PropertyTax Increment Zones Easy to Establish; Hard to Close
Texas Property Code 2023 Chapter 311
Property tax increament zones are intended to jump-start development and growth in an area fairing poorly economically. The board of directors is responsible for developing project plans.
Texas Property Tax Code
2021 Edition
Texas Comptroller of Public Accounts
The Texas Property Tax Code available on this website are current through the Regular Session of the 87th 2nd Called Legislative Session, 2021. The Texas Constitution is current through the amendments approved by voters in November 2019.
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TITLE 3. LOCAL TAXATION
SUBTITLE B. SPECIAL PROPERTY TAX PROVISIONS
CHAPTER 311. TAX INCREMENT FINANCING ACT
Sec. 311.001. SHORT TITLE. This chapter may be cited as the Tax Increment Financing Act
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987.
Sec. 311.002. DEFINITIONS. In this chapter:
(1) “Project costs” means the expenditures made or estimated to be made and monetary obligations incurred or estimated to be incurred by the municipality or county designating a reinvestment zone that are listed in the project plan as costs of public works, public improvements, programs, or other projects benefiting the zone, plus other costs incidental to those expenditures and obligations. “Project costs” include:
(A) capital costs, including the actual costs of the acquisition and construction of public works, public improvements, new buildings, structures, and fixtures; the actual costs of the acquisition, demolition, alteration, remodeling, repair, or reconstruction of existing buildings, structures, and fixtures; the actual costs of the remediation of conditions that contaminate public or private land or buildings; the actual costs of the preservation of the facade of a public or private building; the actual costs of the demolition of public or private buildings; and the actual costs of the acquisition of land and equipment and the clearing and grading of land;
(B) financing costs, including all interest paid to holders of evidences of indebtedness or other obligations issued to pay for project costs and any premium paid over the principal amount of the obligations because of the redemption of the obligations before maturity;
(C) real property assembly costs;
(D) professional service costs, including those incurred for architectural, planning, engineering, and legal advice and services;
(E) imputed administrative costs, including reasonable charges for the time spent by employees of the municipality or county in connection with the implementation of a project plan;
(F) relocation costs;
(G) organizational costs, including the costs of conducting environmental impact studies or other studies, the cost of publicizing the creation of the zone, and the cost of implementing the project plan for the zone;
(H) interest before and during construction and for one year after completion of construction, whether or not capitalized;
(I) the cost of operating the reinvestment zone and project facilities;
(J) the amount of any contributions made by the municipality or county from general revenue for the implementation of the project plan;
(K) the costs of school buildings, other educational buildings, other educational facilities, or other buildings owned by or on behalf of a school district, community college district, or other political subdivision of this state; and
(L) payments made at the discretion of the governing body of the municipality or county that the governing body finds necessary or convenient to the creation of the zone or to the implementation of the project plans for the zone.
(2) “Project plan” means the project plan for the development or redevelopment of a reinvestment zone approved under this chapter, including all amendments of the plan approved as provided by this chapter.
(3) “Reinvestment zone financing plan” means the financing plan for a reinvestment zone described by this chapter.
(4) “Taxing unit” has the meaning assigned by Section 1.04.
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987.
Amended by:
Acts 2005, 79th Leg., Ch. 1094 (H.B. 2120), Sec. 35, eff. September 1, 2005.
Acts 2011, 82nd Leg., R.S., Ch. 1032 (H.B. 2853), Sec. 1, eff. June 17, 2011.
Sec. 311.003. PROCEDURE FOR CREATING REINVESTMENT ZONE
(a) The governing body of a county by order may designate a contiguous geographic area in the county and the governing body of a municipality by ordinance may designate a contiguous or noncontiguous geographic area that is in the corporate limits of the municipality, in the extraterritorial jurisdiction of the municipality, or in both to be a reinvestment zone to promote development or redevelopment of the area if the governing body determines that development or redevelopment would not occur solely through private investment in the reasonably foreseeable future. The designation of an area that is wholly or partly located in the extraterritorial jurisdiction of a municipality is not affected by a subsequent annexation of real property in the reinvestment zone by the municipality.
(b) Before adopting an ordinance or order designating a reinvestment zone, the governing body of the municipality or county must prepare a preliminary reinvestment zone financing plan.
(c) Before adopting an ordinance or order providing for a reinvestment zone, the municipality or county must hold a public hearing on the creation of the zone and its benefits to the municipality or county and to property in the proposed zone. At the hearing an interested person may speak for or against the creation of the zone, its boundaries, or the concept of tax increment financing. Not later than the seventh day before the date of the hearing, notice of the hearing must be published in a newspaper having general circulation in the municipality or county.
(d) A municipality or county proposing to designate a reinvestment zone must provide a reasonable opportunity for the owner of property to protest the inclusion of the property in a proposed reinvestment zone.
(e) Repealed by Acts 2011, 82nd Leg., R.S., Ch. 1032, Sec. 21, eff. June 17, 2011.
(f) Repealed by Acts 2011, 82nd Leg., R.S., Ch. 1032, Sec. 21, eff. June 17, 2011.
(g) Repealed by Acts 2011, 82nd Leg., R.S., Ch. 1032, Sec. 21, eff. June 17, 2011.
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 16, eff. Sept. 1, 1989; Acts 1999, 76th Leg., ch. 983, Sec. 14, eff. June 18, 1999.
Amended by:
Acts 2005, 79th Leg., Ch. 1094 (H.B. 2120), Sec. 36, eff. September 1, 2005.
Acts 2009, 81st Leg., R.S., Ch. 910 (H.B. 1770), Sec. 1, eff. June 19, 2009.
Acts 2011, 82nd Leg., R.S., Ch. 1032 (H.B. 2853), Sec. 2, eff. June 17, 2011.
Acts 2011, 82nd Leg., R.S., Ch. 1032 (H.B. 2853), Sec. 21, eff. June 17, 2011.
Sec. 311.0031. ENTERPRISE ZONE
Designation of an area under the following other law constitutes designation of the area as a reinvestment zone under this chapter without further hearing or other procedural requirements other than those provided by the other law:
(1) Chapter 2303, Government Code; and
(2) Chapter 373A, Local Government Code.
Added by Acts 1989, 71st Leg., ch. 1106, Sec. 26, eff. Aug. 28, 1989. Amended by Acts 1995, 74th Leg., ch. 76, Sec. 5.95(22), eff. Sept. 1, 1995.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 1175 (H.B. 470), Sec. 16, eff. September 1, 2007.
Sec. 311.004. CONTENTS OF REINVESTMENT ZONE ORDINANCE OR ORDER. (a) The ordinance or order designating an area as a reinvestment zone must:
(1) describe the boundaries of the zone with sufficient definiteness to identify with ordinary and reasonable certainty the territory included in the zone;
(2) create a board of directors for the zone and specify the number of directors of the board as provided by Section 311.009 or 311.0091, as applicable;
(3) provide that the zone take effect immediately upon passage of the ordinance or order;
(4) provide a date for termination of the zone;
(5) assign a name to the zone for identification, with the first zone created by a municipality or county designated as “Reinvestment Zone Number One, City (or Town, as applicable) of (name of municipality),” or “Reinvestment Zone Number One, (name of county) County,” as applicable, and subsequently created zones assigned names in the same form numbered consecutively in the order of their creation;
(6) establish a tax increment fund for the zone; and
(7) contain findings that:
(A) improvements in the zone will significantly enhance the value of all the taxable real property in the zone and will be of general benefit to the municipality or county; and
(B) the area meets the requirements of Section 311.005.
(b) For purposes of complying with Subsection (a)(7)(A), the ordinance or order is not required to identify the specific parcels of real property to be enhanced in value.
(c) To designate a reinvestment zone under Section 311.005(a)(4), the governing body of a municipality or county must specify in the ordinance or order that the reinvestment zone is designated under that section.
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1989, 71st Leg., ch. 1137, Sec. 17, eff. Sept. 1, 1989; Acts 1999, 76th Leg., ch. 983, Sec. 1, eff. June 18, 1999; Acts 2001, 77th Leg., ch. 1162, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch. 1094 (H.B. 2120), Sec. 36, eff. September 1, 2005.
Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 14.002, eff. September 1, 2007.
Sec. 311.005. CRITERIA FOR REINVESTMENT ZONE
(a) To be designated as a reinvestment zone, an area must:
(1) substantially arrest or impair the sound growth of the municipality or county designating the zone, retard the provision of housing accommodations, or constitute an economic or social liability and be a menace to the public health, safety, morals, or welfare in its present condition and use because of the presence of:
(A) a substantial number of substandard, slum, deteriorated, or deteriorating structures;
(B) the predominance of defective or inadequate sidewalk or street layout;
(C) faulty lot layout in relation to size, adequacy, accessibility, or usefulness;
(D) unsanitary or unsafe conditions;
(E) the deterioration of site or other improvements;
(F) tax or special assessment delinquency exceeding the fair value of the land;
(G) defective or unusual conditions of title;
(H) conditions that endanger life or property by fire or other cause; or
(I) structures, other than single-family residential structures, less than 10 percent of the square footage of which has been used for commercial, industrial, or residential purposes during the preceding 12 years, if the municipality has a population of 100,000 or more;
(2) be predominantly open or undeveloped and, because of obsolete platting, deterioration of structures or site improvements, or other factors, substantially impair or arrest the sound growth of the municipality or county;
(3) be in a federally assisted new community located in the municipality or county or in an area immediately adjacent to a federally assisted new community; or
(4) be an area described in a petition requesting that the area be designated as a reinvestment zone, if the petition is submitted to the governing body of the municipality or county by the owners of property constituting at least 50 percent of the appraised value of the property in the area according to the most recent certified appraisal roll for the county in which the area is located.
(a-1) Notwithstanding Subsection (a), if the proposed project plan for a potential zone includes the use of land in the zone in connection with the operation of an existing or proposed regional commuter or mass transit rail system, or for a structure or facility that is necessary, useful, or beneficial to such a regional rail system, the governing body of a municipality may designate an area as a reinvestment zone.
(b) In this section, “federally assisted new community” means a federally assisted area that has received or will receive assistance in the form of loan guarantees under Title X of the National Housing Act, if a portion of the federally assisted area has received grants under Section 107(a)(1) of the Housing and Community Development Act of 1974.
Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1, 1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.05(a), eff. Aug. 28, 1989; Acts 1989, 71st Leg., ch. 1106, Sec. 27, eff. Aug. 28, 1989; Acts 1989, 71st Leg., ch. 1137, Sec. 18, eff. Sept. 1, 1989.
Amended by:
Acts 2005, 79th Leg., Ch. 1094 (H.B. 2120), Sec. 37, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch. 1347 (S.B. 771), Sec. 1, eff. June 18, 2005.
Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 14.003, eff. September 1, 2007.
Acts 2007, 80th Leg., R.S., Ch. 1361 (H.B. 2092), Sec. 1, eff. June 15, 2007.
Acts 2011, 82nd Leg., R.S., Ch. 1032 (H.B. 2853), Sec. 3, eff. June 17, 2011.