Chapter 380 of the Texas Local Government Code authorizes municipalities to offer economic development incentives — including property tax abatements, fee waivers, infrastructure support, and direct grants — to businesses that invest and create jobs in their community. For restaurant operators, Chapter 380 agreements can reduce the cost of opening or expanding a restaurant, particularly in areas where the city is actively seeking commercial development.
What Chapter 380 Agreements Offer Restaurants
Chapter 380 agreements are negotiated individually between the business and the municipality. Common incentives for restaurant projects include:
- Property tax abatements: Partial or full abatement of city property taxes on improvements for a period of years (typically 3 to 10 years)
- Permit and impact fee waivers: Reduction or waiver of building permits, impact fees, and development review fees
- Infrastructure improvements: City-funded road access, utility connections, drainage improvements, or parking lot assistance
- Sales tax rebates: A portion of local sales taxes generated by the restaurant may be rebated to the business for a defined period
- Facade and exterior improvements: Grants or matching funds for exterior renovations in downtown or mainstreet districts
When Restaurants Are Most Likely to Qualify
Chapter 380 agreements are discretionary — cities are not required to offer them. Restaurants are most likely to receive incentives in these scenarios:
- Downtown revitalization: Cities seeking to activate downtown districts often incentivize restaurants as anchor tenants
- Food desert areas: Communities identified as food deserts may offer incentives to attract restaurants and grocery stores
- Tourism districts: Areas near convention centers, entertainment venues, or tourist attractions where restaurants complement the tourism strategy
- New development zones: Cities developing new commercial corridors or mixed-use areas may offer incentives to attract first-mover restaurants
- Significant investment: Larger restaurant projects with higher capital investment and more job creation are more likely to negotiate meaningful incentives
How to Pursue a Chapter 380 Agreement
- Contact the economic development office of the city where you plan to open
- Present your project details including capital investment, job creation, and community impact
- Negotiate specific incentive terms with the city's economic development team
- The agreement typically requires city council approval
- Meet the performance milestones specified in the agreement to receive incentives
Complementary Programs
- Enterprise Zone: State sales tax refunds for restaurants in economically distressed areas. Enterprise Zone guide.
- WOTC: Federal hiring tax credits. WOTC guide.
- SBA 7(a): Financing for restaurant buildout. SBA 7(a) for restaurants.
- General Chapter 380 guide: Full Chapter 380 guide.
Bottom Line
Chapter 380 agreements can meaningfully reduce the cost of opening a restaurant in Texas, but they require proactive engagement with local economic development offices. The strongest cases combine significant capital investment, meaningful job creation, and alignment with the city's development priorities. Start the conversation early — before signing a lease or committing to a location — to maximize your negotiating position.
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