A tax abatement is an agreement where a local government (like a county) temporarily reduces or waives some portion of property taxes on a new project to encourage development.
Think of it like this: the county is offering a discount on taxes in exchange for promises the company makes (investment, jobs, infrastructure, community benefits, etc.).
What a tax abatement is (simple definition)
A tax abatement typically reduces the taxable value of certain improvements (often new construction and equipment) for a set period of time.
- It does not usually eliminate taxes entirely.
- It is temporary.
- It is negotiated and voluntary.
Why counties offer abatements
Counties offer abatements to:
- attract new investment
- compete with other counties
- encourage development in specific areas
- negotiate public benefits (infrastructure, roads, local hiring, etc.)
Why residents may oppose abatements
Residents often oppose abatements because:
- it reduces the tax revenue the county would otherwise collect during the abatement term
- the project may create impacts (water use, noise, traffic, lighting) that residents live with long after the abatement ends
- it can set a precedent: once one project gets an abatement, others may expect the same
The “big picture” tradeoff
An abatement can be a tool—but it’s also a decision with long-term consequences.
- If an abatement makes a project financially viable, approving it can accelerate the project.
- If a project only works with an abatement, denying it may cause the developer to go elsewhere.
That’s why many residents see an abatement as the county’s biggest bargaining chip.
What is a PILOT payment?
Sometimes projects propose a PILOT: Payment In Lieu Of Taxes.
A PILOT is basically:
“Even if our taxable value is reduced, we’ll still pay the county a negotiated amount each year.”
PILOTs can be structured in many ways (fixed annual payments, escalating payments, payments tied to milestones, etc.). A strong PILOT can help protect the county’s revenue during an abatement period.
Pros of a tax abatement (when negotiated well)
A well-negotiated abatement can:
- bring new investment that wouldn’t happen otherwise
- lock in community protections (noise mitigation, lighting standards, traffic plans, emergency response commitments)
- fund local priorities through a PILOT or other agreements
- create some local jobs and local spending (especially during construction)
Cons of a tax abatement
A poorly negotiated abatement can:
- reduce county revenue with limited public benefit
- shift more costs to residents (roads, EMS, wear-and-tear, staff time)
- create long-term impacts that outlast any short-term revenue
- remove leverage the county can’t get back once the deal is approved
Important: “More tax base” doesn’t automatically mean “double the budget”
Even if a project increases the county’s overall tax base, that does not automatically mean the county budget doubles overnight.
Budgets are affected by:
- how taxable value is counted and phased in
- abatements and exemptions
- caps/limits and political decisions on tax rates
- increased county costs to support growth and infrastructure
The bottom line: big projects change the math, but they don’t automatically deliver big benefits unless negotiated and managed carefully.
How the process should work (transparency matters)
Major actions related to abatements must occur in public meetings with posted agendas, public notice, and recorded votes.
If a company asks for a deal that affects the whole county, residents deserve:
- clear agendas
- clear timelines
- clear documents
- clear opportunities for public comment
What residents can do
If you care about a proposed abatement:
- Watch the Commissioners Court agenda regularly
- Attend meetings when items appear
- Speak during public comment
- Email/call your county officials respectfully and clearly
- Ask for the full terms of any abatement/PILOT before any vote