Knoxville and Knox County each provide two primary types of tax incentives: Tax Increment Financing (TIF) and Payment-In-Lieu-Of-Taxes (PILOT). Tax incentives for newly recruited businesses are necessary to compete with other communities.
Local Tax Incentives
These programs, which are administered by the City of Knoxville’s and Knox County’s respective Industrial Development Boards (IDB) are performance-based and have time limits, depending on location and type of project. A third program, called a Redevelopment TIF, is available for community redevelopment projects within Redevelopment Areas prescribed by the City of Knoxville.
The PILOT program is for projects that will create jobs or additional investment in an area. The IDB owns the subject property and leases it back to the taxable entity that developed the project. The prior year’s taxes collected is typically used as the basis for establishing the PILOT payment amount.
The TIF program is for economic development projects that provide improvements to public infrastructure in blighted and under-utilized areas of Knox County and in other properties designated by Knox County Commission and Knoxville City Council. The infrastructure loan is paid down by allocating the incremental increase in new taxes collected in the district, initiated by the new development.
Within qualified redevelopment and urban renewal projects in the City of Knoxville, Knoxville’s Community Development Corporation (KCDC) will consider and implement the use of tax increment financing for a specific redevelopment and/or urban renewal project. KCDC is the housing and redevelopment authority of the City and as such is authorized to issue tax increment debt to finance certain qualifying costs relating to a Project. Such debt would be secured solely by incremental taxes generated by the Project and would otherwise be non-recourse to KCDC. KCDC has adopted Policies and Procedures to provide guidance to applicants for tax increment financing as to the procedure KCDC intends to use in the consideration and administration of tax increment financing transactions described in redevelopment and urban renewal plans prepared at the request of the City.
|Local Incentive Program Comparison|
|PILOT||IDB TIF||Redevelopment TIF (i.e., KCDC, Housing Authority)|
|Primary Public Benefit||Economic development||Economic development||Community redevelopment|
|Maximum Term||20 Years (without State approval)||15 Years (County IDB policy)
30 Years (State statute)
|Term of Redevelopment Area|
|Title to Property||Conveyed to IDB||Not conveyed to IDB||Not conveyed to IDB|
|Property Affected||Project area only||Economic Impact area||Redevelopment Area or Project Specific|
|Required Approvals||County IDB, operating within policies and procedures approved by County Commission
County IDB and County Commission on projects approved by County Commission
City IDB and City Council (when within corporate limits of City of Knoxville) approval of project
|Approval of Economic Impact Plan by County Commission, IDB and City Council (when within corporate limits of City of Knoxville and when city taxes are utilized)||Approval of Redevelopment Plan by Redevelopment Authority (i.e., KCDC or Housing Authority), County Commission and City Council (when within corporate limits of City of Knoxville) Including Tax Increment Financing Provision|
|Eligible Property||Any approved project authorized by state law||Any approved project authorized by state law||Any approved project within a redevelopment district authorized by state law|