Chapter 313 Agreements

State law allows school districts to consider approval of Chapter 313 agreements, which is an appraised value limitation agreement in which a taxpayer agrees to build or install property and create jobs within the district boundary in exchange for a 10-year limitation on the taxable property value for school district Maintenance & Operations (M&O) tax purposes.  

Hundreds of Chapter 313 agreements have been approved by school districts in Texas, as these agreements allow districts to:  

1.  Continue receiving 100% of revenue for school district’s Interest and Sinking (I&S) Debt Service fund, which is established for only school bonds – and therefore have the opportunity to consider bonds at higher investment capacity, often with little or no increase to the total tax rate;  

2. Minimize the amount of recapture they will owe to the State of Texas due to an influx of M&O revenue when a large industrial project is at full value on the tax roll; 

3. Have time to prepare and strategize for (often much higher) recapture payments that WILL be required as payment to the state when the industry’s tax limitation expires and district revenue exceeds the foundation school program state entitlement – currently beginning with the basic allotment of $6,160 per student (2022). 

4. Receive revenue protection and supplemental payments from industry under the agreement to support the district during the period of limitation, all of which can be used for one-time school expenses and are not subject to state recapture; and 

5. Receive protection from reduced state funding that is triggered when high industrial tax values cause a district’s M&O revenue to increase above the basic allotment per student.  

The application for a limitation on the appraised value for M&O is submitted directly to the school district and requires an application fee established by the district. The application must be reviewed and certified by the State Comptroller’s Office prior to consideration for approval by the school board. 

CLICK HERE for an overview of Chapter 313 Agreements, including a list of agreements now in effect as of October 2022. 

Recapture is a method of equalizing varying degrees of property wealth among Texas school districts. The Texas Legislature created recapture in 1993 in response to a Texas Supreme Court ruling which found that the state’s heavy reliance on local property taxes to fund public education had created unconstitutional disparities in the amount of money that each district had to educate students. A series of formulas determines a school district’s entitlement, which is the amount of funding the district should have to educate each student. If the district’s tax rate brings in revenue in excess of entitlement, the state takes those excess dollars away.  

If recapture-paying districts set a lower tax rate, the state reduces their entitlement. The state is recapturing an estimated $350,000 from Gregory-Portland ISD in 2022. As Chapter 313 agreements end at 10 years for each investment project, the district’s taxable property values will increase significantly. As a result, the amount the state will recapture from the district is predicted to increase to $46 million in 2027, based on current-law school finance formulas.  

G-PISD understands that the intent of the wealth equalization (“Robin Hood”) state law is to serve all districts and students in Texas – furthermore, we agree and believe in equity for all Texas students. That process is still maintained with Chapter 313 agreements. Millions of dollars are scheduled for recapture from G-PISD in the years ahead whether or not Chapter 313 agreements are approved by the school board.   

The state will continue to fund all districts beginning with the basic allotment per student, $6,160, under current law.  Additionally, with or without an approved Chapter 313 agreement, G-PISD would have to send funds in EXCESS of this basic allotment / school foundation program allocations to the state.  With an approved Chapter 313 agreement, there are some revenue protection and supplemental payments that G-PISD could receive that are not subject to state recapture (in addition to other benefits to the district). This positively impacts the district’s M&O fund for operational revenue. 

Gregory-Portland ISD understands some individuals have expressed concerns regarding environmental changes as a result of industrial growth in our local area. It is important to remember that industry can decide to locate, or build, in our area with or without an approved Chapter 313 agreement. 

Chapter 313 agreements are intended and written into law as financial agreements, not environmental agreements. Gregory-Portland ISD has received outreach and public comment from some individuals residing in our region who oppose these agreements because of the tax limitation benefit they provide to industry for a 10-year period of time. 

We have heard these concerns. As a result, in past years our School Board has negotiated landmark Chapter 313 agreements that –according to our state legal experts— are uncommon and unseen in other agreements throughout the state. These negotiations have included, for example, the requirement that some industry partners provide air quality monitoring stations on school property and provide access to a custom website where air quality can be checked by the public as desired (and/or used for educational purposes). These additions to agreements were made by our Board to support those who expressed environmental concerns, while also being able to move forward with long-term financial considerations for our district that will directly impact our students, teachers, staff, and community. 

The G-PISD School Board has reviewed, negotiated, and approved many agreements in the last several years. Their consideration of these agreements is part of the district’s financial management strategy to ensure local dollars remain local as much as possible, and our school district remains financially secure as we navigate local changes under wealth equalization (“Robin Hood”) law.  

Many Texas school districts who are under Robin Hood law, and annually pay millions to the state in recapture, are operating with deficient budgets and are unable to increase teacher and staff pay among other limitations. G-PISD leaders are aware of the need to manage tax dollars well, especially as we realize that in 10-to-20 years our district’s recapture payments will continue to increase – and those payments must be made from the M&O fund, which is tied to salaries, curriculum materials, utilities, and other operational expenses that run our school district each year.  

These agreements are complex, however with simplicity it can be stated that the agreement terms must clearly support the district in managing its status as a high-wealth (“Robin Hood”) school district subject to state recapture for an agreement to be considered for approval by the board. Industry can choose to build or locate with or without an approved Chapter 313 agreement – which means any district must consider its financial stability in either case as well. 

If a Chapter 313 agreement is not approved, it is true that industry may decide not to build, expand, or locate in the area -- however, they may instead decide to move forward with those plans and pay taxes on their full tax valuation for the 10-year period in question. The school district is not at all a part of that decision-making process, which often includes many factors – one of which may be whether or not an entity receives approval of a Chapter 313 agreement. 

Since the 2016-2017 school year, G-PISD has received approximately $77.5 Million through revenue-protection and supplemental payments. G-PISD is able to utilize these additional funds without restriction for above and beyond academic purposes such as teacher salaries, instructional materials, and facility improvements due to not being considered in current law school finance formulas. In essence, G-PISD has capitalized on ensuring a high performing and engaged workforce throughout South Texas with competitive teacher salaries starting at $60,000 for the 2022-2023 school year.  

In addition, G-PISD has been committed to addressing capital improvements needs through school bonds since 2012. Due to Chapter 313 agreements not impacting the I&S component of the tax rate, school districts are able to capitalize of school bond capacity based on total appraised property values for these projects. For example, G-PISD called a bond election for November 8, 2022 for approximately $242 Million. This is possible because forecasted I&S net taxable values enable the school district to leverage bond dollars and as noted above, G-PISD is able to collect taxes on 100% of this total taxable value through the current I&S tax rate of $.2500. 

School districts located near expanding business and industry are among the list of those who have Chapter 313 agreements either approved or pending with the Texas Comptroller’s Office including local school districts in Ingleside, Taft, Sinton, Tuloso-Midway, Calallen, Corpus Christi, Robstown, Mathis, Beeville, Goliad, Kingsville, and more. CLICK HERE to view the Comptroller’s website listing. 

Corpus Christi Liquefaction (“Cheniere Energy”) submitted an application to Gregory-Portland ISD that is currently under review by the Texas Comptroller as of October 17, 2022. Pending certification by the comptroller’s office, the School Board will have an opportunity to review the terms of this agreement and decide whether to approve at a future board meeting.  

If approved, the current (not final) terms of this agreement would include and/or initiate: 

• A 10-year tax value limitation agreement for M&O revenue to Corpus Christi Liquefaction beginning in the year 2038 for Stage 3C, and year 2042 for Stages 4A and 4B; 

• Total estimated tax savings of $172 Million for Corpus Christi Liquefaction (which would be subject to state recapture if collected by G-PISD); 

• Estimated revenue protection and supplemental payments beginning in 2038 in excess of $36 Million for Gregory-Portland ISD that are not subject to state recapture; and 

• Full tax valuation with 100% of taxes paid to Gregory-Portland ISD for the I&S fund (restricted for only school bonds, and only accessible with voter approval). 

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CGRP 04, LLC ("Bechtel") submitted an application to Gregory-Portland ISD that is currently under review as of October 17, 2022. This application is currently pending certification and steps necessary for consideration by the School Board.

If approved, the current (not final) terms of this agreement would include and/or initiate: 

• A 10-year tax value limitation agreement for M&O revenue to CGRP 04, LLC, beginning in 2028;

• Tax savings* for CGRP 04, LLC (which would be subject to state recapture if collected by G-PISD); 

• Estimated revenue protection and supplemental payments* beginning in 2028 for Gregory-Portland ISD that are not subject to state recapture; and 

• Full tax valuation with 100% of taxes paid to Gregory-Portland ISD for the I&S fund (restricted for only school bonds, and only accessible with voter approval). 

*Estimates will be posted on this web page upon receipt from legal counsel. 

LEARN MORE: Chapter 313 and Recapture Overview