VOL. 129 | NO. 234 | Tuesday, December 2, 2014
TIF Incentives Could Become More Common in Memphis
By Amos Maki
Used widely in other Tennessee cities, Tax Increment Financing has been a popular way to spur development.
Memphis officials are seeking approval for just the third TIF district in the city for the redevelopment of the Graceland area but could increasingly rely on the incentive.
“I think a TIF is a valuable tool used not only in other Tennessee communities but across the country, and a tool we will undoubtedly use more of,” said Reid Dulberger, president of the city-county Economic Development Growth Engine. “I think what you’ll see is we will be exploring more and more the use of TIFs to spur development in Memphis and Shelby County and as we get better at it, as we learn the nuances and how it works best, we will have more opportunities to use it.”
The EDGE board recently approved the creation of a TIF district for the Graceland campus around Elvis Presley’s former home. The Memphis City Council and Shelby County Commission must still approve the creation of the TIF district, and the state must also sign off on the creation of the district because the funds will improve property owned by a private entity, Elvis Presley Enterprises.
TIFs, in essence, pay up front for public or private improvements out of future growth in taxes attributed to the project.
EDGE plans on issuing up to $125 million in revenue bonds to help fund a series of improvements to the Graceland campus, including the planned 450-room Guest House at Graceland hotel, improved exhibits and new attractions and retail. The increases in property tax revenue generated in the TIF district will be used to pay off the bonds.
There are two existing TIF districts in Memphis, one for the Uptown redevelopment project and another for the Highland Row development near the University of Memphis. After laying dormant for years following the onset of the recession, Indianapolis-based Milhaus Ventures has revived the Highland Row project.
Though lightly used in Memphis, TIFs have been used more widely in Nashville, Knoxville and Chattanooga. The city of Knoxville lists 19 TIF-supported projects, and Nashville’s Metropolitan Development and Housing Agency lists nine TIF redevelopment districts.
Memphis and Shelby County have historically relied on payments-in-lieu-of-taxes incentives for economic development efforts. While TIFs provide upfront financing for public and private projects, PILOTs reduce property tax payments over a period of years to spur investment.
“TIFs are another tool that should be in our toolbox,” said James McLaren, an attorney with Adams and Reese LLP who is representing EPE and has worked many projects that involved incentives. “For the right project, a TIF can be a more effective incentive than a PILOT.”
It remains unclear just how much the TIF program has been used statewide because counties weren’t required to file TIF data with the state until 2012, following a change in state law.
“There has been a significant learning curve in filing those reports,” said John Dunn, a spokesman for the state Comptroller of the Treasury. “We received some data in 2013 and some this year, but it is still a minority of the total data.
“Unfortunately I cannot provide statewide TIF data at this time because of this learning curve,” said Dunn. “We have communicated with the counties within the last few months in an effort to receive their TIF filings as required.”