NAVIGATING THE EXTINCTION OF CHAPTER 313
Industry partnerships build unique opportunities
What is Chapter 313?
Chapter 313 is the Texas Economic Development Act established in 2001. Chapter 313 agreements allow school districts to temporarily limit the amount of tax revenue that new industries pay into the Maintenance & Operations (M&O) fund for up to 10 years.
A Chapter 313 Agreement does not impact Interest & Sinking (I&S) funds. The district continues to collect all the taxes on this side of the tax rate.
It’s a win-win for the industry and the district.
The industry provides “revenue protection payments” so the school district does not lose money due to the lowered property valuation under the state funding formula while the industry enjoys a 10-year limitation on their appraised property value.
The agreement also helps the district reduce how much it owes in state recapture payments.
Why is this important?
Chapter 313 expired on December 31, 2022, however, any existing agreements remain valid for their designated 10-year limitation terms. Many of those agreements in G-PISD are coming to an end.
The Impact of Chapter 313
Chapter 313 benefitted G-PISD by helping the district maintain high-quality programs and services, support day-to-day operations, remain a leader in teacher and staff compensation, and reduce the financial burden on local taxpayers.
Additionally, since Chapter 313 doesn’t impact the I&S rate, G-PISD has been able to increase our bond capacity for facility improvements without increasing the local tax rate. Most recently, voters approved a $205 million school bond in May 2025 with 90 percent of the bond funded by tax contributions from local industry.
G-PISD’s Chapter 313 Agreements
| Projects | Expires |
|---|---|
| CC Liquefaction Train 3 | 2028 |
| Apex Midway Wind | 2026 |
| SABIC US Projects | 2031 |
| GCGV Asset Holdings | 2031 |
| Exxon Mobil | 2031 |
| CC LiquefactionTrain 4 | 2034 |
| CC LiquefactionTrain 5 | 2034 |
| Padre Solar, LLC | 2028-2037 |
| CC Liquefaction (Stage 3C) | 2028-2037 |
| CC Liquefaction (Stage 4A) | 2042-2051 |
| CC Liquefaction (Stage 4B) | 2042-2051 |
| CGRP 04 | 2028-2037 |
On the Horizon
As the 10-year limitation agreements end, industry property becomes fully taxable on the M&O side of the school tax rate.
While this increases local property tax collections for G-PISD, it also significantly increases the district’s Chapter 49 recapture obligation (“Robin Hood”), meaning a larger portion of locally generated tax dollars are required to be sent back to the state.
With Chapter 313 nearing extinct, what’s next?
The 88th Texas Legislature created Chapter 403 to replace the Chapter 313 program. While Chapter 403 continues to provide opportunities for economic development partnerships, it is generally less financially beneficial to school districts compared to the previous Chapter 313 structure.
Jobs, Energy, Technology and Innovation Act (JETI - Chapter 403)
The 88th Texas Legislature approved House Bill 5 – the Jobs, Energy, Technology and Innovation Act – to attract investments and jobs to Texas. To qualify under JETI, companies must meet minimum local job creation and investment requirements and pay a $30,000 application fee to the school district. The local school district and the office of the Texas governor must approve the project agreement.
Key Differences Between Chapter 313 and Chapter 403 (JETI) Agreements
- A company with a JETI agreement will receive a 100 percent school district M&O tax limitation during the construction phase of a project, which might be up to two years, but the limitation drops to 50 percent once the project is online. The old program, on the other hand, did not make a distinction between the construction and operational phases of a project.
- The governor is now a party to agreements with the applicable school district under the new program and must approve and enter into an agreement for each, whereas under the Chapter 313 program, agreements were only between a company and a school district.
- The Chapter 313 program allowed companies to give school districts “payments in lieu of taxes,” which were supplemental payments representing a portion of the tax savings the company would get over the lifetime of the agreement, which could be up to 40 percent. JETI explicitly prohibits these payments.
- Although certain facilities delivering utility services are exempt from the jobs requirement under JETI, the requirement cannot be waived like it often was under the Chapter 313 program. For example, most if not all the renewable energy projects in the Chapter 313 program have jobs requirement waivers, which waive jobs to minimum industrywide employment standards.
Source: Comptroller.Texas.Gov