Authority for most new MDHA TIF loans expired on June 30

Many of you know that the Council was active in working on tax increment financing (TIF) reform last term. One of the Council’s last acts in the 2015-2019 term was to require that MDHA and the Council reach a new agreement about the goals for TIF loans in 8 MDHA redevelopment districts. When that legislation passed in August 2019, we left a generous 3 years to get the project done. Last week, the June 30, 2022, deadline for this work passed. As a result, absent further action by MDHA and the Council, no new TIF loans are allowed in these 8 redevelopment districts.

There are 11 active redevelopment districts in total. The expiration of TIF loan capacity does not impact the Capitol Hill Redevelopment District (which never included TIF loans at all), the Capitol Mall Redevelopment District (where new loan capacity expires in 2030 and, I believe, the district does not have much lending capacity left in the plan), or the East Bank Redevelopment District (which expires in 2025 and has a relatively low total TIF loan cap of $25 million).

Next, I’ll link to some of my posts from last term about TIF. Because of changes in how Metro publishes legislation, all of my links in the older posts to legislation from last term are broken. If you want to see those source documents, you’ll need to search for the specific 2015-2019 bill number here.

Here is a post about how MDHA TIF loans work generally.

TIF reform last term led to a lengthy study group process. There was a final report in May 2019 with multiple recommendations. More here about the May 2019 report. The report recommended several items of legislation, which are described here and here. The Council passed all of the MDHA TIF reform legislation before our term ended in August 2019.

One of these ordinances, BL2019-1645, amended the TIF provisions of 8 MDHA redevelopment plans. One of the key amendments was to require a periodic (every 7 to 10 years) reassessment by MDHA and the Metro Council of the impact and goals for TIF loan investments in each redevelopment district. The first assessment was required to be done by June 30, 2022, or else the ability for MDHA to make new TIF loans in these districts would terminate.

That deadline passed last week without these reassessments being completed. Therefore, for now, no new MDHA TIF loans are allowed in these 8 redevelopment districts.

I understand that MDHA is working on moving the assessments forward, but I don’t know the exact status. For now, it is extraordinary that MDHA and the Mayor’s Office has allowed TIF authority to fully end in 8 redevelopment districts.

Looking forward, with there being so much focus on reforming MDHA TIF loans, the development community has shifted its focus to looking at doing TIF loans through the Industrial Development Board. When I came into office in 2015, there had never been an IDB TIF loan in Nashville. Even now, there have been only two IDB TIF loans ever in Nashville — the Bellevue Mall redevelopment, and the massive Oracle TIF loan that was approved last year. The bottom line is that TIF reform in the last Council term focused on MDHA TIF loans, and as a result there’s been a shift in focus to looking at trying to use IDB TIF loans.

I suspect that, between MDHA wanting to restore TIF capacity in at least some of its redevelopment districts and the upcoming $750+ million non-stadium infrastructure costs on the East Bank, TIF (both through MDHA and the IDB) will be coming back to the forefront of more discussions in the coming year.

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For more information, click here for MDHA’s list of its redevelopment districts and here for a page where MDHA posts its annual TIF financial reporting to the Council.