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Special Assessments and Other Incentives

Public Improvement Districts (PIDs)

Chapter 372, Local Government Code

PIDs offer cities and counties a means for improving their infrastructure to promote economic growth in an area. The Public Improvement District Assessment Act allows cities and counties to levy and collect special assessments on properties that are within the city or its extraterritorial jurisdiction. Additional financing options are available to certain large counties.

PIDs may be formed to create water, wastewater, health and sanitation, or drainage improvements; street and sidewalk improvements; mass transit improvements; parking improvements; library improvements; park, recreation and cultural improvements; landscaping and other aesthetic improvements; art installation; creation of pedestrian malls or similar improvements; supplemental safety services for the improvement of the district, including public safety and security services; or supplemental business-related services for the improvement of the district, including advertising and business recruitment and development.

Municipal Management Districts

Chapter 375, Local Government Code

These districts, also called downtown management districts, are created within an existing commercial area to finance facilities, infrastructure and services beyond those already provided by individual property owners or the municipality. The improvements may be paid for by self-imposed property taxes, special assessments and impact fees, or by other charges on district property owners. The creation of the district does not relieve a city from providing basic services to the area. A district is created to supplement, not supplant, the municipal services available to the area.

Neighborhood Empowerment Zones

Chapter 378, Local Government Code

A Neighborhood Empowerment Zone is a designated area within a municipality that is created to promote one or more of the following: affordable housing; an increase in economic development; an increase in the quality of social services, education or public safety; or the rehabilitation of affordable housing in the zone.

North American Free Trade Agreement (NAFTA) Impact Zones

Chapter 379, Local Government Code

NAFTA Impact Zones are intended to promote business opportunities for local businesses within the zone; increase economic development within the zone; or promote employment opportunities for residents within the zone.

To be designated a NAFTA Impact Zone, the area must be an area whose present condition substantially arrests or impairs the city’s growth, retards the provision of housing, or constitutes an economic or social liability to public health, safety, morals or welfare; an area that is predominantly open, and because of obsolete platting, deteriorating structures or other factors, substantially impairs or arrests the growth of the city; an area that is in a federally-assisted new community located in a home rule city or in the area immediately adjacent to a federally-assisted new community in a home rule city; entirely in an area that meets the requirements for federal assistance under Section 119 of the Housing and Community Development Act of 1974; or reasonably likely, as a result of designation as a NAFTA Impact Zone, to contribute to the retention or expansion of primary employment or to attract major investment in the zone that would be a benefit to the property and that would contribute to the economic development of the city.

For property within a NAFTA Impact Zone, a city may use the following:

• Building Fee Waiver—waive or adopt fees related to the construction of buildings in the zone, including inspection and impact fees;
• Municipal Sales Tax Refund and Abatement Agreements—offer sales tax refund or municipal sales tax abatement agreements, not to exceed 10 years;
  
• Property Tax Abatement—abate municipal property taxes on property located within the zone subject to the 10-year duration limit; or
  
• Environmental Goals—set baseline performance standards to encourage the use of alternative building materials to address concerns related to the environment or to building costs, maintenance or energy consumption.

NAFTA Impact Zones are created and administered locally.