TIF Expertise: Common Pitfalls for Mississippi Municipal Financial Advisors to Avoid

Mississippi’s Tax Increment Financing framework — strengthened by the passage of Senate Bill 2846 — gives municipalities a powerful new tool for attracting commercial real estate development without exposing public credit. But for municipal financial advisors, the opportunity comes with a caveat: developer-backed TIF Bonds only protect your municipality if the structure is built correctly from the start. A misstep in Taxpayer Agreement negotiation, statutory compliance, or interlocal coordination can turn a promising project into a fiscal liability. Based on our experience working with TIF Bond structures across multiple states, here are some of the considerations Hageman Capital believes are worth keeping in mind.

Pitfall #1: Underutilizing Taxpayer Agreements

Senate Bill 2846 introduced voluntary Taxpayer Agreements into Mississippi’s TIF framework — and they are arguably the single most important protection available to municipalities in a developer-backed bond structure. A Taxpayer Agreement creates a binding contractual obligation requiring the developer to guarantee minimum payments if increment falls short of debt service requirements. It can also be secured by a lien on the project’s real property, with parity to ad valorem tax liens.

In our experience, the challenge isn’t that advisors are unaware of Taxpayer Agreements — it’s that they may be treated as optional or negotiated without the level of detail they deserve. A well-crafted Taxpayer Agreement is detailed, enforceable, and structured alongside the redevelopment agreement rather than as an afterthought. Key provisions worth considering include specific shortfall payment triggers, lien terms, default remedies, and a clear assignment clause that allows the municipality to transfer enforcement rights to a bondholder or trustee. Hageman Capital has worked with Taxpayer Agreement structures across multiple states and is happy to share what we’ve learned with your team as you evaluate these provisions.

Pitfall #2: Misunderstanding What Developer-Backed Means

Developer-backed TIF Bonds are not general obligations of the municipality. They carry no pledge of municipal credit or taxing power and do not count against statutory debt limits. This is the core advantage of the structure SB 2846 enables — but it’s worth noting that the “developer-backed” distinction requires a different analytical lens than traditional municipal debt.

Because the municipality is acting as a conduit issuer, the bond is repaid solely from increment revenue and developer guarantees. That naturally shifts the focus of due diligence toward evaluating the developer’s capacity: Does this developer have the balance sheet to support the Taxpayer Agreement? Is the project’s pro forma realistic? What happens if construction is delayed or costs escalate? These are the kinds of questions that protect the public interest in a developer-backed structure, and they represent a meaningful departure from a traditional municipal-backed bond analysis.

Pitfall #3: Failing to Coordinate With Overlapping Taxing Bodies

TIF captures the incremental increase in property tax revenue — revenue that would otherwise flow to every taxing jurisdiction that levies property taxes in the project area. That includes school districts, counties, and utility districts. When coordination with these overlapping taxing bodies is limited or delayed, it can lead to political opposition, legal challenges, or interlocal disputes that derail a project after months of work.

Mississippi’s framework allows municipalities and counties to enter into interlocal cooperation agreements pledging both municipal and county increment to service TIF debt. This is a powerful feature, but it requires proactive communication about how existing revenue streams are protected. The original assessed value continues to flow to all taxing jurisdictions as usual — only the increment is redirected, and only for the bond’s term. Making that case clearly and early to school boards and county supervisors is often essential. Hageman Capital is available to provide independent analysis that may be useful in those conversations.

Pitfall #4: Neglecting the Public Hearing and Statutory Process

Mississippi’s TIF Act requires specific procedural steps before a TIF Bond can be issued: a redevelopment plan, a TIF plan, a public hearing with proper notice, governing body approval, and certification of the original assessed value by the municipal clerk. Skipping a step or cutting corners on public notice can create vulnerability to legal challenge — and in a state where this legislation is newly enacted and untested in court, procedural compliance is especially important.

The public hearing in particular is both a legal requirement and a political opportunity — it’s where elected officials demonstrate transparency and where community concerns can be addressed directly. Hageman Capital’s team has studied the full procedural sequence outlined in Mississippi’s TIF Act and is happy to walk through the requirements with your municipality as a supplemental resource.

Hageman Capital: A Free TIF Bond Resource

Every consideration on this list is manageable — especially when your team has access to experienced TIF Bond perspectives. Hageman Capital works alongside municipal financial advisors as a free educational resource, offering insight into the TIF Bond process from initial developer inquiry through Taxpayer Agreement structuring and bond issuance. We’re not a substitute for your legal counsel, financial advisors, or internal team — we’re a supplement, focused specifically on sharing what we’ve learned from structuring developer-backed TIF Bonds across the country.

Whether you’re looking for a second perspective on Taxpayer Agreement provisions, want to better understand how SB 2846 applies to a specific deal, or simply want to talk through the developer-backed bond structure with someone who’s seen it work in other states, our Director – Government Relations, Whitney Peterson, is available for a no-cost conversation. Request a meeting with Whitney here. There’s no obligation — just experienced TIF Bond professionals happy to share what we know.