Page 21 - Murfreesboro, TN Comprehensive Plan: Chapter 7, Economic Development

Economic Development 7.21

DRAFT 12.02.15

tax revenues. TIF helps expand the district’s overall tax
revenue base by stimulating new private development
with new TIF-financed infrastructure or developer
incentives. Most private development wouldn’t
otherwise happen in TIF-designated areas because of
blight or other impeding conditions.
Since TIF-funded projects create their own debt-
payment streams (from the additional tax revenue
that they themselves generate), they are a type of
self-financing mechanism. Also, because the increment
is unlikely to accrue at the same level without the TIF
(again, TIF-funded investments are needed to induce
the revenue-generating investment) it doesn’t equate to
a dollar-for-dollar reduction to the general fund absent
the TIF. In other words, most of the increment wouldn’t
otherwise exist were it not for the public debt needed
to create it.
TIFs however can cause harmful fiscal impacts if used
to finance development projects with high public
service burdens such as single-family housing. This is
because district tax revenues flowing into the general
fund are frozen at their current levels resulting in the
need to spread new service costs system-wide with no
commensurate increase in general revenues emanating
from within the district. Therefore, TIFs are typically
used to help finance mostly commercial and industrial
development.
Common eligibility criteria for the use of TIF include:
job creation; blight elimination; project scale (usually
defined by minimum capital investment); public
benefits and amenities conferred; catalytic affects
(i.e., ability to spawn follow-on/spillover investment);
bond amortization period and the amount of private
investment leveraged. Public Chapter 605 of Tennessee
statutes govern the use of TIF.

GAME CHANGER: DOWNTOWN

“Downtown high-rises will not only help our

population expansion but also likely entice

companies to pursue high-rise offices and towers

too, spurring more economic growth.”