TIF Overview for Tennessee City Council Members

As a city council member in Tennessee, you may soon be asked to vote on a TIF-supported development project — and that vote will carry weight with your constituents, your fellow council members, and the local media. Tennessee’s new TIF legislation (SB 1760 / HB 1892) has introduced developer-backed TIF Bonds with protections that make the structure far more favorable for municipalities than traditional approaches. Here is a high-level overview to help you prepare.

TIF in Plain Language

Tax Increment Financing does not spend public money, create new taxes, or raise existing tax rates. It captures only the increase in property taxes that a new development project generates — revenue that would not exist without the project. The base amount of property taxes your city was collecting before the development continues flowing to all taxing jurisdictions as usual. Only the new growth, the increment, is set aside for a limited period (up to 20 or 30 years depending on the TIF agency) to help pay for eligible project costs.

When the TIF period ends, all revenue — including the increment — flows permanently to the city, county, schools, and other taxing bodies. The net result is a larger tax base generating more revenue than your community had before the project was built.

What SB 1760 Means for Risk

The new legislation authorizes taxpayer agreements — binding contracts where the developer guarantees bond repayment. If the increment falls short, the developer covers the difference. The lien created by this agreement carries the same priority as property tax liens and takes precedence over any mortgage on the property. The municipality issues the bond as a conduit — with no obligation to advance funds from the general fund. No public debt is created. No municipal credit is pledged.

What You Are Actually Voting On

When a TIF resolution comes before your council, you are voting to approve either an economic impact plan (for IDB projects) or a redevelopment plan (for Housing Authority projects). Tennessee law allows this approval by resolution at a single reading. Before that vote, you should have access to the TIF plan document identifying the project boundaries, projected increment, proposed allocation period, eligible costs, and estimated impact on all affected taxing agencies. The developer’s taxpayer agreement and redevelopment agreement terms should also be part of the record.

Your job is to evaluate whether the project genuinely benefits your community, whether the safeguards protect the public interest, and whether you can explain your vote clearly to constituents who ask. Developer-backed TIF Bonds make that explanation straightforward: the developer pays, the community benefits, and the city holds no debt.

Hageman Capital as Your TIF Resource

Hageman Capital provides free TIF education to Tennessee council members. Whether you want a walkthrough of the legislation, help preparing constituent talking points, or simply want to ask questions before your next vote, our team is available. Connect with Whitney Peterson, our Director – Government Relations, for a no-obligation conversation.