With a vibrant cultural scene, enhanced quality of life, and a strategically central location, Bexar, one of the fastest-growing counties in Texas, is becoming a magnet for new businesses and industries. This desirability can be attributed to the county’s ongoing economic development efforts.
The arrival of businesses in Bexar County often raises property rates due to increased demand for commercial spaces. As new enterprises take root and property values climb, local tax revenue also sees a boost. This occurs when the need for commercial space grows, but the supply stays limited, leading to higher property values and subsequently increased commercial property taxes.
In this article, we’ll understand in detail what economic development is, how it affects commercial property taxation, and what tax relaxations businesses can enjoy.
Understanding Economic Development
Economic development is the process of making a state or region better by improving things like healthcare, education, roads, and creating new products and industries. In Bexar County, various processes and activities boost the region’s economic development like increased investments, enhanced education, skill development, encouraging innovations, technological advancements, improved infrastructure, business growth, and better trade opportunities.
The end goal of economic development is to create more jobs for people and improve their lives by giving them access to better facilities.
Impact of Economic Development on Commercial Property Tax
⦁ Higher Property Values & Property Tax
Economic development often drives demand for commercial spaces, resulting in higher property values. As these businesses thrive, the area becomes more attractive. Property values tend to rise more due to increased demand for space. Higher property values boosts the assessment value of commercial properties, prompting an increase in property taxes, generating more revenue for local authorities.
⦁ Expansion of Tax Base
Economic development makes a place wealthier, with more businesses, jobs, and higher property values. This boosts tax collection as businesses, earners, and property owners pay more taxes. Also, increased spending and investments lead to more tax revenue. Overall, a growing economy broadens the government’s tax base, bringing in more funds which can be used to carry out public services and infrastructure projects in the region.
It is worth noting that property taxes are not the same everywhere in Bexar County and depend on certain factors.
Key factors Influencing the Commercial Property Taxes
1.) Location of the property
Commercial property taxation varies based on where the property is situated. Locations with prime access tend to have higher property values and, consequently, higher tax rates. In contrast, properties in less developed or remote areas might have lower values and taxes.
2.) Type of business
Different businesses have varied impacts on the local economy and community. Tax assessments might consider factors such as the business’s size, profitability, and industry type. For example, property taxes for a manufacturing plant are likely to be higher than property taxes for a retail store.
3.) Availability of tax incentives
The impact of economic development on commercial property taxation can be mitigated by the availability of tax incentives. Bexar County offers a number of tax incentives for businesses, which can help to offset the cost of property taxes, making the region more attractive for businesses.
Tax Incentives and Abatements in Bexar County
Taxation matters to business owners because it affects their bottom line. Commercial property tax can burden small businesses by directly impacting a company’s expenses and profitability, there are two major tax incentives in Bexar County to mitigate these costs.
Chapter 380 tax abatement
Chapter 380 tax abatement is a vital incentive in Bexar County for businesses. It offers partial property tax relief for a set time. Exemption amount and duration vary based on business type and property location. It is best to stay updated with the tax abatement guidelines to make informed decisions. This empowers businesses to strategically leverage this opportunity for sustained development and financial advantage.
Chapter 381 tax increment financing (TIF) district
A Tax Increment Financing (TIF) district is a defined zone where property taxes fund targeted development projects. As the area improves, property values rise, increasing tax revenues. The “increment” of this extra revenue is used for district projects. Though property taxes may rise, the additional income within the TIF district reduces the overall tax load, benefiting both the local government and area development.
Beware of High Property Taxes
As Bexar County grows economically, some landowners might face unfairly high property taxes because of mistakes in evaluations or taxes that don’t match their property’s worth. If these taxes become too heavy, landowners can speak up and ask for a review. They have the right to appeal and get things corrected.
Alamo Ad Valorem can assist throughout the process of Bexar County property tax appeals to help you successfully exercise your right to protest and ensure fair taxation.