TIF Expertise: Common Pitfalls for Tennessee Economic Development Directors to Avoid

Economic Development Directors in Tennessee are the professionals who source deals, structure incentives, and shepherd projects to completion. With SB 1760 introducing developer-backed TIF Bonds with taxpayer agreements, you have a powerful new tool — but deploying it effectively requires avoiding several common missteps. Hageman Capital works alongside ED Directors across the state, and here are the pitfalls we see most often.

Pitfall 1: Recommending TIF Without a Thorough Feasibility Analysis

The “but-for” test is both a legal requirement and a credibility check. If you recommend TIF for a project that would have proceeded without it, you undermine your position with the governing body and waste incentive capacity on a deal that did not need it. Before recommending TIF, verify the developer’s proforma, confirm the funding gap, and ensure the projected increment can support the proposed bond. An independent feasibility analysis protects both your recommendation and your credibility.

Pitfall 2: Choosing the Wrong TIF Agency Structure

Selecting between a Housing Authority and an IDB has downstream consequences for eligible costs, allocation period, and approval requirements. An IDB may seem simpler, but if the project involves significant private property improvements, you will need state approval from the Comptroller and Commissioner — which adds time. A Housing Authority offers broader cost authority and longer terms but requires a blight determination. Matching the agency to the project’s specific needs early prevents costly course corrections later.

Pitfall 3: Letting Developers Dictate Terms Without Pushback

Your job is to attract investment and close deals — but not at any cost. The redevelopment agreement is the central contract, and it is where you negotiate the protections that keep the deal fair for the municipality. Insist on enforceable construction timelines, clear eligible cost caps, strong taxpayer agreement shortfall guarantees, financial reporting obligations, and meaningful default remedies. A developer who resists reasonable protections may not be the right partner for a publicly supported project.

Pitfall 4: Failing to Prepare the Governing Body

Even a well-structured deal can fail at the council vote if elected officials are surprised by the details. Brief your mayor and council members before the public hearing — not after. Provide clear materials explaining the TIF structure, the risk protections, the projected community benefits, and the answers to the questions constituents will ask. Your role is not just to structure the deal, but to ensure the decision-makers understand and support it.

Pitfall 5: Not Having a Capital Partner Identified Early

A developer-backed TIF Bond only delivers upfront capital if there is a buyer for the bond. Identifying a capital provider like Hageman Capital early in the process gives the developer certainty, strengthens the lender’s confidence, and helps you present a complete deal to the governing body. Waiting until after approvals to figure out the capital side introduces unnecessary risk and delay.

Hageman Capital Is Here to Help

Our team works with ED Directors across Tennessee as a free TIF resource — from feasibility evaluation to deal structuring to capital deployment. Request a meeting with Whitney Peterson, our Director – Government Relations, and let’s make sure your next deal is structured for success.