In 1989, Texas voters approved a constitutional amendment giving local taxing jurisdictions the option to exercise or not exercise their authority to tax specific personal property known as Freeport goods. The City of Pearland, Port of Houston Authority, Harris County Flood Control District, Harris County Hospital District and Lower Kirby Management District have elected to grant the Freeport exemption, providing a substantial financial benefit to Pearland’s primary employers, which by definition, manufacture or distribute products that are shipped outside of Texas.

The Freeport exemption exempts certain types of tangible personal property (i.e., inventory) from ad valorem (property) taxation provided the property is:

• Acquired in or imported into Texas to be forwarded out of state

• Detained in Texas for assembling, storing, manufacturing, processing, or fabricating purposes by the person who acquired or imported it; and

• Transported out of state within 175 days after the date the person acquired or imported it into Texas.