TIF Overview for Tennessee Economic Development Directors

Tennessee’s passage of SB 1760 and HB 1892 has added a significant new capability to the state’s TIF toolkit. For Economic Development Directors managing active developer pipelines, this legislation means you now have a deal-structuring mechanism that competing states are still catching up to. Here is an overview of the framework and how it fits into your work.

TIF in Tennessee: The Framework

Tax Increment Financing in Tennessee operates through two primary agency types. Housing Authorities can allocate increment for up to 30 years and focus on redevelopment of blighted areas. Industrial Development Boards can allocate increment for up to 20 years and have broader project authority, though state approval is required for private property improvements beyond public infrastructure. Both can issue TIF bonds or notes to developers, who then assign those instruments to capital providers in exchange for upfront construction capital.

The increment itself consists of the increase in property taxes above the base amount established when the TIF plan is approved. No existing revenue is redirected — only the new growth generated by the project is captured. When the allocation period ends, all revenue flows back to the taxing jurisdictions permanently.

What SB 1760 Adds to Your Toolkit

The new legislation introduces taxpayer agreements — voluntary, binding contracts where the developer guarantees any shortfall between actual increment and required debt service. The taxpayer agreement lien is recorded with the register of deeds, runs with the land, carries first-priority status over mortgages, and is enforceable as property taxes. For ED Directors, this changes the conversation with developers and lenders alike: the municipality’s credit is completely off the table, and the security structure is stronger than traditional TIF bonds.

How This Helps You Close Deals

When a developer evaluates incentive packages across competing cities, certainty of capital is a major factor. Developer-backed TIF Bonds with taxpayer agreements offer that certainty. The developer can sell the bond to a capital provider like Hageman Capital and receive upfront cash — rather than waiting years for increment to accumulate. For your pipeline, this means you can offer an incentive that is financially compelling to the developer, defensible to your governing body, and carries zero municipal credit exposure. That is a combination few other incentive tools can match.

Choosing Between Housing Authority and IDB

One of the first decisions in any Tennessee TIF transaction is which agency to use. Housing Authorities offer longer allocation periods and broader eligible cost categories for blighted areas, but require a blight determination. IDBs offer more flexibility on project types and do not require blight findings, but have shorter allocation periods and need state approval for private property expenditures. The choice depends on the project’s location, the nature of the costs, and whether the additional time or eligible cost flexibility of a Housing Authority structure adds value.

Hageman Capital as Your TIF Resource

Hageman Capital works alongside ED Directors as a free TIF structuring resource — helping you evaluate project feasibility, navigate the IDB vs. Housing Authority decision, and structure developer-backed TIF Bonds that move deals from conversation to groundbreaking. Connect with Whitney Peterson and let’s discuss your pipeline.