Harris County Precinct 1, TX – Tax Abatement Policy Review

Challenge

The use of incentives is often criticized for providing a subsidy to a private entity at the expense of taxpayers. However, a strategic approach to structuring and targeting incentives can be an effective means of achieving specific goals and desired outcomes. As part of the establishment of an office dedicated to economic equity and opportunity, the Harris County Commissioner’s Court sought to understand whether the County’s current tax abatement policy was addressing its goal to promote development that was equitable and accountable.

Response

Harris County Precinct 1 engaged TIP Strategies to review Harris County’s tax abatement policy, identify best practices from Texas and US peers for using tax abatement as an economic development tool, and make recommendations on ways to strengthen and improve the policy. TIP’s analysis found that Harris County’s use of tax abatement agreements facilitated investment in low- to moderate-income level census tracts and supported the diversification and enhancement of the economy through the retention and creation of almost 9,000 jobs. In addition, Harris County has used tax abatement as an economic development tool sparingly relative to peer counties in Texas and nationally; a finding that could also suggest an opportunity cost. Based on TIP’s analysis, interviews with economic development partners and stakeholders, and a literature review of best practices, TIP suggested strategies for creating a more responsible, transparent, and accountable policy.