Reviewed Date: 01/05/2023
Disclosure of Economic Development Agreements; Conditions and Term of Agreements
All economic development agreements granting property tax incentives must be submitted in writing to the chief executive officer of each jurisdiction in which the property is located and to the state comptroller. The agreement must be submitted within 10 days after execution. To determine the exempt status of property subject to the agreement, the parties may petition the local and state boards of equalization for adjudication in the manner required for filing local assessment appeals. T.C.A. §§ 4-17-301, et seq.. Lessees must make annual reports to the state board of equalization on property leased and in-lieu-of-tax payments made. T.C.A. § 7-53-305(e).
Tax Increment Financing and Economic Impact Plans for Industrial Development
T.C.A. § 7-53-312 authorizes and establishes procedures for using tax increment financing and economic impact plans for industrial development.
Uniformity in Tax Increment Financing Act of 2012
Regardless of the authority for a tax-increment financing plan base and dedicated taxes are defined by T.C.A. § 9-23-101, et seq. These provisions also govern the allocation of taxes collected within a tax-increment finance area. Allocation of tax-increment financing revenue is capped at 20 years for an economic development plan and at 30 years in the case of a redevelopment plan or community development plan. These limits may be increased with approval from the comptroller and the commissioner of economic and community development.
Regional Megasite Authorities
Municipalities and counties may create regional megasite authorities, which are similar to a regional industrial development corporation (IDC). A “megasite” must consist of at least 1,000 contiguous acres before an authority may be created. The authority is incorporated similarly to an IDC and governed by a board of directors on which the mayor of each participating municipality sits. The authority can issue bonds and may be delegated the authority to require in-lieu-of-tax payments by lessees. Restrictions on tax breaks and in-lieu-of-tax payments are similar to those for IDCs. The authority also may prepare economic impact plans. Any authority is subject to sunset review T.C.A. §§ 64-6-101, et seq.
Local Development Authority: Industrial Development Loans
The Tennessee Local Development Authority has authority to issue notes or bonds whose proceeds may be used for loans to cities to finance constructing sewage treatment facilities, waterworks, correctional facilities, and resource and energy recovery facilities. The loan agreements are between the Department of Environment and Conservation and the city. T.C.A. § 4-31-101.
The state Funding Board and the Tennessee Local Development Authority are authorized to approve an application to the Department of Economic and Community Development for a loan of up to $250,000 to a city of less than 25,000 population or to a county with no city of more than 50,000 population. Each must have had an unemployment rate for 12 months higher than the state average or an average per capita income below the state average for the previous 12 months. The loan’s primary purpose must be to increase the number of manufacturing jobs. It may be used for water and sewerage facilities, land acquisition, site preparation, extending utilities, road access, and environmental monitoring equipment. T.C.A. § 4-31-301.