Structuring Your TIF: What It Means for Tennessee and City Council Members

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.

Hageman Capital provides free educational support to Tennessee council members who want to understand TIF Bond structuring before their next vote. Connect with Whitney Peterson, our Director – Government Relations, for a no-obligation conversation.