Presented by: Tammy McRae Montgomery County Tax Assessor/Collector

What types of tax incentives does Montgomery County offer?  Freeport Exemption Section , Texas Property Tax Code  Tax Increment Financing (TIF) Chapter 311, Texas Property Tax Code Chapter 381, Texas Local Government Code  Tax Abatement Act (School Districts May Not Use) Chapter 312, Texas Property Tax Code Chapter 381, Texas Local Government Code

Freeport Exemption The Texas Property Tax Code, Section provides an exemption from taxation of inventory or property that consists of freeport goods. Freeport goods are tangible personal property, including goods, wares, merchandise, aircraft parts and ores. Freeport goods qualify for the exemption if they leave Texas within 175 days from the date they are brought into or acquired in the state. Property qualifies as freeport goods regardless of whether the person who owns the property on January 1 is the same person who transports the goods out of the state. This exemption does not apply to oil, natural gas, or liquid or gaseous materials that are immediate derivatives of refining of oil or natural gas.

Tax Increment Financing Local governments can use this incentive to publicly finance needed structural improvements and enhanced infrastructure within a reinvestment zone. These improvements are usually undertaken to promote existing businesses and/or attract new business to the area. Tax Increment Financing may be initiated by one of two ways: 1.By petition of the affected property owners 2.By the city or county’s governing body

Tax Abatement Act A tax abatement is an agreement between a taxing unit and a property owner that exempts all or part of an increase in the value of real property and/or tangible property from taxation for a period not to exceed 10 years. Local governments use tax abatements to attract new industry and commercial enterprises. They are also used to encourage the retention and development of existing businesses. Property that is to be abated must be in a designated reinvestment zone. The governing body of a taxing unit may enter into a tax abatement agreement if it finds that the terms of the agreement and the property subject to the agreement meet the applicable guidelines and criteria adopted by the governing body. Each taxing unit (except a school district) with jurisdiction over a property may offer a separate tax abatement agreement.

I. Overview of County Tax Abatements in Texas A. Economic development tool authorized by statute. B. Legal parameters set by Commissioners Court II. Overview of Montgomery County’s tax abatement procedure A. Tax A/C oversees tax abatement application process with input from whose precinct the applicant’s project is to be located. Tax A/C requests Commissioners Court to authorize Tax A/C and County Attorney to move forward with preparation of tax abatement agreement. B. County Attorney prepares tax abatement agreement C. Commissioners Court approves and executes final tax abatement agreement. D. Tax A/C oversees compliance with tax abatement agreements.

Category A: expansion to existing business only Abatement Up to 4 Years Total Added Value- $1,000,000 to $4,000,000 Number of Full Time Jobs Category B: expansion to existing business and/or new business Abatement Up to 6 Years Total Added Value- $4,000,001 to $8,000,000 Number of Full Time Jobs Category C: expansion to existing business and/or new business Abatement Up to 8 Years: Total Added Value- $8,000,001 to $25,000,000 Number of Full Time Jobs Category D: expansion to existing business and/or new business Abatement Up to 10 Years Total Added Value- Over $25,000,000 Number of Full Time Jobs- Over 150

Tax Abatement Facts  More than 1000 tax abatement agreements have been executed by Texas local governments since the early 1980s.  Montgomery County has executed 98 tax abatement agreements since  30 Current  50 Expired/Cancelled  4 Approved to start in 2015  17 Abatements were cancelled via withdrawal or default  25 Applications for abatement denied due to various reasons  Since May 1988 through July 2014:  There have been 16,336 jobs added to the Montgomery County area  A increase of value by $1,075,324,128  Tax revenue of $54,067,455 added

References  Montgomery County 2014 Tax Abatement Policy Guidelines & Criteria  Texas Property Tax Code 2013  Economic Development Handbook, published by Texas Attorney General in 2013  For additional information please contact Tammy McRae, Montgomery County Tax Assessor/Collector. (936)