When a TIF Bond resolution comes before your Tennessee city council, the structuring details matter — not just for the project’s success, but for whether the deal delivers real value to your community while protecting public funds. Understanding how TIF Bonds are structured for capital provider purchase helps you evaluate whether the deal in front of you is sound. Here is what council members should know.
How Developer-Backed TIF Bond Sales Work
In a developer-backed TIF transaction, the TIF agency issues a bond to the developer. The developer then sells that bond to a capital provider like Hageman Capital in exchange for upfront cash to fund construction. The bond is repaid over time from the tax increment generated by the completed project. The developer’s taxpayer agreement under SB 1760 guarantees any shortfall — meaning the municipality has no financial obligation beyond serving as the conduit issuer.
For this to work, the bond must be structured in a way that a capital provider will purchase it. That means the projected increment must be sufficient, the taxpayer agreement must be enforceable, and the developer must have the financial capacity to honor the guarantee. When these conditions are met, the deal has a clear path to closing — and your community gets a completed project.
What to Look for in the Deal Structure
As a council member reviewing a TIF resolution, focus on several key structural elements. Does the projected increment cover the debt service with a reasonable cushion? Has the developer signed a taxpayer agreement with clear shortfall guarantee terms? Is the taxpayer agreement lien recorded and enforceable as property taxes? Are there construction milestones and default remedies in the redevelopment agreement? Has a capital provider been identified, confirming the bond is purchasable?
You do not need to evaluate the financial modeling yourself — that is the job of your municipality’s financial advisors. But you should confirm that a thorough feasibility analysis has been completed and that the professionals advising the deal are satisfied with the structure.
Why the Capital Provider Matters
The involvement of a capital provider like Hageman Capital is a positive signal about the deal’s quality. A capital provider that purchases TIF Bonds for a living has underwritten hundreds of these transactions and evaluates the same risk factors your financial advisors do — projected increment, developer capacity, legal enforceability, and market conditions. When a capital provider is willing to purchase the bond, it means an independent third party has validated the deal’s financial soundness. That should give you additional confidence in the structure.
Your Role: Verify, Then Vote With Confidence
Council members are not expected to be TIF structuring experts. Your role is to verify that the process has been followed, the analysis is sound, the protections are in place, and the project serves the community’s interests. When the deal is structured for a capital provider to purchase the bond, the developer gets upfront capital, the project gets built, and the city holds zero debt. That is the outcome every council member should be looking for.
For Tennessee municipal financial advisors, structuring a TIF Bond that a capital provider will purchase is the technical exercise that determines whether a developer-backed TIF transaction delivers its intended benefits. The deal that works — upfront capital for the developer, zero credit exposure for the municipality, and a completed project that grows the tax base — depends on getting the bond structure right. Here is the framework for structuring TIF Bonds that Hageman Capital can purchase.
Bond Structure Requirements
Hageman Capital purchases developer-backed TIF Bonds structured as private placements — issued by the TIF agency directly to the developer, who assigns the bond to Hageman Capital at closing. The bond must be non-recourse to the TIF agency and municipality, payable solely from tax increment revenues and secured by a taxpayer agreement under SB 1760. Key structural parameters include the amortization schedule (which must align with projected increment timing), the interest rate (negotiated based on market conditions and deal-specific risk), the maturity (within Tennessee’s 20-year IDB or 30-year Housing Authority limits), and the coverage ratio (the margin by which projected increment exceeds required debt service).
The Taxpayer Agreement as Security
The taxpayer agreement is the instrument that makes developer-backed TIF Bonds purchasable. From a capital provider’s perspective, the agreement must include a clear taxpayer direct payment calculation (the positive difference between the next-due debt service and available increment), a recorded lien with first-priority status that runs with the land and survives foreclosure, enforcement provisions that allow collection as real property taxes, and the anti-acceleration provision specified in SB 1760 (ensuring existing mortgage holders cannot call their loans solely due to the taxpayer agreement). The developer’s financial capacity to honor the guarantee is evaluated through balance sheet review, track record analysis, and assessment of their other outstanding obligations.
Increment Modeling for Capital Provider Underwriting
The increment projection is the foundation of the bond’s valuation. Your model should account for the development timeline (including conservative assumptions about construction delays and assessment lag), the assessed value increase based on the project’s expected market value at completion, the applicable tax rate and any millage rate changes, and the increment calculation methodology specified in the TIF plan (aggregate vs. parcel-by-parcel). Hageman Capital’s underwriting team will review these projections independently, but starting with a conservative, well-documented model streamlines the process and builds confidence.
Coordinating Bond Documents
The loan documentation for a developer-backed TIF Bond transaction typically includes the bond or note itself, the redevelopment agreement, the taxpayer agreement, a security agreement pledging TIF revenues to the bondholder, and bond counsel’s opinion. Bond counsel should review all documentation to ensure statutory compliance under the Uniformity Act and SB 1760. The TIF agency’s filing obligations — recording the taxpayer agreement with the register of deeds, notifying the county trustee, and filing parcel data with the Comptroller — must also be completed on schedule.
Why Engage Hageman Capital During Structuring
The most efficient path to closing is having the capital provider at the table during the structuring phase — not after the bond documents are finalized. Hageman Capital can provide guidance on coverage ratio expectations, amortization preferences, taxpayer agreement terms that meet our underwriting standards, and timing considerations. This front-end collaboration prevents costly restructuring after governing body approval and gives all parties — the municipality, the developer, and the lender — certainty that the deal will close.
Nebraska has one of the most established TIF frameworks in the Midwest, authorized by the Community Development Law. Cities across the state have used TIF for decades to remediate blight, fund public infrastructure, and catalyze redevelopment. Now, proposed legislation (LB 1168) would introduce conduit revenue bonds and taxpayer agreements — tools that shift the financial risk of TIF-supported projects from the Community Redevelopment Authority to the developer, giving municipal leaders a stronger, more insulated approach to incentivizing development.
What the Proposed Legislation Would Change
Under current Nebraska law, TIF bonds issued by a CRA are general obligations of the CRA — payable from its revenue, income, receipts, and proceeds, including the tax increment. While these bonds are not a debt of the city, they do expose the CRA’s broader asset base to bondholder claims. LB 1168 would create conduit revenue bonds payable solely from specifically pledged revenues, insulating the CRA’s other activities. It would also authorize taxpayer agreements where the developer guarantees any shortfall, with liens carrying parity with property tax liens and priority over existing and subsequent mortgages.
How Nebraska TIF Compares to Other Incentives
Nebraska municipalities have access to the ImagiNE Nebraska Act (income tax credits and wage credits for qualifying businesses), Community Development Block Grants, historic tax credits, and traditional TIF. Each tool has a niche, but TIF offers unique advantages: it captures revenue that would not exist without the project, generates long-term tax base growth rather than reducing existing revenue, and under the proposed LB 1168 framework would carry zero CRA general obligation exposure. Unlike state tax credit programs, TIF does not depend on competitive applications or appropriation cycles.
Nebraska’s Unique TIF Characteristics
Nebraska TIF applies only to ad valorem real property taxes — no sales tax, franchise fees, or other revenue streams are captured. The tax division period runs 15 years for standard projects or 20 years for areas declared extremely blighted. The CRA (or the city acting as authority) is the entity that prepares redevelopment plans, issues bonds, and enters into redevelopment contracts. A substandard and blighted declaration is a threshold requirement before any redevelopment plan can be adopted, and a cost-benefit analysis demonstrating the but-for test is mandatory.
Evaluating Project Feasibility
Before committing to TIF, the cost-benefit analysis must consider tax shifts, public infrastructure impacts, employment effects both inside and outside the project area, and other relevant factors. The governing body must find the project is in the community’s long-term best interest and would not be economically feasible without TIF. The Notice to Divide Tax must be filed with the county assessor by July 1 — a critical deadline that, if missed, delays the entire project by a year.
Working With Developers on Terms
The redevelopment contract is the central agreement. Key provisions include the developer’s construction obligations, TIF-eligible cost caps, developer guarantees, disbursement conditions, and default remedies. The CRA must provide the governing body with at least 30 days’ written notice before accepting a redevelopment contract proposal. Under LB 1168, the taxpayer agreement would formalize the developer’s shortfall guarantee with enforceable lien security — adding a contractual layer that current law lacks.
TIF as a Community Growth Engine
Nebraska TIF has a proven track record of turning substandard and blighted areas into productive tax base. Every completed project adds assessed value that, after the TIF period ends, flows permanently to all taxing bodies. Hageman Capital purchases developer-backed TIF Bonds and serves as a free resource for Nebraska municipal leaders navigating this framework. Connect with our team to explore what TIF can do for your community.
When Old Town Companies developed the North End project in Carmel, Indiana, they faced a challenge Nebraska developers encounter regularly: a community-serving, mixed-use project that needed creative financing to bridge the gap between total cost and what private capital alone could cover. TIF and Hageman Capital’s ability to purchase TIF bonds made the project possible. For Nebraska municipal leaders working within the Community Development Law — and preparing for potential changes under LB 1168 — this case study illustrates how developer-backed TIF works in practice.
The North End Project
North End is a mixed-use development in Carmel, Indiana: 168 high-end apartments (including 40 units for individuals with intellectual and developmental disabilities), plus office and retail space. Old Town Companies served as the developer, and the City of Carmel provided TIF support backed by the real estate. The project addressed real community needs in an area with limited development along the Monon Trail — but mission-driven housing rarely pencils without public incentives.
How TIF Made It Work
Old Town was financing through a Freddie Mac program requiring municipal incentives and affordable unit set-asides. TIF provided the incentive, but Old Town needed upfront capital at loan closing — not years of incremental payments. Hageman Capital purchased the TIF bonds, delivering the equity required to close the construction loan. The project closed in December 2021 and is now complete, generating long-term tax base growth for Carmel.
What Nebraska Municipal Leaders Should Take Away
The principles translate directly to Nebraska’s framework. TIF makes projects feasible that would not otherwise proceed — satisfying the cost-benefit analysis and but-for test Nebraska requires. Developer-backed TIF bonds shift risk from the CRA to the developer. The ability to sell the bond to a capital provider transforms TIF from a long-term revenue stream into immediate construction capital. Under proposed LB 1168, conduit revenue bonds and taxpayer agreements would further insulate the CRA while providing lenders with super-priority lien security.
Nebraska’s ad-valorem-only TIF framework means the increment consists solely of real property tax increases — making accurate assessment projections and conservative timeline assumptions especially important. The 15-year standard period (20 for extremely blighted areas) shapes the amortization structure differently than longer-term states.
Hageman Capital: Your TIF Partner at No Cost
Hageman Capital purchases developer-backed TIF Bonds and serves as a free resource for Nebraska municipal leaders and CRAs. Connect with our team to see how TIF can transform development in your community.
Nebraska municipal leaders and CRAs field developer inquiries regularly. Understanding what drives commercial real estate developers — how they evaluate markets, what makes a project financially viable, and what they need from your municipality — is essential to deploying TIF effectively under the Community Development Law.
How Developers Choose Where to Build
Developers evaluate population growth, employment centers, infrastructure quality, regulatory environment, and the competitive incentive landscape. Nebraska cities — from Omaha and Lincoln to smaller communities across the state — compete for developer attention. The city that can articulate its TIF process clearly and move efficiently from application to bond issuance wins the conversation. Nebraska’s established Community Development Law framework, combined with active CRAs in many cities, positions municipalities well — and proposed changes under LB 1168 would strengthen that position further.
The Financial Anatomy of a Development Project
Every project has a capital stack — equity, debt, and incentives. TIF fills the gap between total cost and what private capital alone can cover by capturing the incremental property tax revenue generated by the completed project. When the developer sells their TIF Bond to Hageman Capital, that future revenue stream becomes upfront cash — reducing equity requirements and accelerating the project timeline. In Nebraska, where TIF captures only ad valorem property taxes (no sales tax or franchise fees), the increment projection is especially sensitive to assessed value accuracy and development timing.
What Makes a Nebraska Project Ideal for TIF
Nebraska TIF requires a substandard and blighted declaration — the threshold requirement. Projects best suited for TIF include those in areas with deteriorated structures, defective street layout, environmental contamination, or other conditions that meet the statutory blight criteria. Eligible costs include site acquisition, demolition, utilities, streets, environmental remediation, and public improvements. The developer bears the cost of constructing private improvements from their own funds. Projects with significant public infrastructure needs and a projected assessed value increase large enough to generate meaningful increment are ideal candidates.
Positioning Your Municipality
Developers value certainty and speed. Having an active CRA, pre-identified substandard and blighted areas, and a clear application process positions your city to compete. Understanding the July 1 Notice to Divide Tax deadline and the 30-day planning commission review period helps you set realistic timelines for developers considering your community.
Hageman Capital: Bridging Municipalities and Developers
Hageman Capital purchases developer-backed TIF Bonds and works with Nebraska municipal leaders at no cost. Connect with our team to learn more about positioning your city for developer success.
When a Nebraska developer secures a TIF Bond from their CRA, they have options for monetizing it. Understanding these options helps municipal leaders evaluate developer proposals and structure deals that deliver the best outcomes for the community.
Option 1: Hold the Bond and Collect Increment Over Time
A developer can hold the TIF Bond and receive payments as ad valorem increment is collected each year. Nebraska’s 15-year standard period (20 for extremely blighted areas) means the developer waits up to two decades for full repayment — while construction costs are front-loaded. For most developers, tying up capital in a long-duration receivable is financially inefficient, especially when construction lenders expect equity at closing.
Option 2: Borrow Against the Bond
A developer can use the TIF Bond as collateral for a loan, providing some upfront liquidity at a discount. The lender will not advance full value, interest adds cost, and the developer retains the ongoing loan relationship. Nebraska’s ad-valorem-only increment framework (no sales tax or franchise fees) may lead lenders to apply more conservative valuations compared to multi-revenue-stream states.
Option 3: Sell the Bond to Hageman Capital
Hageman Capital purchases developer-backed TIF Bonds, providing upfront cash at closing. No ongoing loan, no interest accruing, no collection uncertainty. The developer trades a 15-to-20-year receivable for day-one capital. Under proposed LB 1168, taxpayer agreements with super-priority lien security would strengthen the bond’s value and support competitive purchase pricing.
Why This Matters for Municipal Leaders
When a developer plans to sell their TIF Bond to Hageman Capital, it signals the deal has financing certainty, the structure is sound, and the project is more likely to complete on schedule — which means the increment starts flowing on time. For municipalities and CRAs, that is the best possible outcome.
Hageman Capital works with both municipalities and developers to structure Nebraska TIF Bonds for maximum value. Connect with our team to learn more.
If you are a Nebraska mayor exploring TIF for your community, this overview covers what you need to know. The Community Development Law provides a proven framework, and proposed LB 1168 would add conduit revenue bonds and taxpayer agreements that further strengthen municipal protections.
What TIF Is and What It Is Not
TIF captures the increase in real property taxes generated by new development. No new taxes are created. No existing revenue is redirected — the base value of taxes continues flowing to all taxing bodies as usual. Only the excess value, the growth that would not exist without the project, is set aside for 15 years (or 20 for extremely blighted areas) to pay eligible redevelopment costs. When the TIF period ends, all revenue flows permanently to every taxing jurisdiction.
How TIF Works in Nebraska
Nebraska TIF requires a substandard and blighted declaration, a redevelopment plan reviewed by the planning commission, public hearings, governing body approval, and a cost-benefit analysis demonstrating the but-for test. The CRA issues bonds and enters into redevelopment contracts with developers. The Notice to Divide Tax must be filed by July 1 — a critical deadline. Under proposed LB 1168, conduit revenue bonds would not be general obligations of the CRA, and taxpayer agreements would provide enforceable developer guarantees with super-priority liens.
Your Role as Mayor
You champion projects publicly, ensure the governing body has a sound cost-benefit analysis, and maintain transparency through the public hearing process. You are not expected to be a TIF structuring expert — your CRA, financial advisors, and resources like Hageman Capital handle the technical details. What you communicate to constituents is straightforward: TIF grows the tax base without spending public money or creating municipal debt.
Nebraska’s Community Development Law provides one of the most established TIF frameworks in the Midwest. For Economic Development Directors managing developer relationships and project pipelines, this overview covers how the framework works and how proposed legislation (LB 1168) would expand your structuring options.
Nebraska TIF: The Framework
TIF in Nebraska captures only ad valorem real property tax increment — no sales tax or franchise fees. The tax division period runs 15 years for standard projects or 20 years for projects in areas declared extremely blighted. The Community Redevelopment Authority (CRA) — or the city acting as the authority — is the entity that prepares redevelopment plans, issues TIF bonds, and enters into redevelopment contracts with developers. A substandard and blighted declaration is required before any redevelopment plan can be adopted, and a cost-benefit analysis demonstrating the but-for test is mandatory for every project.
The process follows a defined sequence: blight study, planning commission review (30-day window), public hearing with published and mailed notice, governing body approval, redevelopment contract negotiation, and bond issuance. The Notice to Divide Tax must be filed with the county assessor by July 1 of the calendar year in which the tax division becomes effective — a hard deadline that, if missed, delays the entire project by a full year.
What LB 1168 Would Add to Your Toolkit
Proposed legislation (LB 1168) would introduce two significant new tools. First, conduit revenue bonds — a new category of TIF bond payable solely from specifically pledged revenues rather than being a general obligation of the CRA. This would more clearly insulate the CRA’s other activities and assets from the risk of any single project. Second, taxpayer agreements — contracts where the developer guarantees any shortfall in tax increment revenue and can agree to limit their right to challenge property assessments. Taxpayer agreement liens would carry parity with property tax liens and take priority over existing and subsequent mortgages on the property.
For ED Directors, the practical implication is significant: you could offer developers a structure with enforceable guarantees and super-priority lien security, while presenting your governing body with a deal that clearly insulates the CRA from project-specific risk. This combination makes developer-backed TIF Bonds more attractive to capital providers like Hageman Capital, which translates to better pricing for the developer and stronger projects for your community.
How This Helps You Close Deals
Developer-backed TIF Bonds give developers upfront cash when they sell the bond to a capital provider like Hageman Capital. The developer does not have to wait 15 to 20 years for increment to accumulate — they receive construction capital at closing. For your pipeline, this means you can offer an incentive that is financially compelling to developers, defensible to your governing body, and carries reduced CRA exposure. Nebraska’s established procedural framework — blight studies, planning commission review, public hearings, governing body approval — provides the foundation your elected officials need to approve projects with confidence.
Your role is to navigate this process efficiently: identify qualified project areas, match the right developer with the right opportunity, prepare a thorough cost-benefit analysis, manage the statutory timeline (especially the July 1 deadline), and structure the redevelopment contract to protect the community while keeping the deal competitive. Every deal you close successfully becomes a template for the next one — building your city’s reputation as a place where TIF-supported projects get done.
Eligible Costs and Project Types
TIF-eligible costs in Nebraska include site acquisition, demolition, environmental remediation, streets, water and sewer infrastructure, storm water systems, electrical and gas extensions, street lighting, public parking, landscaping, facade enhancements, and professional fees. The developer bears the cost of constructing private improvements from their own funds. Projects must be located in areas declared substandard and blighted — but the statutory criteria are broad enough to encompass a wide range of aging, underutilized, or deteriorated areas across the state.
Hageman Capital as Your TIF Resource
Hageman Capital works alongside Nebraska ED Directors as a free TIF structuring resource — helping you evaluate project feasibility, navigate the Community Development Law process, and structure developer-backed TIF Bonds that get deals across the finish line. We complement your existing team — never replace it. Connect with Whitney Peterson, our Director – Government Relations, and let’s talk about what is in your pipeline.
As a Nebraska governing body member, you vote on substandard and blighted declarations and redevelopment plan approvals — decisions that shape your community’s development trajectory. Here is a high-level overview of how TIF works under the Community Development Law and what proposed changes under LB 1168 would mean.
TIF in Plain Language
TIF captures only the increase in real property taxes generated by new development. The base value of taxes continues flowing to all taxing bodies — city, county, school district, community college, and others. No existing revenue is redirected. Any interest and penalties on delinquent taxes go to the taxing bodies, not the TIF fund. The excess value is set aside for 15 years (or 20 for extremely blighted areas) to pay eligible redevelopment costs. When the period ends, all revenue flows permanently to every jurisdiction.
What LB 1168 Would Change
Proposed conduit revenue bonds would not be CRA general obligations — payable solely from pledged project revenues. Taxpayer agreements would create enforceable developer shortfall guarantees with super-priority lien security. This means the CRA’s broader assets would be insulated from project-specific risk, and the developer would contractually bear the performance risk.
What You Are Voting On
You vote on the substandard and blighted declaration (after a blight study, planning commission review, and public hearing) and the redevelopment plan approval. The cost-benefit analysis must demonstrate the project is in the community’s best interest and would not proceed without TIF. The CRA must give 30 days’ written notice before accepting a redevelopment contract. Public notice requirements include published notice and mailed notice to affected neighborhood associations and political subdivisions. These safeguards ensure transparency throughout the process.
Nebraska’s Community Development Law creates a well-defined TIF framework with specific characteristics that shape your financial analysis. Proposed LB 1168 would introduce instruments that materially change the risk architecture. Here is a technical overview.
Nebraska TIF Framework
TIF captures only ad valorem real property taxes — no sales tax or franchise fees. The tax division period is 15 years (20 for extremely blighted areas). CRA bonds under current law are general obligations of the CRA payable from all CRA revenue and income. They are not a debt of the city. Interest and penalties on delinquent taxes flow to the taxing bodies, not the TIF fund. The cost-benefit analysis must evaluate tax shifts, infrastructure impacts, employment effects, and other factors. The Notice to Divide Tax must be filed by July 1.
What LB 1168 Would Change
Conduit revenue bonds would be payable solely from pledged revenues — not CRA general obligations. Taxpayer agreements would create developer shortfall guarantees with liens carrying parity with property tax liens, priority over mortgages, and the ability to limit assessment challenges. This addresses two key risks in current practice: CRA exposure to project-specific underperformance, and assessment appeal risk that can reduce the increment below projections.
Key Modeling Considerations
Nebraska’s ad-valorem-only framework makes your increment projection especially sensitive to assessed value accuracy and development timing. Model the excess value (current minus base) against debt service, account for construction delays and assessment lag, and verify the base value with the county assessor. The 15-year period constrains amortization more than longer-term states. The blight study findings should be cross-referenced against the redevelopment plan’s projected improvements to ensure consistency.
Hageman Capital as a Technical Resource
We work alongside Nebraska financial advisors at no cost. Connect with our team for a technical consultation.
