Tennessee Law Brings Uniformity to TIF

On March 21st, 2012, Tennessee Governor Bill Haslam signed Senate Bill 2175, the Uniformity in Tax Increment Financing Act of 2012, into law.  The law is intended to make TIF easier for local governments to use as an economic development tool.

TIF is not a new concept in Tennessee. Before SB 2175, TIF was used in different ways.  Under Tennessee Code Annotated (TCA) Title 7, Chapter 53, an industrial development corporation is authorized to use TIF for industrial parks or other projects owned by the corporation. TCA Title 13, Chapter 20, allows a housing authority to adopt a redevelopment plan or urban renewal plan which includes incremental property taxes as a financing source. In addition, the Community Redevelopment Act of 1998 allows municipalities and counties to create community redevelopment agencies, adopt community redevelopment plans and issue redevelopment revenue bonds based on property tax increment.

Because the rules to create and use TIF in each of these three ways are different, the Tennessee legislature adopted SB 2175 to provide municipalities and counties with a more uniform tool for economic development. Generally, SB 2175 provides the following:

  • TIF Districts established by housing authorities, municipalities and counties are limited to 30 years. TIF Districts established by industrial development corporations are limited to 20 years.
  • The term of a TIF district can be extended with agreement from both the Commissioner of Economic and Community Development and the Comptroller of the Treasury if they decide such an extension is in the State’s best interest.
  • Industrial projects may use TIF dollars to pay for privately owned land, improvements and equipment in addition to public infrastructure, site acquisition and site improvements if both the Commissioner of Economic and Community Development and the Comptroller of the Treasury decide such use is in the State’s best interest.

Elected and government officials have welcomed the adoption of SB 2175 because it will make it easier for communities to use TIF to encourage job growth.

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