The Hamilton County Commission voted unanimously to approve bonds for a private development project under the tax increment financing process permitted by law in Tennessee. This is the first time the county has engaged in such financing, and there was no public discussion among county commissioners on the matter, the Times Free Press reported.
Tax increment financing was conceived in California as an incentive for local governments to encourage development of real estate that otherwise would be considered blighted or of low value to stimulate growth and boost property values. The financing uses a tax revenue increase to fund projects that benefit the public. Developers pay for projects and pay themselves back over a 20-year period with other tax revenues.
The use of the financing has been extensive in cities such as Chicago, which designates districts eligible for the taxpayer-subsidized developments, and the money is “used to build and repair roads and infrastructure, clean polluted land and put vacant properties back to productive use, usually in conjunction with private development projects.” The intent has been to improve low-valued properties that never would be developed without the incentive or tax breaks.
Tennessee Gov. Bill Haslam signed into law a broadening of the tax increment finance tool, allowing local governments to expand their defined uses for the funding.
The Hamilton County-approved project was for a $9 million bond over a 20-year period to create a mixed-use community just across the valley from Lookout Mountain, overlooking the Black Creek Mountain golf community.