A Shelby County resolution requiring developers who want to use future property tax revenues to pay for development to first complete “culturally competent community engagement” may run afoul of constitutional equal protection guarantees, according to Tennessee Attorney General Jonathan Skrmetti.
Though the resolution “contains no explicit race-based criteria” for approval, Skrmetti stated in a written opinion issued in January that the resolution’s mention of a “focus on eliminating racial inequities” and acknowledgment of historical and current discrimination and prejudice “nonetheless contemplates the consideration of race in the process.”
Commissioner Henri E. Brooks spearheaded the resolution with the aim of including community engagement early in the process when developers apply for tax increment financing. The tool allows local governments to pay for the redevelopment of “blighted” areas with future tax revenue. The tax agreements are based on the theory that improvements will raise property values in the area and thus increase property tax revenue, which can then be used to pay off the redevelopment bonds.
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The higher values and new tax revenue are used to pay off the bonds issued as part of a such deals. Many cities in Tennessee use them, to varying degrees of success.