The central concern for financial advisors evaluating TIF has always been: who holds the risk if the increment falls short? Tennessee’s new legislation answers that definitively. Under a taxpayer agreement, the developer contractually guarantees any shortfall between actual tax increment revenues and the debt service obligation — a taxpayer direct payment mechanism that insulates the municipality entirely. The taxpayer agreement lien is recorded with the register of deeds, runs with the land, carries first-priority status over any existing or subsequent mortgage, and is enforceable as real property taxes. Critically, the legislation specifies that any deed of trust provision requiring acceleration solely due to entering a taxpayer agreement is unenforceable. For your analysis, this means TIF bonds issued under this framework do not constitute municipal debt, do not count against statutory debt limitations, and carry no recourse to the municipality’s general credit.

Developer-backed TIF Bonds in Tennessee can be issued through either a Housing Authority (up to 30 years) or an Industrial Development Board (up to 20 years). The bond is non-recourse to the TIF agency — payable solely from tax increment revenues, with the developer’s taxpayer agreement serving as the contractual backstop. Your role is to evaluate the projected increment against the proposed debt service, stress-test assumptions around development timeline and assessed value growth, coordinate with overlapping taxing jurisdictions, and ensure the full statutory process — public hearings, governing body approvals, state filings — is followed. The taxpayer agreement structure provides enforceable security that traditional TIF lacked, giving you a defensible recommendation to bring to elected officials.