Metro Tax Increment Financing Study Committee Releases Report

Press released, May 8, 2019 - Today, Metro's Tax Increment Financing Study and Formulating Committee released its report to the Metro Council. The report includes broad recommendations in three areas – transparency, communication, and education; policy and process; and accountability.

"Tax increment financing has been an important economic development tool in Nashville," said committee chair Council Member Bob Mendes. "To be most effective, TIF should be paired with consistent public input and an intense commitment to transparency. The committee's recommendations should help Nashville find a fair balance as the city continues to grow." 

Committee member Charles Robert Bone who serves as the Chair of MDHA's Board of Commissioners added, "The input we received over the last six months from both the public and from those with direct TIF experience was helpful to the committee and will be invaluable to MDHA as we move forward. It is my hope that the implementation of these recommendations will instill greater public confidence in the utilization of this tool and encourage a more diverse application of TIF." Mendes said, " There's consensus that TIF must include a public benefit – whether it is affordable housing or improved infrastructure. I appreciate the committee coming together on these recommendations for improving how Nashville uses TIF."

The committee will make a presentation about its report to the Metro Council on May 20, 2019, at 3:00 P.M., in the David Scobey Council Chamber, 2nd Floor, Historic Metro Courthouse, 1 Public Square, Nashville, Tennessee 37201. 

On September 19, 2018, Mayor David Briley signed ordinance BL2018-315 creating a Tax Increment Financing Study and Formulating Committee. The goals of the committee were to study how the Metropolitan Government utilizes tax increment financing and to formulate recommendations for its implementation in a more transparent, equitable, effective, and understandable manner. The committee was asked to look at how tax increment financing is awarded, the strengths and weaknesses of how tax increment financing is currently awarded, whether alternative lawful approaches exist for structuring tax increment financing awards, and whether methods for awarding tax increment financing should be revised following the emergence of transit-oriented redevelopment districts and other developments. 

Over the last six months, the committee met 11 times including a public hearing on March 6, 2019. The committee heard from affordable housing providers and advocates, Metro, MDHA, developers, attorneys, and lenders who had previous experience with tax increment financing in Nashville. Members of the committee are: Mr. Charles Robert Bone, Dr. Paulette Coleman, Mr. Brian Kelsey, Ms. Talia Lomax O'dneal, Mr. Bert Mathews, Councilmember Bob Mendes (Chair), Mr. Richard F. Warren. 

For more information, please contact Bob Mendes at 615.756.3533, bob.mendes@nashville.gov. 

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Rod Comment: Here is a link to copy of the report. Opinionated citizens who want to be informed and especially candidates for Council should read it.  It gives background on what is a TIF and how TIF is awarded and makes some policy recommendations. 

Here in a nut-shell is how TIF works.  In an area that is designated as a redevelopment area, Metro does all of the infrastructure improvements to facilitate a development. The city builds the streets, sidewalks, water and sewer expansion, lighting, and maybe some other developments. To pay for these improvements the taxes collected from the development in excess of what would have been paid if the development had not been build goes to pay the debt service for that city infrastructure development.  The problems with this is that the new development does not pay taxes to support general government cost but the tax collected from the new development goes to pay the infrastructure debt service.  People ask, how can Nashville be broke with all of the new development taking place?  That is why. It does not contribute to the general fund.

One question addressed in the report is, should there be a cap on the amount of the new development tax revenue that goes to fund the infrastructure or should some of the new tax revenue go to the general fund?  The report contains a list or recommendations primarily relating to making the process more transparent and giving the Council a roll in the TIF process which is now almost totally under the control of MDHA.

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