Structuring Your TIF: What It Means for Tennessee and Mayors

For Tennessee mayors championing TIF-supported development, the ultimate goal is a completed project that grows the tax base without exposing your city to financial risk. Achieving that goal depends on how the TIF Bond is structured — and specifically, whether it is structured in a way that allows a capital provider like Hageman Capital to purchase it from the developer. Here is what that structuring process looks like and what it means for your role.

What Makes a TIF Bond Purchasable

Hageman Capital purchases developer-backed TIF Bonds — but not every TIF Bond meets the criteria for purchase. The bonds that work are structured as private placements issued by the TIF agency directly to the developer, non-recourse to the municipality, secured by the tax increment revenue and a taxpayer agreement under SB 1760. The projected increment must be sufficient to support the debt service with a reasonable coverage cushion, and the developer must have the financial capacity to honor the taxpayer agreement guarantee.

For mayors, this means the structuring decisions made during the redevelopment agreement negotiation directly affect whether the developer can monetize the bond and receive upfront capital. A well-structured deal attracts capital. A poorly structured deal leaves the developer without a buyer — and the project without a clear financing path.

The Taxpayer Agreement Is the Key

SB 1760’s taxpayer agreement creates the enforceable security that capital providers require. The developer’s contractual guarantee of any shortfall between actual increment and required debt service, backed by a first-priority lien on the property, is what transforms a TIF Bond from a speculative revenue instrument into a purchasable asset. Without a strong taxpayer agreement, the bond carries too much uncertainty for a capital provider to price it favorably. With one, the developer receives competitive proceeds at closing.

How the Process Works From the Mayor’s Perspective

As mayor, you will not be drafting the bond documents or negotiating coverage ratios — that is the work of your economic development team, financial advisors, and bond counsel. Your role is to ensure the deal gets structured properly by engaging the right professionals, supporting a thorough feasibility analysis, and guiding the governing body through the approval process. When Hageman Capital is identified as the capital provider early in the process, it gives the developer certainty, the lender confidence, and the governing body assurance that the deal has been vetted by professionals who purchase these instruments for a living.

The Outcome Everyone Wants

When a TIF Bond is structured correctly, the developer sells it to Hageman Capital at closing and receives the upfront cash needed for construction. The municipality issues the bond as a conduit with zero credit exposure. The project gets built, generating assessed value that flows into the TIF fund and services the bond. When the allocation period ends, all tax revenue flows permanently to the taxing jurisdictions. Jobs are created, blight is eliminated, and the community’s tax base is larger than it was before.

Hageman Capital helps Tennessee mayors ensure their TIF projects are structured to achieve this outcome — at no cost. Connect with Whitney Peterson, our Director – Government Relations, and let’s get the structure right for your community.