Tax Increment Financing (TIF) is an economic development tool used by local governments to allocate all or a portion of the new, additional taxes generated by a project over a limited period of time to pay for public infrastructure and other improvements related to that project.
Tax increment is the difference in tax revenues generated by the project in the plan area after the project has been completed, compared with the tax revenues generated in the plan area before the development plan was adopted. The difference in these tax revenues pays the costs of improvements to the public infrastructure serving the plan area.
In Knox County (typically for those areas outside qualified redevelopment and urban renewal project areas), the County IDB has established policies and procedures for the facilitation of Tax Increment Financing. The program is primarily for economic development projects that provide improvement 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 County IDB has always viewed its core mission as the promotion of economic development and growth, and in particular, commercial and industrial projects that involve a significant capital investment and the generation of new jobs with wages in excess of the annual average wage. Therefore, a project seeking TIF assistance that fits within the County IDB’s core mission will encounter greater flexibility and receptivity by both the County IDB and governmental authorities.
Application and Approval Process
Approval of Economic Impact Plan by County Commission, County IDB and City Council (when within corporate limits of City of Knoxville and when city taxes are utilized) are required when TIF application is considered.
The process for requesting tax increment financing commences with an applicant filing a completed Application together with all exhibits, supplements, schedules, and financial information required in the Application.
Submission to Governmental Authorities
Once the County IDB determines that it has received a properly completed application and any other information that it considers relevant or necessary for County Commission to determine the qualifications of the applicant and the project, the IDB will submit the application and the information with a proposed Resolution of Intent to the County Mayor, Knox County Commission (or a designated Committee of the Commission), Knox County Department of Engineering and Public Works and other governmental departments specified by either the Mayor or the Commission. If the TIF request will affect City property taxes, the County IDB will take comparable actions and in a timely manner provide the same information to the City Mayor, City Council and other governmental departments specified by either the Mayor or City Council.
After a full review by these governmental authorities, the Commission may take one of three actions: (i) reject the application and return it to the County IDB, (ii) return it to the County IDB for more information, or (iii) approve a Resolution of Intent described below. To authorize further action and direct the County IDB to prepare and submit an economic impact plan, the Commission will adopt a Resolution of Intent stating that (i) the proposed project will provide necessary improvements to public infrastructure that the County wants to occur within the proposed time for the project, but does not currently plan to effect in the short term under its existing capital improvement plans, and (ii) the Commission will consider an economic impact plan prepared and submitted by the County IDB with respect to the project in accordance with the Policies and Procedures. If the TIF request will affect City property taxes, City Council may engage in the same deliberations and may take similar action with respect to the application.
Economic Impact Plan
If the County IDB receives a Resolution of Intent from the Commission or City Council that makes the above findings and directs the County IDB to proceed with the preparation and submission of an economic impact plan, the applicant will submit a proposed economic impact plan.
The applicant shall submit the proposed economic impact plan to the County IDB no later than 60 days after approval of the Resolution of Intent by County Commission.
Application Review Committee
The County IDB’s Application Review Committee (Committee) will review the economic impact plan, the application process to date, and the Resolution of Intent. The Committee will also review a proposed Development and Financing Agreement and will evaluate the terms in light of the County IDB’s policies and determine whether to recommend the agreement and any variations from such policies to the County IDB. The Committee will advise the County IDB whether the economic impact plan complies with the Act and this Program, and is, therefore, qualified to be considered for submission to County Commission and/or City Council for approval. The Committee will also determine whether to recommend the Development and Financing Agreement to the County IDB for its approval.
Notice and Hearing of IDB
After the Application Review Committee and the County IDB’s staff and counsel determine the economic impact plan to be complete, the County IDB will hold a public hearing related to the proposed plan at a regular or special meeting. If the County IDB determines that the economic impact plan substantially complies with the Act, and the IDB’s policies and core mission, it will submit the economic impact plan to Knox County Commission and/or Knoxville City Council for consideration and approval.
Approval of Municipality/Transaction Documents
If Knox County Commission approves the economic impact plan, the applicant and the County IDB will enter into a Development and Financing Agreement with the project developer, which will incorporate the specific terms of the tax increment financing approved by the municipality.
The applicant will close the TIF transaction within 30 days after the County IDB sends the Development and Financing Agreement and the related closing documents to the applicant.
**Applicants shall refer to the TIF Policies and Procedures for complete details on the application, review and approval process.**