Houston Skyline

Tax Abatements

Houston created a program that encourages new growth, new development, and new jobs: tax abatements. These abatements attempt to strengthen Houston’s existing competitive advantages, while augmenting Houston’s emerging markets.

What projects qualify for abatements?

  • A developer builds in a declining part of Houston, a place where the project increases  job opportunities,reduces poverty, or redevelops an area.

  • The rare situation when a developer requires an abatement to remain, expand, or locate, in Houston, a situation where Houston’s job and economic market is significantly strengthened by the developer’s presence.

  • A company invests in real estate that serves the public. Such an investment could provide affordable housing or rejuvenate a blighted area.

What project costs qualify for an abatement?

  • A developer improves their building or equipment

  • A developer improves or modernizes their site*

  • The property is deteriorated or demolished, qualifying under section 44-132 of Ordinance 2014-0245

What project costs are unqualified for abatements?

  • Property that receives a historic site exemption

  • Land, inventory, supplies, tools, vehicles, vessels and aircrafts

  • Improvements that generate electrical energy not entirely consumed by the new development

  • Improvements that produce, store, or distribute, natural gas, or other fuels not used by the development site

Is there anything else we should know about COH abatements?

  • The lessor must be part of the abatement agreement if it involves leased property.

  • The City is highly interested in projects that also receive state economic or federal  development funds.

  • Senior economic development officials meet with developers to discuss the abatement offer in the final stages of the abatement process 

What are the requirements to receive an abatement?

(1)   A project must increase the value of their taxable property by at least $1,000,000.00 for deteriorated/demolished property or $5,000,000 for other development.

(2)   A project must retain or “create” at least 25 permanent jobs at the beginning of the abatement, continuing throughout the remaining years of the agreement.

(3) The City must receive a detailed financial pro forma from the developer that explains all costs and projected revenue in line-item detail.   

(4)   If the project site is located within a Texas Enterprise Zone (TEZ), the minimum investment requirements is $500,000 and the project must create five permanent jobs.

How does the city determine the terms of an abatement?

The City decides how many years an abatement should last based on the impact the project creates for the City.

What happens if the developer doesn't meet abatement terms?

The City will recapture taxes abated if the developer defaults on the agreement.

 

For more information please contact us.