Price the incentive with its obligations
A school-tax value limitation can improve a Texas investment. The return depends on the property covered, the signed timetable, and the operating commitments that survive the incentive period.
Sulayman Bowles · · Updated
How should a business underwrite a Texas JETI incentive?
Place the benefit in the school M&O tax line for eligible property, rather than discount the whole tax bill. Retain genuine competing-site evidence, the signed construction and incentive timetable, and jobs, wages and reporting obligations. Model the benefit after program costs and the compliance tail. A proposed investment, signed agreement and operating output are different stages of evidence. A permitted start deferral can leave the end fixed and consume benefit years; price the post-benefit operating tail separately.
Evidence: Government Code Chapter 403, Subchapter T: current JETI law · JETI FAQ: competing locations, jobs and eligible investment · JETI process and timeline
Read this alongside Texas business research..
Locate the JETI benefit in the project’s tax bill before valuing the incentive. Ordinarily, eligible property’s school maintenance-and-operations taxable value is 50 percent of market value; qualifying opportunity-zone property receives a 25 percent limit. School debt-service, county and city taxes remain separate, as do other assets and construction costs. That narrower tax base determines how much the incentive can contribute to the investment return. Government Code §403.605
The Jobs, Energy, Technology and Innovation program connects a company, school district and governor through an agreement with investment, employment, wage and other requirements. Current public records now include both signed agreements and 2026 reporting documents. For a business choosing a site or a supplier assessing a proposed plant, those are different stages of evidence. Program overview · Current agreements
A financeable decision needs more than a projected incentive total. It needs eligible property, a credible competing-location process, an executable construction schedule, the signed agreement and an owner for continuing obligations. Put those alongside power, water, hiring and customer qualification. A tax benefit improves the economics of an operating project; it cannot by itself make that project deliver usable capacity.
Scope and assumptions
Texas Government Code Subchapter T and official program documents checked October 12, 2026. Published application and reporting records are evidence of those documents, not an independent audit of operating output, employment or investment. All return calculations use declared hypothetical inputs. Actual project eligibility, agreements, tax treatment and compliance require professional review. Targeted October 13 revision: actual fixed-end deferral mechanism and separately labeled present-value sensitivities. Original source-check dates remain attached to the individual references.
Find the tax that is actually reduced
During the incentive period, §403.605 sets eligible property's school M&O taxable value at 50 percent of its annual market value, or 25 percent when the property qualifies for the opportunity-zone treatment. That second figure is a 75 percent reduction in the relevant value, rather than a 75 percent discount on the whole site's tax bill. Separate the two percentages in the model. §403.605(a)
The statute also provides zero M&O taxable value for eligible property during the specified construction years, starting with the tax year after the agreement year and ending with the year containing construction completion. The incentive and construction periods are part of the agreement. Do not replace those dates with an assumption that the discount begins when a board approves the project. §403.605(b); §403.612
Use separate lines for eligible value, excluded assets, school M&O, school interest-and-sinking taxes, and the other taxing units. Model depreciation or reappraisal and actual adopted rates year by year. An incentive measured as a percentage of market value creates a different cash path from a fixed-dollar grant, especially when equipment value falls or school rates change.
Ask the appraisal and tax advisers to reconcile the agreement's property schedule with the proposed fixed-asset register. A headquarters, old equipment, inventory and land should not enter the discounted-value cell by proximity to an eligible production building. Keep the ordinary business-property-tax forecast available so the team can see exactly which line the incentive changes.
Eligibility is an activity, property and timing question
The current statutory definition includes specified manufacturing, utility, natural-resource, high-technology and critical-infrastructure projects, and excludes nondispatchable generation and energy-storage facilities. An industry label is only an initial screen. Match the actual activity and applicable classification to current agency requirements before relying on a proposed benefit. §403.602(8) · Program guidance
Eligible property has its own boundary: the statute specifies qualifying new buildings or expansions constructed after agreement execution and qualifying tangible property first located in the relevant zone after that date, with ownership or capitalized-lease conditions. Investment excludes land and inventory. Buying a site early or assigning equipment to an existing operation can therefore affect the eligible package even when total capital spending is large. §403.602(9), (13) · Official FAQ
Jobs and minimum investment depend on county population; for a project crossing counties, the statutory requirement uses the smallest-population county in which part of the project lies. The minimums are not the applicant's entire operating plan. They establish a program screen and continuing commitments, while demand, safe staffing and supplier needs determine the viable business. §403.604
The required investment and initial jobs are due by the end of the first tax year of the incentive period, and the statutory jobs requirement continues through agreement expiry. An eligible dispatchable-generation project has a separate jobs exception. Apply that exception only to the category it covers; it is not an exemption for every capital-intensive operation. §403.604(a), (b)
| County population | Required jobs | Minimum investment |
|---|---|---|
| 750,000 or more | 75 | $200M |
| 250,000–749,999 | 50 | $100M |
| 100,000–249,999 | 35 | $50M |
| Below 100,000 | 10 | $20M |
Government Code §403.604 and Comptroller program table. The dispatchable-generation jobs exception and multi-county rule are separate. These are qualifying minimums, not observed jobs or completed capital spending.
Retain the competing-site evidence before the decision closes
The Comptroller's FAQ says a positive recommendation needs a current competitive site-selection process with tangible planning for locations outside Texas. Examples include detailed incentive letters, shareholder presentations comparing locations and internal fiscal comparisons. Showing that an incentive improves project viability is insufficient by itself. That makes the evidence task relevant before the company has effectively committed to one site. Compelling-factor FAQ
A useful location memo compares the same operating project across plausible sites. Retain the dated alternatives, access to power and water, logistics, labor, permits, customer requirements and total expected cash cost. Record which assumptions are signed commitments and which remain estimates. The tax adviser can then connect the commercial decision to the agency's actual criteria.
The official process begins with a complete application and proof of the $30,000 school-district application fee. Its timeline distinguishes the Comptroller's recommendation, favorable governor and school-district determinations, a public hearing and execution of the agreement. It also identifies a performance bond. Those steps belong on the critical path and in transaction costs. Process and timeline
The published agency timeline is a process guide. Check the current statute and the actual correspondence before treating a stated review period as a guaranteed closing date. Administrative completeness, amendments, questions and the district's hearing schedule can change the business's timetable. An unsigned favorable letter should not be booked as a completed agreement.
Read applications, agreements and reports as separate evidence
The J0013 public record for Brazos Midland Processing in Stanton ISD illustrates the document sequence. The application was posted December 23, 2024, an agreement was posted August 11, 2025, and a 2026 biennial report was posted September 16, 2026. Those are posting dates, not interchangeable dates of expenditure, signing or production. Official project record
The 2026 report identifies July 29, 2025 as the agreement-execution date and a 2026–2035 incentive period, followed by a 2038 final maintain-viable-presence year. Its presence shows why ongoing reporting belongs in the diligence package. It does not establish from the listing alone that every obligation was fulfilled or that output is available to a buyer today. 2026 report, first page
For a proposed manufacturing supplier, trace the same sequence and add commissioning, product qualification and customer delivery evidence. For a lender or buyer of the project company, obtain the signed agreement, amendments, compliance correspondence and the liabilities that transfer. Publicly proposed investment should remain labeled as proposed when it enters an opportunity model.
Avoid adding every application amount into a headline for realized Texas investment. A proposed amount, current-agreement listing and reported spending have different definitions and observation dates. The commercial value of the public record is that it helps identify the next document to request, rather than eliminate the need for project-level verification.
Calculate the benefit after the obligations
Consider a hypothetical eligible $300 million property value, held constant solely to explain the arithmetic. Assume an M&O rate of $0.60 per $100, a school debt-service rate of $0.25, and other local rates totaling $1.10. The unassisted annual bill on that assumed value is $5.85 million. Real assets, rates and valuation paths would need separate projections.
A normal 50 percent M&O value limitation reduces the assumed M&O tax from $1.8 million to $900,000. The other $4.05 million of taxes remain in this simplified model, making total annual tax $4.95 million. The annual savings are $900,000, or about 15.4 percent of the full unassisted bill. Applying a 50 percent discount to $5.85 million would materially overstate the benefit.
If the same assumed eligible value satisfied the opportunity-zone treatment, M&O tax would be $450,000 and the total bill $4.5 million, a $1.35 million annual reduction. Eligibility and the property's zone boundary must be demonstrated independently. This is a comparison of statutory mechanics using declared inputs, not a recommendation for a particular location.
For the normal limitation, ten level annual savings of $900,000 discounted at an assumed 8 percent have a present value of approximately $6.04 million. Assume, separately, $150,000 of incremental annual program-related cost during those ten years and $250,000 upfront. The simplified net present value falls to approximately $4.78 million. This estimate excludes construction-period benefits, changing rates and values, financing effects, taxes on income, post-incentive obligations and downside liabilities.
Delay has a specific legal mechanism. Under §403.613(c), a permitted start deferral for projected investment shortfall leaves the agreement’s end unchanged. If the example loses its first $900,000 saving but retains years 2–10, gross present value falls from $6.039 million to $5.206 million at the same assumed 8% rate: an $833,333 loss. This is not the same as moving an intact ten-year annuity one year later. Modifying both dates under subsection (d) is a separate notice, review and objection process, and can be blocked. Incentive-period provisions.
| Declared annual scenario | School M&O tax | Total property tax |
|---|---|---|
| No limitation; all assumed value taxable | $1.80M | $5.85M |
| 50% M&O taxable value | $0.90M | $4.95M |
| 25% M&O taxable value if opportunity-zone treatment applies | $0.45M | $4.50M |
Hypothetical $300M eligible value; rates $0.60 M&O, $0.25 school debt service and $1.10 other taxes per $100. No additional exemptions, excluded assets, rate changes or actual agreement inferred.
The compliance tail can outlast the savings
The agreement specifies employment and investment obligations, a wage requirement and health-benefit provisions. The statutory wage test requires the relevant average to exceed 110 percent of the applicable industry-sector average computed by TWC using the most recent available four quarters. Count qualifying jobs and the appropriate payroll, rather than assume any announced construction headcount satisfies the agreement. §403.612(b) The full-time definition requires at least 1,600 hours annually and excludes construction jobs. Transferring an existing Texas job generally requires filling the resulting vacancy. Test the staffing plan against those definitions before counting the promised positions. §403.602(10); §403.604(c)
The law provides penalties for specified jobs or wage failures across two consecutive reports, subject to the statutory tax-benefit cap. It separately allows termination after notice and a 180-day cure-and-dispute period, with a penalty equal to lost ad valorem revenue plus interest if termination occurs under that provision. Those are distinct mechanisms; a general statement that there is a cure period should not erase the modeled downside. §403.614; §403.612(d)
Price the tail separately from the benefit years. If the example’s assumed $150,000 incremental annual compliance/staffing cost persists in years 11–13, its additional present value is $179,054 at 8%. Deducting that invented tail from the original $4.783 million net case yields $4.604 million; it is a separate sensitivity, not the combined deferral scenario above. Actual obligations determine which costs persist after savings stop.
The official process includes a three-year maintain-viable-presence period after the incentive period. An exit model should therefore address sale, closure, refinancing and assignment during that tail. The proposed selling price should not assume the incentive can be transferred with no consent, ongoing requirement or liability review. Program timeline
Make one investment memo carry the benefit and the risk
Present the operating case without the incentive first, then show the exact tax lines changed by the signed program. That makes the project's dependence on approval, schedule and compliance visible to the investment committee. Resolve site authority and capacity alongside the tax analysis, rather than after an incentive announcement has created pressure to proceed.
Recheck this research when program rules, eligibility, the property boundary, adopted rates, agreement terms or reporting outcomes change. For a live project, the controlling evidence is its current signed package and official correspondence. A general program article provides the questions and mechanisms; it does not certify that project's benefit.
- Which activity, assets and dates meet current eligibility and zone requirements?
- What dated evidence demonstrates a genuine competing-site process?
- Which tax lines change, when does each benefit begin, and what costs offset it?
- Who owns jobs, wages, investment, bond and continuing-report obligations?
- What does delay, sale, closure or a compliance failure do to the project's cash and exit value?
Underwrite the agreement as part of the project
JETI is most useful when the business can identify the benefit precisely and operate the commitments that support it. Model the school M&O reduction, prove the competitive-site case, retain the signed schedule and price the compliance tail. That produces an incentive analysis the next lender, buyer or operating owner can inspect.
Questions
Does JETI cut all Texas property taxes by 50 percent?
No. The normal limitation makes eligible property's school M&O taxable value 50 percent of market value during the incentive period. School debt service and other taxing units are separate. Qualifying opportunity-zone property has a different M&O value limit. §403.605
Do land and inventory count toward JETI investment?
The statutory investment definition excludes land and inventory. Eligible buildings and tangible property also have ownership, zone and post-agreement timing requirements. Match the actual assets to the current definition. §403.602 · FAQ
Is a better project return enough to prove JETI is a compelling factor?
The Comptroller's FAQ says financial viability alone is insufficient. It requires current competing-site evidence and tangible planning for sites outside Texas, such as incentive letters or internal location comparisons. Official compelling-factor guidance
Do JETI obligations end when the incentive period ends?
Some continue. The official timeline includes three years of maintain-viable-presence after the incentive period, and the agreement defines continuing requirements. Review the signed package before modeling an exit or closure. Process and timeline · §403.612
Sources
- Government Code Chapter 403, Subchapter T: current JETI law
Texas Legislature · Current consolidated statute checked October 12, 2026
Verified Oct 13, 2026
Sections 403.602, .604, .605, .612 and .614 supply definitions, thresholds, value, obligations and enforcement. Read each route separately.
- JETI program overview and job/investment table
Texas Comptroller of Public Accounts · Current program guidance
Verified Oct 12, 2026
- JETI FAQ: competing locations, jobs and eligible investment
Texas Comptroller of Public Accounts · Current guidance
Verified Oct 12, 2026
- JETI process and timeline
Texas Comptroller of Public Accounts · Current agency process guide
Verified Oct 12, 2026
Use current statute and actual correspondence for controlling requirements; a guide is not a project-specific closing guarantee.
- Current JETI agreements and proposed investment
Texas Comptroller of Public Accounts · Listing observed October 12, 2026
Verified Oct 12, 2026
The listing's proposed investment column is not realized spending or usable production.
- J0013 Brazos Midland Processing, Stanton ISD: document record
Texas Comptroller of Public Accounts · Application 2024; agreement posting 2025; report posting September 16, 2026
Verified Oct 12, 2026
Posting dates are labeled explicitly and differ from execution dates.
- J0013 published 2026 biennial report
Agreement-holder report published by the Texas Comptroller · 2026 report posted September 16, 2026
Verified Oct 12, 2026
First page reports July 29, 2025 execution, incentive 2026–2035 and MVP3 in 2038. No audit conclusion inferred.
Supporting material
- Texas business source and decision ledger
Primary evidence, declared assumptions and update triggers across the Texas business and autonomy library.