Chattanooga City Council has approved a number of enhancements to rules governing tax increment financing, a tool that allows the city to leverage future tax revenue to pay for public improvements by revitalizing blighted areas.
The changes will bring the city rules into line with state rules regarding public infrastructure, the maximum term of a TIF and the process for seeking state approval while also strengthening the city’s ability to protect residents’ interests and respond to community needs.
“Our goal was to make the TIF policy predictable and easy to understand but also to put some teeth into it,” says Jermaine Freeman, senior adviser for economic opportunity for the city.
“These changes also improve our ability to administer and regulate TIFs more effectively and provide additional support for the staff members who vet, negotiate and implement these economic development tools.”
Tax increment financing is a funding tool cities and counties use to revitalize blighted properties. As these devastated properties are improved and developed, increasing their taxable value, the city sets aside part of the increase in property tax revenues to help fund public improvements in the area.
TIFs are usually enacted for a set number of years based on project needs. During this time, all existing property taxes continue to be collected. Of the new taxes that are raised as a result of new development, Hamilton County still collects the full portion for its schools.
Only a portion of new revenues paid by property owners are set aside to help fund infrastructure and public works.
The new maximum term of a TIF without seeking an exception will be defined as 20 years, matching the state statute.
The changes also increase the application fee to $8,000 from $1,500 previously and increase the administrative fee levied on the TIF increment from 0.25% to 2.5%.
As part of the submission process, applicants will also be asked to disclose whether they are under indictment, have filed for bankruptcy, or are involved in civil or criminal litigation.
The city is also adding a requirement for applicants to sign an affidavit stating the project is unable to move forward without the TIF incentive and requires documentation justifying the dollar amount and time period of the TIF.
Source: city of Chattanooga