow guidelines outlined in Tax Code, Section 312.202.
Taxing authorities have the option to waive up to 100% of personal or real property taxes for as long as 10 years. Often, property values in these areas rise because of new business developments, infrastructure improvements, added amenities, or inflation. Once the tax abatements end, local governments can collect increased revenue and use it to improve community services.
Abatements and the Timeline for Tax Collection and Processing
The abatement period begins when terms are agreed upon during the year.
Between July and September, local governments determine budgets and set tax rates.
These budgets and rates become active starting October 1, marking the new fiscal year.
Any abatement agreement that has been accepted will commence on January 1 of the following year.
Property owners receive appraisal notices by May 1, which highlight exemptions such as abatements.
In October, tax bills are sent to every property owner, including those benefiting from abatements.
Taxes, reflecting any reductions from abatement agreements, must be paid by January 31.
Nonpayment may result in delinquency penalties and can render the abatement invalid. Abatements are designed to encourage new development, attract businesses, foster population growth, and enhance property values. The amount due may be reduced either partially or entirely, subject to the specific terms of the agreement.
The current tax abatements for Navarro County are:
- Pactiv LLC
- Clean Vision Solar
- Audubon Metals Texas LLC
- Pisgah Ridge Solar LLC
- Corsicana Bedding
- Hughes Commercial
- Homeland Vinyl
- Armadillo Solar
- SI Corsicana QOZB #8
- Building Materials Manufacturing Corp
- Construction Maestros
- OEGG Inc
- Guardian Glass
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