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Tax Increment Financing is one of the most powerful development tools available to Mississippi municipalities. With the passage of Senate Bill 2846 — effective July 1, 2026 — mayors across the state now have access to a new framework for structuring developer-backed TIF Bonds that shift financial risk off the municipality and onto the private developer. But like any complex financial tool, TIF works best when it’s structured correctly from the start. Getting it wrong can mean stalled projects, political friction, and missed opportunities for community growth.

At Hageman Capital, we’ve worked with municipal leaders across multiple states navigating the nuances of TIF. Based on that experience, here are some of the areas where we’ve seen mayors benefit from closer attention.

Pitfall 1: Assuming All TIF Bonds Carry Municipal Risk

One of the most common misconceptions among elected officials is that approving a TIF Bond means putting the city’s credit on the line. Under Mississippi’s traditional TIF framework, that concern had some basis. But SB 2846 changes the equation. The new legislation authorizes voluntary Taxpayer Agreements that create a contractual payment obligation backed by the developer — not the municipality. These agreements do not constitute public debt, do not count against statutory debt limits, and do not pledge the city’s general credit or taxing power.

The key distinction is between municipal-backed and developer-backed TIF Bonds. When structured as a developer-backed bond, the obligation is repaid solely from the incremental property taxes generated by the specific project. If the increment falls short, the developer — not the city — is responsible for covering the gap through a minimum taxpayer agreement. This is a fundamentally different risk profile, and it’s one that Hageman Capital has deep experience with across multiple states.

Pitfall 2: Skipping the “But-For” Analysis

Every TIF project benefits from a straightforward test: but for the availability of TIF, would this project happen here? When this step is skipped — or a developer’s assertion is accepted at face value without independent analysis — it can leave municipal leaders vulnerable to criticism that public value was given away unnecessarily. Equally important, a strong “but-for” analysis is one of the best tools available for a public meeting or council session when constituents ask why the city is supporting a private development.

In our experience, engaging a qualified financial consultant to prepare independent projections of the expected tax increment, the developer’s project feasibility, and the gap that TIF is designed to fill can make a meaningful difference. This isn’t about being adversarial with developers — it’s about building a factual foundation that supports confident public decision-making.

Pitfall 3: Underestimating the Importance of the Redevelopment Agreement

The redevelopment agreement is the central contract governing every TIF transaction, and it’s where most of the protective provisions for the municipality live. When this document is treated as a formality — or its key terms aren’t fully understood by the decision-makers approving it — there’s a risk of approving structures that don’t adequately protect the city.

Critical provisions worth paying close attention to include the developer’s construction timeline and milestone commitments, the maximum reimbursement amount, the minimum taxpayer agreement requiring the developer to cover any increment shortfall, and remedies for default. Under SB 2846, Mississippi municipalities also have the option to secure taxpayer agreement payments with a lien on the property that carries parity with ad valorem tax liens — a powerful safeguard that is worth discussing with bond counsel early in the process.

Pitfall 4: Failing to Communicate the Structure to Constituents

TIF is a nuanced financial mechanism, and public misunderstanding is one of the fastest ways for a good project to lose political support. Being able to clearly explain how a developer-backed TIF Bond works — and specifically, how it differs from using taxpayer dollars — can make a significant difference in maintaining community confidence.

The most important points to communicate are straightforward: TIF does not create new taxes. TIF does not raise anyone’s tax rate. The original assessed value continues flowing to every taxing jurisdiction as usual. Only the new increment — the growth that wouldn’t exist without the project — is captured to repay the bond. And under a developer-backed structure, the city carries zero credit risk. Hageman Capital has plain-language educational resources available that may be helpful as you and your team prepare for public-facing conversations about TIF.

Pitfall 5: Navigating TIF Without TIF-Specific Expertise at the Table

Mississippi’s new TIF framework — including taxpayer agreements, lien structures, and conduit bond authority — introduces legal and financial considerations that may be new to your municipality’s existing team. Your city’s legal counsel, financial advisors, and staff are the right people to guide your decisions, and they bring essential knowledge of your community’s specific needs and circumstances. What Hageman Capital offers is a supplement to that existing expertise: TIF-specific knowledge drawn from working with developer-backed bond structures across multiple state frameworks.

We work alongside your municipality’s advisors — not in place of them. Our role is to share what we’ve learned about how these structures work in practice, help your team evaluate the TIF-specific elements of a proposed deal, and make sure the specialized knowledge needed for developer-backed bond structuring is accessible at no cost to your city. It’s a collaborative approach, and one that we’ve found works well when a municipality’s trusted advisors and TIF-specific expertise are both at the table.

Start the Conversation

If you’re evaluating a TIF opportunity in your community — or simply want to understand how Mississippi’s new developer-backed TIF Bond framework applies to your city — Hageman Capital is available as a resource. Whitney Peterson, our Director – Government Relations, works directly with municipal leaders across the state to share TIF-specific insight and educational resources at no cost.

Your community’s next development project could be the one that transforms your tax base for a generation. Request a meeting with Whitney here to start the conversation.

If you’re a mayor in Mississippi, you already know the balancing act: attract quality development, grow the tax base, and do it all without putting your city’s finances or your constituents’ trust at risk. Tax Increment Financing has been part of the economic development toolkit in Mississippi for years, but recent legislation — Senate Bill 2846, signed by the Governor and effective July 1, 2026 — changes the game in a meaningful way. This post breaks down what TIF is, what’s new, and why developer-backed TIF bonds deserve your attention.

A Quick Refresher: How TIF Works in Mississippi

TIF doesn’t create new taxes. It doesn’t raise anyone’s tax rate. What it does is capture the increase in property tax revenue — the “increment” — that a new development generates, and directs that increase toward paying for costs associated with making the project happen.

Here’s the simple version. Before a project is built, the land in the project area generates a baseline amount of property tax revenue each year. After a developer builds, the property is worth more, and taxes go up. The difference between the new, higher amount and the original baseline is the increment. Under TIF, that increment is set aside and used to repay eligible project costs — things like infrastructure, site preparation, demolition, and public improvements that made the development possible.

The baseline tax revenue that was already flowing to the city, county, school district, and other taxing bodies continues untouched. Only the new, incremental revenue is redirected, and only for a limited period of up to 30 years. When the TIF period ends, all revenue — including what had been the increment — flows back to every taxing jurisdiction in full.

Mississippi also allows municipalities to pledge a percentage of sales tax collected within the TIF district and attributable to a project, adding another revenue layer to support development.

What’s Changed: Developer-Backed TIF Bonds and Taxpayer Agreements

Here’s where Senate Bill 2846 makes a real difference for mayors and their communities. The new law authorizes municipalities to enter into voluntary “taxpayer agreements” with developers. In practical terms, this creates a formal, legally enforceable structure for developer-backed TIF bonds — a model that fundamentally shifts who holds the financial risk.

In a developer-backed TIF bond transaction, the municipality issues a TIF bond directly to the developer. The developer then assigns that bond to a lender — like Hageman Capital — in exchange for upfront capital to fund construction. The bond is repaid over time solely from the tax increment the completed project generates. The critical distinction: these bonds do not constitute a general obligation or debt of the municipality. Your city’s credit, taxing power, and general fund are not on the line.

Under the new legislation, the taxpayer agreement formalizes the developer’s obligation to make up any shortfall if the increment falls short of required debt service payments. The agreement can also be secured by a lien on the real property within the project area, with that lien carrying parity with ad valorem tax liens. In other words, the developer is contractually and legally accountable for performance — not the city.

Why This Matters for Mayors

As a mayor, every major development vote carries your name. Constituents want to know you’re not gambling with public resources, and council members need confidence that a yes vote won’t come back to haunt the city’s balance sheet. Developer-backed TIF bonds address those concerns head-on.

First, they eliminate municipal credit risk. Because the bonds are repaid solely from the increment and backed by the developer’s taxpayer agreement, the city is not pledging its faith, credit, or taxing power. The obligation doesn’t count against constitutional or statutory debt limits.

Second, they create accountability. The taxpayer agreement requires the developer to cover any gap between actual increment and required debt service. This isn’t a handshake — it’s an enforceable contract with lien protection.

Third, they accelerate development. When a developer can convert a TIF bond into upfront capital by assigning it to a lender, projects move faster. Construction starts sooner, property values rise, jobs are created, and new tax revenue begins flowing to the community — all without the city fronting a dime.

What Qualifies for TIF in Mississippi

Mississippi’s TIF statute provides broad flexibility for project areas. Qualifying criteria include blighted or deteriorated areas, historic preservation sites, areas with defective street or lot layouts, projects certified under the Regional Economic Development Act, and — importantly — areas where development is determined to be in the public interest. That last category gives mayors and governing bodies significant discretion to support projects that serve the community’s needs, even in areas that aren’t classically blighted.

Eligible costs are equally broad: land acquisition, demolition, infrastructure, site preparation, public improvements, planning and engineering, and even the costs of issuing the TIF bonds themselves. Under the new legislation, redevelopment projects undertaken through taxpayer agreements can also include the costs of acquiring, constructing, installing, and equipping both public and private improvements.

How Hageman Capital Fits In

Hageman Capital is a specialized capital provider focused entirely on developer-backed TIF bonds. We purchase TIF bonds from developers, providing them with the upfront capital they need to break ground — while the municipality retains zero credit exposure. Our role is to serve as a resource to municipal leaders navigating this new tool: we understand TIF bond structures across multiple states, we speak the language of both municipal finance and commercial real estate, and we’re here to help your team evaluate how developer-backed TIF bonds can work for your community.

We’re not here to sell you anything. We’re here to make sure you have the education, the structure, and the confidence to say yes to the right projects — on terms that protect your city and deliver results for your residents.

A Win for Your Community

Mississippi’s new TIF legislation gives mayors a powerful, low-risk tool to drive economic development. Developer-backed TIF bonds mean your city can attract investment, support quality projects, and grow the tax base — all without putting municipal credit or taxpayer dollars at risk. The developer holds the obligation. The community reaps the benefit. And you lead with confidence.

If you want to learn more about how developer-backed TIF bonds work in Mississippi, Hageman Capital is here to help. Reach out to start a conversation — no obligation, no pressure, just expertise.

Category: Mayors