TIF Expertise: Common Pitfalls for Tennessee City Council Members to Avoid

Voting on a TIF resolution is one of the most consequential economic development decisions a Tennessee city council member will face. Developer-backed TIF Bonds under SB 1760 offer strong protections for your municipality, but there are common missteps that council members should be aware of before casting that vote. Hageman Capital works with municipal leaders across the state, and here are the pitfalls we encourage council members to watch for.

Pitfall 1: Voting Without Fully Understanding the Structure

TIF is a complex financial tool, and there is no shame in needing more information before you vote. The pitfall is voting yes — or no — without understanding what you are actually approving. Before the vote, make sure you understand how the increment is calculated, what the taxpayer agreement guarantees, how long the allocation period lasts, and what happens if the project underperforms. If you do not understand something, ask. It is far better to request a briefing than to vote on incomplete information.

Pitfall 2: Confusing TIF With a Tax Giveaway

The most common public misconception about TIF is that it gives away taxpayer money to developers. If you share this misconception, you will either vote against a beneficial project or be unable to defend your yes vote to constituents. TIF does not redirect existing tax revenue. It captures only the new increment — revenue that would not exist without the project. The base amount continues flowing to all taxing jurisdictions. Under developer-backed structures, the municipality carries zero credit risk. Being able to articulate this clearly is essential to your role.

Pitfall 3: Not Reviewing the Taxpayer Agreement Terms

SB 1760 authorizes taxpayer agreements, but the strength of those agreements depends on the specific terms negotiated. As a council member, you should review (or have your financial advisor review) the shortfall guarantee provisions, the lien terms, the enforcement mechanisms, and the developer’s financial capacity to honor the guarantee. A taxpayer agreement that looks good on paper but lacks enforcement teeth does not protect your community.

Pitfall 4: Ignoring Constituent Communication Until It Is Too Late

Public hearings are a statutory requirement, but they should not be the first time your constituents hear about a TIF project. Proactive communication — explaining what TIF is, how it works, and why the specific project benefits the community — builds public support before opposition has a chance to form around misconceptions. Prepare talking points before the hearing, not after.

Pitfall 5: Assuming Someone Else Will Do the Oversight

Once a TIF plan is approved, your oversight role does not end. Annual reporting, construction milestone tracking, and compliance with the redevelopment agreement are ongoing responsibilities. Make sure the TIF agency has systems in place for monitoring and that the governing body receives regular updates on project status and increment performance.

Get the Clarity You Need

Hageman Capital provides free TIF education to Tennessee council members. Our goal is to make sure you have the understanding and confidence to cast an informed vote — and to explain that vote to the people who elected you. Request a meeting with Whitney Peterson, our Director – Government Relations, and get your questions answered before the next resolution hits the agenda.