Structuring Your TIF: What It Means for Mississippi City Council Members

If you serve on a city council in Mississippi, there is a good chance someone — a mayor, an economic development director, or a commercial real estate developer — is going to put a TIF proposal on your desk soon. When that happens, your job is straightforward but high-stakes: understand what you are voting on, decide whether it benefits your community, and be prepared to explain that vote to the people who elected you.

Mississippi’s updated TIF legislation, Senate Bill 2846, gives your municipality a new and more favorable way to structure TIF incentives. The key change is that TIF Bonds can now be backed by the developer rather than by the municipality. That single structural shift changes the risk equation for your city — and it is worth understanding before you cast your vote.

A Quick Refresher: How TIF Works

Tax Increment Financing does not create a new tax or raise anyone’s tax rate. It captures the increase in property tax revenue that a new development generates — the “increment” — and uses that increase to help pay for costs associated with making the project happen.
Before a development project breaks ground, the land in the project area produces a certain amount of property tax revenue each year. That amount is called the original assessed value, and it continues flowing to the city, county, school district, and other taxing bodies as usual.

Nothing about those existing revenues changes. After the project is built, the property is worth more, so property taxes go up. The difference between the new, higher amount and the original assessed value is the increment. Under TIF, that increment is set aside and used to repay the eligible costs of the development over a defined period of up to 30 years. When the TIF period ends, all tax revenue — including what had been the increment — flows back to every taxing jurisdiction at the full, higher amount.

In short, TIF lets your city use the future tax growth a project creates to help make that project possible in the first place, without touching your existing tax base.

What Changes with Developer-Backed TIF Bonds

Historically, many TIF structures have relied on municipal credit to back the bonds issued for a project. That means the municipality assumes some degree of financial exposure if the project underperforms. For council members, that creates a legitimate concern: what happens if the development does not generate enough increment to cover the bond payments?

Under SB 2846, Mississippi municipalities can now structure TIF Bonds as developer-backed obligations. Here is what that means in practice:
The municipality issues a TIF Bond to the developer. The developer then assigns — essentially sells — that bond to a capital provider like Hageman Capital, receiving upfront cash to fund the project’s development costs. The bond is repaid over time solely from the incremental property taxes the completed project generates. Critically, the bond does not constitute a general obligation or debt of the municipality. Your city’s general credit and taxing power are not pledged. The municipality is not on the hook if the increment falls short.

SB 2846 also authorizes voluntary “taxpayer agreements” between the municipality and the developer. These agreements create a contractual obligation for the developer to make up any shortfall in increment revenue. The legislation is explicit: these agreements do not constitute a tax, a fee, or municipal indebtedness, and they do not count against any constitutional or statutory debt limits. A taxpayer agreement can even be secured by a lien on the developer’s real property, giving the arrangement additional enforceability.

This is a fundamental shift. The financial risk moves from taxpayers and the municipality to the developer and the project itself.

Why This Matters for Your Vote

As a council member, every vote on a major development project carries weight. Constituents may question whether you are approving a handout to a private developer. They may worry about the impact on schools or other taxing bodies. Developer-backed TIF Bonds address those concerns directly.

First, existing tax revenues are not affected. The original assessed value continues to flow to every taxing jurisdiction, including school districts, throughout the life of the TIF. Only the new, incremental revenue generated by the development is captured — revenue that would not exist without the project.

Second, the municipality carries no debt obligation. Because developer-backed TIF Bonds are not general obligations, they do not appear on your city’s balance sheet, do not affect your bond rating, and do not count against any debt limits.

Third, the developer bears the performance risk. If the project does not generate sufficient increment, the taxpayer agreement requires the developer — not the city — to cover the gap. Your constituents are protected.

What Council Members Should Ask

When a TIF proposal comes before you, there are a few questions worth raising to ensure the deal is structured well. Does the project genuinely need TIF to be viable? What is the projected increment, and does it cover the bond payments with a reasonable cushion? Has the redevelopment plan been reviewed by qualified financial and legal advisors? Does the taxpayer agreement include sufficient protections for the municipality? And what public benefits — jobs, infrastructure, expanded tax base — will the completed project deliver to your community?
These are not questions designed to slow a deal down. They are questions that make you a better steward of public resources and give you the language to explain your vote with confidence.

A Resource, Not a Sales Pitch

Hageman Capital works with municipalities across the country to help local leaders understand how developer-backed TIF Bonds work and how to structure them in a way that protects the public interest. We are not asking you to approve anything. We are offering the legal, financial, and real estate expertise to make sure that when a TIF proposal does land on your desk, you have the clarity to evaluate it on its merits.
If you would like to learn more about how TIF Bond structuring works in Mississippi under SB 2846, Hageman Capital is here as a resource. Reach out to start the conversation.